EXHIBIT 10.21
MANUFACTURING AGREEMENT
BETWEEN
EMULEX CORPORATION
AND
BENCHMARK ELECTRONICS INCORPORATED
This Agreement is entered into by and between Benchmark Electronics, Inc.
("Benchmark") a Texas corporation having its principal place of business at 3000
Technology Drive, Angleton, Texas 77515, and Emulex Corporation ("Emulex"), a
California corporation having its principal place of business at 3535 Harbor
Boulevard, Costa Mesa, California 92626, and shall be effective as of the later
of the dates on which the parties execute the Agreement ("Effective Date").
Now, therefore, the parties agree as follows:
1. DEFINITIONS
1.1 "Product" means the Emulex product listed in Attachment A,
manufactured by Benchmark in accordance with this Agreement.
The parties may add other Emulex products to this Agreement in
accordance with the Product Quotation Acceptance Methodology
described in Section 8.
1.2 "Product Documentation" means information required for the
manufacture of the Product, including BOM, AVL, drawings,
specifications, packaging requirements, unique test equipment,
test procedures, and software code.
1.3 "Purchase Order" or "Order" means Emulex's purchase order,
which may be submitted to Benchmark in writing,
electronically, or other format mutually agreed to, and any
documents incorporated therein by reference.
1.4 "Manufacturing Lead Time" means the total aggregate lead time
of the Material of the Product having the longest lead time,
plus the time necessary for receiving, inspection,
manufacturing, systems integration, test and shipment of the
Product, all as agreed by the parties.
1.5 "Materials" means component line items, including but not
limited to, long lead time components, minimum and multiple
buys, reel quantities, components that are at time of purchase
by Benchmark, or become, non-cancelable non-returnable
components, on the BOM, which are collectively assembled to
produce the Product.
1.6 "BOM" means Emulex's bill of Materials.
1.7 "RMA" means return material authorization.
1.8 "Obsolete Materials" means Materials on hand and/or on order
that can no longer be used in the Product.
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1.9 "Excess Materials" means Materials on hand and/or on order in
excess of twelve (12) weeks' forecasted demand (based upon
Emulex's Orders and/or then current Forecast) resulting from
Emulex's cancellations, reschedules, or other delays or
changes.
1.10 "AVL" means Emulex's approved vendor list, updated from time
to time, which specifies vendors approved by Emulex to supply
Materials specified in a BOM, from which Benchmark may
purchase or procure Materials.
1.11 "Delivery" or "Delivery Date" means the date the Product is
shipped from Benchmark's place of manufacture.
2. SCOPE OF AGREEMENT
Benchmark agrees to manufacture Products for Emulex in accordance with
the terms and conditions of this Agreement and at the manufacturing
locations listed in Attachment A. This Agreement is non-exclusive and
the parties may enter into similar agreements with other parties.
Except for Purchase Orders issued to Benchmark, Emulex shall not be
obligated to purchase any Products from Benchmark hereunder.
Local Contracts: If a subsidiary of Benchmark manufactures Products for
Emulex, the sale of such Products shall be subject to the terms and
conditions of this Agreement upon the execution by Emulex and the
Benchmark subsidiary of a local contract incorporating all of the terms
and conditions of this Agreement and adding any additional terms
necessary to reflect the manufacturing and business requirements unique
to the relationship between Emulex and the Benchmark subsidiary ("Local
Contract"). Benchmark's subsidiary reserves the right to review the
financial condition of Emulex prior to entering into such Local
Contract. The Local Contract shall only be binding if signed by the
authorized officers and/or directors of Emulex and the Benchmark
subsidiary.
3. TERM AND TERMINATION
3.1 Subject to the provisions of sub-Sections 3.2 and 3.3, below,
the initial term of this Agreement shall be for a period of
one year from the Effective Date. This Agreement shall
automatically renew at the end of the initial term for
successive periods of one year each, unless one party notifies
the other in writing of its intent to terminate the Agreement.
Such notice shall be delivered no later than ninety days prior
to the end of the initial or renewal term then in effect.
3.2 Emulex may terminate this Agreement and/or an Order for
convenience at any time by giving Benchmark at least ninety
days' prior written notice. Termination of the Agreement will
not relieve the parties of any obligations incurred prior to
the date of termination.
3.3 In addition to the termination rights specified in sub-Section
3.2, above, either party may immediately terminate this
Agreement and/or an Order if the other party:
(a) becomes insolvent or bankrupt, files or has filed
against it a petition in bankruptcy, or undergoes a
reorganization pursuant to a petition in bankruptcy
filed with respect to it; or
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(b) is dissolved or liquidated, or has a petition for
dissolution or liquidation filed with respect to it;
or
(c) is subject to property attachment, court injunction,
or court order which substantially and negatively
affects its operations; or
(d) makes an assignment for the benefit of creditors; or
(e) ceases to function as a going concern or to conduct
its operations in the normal course of business.
3.4 Either party may immediately terminate this Agreement and/or
an Order if the other party fails to perform any of the
material obligations imposed upon it under the terms of this
Agreement so as to be in default hereunder and fails to cure
such default, or to give adequate assurance of performance,
within thirty days after receiving written notice thereof,
except in the case of payment-related defaults, for which the
cure period shall be ten business days.
3.5 In the event either party terminates or cancels this Agreement
or an Order for any reason, Emulex shall pay Benchmark, within
thirty (30) days of Benchmark's invoice setting forth the
following termination charges: (1) the price for all finished
Products existing (a) for termination by Benchmark, on the
date that the termination notice is sent to Emulex, and (b)
for termination by Emulex, on the date Benchmark receives the
termination notice; (2) Benchmark's actual and documented cost
(including labor, Materials and a reasonable mark-up) for all
work in process; (3) Benchmark's Delivered Cost (defined as
Benchmark's actual cost of the Materials plus a six percent
(6%) handling charge for freight in, importation costs,
receiving and inspection, stocking, cycle count, pick and
pack, attrition, etc.) for Materials purchased pursuant to
Section 7 (Forecast) herein; and (4) any vendor cancellation
and restocking charges, provided that Benchmark makes
commercially reasonable efforts to minimize the quantities of
such items and the amounts of such cancellation and restocking
fees.
3.6 The parties hereby agree to negotiate in good faith to resolve
any other costs associated with the termination of the
Agreement or an Order that are in addition to those costs
specified above in Section 3.5.
4. EMULEX PROPERTY
4.1 Information Required for Product Manufacture
Subject to the provisions of Sections 5 and 16, Emulex will
provide Benchmark with the Product Documentation. Emulex
reserves the right to change the content of the Product
Documentation at any time, provided such changes are made
pursuant to the process for engineering changes in Section
12.1.
