EXHIBIT 10.19
ARRIS - PLEXUS MANUFACTURING AGREEMENT
This Manufacturing Agreement ("Agreement") is entered into as of this
12th day of May, 2004 by and between Plexus Services Corp., a Nevada
corporation, located at 55 Jewelers Park Drive, Neenah, Wisconsin 54956
("Manufacturer") and ARRIS International, Inc., a Delaware company, having its
principal office at 3871 Lakefield Drive, Suwanee, Georgia 30097 ("Purchaser").
RECITALS:
WHEREAS, Manufacturer is in the business of providing manufacturing
services that include the custom manufacture of printed electronic circuit
boards, systems and related services; and
WHEREAS, the parties desire to establish the terms and conditions that
will apply to Purchaser's purchase from Plexus of the products set forth in
Exhibit A to this Agreement ("Products").
AGREEMENTS:
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Manufacturer and the Purchaser
hereby agree to the following Agreement:
1. TERM
This Agreement shall be effective as of the date first above mentioned (the
"Effective Date") and shall, subject to Section 8 of this Agreement, remain in
force for one (1) year. Thereafter, this Agreement shall automatically be
renewed for successive one (1) year terms.
2. SPECIFICATIONS
During the term of this Agreement, Manufacturer shall manufacture the Products
for Purchaser. All Products covered under this Agreement shall be manufactured
in accordance with Purchaser's specifications and drawings attached as Exhibit B
of this Agreement (the "Specifications"). The Products and Specifications may be
changed from time to time as the parties mutually agree and such Exhibits shall
be updated to reflect such changes.
3. TITLE AND SHIPPING
Per Purchaser's instructions and unless otherwise directed by Purchaser,
Manufacturer will ship Products on Purchaser's behalf directly to Purchaser's
customers.
All shipments by Manufacturer are EXW: Buffalo Grove Facility (Incoterms 2000).
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4. PAYMENT TERMS
a. Manufacturer and Purchaser agree to payment terms of net forty-five
(45) days from the date of invoice if payment is by wire transfer or
electronic funds transfer. If payment is by check, payment terms will
be net thirty (30) days from the date of invoice. Except with respect
to Excess Materials (as defined below) paid for by Purchaser and held
as consigned goods by Manufacturer, Manufacturer will not invoice
Customer until Products or Materials are shipped.
b. All prices and payments shall be in U.S. Dollars unless otherwise
agreed by the Parties.
c. All prices are exclusive of all taxes, duties, customs or similar
charges and are subject to an increase equal in amount to any charge
Manufacturer may be required to collect or pay upon shipment of the
Product.
5. PURCHASE ORDERS AND FORECASTS
a. Purchaser will provide to Manufacturer firm purchase orders for a
minimum of sixty (60) days in advance of delivery of Products
("Purchase Orders"). Further, Purchaser will maintain a six month
non-binding forecast by month of planned purchases of Products and will
issue revisions of that forecast to Manufacturer monthly ("Forecast",
as initially shown in Exhibit C and updated on a monthly basis
beginning thirty (30) days after the Effective Date). Manufacturer will
purchase materials to support Purchase Order demand ("Materials").
Materials purchased may exceed actual Purchase Order demand due to
minimum or economic order quantity requirements of Materials suppliers.
Manufacturer will provide Purchaser with a list at quarterly business
reviews of those Materials subject to such minimum or economic order
quantity requirements. Purchaser is responsible, and will pay in
accordance with Section 4(a), for Material purchased to support
Purchaser's Purchase Orders, to fulfill the first sixty (60) days of
the Forecast as in effect from time to time, or with Purchaser's
pre-approval, purchased to support Purchaser's non-binding Forecast. If
in case of Purchaser requests schedule reductions or cancellations,
Manufacturer will use commercially practicable efforts to reschedule or
cancel such Materials. Purchaser will maintain a minimum of sixty (60)
days of Products on order at all times. Each Purchase Order shall
become effective upon acceptance of the order by Manufacturer.
b. Purchaser may reschedule deliveries on Products under Purchase Orders
in accordance with the following schedule:
Number of days prior to the original Maximum percentage of the Product
schedule delivery date that written quantity by which the scheduled
notice of a change OR rescheduling is delivery can be decreased or
received by Manufacturer. rescheduled for later delivery
without incurring cancellation
charges (other than as provided in
Exhibit H).
00 - 60 DAYS 0% can be rescheduled. Total
volume is firm. Product mix
changes are acceptable with thirty
(30) calendar
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days prior written notice.