4.2 Emulex-Provided Equipment and Tools
(a) All Emulex owned equipment and tools (collectively
"Equipment") will be marked with Emulex's control
numbers prior to shipment to Benchmark. If Benchmark
purchases such Equipment on Emulex's behalf, Emulex
will provide Benchmark with the appropriate control
numbers and labels to identify it as Equipment.
Benchmark is authorized to use such Equipment at no
charge in concert with Product Documentation to
produce Product, and shall only be
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responsible for damage to such Equipment caused by
Benchmark's negligence or willful misconduct. Damage
due to normal wear and tear and replacement of the
Equipment or worn or defective parts thereof and
maintenance or calibration of such Equipment shall be
the sole responsibility of Emulex unless otherwise
agreed by the parties.
(b) Benchmark will notify Emulex if it reasonably
believes that Equipment is required to meet Emulex's
Product manufacturing requirements or schedules, and
will obtain Emulex's approval before purchasing such
Equipment. This Equipment may consist of in-circuit
test equipment, functional test equipment, special
component tooling, special assembly tooling, PCBA
pallets and/or other items as agreed between the
parties. Emulex will reimburse Benchmark for such
Equipment according to the terms of Section 8.2. Any
Equipment purchased under this Section 4.2 will
become the property of Emulex, and Benchmark shall
ship, Ex Works (Incoterm 2000) Benchmark's plant, all
such Equipment at the sole cost and direction of
Emulex upon the termination or expiration of this
Agreement. Notwithstanding the Ex Works shipment
term, Benchmark shall be responsible for loading the
Equipment onto the carrier's truck at Benchmark's
plant and shall have risk of loss for the Equipment
until such Equipment is loaded onto the carrier's
truck.
5. INTELLECTUAL PROPERTY RIGHTS
5.1 During the term of this Agreement, Emulex grants Benchmark
only those specific rights and licenses under Emulex's
applicable patents, copyrights, trademarks, trade names,
logos, and other intellectual property rights necessary for
Benchmark to manufacture the Products for Emulex under this
Agreement. Benchmark's rights and licenses granted hereunder
end upon termination of this Agreement.
5.2 Benchmark shall not publicize or use the name or trademark of
Emulex in any manner related to this Agreement without
Emulex's prior written consent.
6. APPROVAL OF VENDORS AND MATERIALS
Emulex is responsible for any change in AVL, Materials or Product.
Benchmark will purchase Materials only from the AVL, which will be
provided to Benchmark by Emulex and updated as changes warrant. Emulex
shall provide Benchmark with all updated AVL lists. Upon Benchmark's
receipt of an updated AVL list, Benchmark will provide Emulex with an
impact statement on any impact on the Product price, including price
for BOM, and/or the Delivery Date of Products, and the parties shall
mutually agree upon any necessary adjustment to Product pricing and/or
Delivery Dates. Any changes in vendors proposed by Benchmark are
subject to Emulex's advance written consent. If Emulex refuses to give
such consent or fails to respond to a change in vendor proposed by
Benchmark within five days, and if Benchmark has used commercially
reasonable efforts to purchase Materials from approved vendors but
shortages or allocations exist, Benchmark shall not be liable for
failing to deliver affected Products on time.
7. FORECASTS
Emulex will make commercially reasonable efforts to provide Benchmark
with a twelve-month rolling forecast, updated monthly ("Forecast");
however, the parties acknowledge that, due to the
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end of life status of the Products, such Forecasts may be unavailable
or inaccurate. Emulex authorizes Benchmark to procure Materials in
accordance with component lead time for Orders, net of yield losses,
and to support Forecasts. These actions may result in Excess Materials,
which may be subject to the terms of Section 14. Emulex may limit its
liability hereunder by specifying in writing a maximum amount of
purchases of Materials by Benchmark in excess of Material required for
Orders. If Emulex elects to specify a maximum amount, Benchmark will
purchase only to that amount and will notify Emulex of the impact to
Emulex's Orders and will not be liable for failure to deliver Products
on time if such failure results directly from Emulex's Materials
purchase limitations.
8. PRICING AND PAYMENT TERMS
8.1 The prices to be paid by Emulex for any Products ordered
pursuant to this Agreement shall be listed in Attachment A.
Any price changes to Products, or addition of new Products and
its prices, will be agreed to between the parties in
accordance with the following methodology: To introduce
revised prices for current Products or to add new Products and
its prices, Benchmark shall provide a product quotation
("Product Quotation") to Emulex listing the Product and the
new or revised prices for each assembly of the Product. To
indicate Emulex's acceptance of the Product Quotation, Emulex
shall either provide Benchmark with written acceptance by
email or fax, or issue an Order or revise an existing Order,
to reflect the revised prices for the current Products or the
new Product and its prices as specified in the Product
Quotation ("Product Quotation Acceptance Methodology"). All
accepted Product Quotations shall be incorporated herein by
reference and made a part of this Agreement. All prices and
fees described or contemplated under this Agreement are in
U.S. dollars. Product pricing does not include federal, state,
or local excise, sales, or use taxes; export licensing of the
Product, or payment of broker's fees, duties, tariffs or other
similar charges; cost of compliance with any environmental
legislation which relates to the return of end of life Product
from Emulex to Benchmark for disposal; setup, tooling, or
non-recurring engineering activities (collectively "Charges").
If such Charges are applicable, they shall be set out as a
separate line item on Benchmark's invoice. Emulex agrees to
provide to Benchmark a valid Reseller's Certificate for
exemption from any potentially applicable sales and use taxes.
8.2 Payment terms shall be net forty-five (45) days from the date
of Benchmark's invoice. On any invoice not paid by maturity
date, Benchmark has the right to charge Emulex interest from
maturity to date of payment at the rate of four percent (4%)
per annum, or the maximum amount permitted by law, whichever
is the lesser. Benchmark's invoice shall be contain the
following information: 1) description of the Product, 2) unit
price of the Product, 3) total quantity of the Product, 4) any
applicable Charges as a separate line item, 5) total amount of
the invoice, 6) date Product is shipped, 7) location Product
is shipped to, 8) Emulex's billing address, 9) Benchmark's
payment address. If the invoice contains the foregoing
information, it shall be deemed a correct invoice unless
Emulex notifies Benchmark in writing of an error in the
invoice within ten (10) calendar days of Emulex's receipt of
such invoice. If Emulex notifies Benchmark in writing of an
error in an invoice within such ten day period and Benchmark
agrees that the error specified by Emulex error exists,
Benchmark shall issue a revised invoice to correct the error
within ten (10) calendar days of Benchmark's receipt of
Emulex's notice. Payment of an invoice shall not constitute or
imply acceptance of the Product or relieve Benchmark of any
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obligations assumed under this Agreement, nor prevent Emulex
from asserting any other rights it may have under this
Agreement.
8.3 During the term of this Agreement, the parties may make price
adjustments for documented Materials price variances occurring
as a result of, without limitation, schedule adjustments,
worldwide supply of Materials, BOM changes, engineering
changes, process changes, or changes to Forecasts. Benchmark
shall permit Emulex to conduct an audit, at Emulex's expense,
of actual costs incurred by Benchmark for Product Orders at
the end of each quarter, provided Emulex gives Benchmark at
least five (5) days prior written notice and such audit is
conducted during normal business hours and does not unduly
interfere with Benchmark's business operations. Benchmark will
provide, upon Emulex's reasonable request, financial and other
information necessary to substantiate Product prices and to
assist the parties in identifying areas where price reductions
may be achieved, provided that Benchmark is not restricted
from doing so under applicable securities laws and/or
confidentiality agreements with third parties. If Benchmark is
subject to such confidentiality agreements, Benchmark shall
make all commercially reasonable efforts to obtain permission
to disclose the relevant information to Emulex, including
without limitation, requesting the relevant parties to sign
three-party confidentiality agreements.
8.4 Benchmark will obtain Emulex's approval prior to procurement
of any Material when the actual per unit cost of any Material
exceeds Benchmark's quoted per unit cost for such Material (as
specified in Benchmark's Product Quotation) by more than 1%
only when Benchmark intends to increase the Product price by
the increased cost in the Material. Upon Emulex's approval,
Benchmark will invoice Emulex for the difference between the
actual and quoted cost of the Material, and Emulex agrees to
pay for all such approved costs.
9. PURCHASE ORDERS
9.1 Emulex will provide Benchmark with Purchase Orders in the form
of hard copy, by facsimile, or by electronic transfer.
Purchase Orders will specify part numbers, quantity, prices,
Product revisions, and requested Delivery Dates and locations.
The parties acknowledge that the Manufacturing Lead Time will
change due to reasons beyond Benchmark's reasonable control;
therefore, Benchmark will exercise commercially reasonable
efforts to notify Emulex immediately of any change in
Manufacturing Lead Time. Benchmark has the right to accept or
reject the Purchase Order within five (5) business days of
receiving the Purchase Order. If Benchmark does not accept or
reject the Purchase Order within the five day period, the
Purchase Order shall be deemed accepted provided that
Benchmark has actually received the Purchase Order from
Emulex. In the event Benchmark is unable to meet the delivery
schedule set forth in a proposed Purchase Order, or finds the
schedule to be unacceptable for some other reason, the parties
shall negotiate in good faith to resolve the disputed
matter(s).
9.2 Benchmark will use commercially reasonable efforts to meet
Product quantity increases within the Manufacturing Lead Time,
subject to Materials availability, other scheduled
manufacturing, and manufacturing capacity. Any premium,
expediting, or other increased charges that are required in
order to meet Emulex's increased requirements must be approved
in advance by Emulex. Emulex agrees to pay for all such
approved costs.
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9.3 Emulex shall have the right to reschedule delivery for each
Purchase Order or partial Purchase Order without Benchmark's
consent under the following conditions: (i) in accordance with
the chart specified below; (ii) the original Delivery Date for
Products in each Purchase Order may only be rescheduled by
Emulex up to three (3) times, unless otherwise consented by
Benchmark; (iii) the rescheduled Delivery Date for each
reschedule permitted in subsection (ii) herein shall not
exceed the reschedule period below.
- -----------------------------------------------------------------------------------------
Days Before Scheduled Purchase Order Percentage Allowed To Extend
Delivery Date Delivery Date Reschedule Period
- -----------------------------------------------------------------------------------------
0 - 29 25% 30 days
- -----------------------------------------------------------------------------------------
30 - 59 50% 60 days
- -----------------------------------------------------------------------------------------
60 - 89 75% 90 days
- -----------------------------------------------------------------------------------------
> 90 100% No limit
- -----------------------------------------------------------------------------------------
9.4 Emulex shall have the right to cancel delivery of a Purchase
Order without Benchmark's consent, provided however, that
Benchmark must be notified in writing of the cancellation at
least thirty days prior to the scheduled delivery date, and
Emulex shall be responsible for any cancellation charges
specified in Section 3.5.
10. DELIVERY
10.1 Benchmark shall follow all instructions contained in Emulex's
routing instructions, which Emulex will provide to Benchmark
and which will be specified on each Order. Emulex may modify
its routing instructions from time to time and will provide
Benchmark with an updated version of any such modified
instructions. Emulex is responsible for all freight charges
for Products that are shipped in accordance with Emulex's
routing instructions. Benchmark shall be responsible for any
freight charges incurred for Product shipped outside the
routing instructions to include, but not be limited to, use of
other than Emulex's preferred carriers. If there are any
conflicts between the current version of routing instructions
provided to Benchmark and the contents of this Section 10, the
current routing instructions will prevail. Benchmark and
Emulex will review freight forwarders for cost reduction
opportunities. Any changes in freight carriers will require
Emulex's approval.
10.2 Deliveries will be considered on time if they are shipped no
more than three business days earlier or no days later than
the Delivery Date specified in the Emulex Purchase Order. If
Emulex agrees to take partial delivery of any Order, each such
partial delivery shall be deemed a separate sale.
10.3 If Benchmark anticipates or becomes aware that it will not
supply the Product on the delivery date committed by
Benchmark, for any reason to include but not be limited to
Material shortage, process changes, capacity limitations or
causes due to common carriers, Benchmark shall notify Emulex
immediately after Benchmark has knowledge of the situation.
The notification may be communicated by facsimile, telephone,
electronic mail or any other method agreed to by the parties,
provided that Benchmark shall obtain Emulex's actual
acknowledgment of the notice of anticipated delay. Emulex and
Benchmark will jointly develop alternatives to resolve any
late delivery of the Product,
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including use of premium routing. Benchmark will develop
recovery plans with new committed Delivery Dates and
communicate such plans to Emulex within 24 hours of missed
deliveries. If Benchmark is unable to ship the Product on the
committed Delivery Date due to Benchmark's fault that is not
excused by force majeure or that results from Benchmark's
negligence or willful misconduct, Emulex may require Benchmark
to pay for any additional charge or premium beyond the normal
freight fees for expedited delivery.
10.4 Except as provided for otherwise in Sections 10.1 and 10.3,
above, the terms of sale are Ex Works Benchmark's place of
manufacture as specified in Attachment A. All shipments shall
be uninsured unless otherwise specified by Emulex's
procurement agents. Prepay and bill shipment shall be used
only when specified by Emulex's procurement agents. In the
event that prepay and bill is used, Benchmark shall indicate
the number of shipping containers, weight of each shipment and
carrier name on the invoice. Notwithstanding the Ex Works
shipment term, Benchmark shall be responsible for loading the
Products onto the carrier's truck and risk of loss and title
shall pass to Emulex after the Products have been loaded onto
the carrier's truck at Benchmark's facility.