Purchaser remains fully
responsible and will pay in
accordance with Section 4(a) for
all Material, work-in-process
Material and finished goods
Products.
61 - 90 DAYS 25% of total volume can be
rescheduled, one time per Purchase
Order only, for a maximum
reschedule of sixty (60) days from
the original delivery date
acknowledged by Manufacturer.
Purchaser will be responsible for
Material acquired pursuant to the
original delivery date that cannot
be returned, rescheduled or
cancelled per the terms defined in
Exhibit H
91 - 120 DAYS 50% of total volume can be
rescheduled or canceled. Purchaser
will be responsible for Material
acquired pursuant to the original
delivery date that cannot be
returned, rescheduled or cancelled
per the terms of Exhibit H
120 + DAYS 100% of total volume can be
rescheduled or canceled. Purchaser
will be responsible for Material
acquired pursuant to the original
delivery date that cannot be
returned, rescheduled or cancelled
per the terms of Exhibit H
If a Purchaser requested reschedule represents an acceleration or
increase, Manufacturer shall use commercially reasonable efforts to
meet Purchaser's request. Purchaser shall be responsible for the costs
reasonably and directly incurred by Manufacturer to meet Purchaser's
request, subject to prior written notification to and written approval
by Purchaser.
c. Upon Manufacturer's request, Purchaser may give written authorization
to Manufacturer to order or procure Materials with long lead-times in
order to improve Manufacturer's ability to respond to changes in
Purchaser's Forecast. Specific limits regarding the quantity and/or
dollar value of this Material shall be documented in writing and
provided to Purchaser from time to time. This right shall not arise
unless Purchaser gives express written authorization for the specific
amount of Material to be procured.
d. Purchaser shall not be responsible for rescheduling charges if
Purchaser reschedules delivery of Products as a result of
Manufacturer's failure to deliver Products which meet the requirements
of this Agreement or to deliver Products in accordance with specified
delivery schedules.
e. All Purchase Orders issued by Purchaser shall contain the following
information:
1. Purchaser's part number, description, and revision level of Product
to be shipped.
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2. The delivery schedule.
3. The unit price.
f. Manufacturer will ship Products on Purchaser's behalf directly to
Purchaser's customer's via a "drop shipment" methodology. Purchaser and
Manufacturer will make reasonable efforts to develop a model whereby
Purchaser will provide blanket orders to Manufacturer to support
Manufacturer's assembly of Product to a certain level of assembly.
These lower level assemblies would then be configured and shipped per
subsequent orders issued by Purchaser (the parties will work in good
faith to reach agreement on the details of this model prior to
commencement of standard Product shipments, which agreement will be in
writing and signed by both parties).
g. Any Material deemed obsolete due to an ECO or no future scheduled
demand will be reported to Purchaser on a monthly basis. Purchaser
shall make reasonable efforts to review such report and buy any
obsolete inventory from Manufacturer within 30 business days.
6. Warranty
a. Product Warranty
Manufacturer warrants that the Products sold hereunder will be free
from defects in manufacture and workmanship (to exclude customer
provided materials or Product design) and will conform with the
applicable Specifications under normal handling, use and operation for
a period of eighteen (18) months from the date the final end customer
receives the Product this period not to exceed twenty-four (24) months
from the date the Product is shipped by Manufacturer.
Manufacturer's sole obligation under this Product Warranty, and
Purchaser's sole and exclusive remedy, shall be, at Manufacturer's
option, to either repair, replace or credit Purchaser's account for any
Products found to be defective during this warranty period. This remedy
is made on the following conditions:
i. Manufacturer is notified in writing of the defective Products
within a reasonable time after Purchaser or Purchaser's
customer acknowledges receipt of Products.
ii. Purchaser shall forward defective Products to Manufacturer at
Manufacturer's expense. Manufacturer shall use its commercial
best effort to return the repaired or replaced Products
freight prepaid by Manufacturer to Purchaser or other
Purchaser specified location no later than thirty (30) days
from the date Manufacturer receives the defective Products.
Such Products will be returned to Purchaser or other Purchaser
specified location by Manufacturer F.O.B. destination. The
Product warranty referred to in this Agreement shall apply to
all Products supplied to replace defective Products, provided
that the length of the warranty on replacement Product will be
equal to a period of ninety (90) days or the remainder of the
original warranty period, whichever is longer.