10.5 Each shipment of the Product by Benchmark shall include a
packing slip which contains, at a minimum, (i) Benchmark's
name, (ii) box number (e.g., 1 of 3, 2 of 3), (iii) receiving
address, (iv) Emulex's purchase order number, (v) Emulex's
part number, (vi) shipping quantity, (vii) date of shipment,
and (viii) RMA number when applicable.
10.6 All Products shall be packaged, marked and otherwise prepared
in accordance with Product Documentation, and if none are
specified or required, with good commercial practices. In
packaging Products, Benchmark shall also take any additional
steps needed to ensure reasonable protection from damage due
to rough handling and other hazards that might occur during
transit. Packaging for export/import shipments may also be
subject to specific instructions, which Emulex will provide to
Benchmark in writing in the form of Product Documentation
pursuant to Section 4.1.
10.7 Emulex will provide the following information about its
Products in writing to Benchmark: (i) country of origin; (ii)
Harmonized Tariff Schedule of the United States ("HTSUS") ,
and (iii) Export Control Classification Number ("ECCN").
Emulex will provide the commercial invoice. Benchmark will
prepare all international shipping documentation, including
NAFTA certificate, including NAFTA preference criteria (as
applicable), Shipper's Letter of Instruction, Shipper's Export
Declaration and any other necessary documentation for
international shipments. Emulex will be the exporter of
record.
11. WARRANTY
11.1 Benchmark warrants that Products provided under this Agreement
will be free of Benchmark's workmanship defects for a period
of three (3) years from date of Delivery. For the purpose of
this Section, "workmanship" shall mean manufacture in
accordance with IPC-A-610, Class 2 or Emulex's workmanship
standards set forth in the Product Documentation and/or
Quality Plan. In addition, Benchmark will pass on to Emulex
all manufacturer's Material warranties to the extent that they
are transferable, but will not independently warrant any
Materials.
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11.2 Subject to Section 11.3 below, Emulex's sole remedy and
Benchmark's sole obligation shall be to repair or replace, at
Benchmark's option, Product found to be defective in
accordance with Section 11.1. The warranty period for any
Product returned for repair or replacement shall be the
greater of the remainder of the original warranty period or
sixty (60) days from the date that the repaired or replaced
Product is Delivered to the Product owner.
11.3 Benchmark's warranty shall be void if the Product has been
subjected to abuse, misuse, accident, disaster, neglect,
improper handling, testing, storage or installation (including
improper handling in accordance with static sensitive
electronic device handling requirements) and/or operation
outside the parameters or environment identified in Emulex's
Product specifications, or unauthorized repair or alterations
by anyone other than Benchmark. Benchmark's warranty does not
cover Products that have defects or failures resulting from
Emulex's design, specification, Product Documentation, or
Emulex Equipment or test software.
11.4 Emulex shall contact Benchmark for an RMA prior to returning
any Product for repair. Benchmark will provide the RMA within
two business days of receipt (one business day for priority
requests) of Emulex's request. Benchmark shall pay all
transportation costs for valid returns of the Products to
Benchmark. Benchmark will exercise commercially reasonable
efforts to ship the repaired or replaced Product to Emulex
freight prepaid, Ex Works Benchmark's manufacturing facility,
as quickly as is practical, with the goal of shipping it by no
later than five days from the date Benchmark received the
defective Product. If Benchmark reasonably determines there is
an excessive number of invalid or "no defect found" ("NDF")
returns, Benchmark will notify Emulex and the parties shall in
good faith work together to resolve NDF returns and any
associated costs. Notwithstanding the Ex Works shipment term,
Benchmark shall be responsible for loading the repaired or
replacement Product onto the carrier's truck at Benchmark's
plant and shall have risk of loss for the Product until such
Product is loaded onto the carrier's truck.
11.5 Out of Warranty Product Repair
Benchmark shall provide out of warranty Product repair during
the term of the Agreement and for a period of not less than
seven years following the last date of Benchmark's Product
manufacture under this Agreement, provided Materials and/or
custom test equipment are available to Benchmark and the
parties agree on pricing for such repair work. Charges for out
of warranty Product repair will be quoted and mutually agreed
to by the parties. Transportation costs to ship the
out-of-warranty Product to Benchmark and for Benchmark to ship
the repaired Product to Emulex shall be at Emulex's sole
expense. Benchmark's repair activities shall include, but not
be limited to Product (i) testing, (ii) repair, (iii) failure
analysis, (iv) root cause analysis, and (v) corrective
actions. Out of warranty Products repaired by Benchmark shall
be subject to all of the provisions applicable to in-warranty
Product set out in this Section 11 solely with respect to the
repair work; such warranty shall not apply to the entire
Product.
11.6 THESE WARRANTY PROVISIONS ARE THE EXCLUSIVE WARRANTIES FOR ANY
PRODUCT PROVIDED BY BENCHMARK HEREUNDER AND SETS OUT THE
EXCLUSIVE REMEDIES FOR CLAIMS BASED ON DEFECTS IN
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OR FAILURE OF ANY PRODUCT. NO OTHER WARRANTY, EXPRESS OR
IMPLIED, SHALL APPLY. BENCHMARK SPECIFICALLY DISCLAIMS THE
IMPLIED WARRANTIES OF MERCHANTABILITY AND/OR FITNESS FOR A
PARTICULAR PURPOSE. BENCHMARK FURTHER MAKES NO WARRANTY THAT
THE PRODUCTS WILL MEET ANY SPECIFICATIONS NOT MADE KNOWN TO
AND/OR EXPRESSLY AGREED TO BY BENCHMARK OR RECEIVE THE
APPROVAL OF OR BE CERTIFIED BY ANY FEDERAL, STATE, LOCAL, OR
FOREIGN GOVERNMENT AGENCY OR ANY OTHER PERSON OR CERTIFYING
ENTITY AND BENCHMARK ASSUMES NO RESPONSIBILITY FOR OBTAINING
SUCH APPROVALS OR CERTIFICATIONS.
12. ENGINEERING CHANGES
12.1 Emulex Requested Changes
(a) In the event that changes are required to make the
Product conform to safety and/or regulatory agency
requirements or for design improvements or other
factors, Benchmark shall use its commercially
reasonable efforts to implement the proposed
engineering changes in existing inventory, work in
process, new production of the Product, and into
Product going through Benchmark's repair process as
instructed by Emulex. Emulex shall provide Benchmark
with written notice of any proposed engineering
change, including new Product Documentation, as soon
as possible after Emulex knows of such change. Upon
Benchmark's receipt of Emulex's notice of such
proposed engineering change, Benchmark shall provide
Emulex with an impact statement, including but not
limited to, the effect such change may have on
Product costs, Material (such as the BOM, Excess
and/or Obsolete Material), and/or Delivery Dates of
affected Products, and the parties shall mutually
agree upon such items before Benchmark implements the
proposed change.
(b) For implementing engineering changes on previously
delivered Product, Emulex will request an RMA number
and return, or cause the return of, the affected
Product to Benchmark or an authorized repair facility
for repair or replacement at Emulex's expense. Upon
such repair or replacement, Benchmark shall ship, at
Emulex's expense, the repair or replacement Product
back to the Product's owner under the shipment terms
specified in Section 10.
12.2 Benchmark Requested Changes
Benchmark may request, in writing, that Emulex evaluate an
engineering change to the Product or a change in the method of
packing, packaging, or shipment of the Product. Such request
will include a description of the proposed change sufficient
to permit Emulex to evaluate its feasibility, including the
impact, if any, on the Product price and Product quality
resulting from the proposed change.
12.3 Cost Reductions
The parties agree that competitive pressures necessitate a
program of continuous improvement. Each party shall cooperate
in good faith to implement a Product cost
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reduction program involving new technologies, Material cost
reduction, productivity, quality and reliability improvements,
and manufacturing processes (including cycle time and assembly
costs). The parties shall conduct quarterly program reviews
with specific emphasis on quality, delivery, and cost
improvements. Any cost savings which are achieved by Benchmark
as a result of implementing cost reductions proposed solely by
Emulex (without any input from Benchmark) shall reduce the
price of Products by the entire amount of Benchmark's cost
savings. Any cost savings which are achieved jointly by the
parties or by Benchmark as a result of changes proposed solely
by Benchmark shall be shared equally by the parties for a
period of twelve (12) months and shall be retained exclusively
by Emulex after twelve months. Notwithstanding the foregoing,
cost reductions arising out of a reduction in Material costs
will commence only after all current Purchase Orders have been
closed and all on-hand Materials have been consumed by
Benchmark.
12.4 Any changed Product resulting from application of this Section
12 shall be considered added to this Agreement and subject to
its terms and conditions.
13. PRODUCT QUALITY
Emulex Quality Management and Benchmark shall jointly develop and
implement a mutually acceptable quality plan for the manufacture of the
Product ("Quality Plan") s by using the guidelines set forth in
Attachment B. Benchmark shall use commercially reasonable efforts,
acceptable to Emulex, to continually meet or exceed the quality and
reliability requirements outlined in the Quality Plan.
The current approved master revision Quality Plan shall be retained by
Emulex Quality Management.
The Quality Plan will pay particular attention to:
(a) Quality system design, maintenance and reporting
(b) Supplier management
(c) Continuous (process) improvement
(d) Preventive actions
(e) Process and change control
(f) Product and process traceability (as defined in Emulex's
General Traceability Requirements)
(g) Customer satisfaction and timely complaint resolution
The effective execution of the Quality Plan will be reviewed at the
quarterly business reviews described in Section 15.
14. INVENTORY MANAGEMENT
14.1 If, at any time, Materials on hand and/or on order become
Excess and/or Obsolete Materials, and Benchmark has procured
said Materials in accordance with this Agreement and used
commercially reasonable efforts to minimize the quantities on
hand and/or on order of such Excess and/or Obsolete Materials,
Benchmark may require Emulex to purchase such Materials at the
Delivered Cost price. Emulex will provide to Benchmark an
Order within ten days of being notified by Benchmark of
Materials on
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hand and/or on order that are Excess or Obsolete, and will pay
Benchmark within thirty days of the date of Benchmark's
invoice.
14.2 If Emulex desires to store Excess or Obsolete Materials at
Benchmark, Benchmark will provide a consignment service to
Emulex for a consignment fee to be mutually agreed to by
Emulex and Benchmark. On a monthly basis, Benchmark will
provide Emulex with a purchase order summarizing the quantity
and Delivered Cost of Materials utilized by Benchmark in the
previous month to manufacture Products. Upon Emulex's receipt
of such purchase order, Emulex shall invoice Benchmark no
later than thirty (30) days from such receipt. Benchmark shall
pay Emulex within thirty (30) days of the date of Emulex's
invoice.
14.3 If Emulex elects not to store Excess or Obsolete Materials at
Benchmark and instead elects to have such Materials shipped to
Emulex or another destination designated by Emulex, Benchmark
will ship, at Emulex's expense, such Materials Ex Works
Benchmark's location. Notwithstanding the Ex Works shipment
term, Benchmark shall be responsible for loading the Materials
onto the carrier's truck at Benchmark's plant and shall have
risk of loss for the Materials until such Materials are loaded
onto the carrier's truck.
15. REVIEW AND PLANNING MEETINGS
15.1 Emulex hereby appoints its Director of Manufacturing as its
liaison to monitor Benchmark's performance and delivery of
Product under this Agreement. Benchmark hereby appoints its
designated Supplier Business Manager as its liaison to monitor
Emulex's performance hereunder. These liaisons will also be
responsible for coordinating meetings and discussions and
reports provided for in this Agreement. The names, telephone
and facsimile numbers of the liaisons will be provided by the
parties to each other and the liaisons may be changed by
written notice from one party to the other.
15.2 Emulex's designated liaison will conduct a quarterly
performance and planning review with Benchmark's account
management team. The location and times for these meetings
will be determined by Benchmark and Emulex. The purposes of
these meetings are listed below:
(a) Review Benchmark's performance over the previous
quarter;
(b) Review action items and resolution;
(c) Identify opportunities and areas of improvement;
(d) Agreement on commitments, set target dates and define
"persons" responsible;
(e) Review appropriate Benchmark reports;
(f) Review Benchmark's quality and reliability
improvement plans; and
(g) Publish minutes to EMULEX and Benchmark.
16. CONFIDENTIAL INFORMATION
16.1 Both parties may, in connection with this Agreement, disclose
to the other party information considered confidential and
proprietary information of the disclosing party ("Confidential
Information"). Information shall be considered Confidential
Information if identified as confidential in nature by the
disclosing party at the time of disclosure, or which by its
nature is normally and reasonably considered confidential,
such as
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information related to past, present or future research,
development, or business affairs, any proprietary products,
materials or methodologies, manufacturing processes or
designs, or any other information which provides the
disclosing party with a competitive advantage. Neither party
shall disclose such Confidential Information to any third
party without the prior written consent of the disclosing
party (except that Benchmark may disclose Emulex's
Confidential Information to Benchmark's suppliers solely to
fulfill the purpose of this Agreement provided Benchmark binds
such supplier to substantially similar terms of
confidentiality and restricted use herein) nor use such
Confidential Information other than to fulfill the purpose of
this Agreement. The receiving party shall protect the
disclosing party's Confidential Information with the same
degree of care that it regularly uses to protect its own
Confidential Information from unauthorized use or disclosure.