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iii. DOA's are replaced immediately by the Purchaser and must
receive highest repair priority by Manufacturer. Repaired DOA
units must be brought to "new" condition (boxes/labels/date
codes/etc) for restocking in Purchasers class A inventory.
iv. Manufacture will capture and summarize all warranty repair
data in a format that can be jointly used by the Manufacturer
and Purchaser to lead improvements in process, workmanship and
design to prevent future failures of the top Pareto failures.
Repaired Products shall be warranted for a period of ninety
(90) days or the remainder of the original warranty period,
whichever is longer. The aforementioned warranties shall inure
to Purchaser.
b. Materials procured for use by Manufacturer in the manufacture of
Purchasers Products will be warranted by Manufacturer in accordance
with the original manufacturers warranty or 90 days whichever is
greater. In the event any components are not in conformity with those
foregoing warranties, Manufacturer agrees to make commercially
reasonable efforts to pursue failure analysis (root cause) data from
the supplier and to negotiate on Purchasers behalf all warranty terms.
c The foregoing warranty shall not be valid if the Products or component
parts have been subjected to abuse or the defects are the result of and
caused by misuse, accident, neglect, alteration, or improper testing,
storage, and/or improper installation by Purchaser, it its agents,
other subcontractors or its customers.
d Products shall be accepted by Manufacturer once Purchaser has
identified the returned goods with the proper Returned Material
Authorization (RMA) number displayed on the shipping cartons and the
associated Product name. In addition, if there is more than one RMA lot
being returned at any given time, there cannot be more than one RMA lot
per shipping container. RMA numbers shall be issued by the Program
Manager or designate.
e. Once RMA lot receipts are acknowledged by Manufacturer, these lot(s)
will be returned to Purchaser in new shipping containers with proper
RMA number and Product name displayed on the carton. The period for
this return will be thirty (30) calendar days from the date of receipt
at Manufacturer.
f. Products which are returned to Manufacturer with alleged defects, which
Products are found to be in proper working order, upon return to
Purchaser may be subject to a commercially reasonable and justifiable
charge to cover the costs of handling and testing.
g. Upon Purchaser's request, Manufacturer will repair out-of-warranty
Products. Each such out-of-warranty repair shall be charged as agreed
to by both Parties. This repair cost basis will be one of the
following: (1) charged at a time and material basis; (2) average cost
repair cost basis; (3) fixed unit repair cost. Manufacturer warrants
each such repair for a period of four months for Material and six
months for manufacturing workmanship from the date of shipment of the
repaired Products. Manufacturer shall pay all freight charges
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for repaired Products requiring a second repair under Manufacturer's
warranty for repaired Products as set forth in this paragraph.
h. THE WARRANTIES SET FORTH IN THIS SECTION 6 ARE THE EXCLUSIVE WARRANTIES
PROVIDED BY MANUFACTURER, AND EXCLUDE ALL OTHER EXPRESS OR IMPLIED
WARRANTIES, INCLUDING, WITHOUT LIMITATION, THOSE OF MERCHANTABILITY OR
FITNESS FOR ANY PARTICULAR PURPOSE.
7. DELIVERY
Products shall be delivered to Purchaser in accordance with required delivery
dates as specified on Purchase Orders as agreed-to by Manufacturer. Upon
learning of any potential delays, Manufacturer shall immediately notify
Purchaser in writing as to the cause and extent of such delay. The Purchaser may
request overnight or special delivery on Products failing to meet the ship-dates
specified on purchase orders, the incremental cost to be paid by the
Manufacturer if the delay is due to causes within Manufacturer's control.
Otherwise, the incremental cost for overnight or special delivery on Products
shall be paid by the Purchaser.
8. TERMINATION AND CANCELLATION
a. For Cause - This Agreement may be terminated by either party at any
time upon occurrence of any one or more of the following Events of
Default:
(1) failure of the other party: a) to perform pursuant to the
material terms and conditions of this Agreement; and b) to
cure such performance deficiency within thirty (30) days after
receiving written notice thereof given by the aggrieved party;
or
(2) the entering into or filing by the other party of a petition,
arrangement or proceeding seeking an order for relief under
the bankruptcy laws of the United States, a receivership for
any assets of the other party; a composition with or
assignment for the benefit of its creditors; a readjustment of
debt or the dissolution or liquidation of the other party.