No rights or licenses under patents, trademarks, trade
secrets, or copyrights are granted or implied by any
disclosure of Confidential Information.
16.2 The obligations of confidentiality imposed by this Agreement
shall not apply to any Confidential Information that: (a) is
rightfully received from a third party without accompanying
markings or disclosure restrictions; (b) is independently
developed by employees of the receiving party who have not had
access to such Confidential Information; (c) is or becomes
publicly available through no wrongful act of the receiving
party; (d) is already known by the receiving party as
evidenced by documentation bearing a date prior to the date of
disclosure; or, (e) is approved for release in writing by an
authorized representative of the disclosing party. In
addition, each party shall be entitled to disclose the other
party's Confidential Information to the extent such disclosure
is required by the order of a court of competent jurisdiction,
administrative agency, or other governmental body, provided
that the party required to make the disclosure shall provide
prompt, advance notice thereof to enable the other party to
seek a protective order or otherwise prevent such disclosure.
16.3 The terms and conditions of this Agreement, but not its
existence, are considered Confidential Information.
17. INDEMNIFICATION
17.1 Emulex agrees, at its expense, to defend and indemnify
Benchmark in any suit or action brought or any claim asserted
(collectively, a "Claim") against Benchmark alleging that any
Product or any part thereof manufactured pursuant to this
Agreement and in material compliance with Emulex's
specifications, Product Documentation and directions, and/or
Benchmark's use of Emulex Equipment: (i) directly or
indirectly infringes any patent, copyright, trademark or
service mark; or (ii) has caused injury to the property or
person of any third party, except to the extent directly
attributable to Benchmark's manufacturing processes. Emulex
will indemnify and hold Benchmark harmless from and against
any loss, cost, damage or expense, including without
limitation reasonable attorneys' fees (collectively, "Costs"),
incurred by Benchmark as a direct result of, including defense
against, any such Claim.
17.2 Benchmark agrees, at its expense, to defend and indemnify
Emulex with respect to any Claim against Emulex to the extent
such Claim alleges that Benchmark's manufacturing processes
(i) directly or indirectly infringe any patent, copyright,
trademark or service mark; or (ii) have caused injury to the
property or person of any third party, provided that such
Claim does not relate to Emulex's specifications or written
instructions to
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Benchmark. Benchmark will indemnify and hold Emulex harmless
from and against any Costs incurred by Emulex as a direct
result of, including defense against, any such Claim.
17.3 Emulex will indemnify Benchmark with respect to any Claim
which results from or arises out of: (i) the presence of
Emulex, or Equipment, or Benchmark's equipment, tools, or
facilities ("Tools") used by Emulex in the performance of this
Agreement on Benchmark's property; (ii) the performance by
Emulex or its personnel of services for or on behalf of
Benchmark; (iii) the acts, errors, omissions, or negligence of
Emulex or Emulex's personnel that occur on Benchmark's
property in performance of Emulex's obligations under this
Agreement; or (iv) the use by Emulex of Benchmark's Tools,
except to the extent that any Claim is based upon the
condition of the Tools or Benchmark's, its agent's, or its
employee's alleged negligence in permitting such Tools' use.
17.4 The indemnities in this section are provided on the condition
that: (i) the indemnified party promptly notifies the
indemnifying party in writing of any Claim; (ii) the
indemnifying party has sole control of the defense and all
related settlement negotiations (except that the indemnifying
party shall not settle any Claim affecting the indemnified
party's interest without the indemnified party's prior written
consent); and (iii) the indemnified party gives the
indemnifying party full and complete authority, information
and assistance to defend against such Claim and fully
cooperates in the defense and furnishes all related evidence
in its control at the indemnifying party's expense.
18. LIMITATION OF LIABILITY
EXCEPT WITH RESPECT TO DAMAGES TO THIRD PARTIES UNDER INDEMNIFICATION
OBLIGATIONS OR DAMAGES PROXIMATELY CAUSED BY A BREACH OF
CONFIDENTIALITY OBLIGATIONS SOLELY DUE TO THE BREACHING PARTY'S GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT, NEITHER PARTY SHALL BE LIABLE TO THE
OTHER UNDER ANY CONTRACT, STRICT LIABILITY, NEGLIGENCE OR OTHER THEORY
FOR ANY INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES, INCLUDING
WITHOUT LIMITATION LOST PROFITS, IN CONNECTION WITH THE SUBJECT MATTER
OF THIS AGREEMENT OR ANY PURCHASE ORDER EVEN IF ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES. NOTWITHSTANDING ANYTHING TO THE CONTRARY
HEREIN, IN NO EVENT SHALL EITHER PARTY'S LIABILITY TO THE OTHER FOR
BREACH OF CONFIDENTIALITY OBLIGATIONS ARISING UNDER THIS AGREEMENT
EXCEED ONE MILLION U.S. DOLLARS ($1,000,000.00), WITHOUT LIMITING
INJUNCTIVE REMEDIES.
19. INSURANCE
19.1 Benchmark shall maintain insurance against fire, theft and
damage to any Emulex property held by Benchmark, including
without limitation consigned Materials, in-circuit test
fixtures, capital equipment, returned Materials and other
Emulex Product and property in Benchmark's possession.
Benchmark shall also maintain commercial general liability
insurance, which covers contractual liability and product
liability, in the amounts of $5 million per occurrence and $10
million in the aggregate for Benchmark's manufacturing
defects. Such insurance will name Emulex as an additional
insured with
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respect to claims of bodily injury, including death, and
property damage to the extent such claims arise from
Benchmark's negligent manufacturing of the Products or is
proximately caused by the negligent and/or intentional acts or
omissions of Benchmark, and will remain in effect for a period
of three years after termination of this Agreement. Benchmark
will provide Emulex with a certificate of insurance evidencing
such coverage.
19.2 Emulex shall maintain errors and omissions insurance in the
amounts of $5 million per occurrence and $10 million in the
aggregate for product liability. Such insurance will name
Benchmark as an additional insured and will remain in effect
for a period of three years after termination of this
agreement. Emulex will provide Benchmark with a certificate of
insurance evidencing such coverage.
20. MISCELLANEOUS
20.1 Governing Law
This Agreement shall be governed by and construed in
accordance with the laws of the state of California, without
regard for its rules concerning the conflicts of law. The
United Nations Convention on Contracts for the International
Sales of Goods is hereby expressly excluded from application
to this Agreement.
20.2 Remedies
Both parties acknowledge and agree that monetary damages may
not be a sufficient remedy for breach of this Agreement.
Benchmark further acknowledges that its breach of Sections 5
and/or 16 of this Agreement would cause irreparable harm to
Emulex. Emulex also acknowledges that its breach of Section 16
of this Agreement would cause irreparable harm to Benchmark.
Therefore, the non-breaching party shall be entitled, without
waiving any other rights or remedies, to such injunctive
relief as may be deemed proper by a court of competent
jurisdiction.
20.3 Relationship of the Parties
The parties are and shall remain at all times, independent
contractors in the performance of this Agreement and nothing
herein shall be deemed to create a joint venture, partnership
or agency relationship between the parties. Neither party
shall have the right or authority to assume or to create any
obligation or responsibility, express or implied, on behalf of
the other except as may be expressly provided otherwise in
this Agreement. Each party shall be solely responsible for the
performance of its employees hereunder and for all costs and
expenses of its employees, to include but not be limited to
employee benefits.
20.4 Waiver
The failure of either party to insist upon or enforce strict
conformance by the other party of any provision of this
Agreement or to exercise any right under this Agreement shall
not be construed as a waiver or relinquishment of such party's
right unless made in writing and shall not constitute any
subsequent waiver or relinquishment.
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20.5 Amendment and Modification
To be valid, amendments or modifications to the Agreement must
be in writing and signed by authorized representatives of both
parties. Any verbal agreements, discussions, and
understandings, expressed or implied, shall not constitute an
amendment to this Agreement.
20.6 Invalid Provisions
If any provision of this Agreement is finally held by a court
of competent jurisdiction to be illegal or unenforceable, the
legality, validity, and enforceability of the remaining
provisions of this Agreement shall not be affected or
impaired.
20.7 Survivorship
The provisions of this Agreement which by their nature survive
termination or expiration of the Agreement, including but not
limited to the provisions of Section 5 (Intellectual Property
Rights, Section 11 (Warranty), Section 16 (Confidential
Information), Section 17 (Indemnification), Section 18
(Limitation of Liability), Section 19 (Insurance), Section
20.1 (Governing Law), Section 20.2 (Remedies) of this
Agreement shall survive the termination or expiration of this
Agreement. Outstanding Purchase Orders shall survive the
termination of this Agreement, unless Emulex or Benchmark
cancels the Purchase Orders in accordance with this Agreement.
20.8 Force Majeure
Neither party shall be responsible for any delay in performing
this Agreement to the extent that such delay is caused by the
occurrence of unforeseen circumstances beyond a party's
control and without such party's negligence or intentional
misconduct, including, but not limited to, fire, flood,
hurricane, earthquake, explosion, war, acts of terrorism,
strike, boycott, shortage, riot, lockout, labor dispute, civil
commotion, embargo, government law or regulation, act by any
governmental authority, action of civil or military authority,
act of God, or act or inaction of the other party, including
but not limited to, failure to timely provide Equipment,
Product Documentation, or approval of purchase of Materials
under Section 4 herein.
20.9 Successors and Assigns
Neither party may assign any rights hereunder without the
prior written consent of the other party, which consent shall
not be unreasonably withheld. Any assignment of rights shall
not work as a novation of obligations hereunder without
written agreement. Any attempt to assign any rights, duties or
obligations hereunder without the other party's written
consent will be void. Notwithstanding the above, either party
may assign this Agreement to a surviving entity in connection
with any merger, acquisition or consolidation of not less than
a majority ownership in the merged, acquired or consolidated
company by the surviving entity.
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20.10 Notices
Unless otherwise expressly provided for, all notices,
requests, demands, consents or other communications required
or pertaining to this Agreement shall be sent by next business
day courier, fax followed by confirmation by mail, e-mail, or
some other method that provides proof of delivery, to the
address set forth below:
EMULEX: Emulex Corporation
3535 Harbor Blvd.
Costa Mesa, CA 92626
Attn: Contracts Administration
Benchmark: Benchmark Electronics Huntsville, Inc.
4807 Bradford Drive
Huntsville, AL 35805
Attn: Central Group President
With a copy to: Benchmark Electronics, Inc.
3000 Technology Drive
Angleton, Texas 77515
Attn: Legal Department
In case of mailing, the effective date of delivery of any
notice, demand, or consent shall be considered to be five days
after proper mailing.
20.11 Headings
The section and paragraph headings of this Agreement are
intended as a convenience only, and shall not affect the
interpretation of its provisions.
20.12 Conflicting Terms
The parties agree that the terms and conditions of this
Agreement shall prevail, notwithstanding any contrary or
additional terms in any Purchase Order, sales acknowledgment,
confirmation or any other document issued by either party
effecting the purchase and/or sale of Products ("Documents").
When interpreting this Agreement, precedence shall be given to
the respective parts in the following descending order: (a)
this Agreement; (b) Attachments to this Agreement; (c)
Benchmark's Product Quotation accepted by Emulex and (d) if
Orders are used to release product, those portions of the
Order that are not pre-printed and which are accepted by
Benchmark. The Parties acknowledge that the preprinted
provisions on the reverse side of any Document shall be deemed
deleted and of no effect whatsoever.
21. ENTIRE AGREEMENT
This Agreement, including all Attachments, constitutes the entire
Agreement between the parties and supersedes all prior or
contemporaneous agreements, discussions, and understandings between the
parties, either express or implied. The following Attachments are part
of this Agreement and are incorporated herein by this reference.
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A Product and Price Schedule
B Product Quality
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their duly authorized representatives.
EMULEX CORPORATION BENCHMARK ELECTRONICS, INC.
By: /s/ Paul Folino By: /s/ Cary Fu
----------------------- --------------------------------------
(Signature) (Signature)
Name: Paul Folino Name: Cary Fu
Title: Chairman and CEO Title: President & Chief Operating Officer
Date: 6/2/03 Date: 6/2/03
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ATTACHMENT A
INITIAL PRODUCTS AND PRICE SCHEDULE
1. PRODUCT AND PRICE SCHEDULE
The following table sets forth the Products, and Product price, which
may be changed from time to time pursuant to Sections 8.1 and 8.3 of
the Agreement.
- --------------------------------------------------------------------
PRODUCT
NUMBER DESCRIPTION AND ANNUAL VOLUME QUOTED INITIAL PRICE
- --------------------------------------------------------------------
- --------------------------------------------------------------------
LP9802-F2 HBA - 100,000 units TBD*
- --------------------------------------------------------------------
- --------------------------------------------------------------------
- --------------------------------------------------------------------
- --------------------------------------------------------------------
- --------------------------------------------------------------------
*TBD means to be determined by mutual agreement of the parties. This is
a non-binding forecast of annual volumes.
2. Manufacturing Locations: 4807 Bradford Drive, Huntsville, Alabama
35805; Circuito de Productividad #132, Parque Industrial, Guadalajara
Las Pintas, El Salto, Jal. 45690, Mexico; 94 Moo 1, Hitech Industrial
Estate, Banlane, Bang Pa-in, Ayudhaya 13160, Thailand; and others as
agreed between the parties.
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ATTACHMENT B
GUIDELINES FOR DEVELOPING A PRODUCT QUALITY PLAN
1. PURPOSE:
To define the methods and controls to manufacture and deliver all
Emulex Products.
2. SCOPE:
All Emulex Products produced by Benchmark.
3. RELATED DOCUMENTS:
(a) ISO 9000: 2000 (Quality Systems - Model for quality
assurance).
(b) ANSI/IPC-R-700C Modification, Rework, Repairs of Printed
Boards and Assemblies
(c) ANSI/IPC-A-610 Workmanship Standards
(d) IPC-A-600 Acceptability of Printed Boards
4. RESPONSIBILITY:
Implementation and control of the quality plan is the responsibility of
Benchmark's quality department in conjunction with Benchmark
engineering and production management.
5. MANUFACTURING QUALITY PLAN CHANGES:
Changes to the Manufacturing Quality Plan will be agreed in writing
between Emulex and Benchmark.
6. DOCUMENT CONTROL:
Benchmark will, through the relevant product engineer, ensure all
Product changes are reviewed internally. All Product changes must be
handled through Benchmark's ECO Procedure.
7. ESD:
These requirements apply to the storage, packaging, handling and
assembly of all ESD-sensitive Materials. They also apply to items such
as PWB's, tools, and packaging material which come into contact with
ESD-sensitive Materials.
Direct handling of ESD sensitive parts, including assemblies and
Products, shall be by grounded personnel at static safe workstations.
ESD sensitive Materials should be kept in static shielding
containers/Metro's.
Wrist straps and heel straps are the preferred personal grounding
device. They are required when components or boards are handled.
Straps are to be tested daily (before handling ESD sensitive items) and
replaced if they do not pass. A daily log of test results must be
current and visible.
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Static dissipative smocks shall be worn in areas which contain ESD
sensitive components. These areas include production, test, shipping,
inspection and warehouses. They should be kept clean and always be worn
fastened with the sleeves down, touching the skin.
Power tools, including soldering irons, need to be grounded (three
prong plugs). Work stations and tables at which components or boards
are not in protective packaging must have grounded surfaces.
8. PURCHASING:
All Materials used in the production of Emulex's Products will be
sourced as per the AVL supplied by Emulex.
9. GOODS RECEIVING:
All Materials received for production of the Emulex Products will be
inspected against the Emulex-supplied AVL. Alternative sources or parts
may only be accepted through concession from Emulex.
Customized parts in incoming inspection will be inspected as follows:
visual inspection of the parts for workmanship defects, verification of
certificate of conformity ("COC") and ensuring all parts are as per
Emulex-supplied AVL (AQL as mutually agreed). Records will be
maintained for the above part, verifying the COC received is
appropriate to the specification. These records will be maintained by
Benchmark Receiving.
10. STORES OPERATION:
10.1 Received goods checked against carrier paperwork to confirm
correct amount of packages and with no transportation damage
and signed for accordingly.
For any discrepancy with shipment, the receiving personnel
ensures courier acknowledges, adjusts paperwork and signed by
receiving personnel and courier. Copy of this paper is sent by
receiving to relevant buyer at Benchmark.
Goods are unpacked and checked against Purchase Order and
against supplier documentation. Any discrepancy is reported
directly to the relevant buyer at Benchmark. The discrepancy
is also recorded and is sent to relevant buyer, and the
Material is held until the "action" section is compiled by the
buyer and returned to receiving.
PO received quantity is confirmed
Cleared Materials are identified and marked accordingly.
10.2 Material is put away by locations by stores personnel.
Accountability for the warehouse locations is by warehouse
personal individual ownership. This ownership includes, stock
accuracy, housekeeping, and cycle count.
10.3 FIFO process will be maintained.
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11. NON CONFORMING MATERIAL REVIEW:
Process related non-conforming material ("NCM") is reviewed and
dispositioned in manufacturing by the appropriate engineer. Supplier
related NCM is dispositioned at least weekly by the supplier quality
engineer and quality, and Supplier corrective action measures are
applied where deemed necessary.
A secure MRB room is located the warehouse.
12.0 CONTROL AND MAINTENANCE OF MANUFACTURING, INSPECTION, MEASURING AND
TEST EQUIPMENT:
All manufacturing equipment shall be maintained on a regular basis and
is included in a preventative maintenance schedule.
All inspection, measuring and test equipment used to check conformance
of the Product to specified requirements is subjected to a planned
calibration program.
13. PROCESS INSTRUCTIONS:
Standard operating procedures are available for all automated assembly
stages and for each PCB, placement programs and reflow/wave profiles
are uniquely identified.
In addition, process documentation is available for all component
prework operations, manual assembly, box build and packing operations.
14. PRODUCT IDENTIFICATION:
All Products will be fitted with an assembly number and a serial number
(which includes Product revision).
15. MARKING AND LABELLING:
All Products prior to shipment will have the following labels attached:
the Emulex label, as per process instruction document.
16. INSPECTION AND TESTING:
All products will be 100% inspected and tested at the intervals shown
in the process flow by production personnel. The results of this test
are logged and retained for a minimum of two years in the Quality
Department.
17. REPAIR:
The standard to be used for all rework resulting from inspection or
test rejection will be ANSI/IPC-R-700-C, "Modification, Rework, Repairs
of Printed Boards and Assemblies."
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18. DATA COLLECTION AND REPORTING:
REFERENCED PROCEDURES: SPC Data Collection & Corrective Action
Procedures: Doc 115 0108.
Weekly quality reports will be provided to Emulex detailing the
following:
- Inspection process stages
- In-circuit test
- Functional test
- Outgoing QA inspection
This information will be provided in DPU, DPMO and % yield format
The results from all inspection and test stations will be recorded and
reviewed. Quality meetings will be conducted to review the SPC process
data and corrective actions required.
19. CUSTOMER COMPLAINTS:
All customer complaints must be directed to the quality director who
will immediately acknowledge the complaint by means of fax or E-mail.
This complaint is then submitted by the quality department and all
relevant people are automatically notified through e-mail for input to
the CLCA system.
Once the complaint has been submitted it is then assigned to the person
responsible for identifying root cause and corrective/preventive
action. This may include a short term and long tern solution also
effective date.
The status of a complaint is closed upon satisfactory completion of
these actions and its effectiveness checked by quality.
Each new customer complaint will automatically receive a new tracking
number from the database system. All records are filed in quality.
Customer complaints will be reviewed by site management at least
weekly.
20. RETURNS (RMA):
All field returns will be returned to Benchmark in accordance with
Benchmark's returns procedure. This procedure operates a full
comprehensive RMA facility.
21. RELEASE AUDITING:
All units will be the subject of a sample audit inspection carried out
by the quality department prior to shipment to the customer. The
release audit consists of a visual inspection. Sample sizes will based
on AQL as mutually agreed.
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