b. For Convenience - After the first year anniversary of the Effective
Date, either party may terminate this Agreement for convenience upon
one hundred eighty (180) days advance written notice to the other
party. Should such termination occur, notwithstanding any implication
to the contrary that may otherwise be suggested by this Agreement,
neither party shall owe any obligation of any type whatsoever to the
other party other than for accrued obligations existing as of the date
of termination.
c. Transition Support and Assurance - Manufacturer will support the
transition to a new manufacturer and insure an adequate supply of
Product to support reasonable Purchaser Forecasts during the transition
period. If a supply disruption exceeding two weeks from confirmed
delivery date or limitations of less than 75% of Purchaser's Forecast
occurs due to the sole negligence or willful misconduct of Manufacturer
and Manufacturer fails to cure such supply shortfall within thirty (30)
days after receiving written notice thereof from Purchaser, the parties
agree that damages will be difficult to ascertain and that
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Purchaser's business will be irreparably damaged, as such Manufacturer
will compensate Purchaser $1,000,000 as liquidated damages for the
disruption. Such amount is payable within thirty (30) days of written
notice by Purchaser of its claim for such amount due to such supply
disruption. Purchaser will also provide such written notice to
Manufacturer no later than 60 days after such supply disruption,
failing which Manufacturer will be relieved of the reimbursement
obligation. Prior to payment, Purchaser will provide the necessary
documentation to support claims of supply disruption and a itemized
detail of any out of pocket expense incurred.
As mutually agreed in a transition plan, Manufacturer shall prepare,
and provide access to the Manufacturing Facility for packing, removal
and shipping by Purchaser, each of the following items, to the extent
(with respect to the items described in clauses a through d, below)
such items are either owned by Purchaser or exclusively used in
manufacture of the Products:
a. Product Documentation; e.g. drawings, schematics,
Bills-of-Materials, component specifications, approved
suppliers, test specifications, process files, and other items
necessary to describe the product.
b. Manufacturing Process Documentation; e.g. process profiles,
SMT placement programs, temperature profiles, control
parameters and other items necessary to describe the
manufacturing process.
c. Manufacturing and Test programs; software used in the
manufacture and test of the products.
d. Manufacturing and Test equipment, fixtures, jigs, transport
carriers and other items necessary to manufacture the product.
e. Materials, work in progress and Products.
f. Any consigned equipment described in Section 18 hereof and any
Consigned Inventory described in Section 19 hereof.
Such removal shall be accomplished in a mutually agreed manner so as to
reasonably minimize any disruptions. Items owned by Manufacturer (other
than Materials and Products) shall be purchased by Purchaser at a price
to be negotiated, not to exceed typical market prices. Purchaser shall
also purchase all remaining Products (at then current prices) and
Materials (as if such Materials were Excess Materials) and work in
progress (at Manufacturer's cost at of the last completed manufacturing
operation for such work in progress) and pay Manufacturer any costs
associated with cancellation of Material then on order.
9. INSPECTION
a. Upon request and reasonable notice from Purchaser, Manufacturer shall
allow Purchaser to inspect and review the work being performed under
this Agreement, including Materials being used. However, shipments will
not be delayed if Purchaser fails to effect such source inspection.
Source inspection will not relieve Manufacturer of its warranty
obligations herein.
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b. In the course of purchasing component parts on behalf of Purchaser,
Manufacturer must follow Purchaser's Approved Vendors List (AVL) for
all component parts. If Manufacturer offers an alternative to
Purchaser's AVL, the alternative may be approved in writing by
Purchaser prior to procurement/production at Manufacturer's facility
which approval shall not be unreasonably withheld.
10. ENGINEERING CHANGE ORDERS
It is recognized that from time to time Manufacturer will be asked to implement
Engineering Change Orders ("ECOs"). The following delineates the procedures to
be followed by the Parties:
a. Purchaser must notify Manufacturer in writing of proposed ECO. This
notification will include the documentation of the change to
effectively support Manufacturer's investigation of the impact of this
proposal. The documentation should include: ECO form with written
description of change, revised BOM, drawings, AVL, media, required
implementation date, etc.
b. If such changes cause an increase or decrease in the total number of
Products due under an order issued hereunder or in the time required
for its performance, an equitable adjustment shall be made; provided,
however, that any claim by either party therefore must be asserted in
writing in the form of a quotation within thirty (30) calendar days
from the acknowledged receipt date of the change notice by
Manufacturer.
c. Upon notice of a change, Manufacturer shall use commercially reasonable
efforts to review all costs impacted within five (5) days after
Manufacturer's receipt of ECO proposal. All cost impacts and material
availability issues will be presented, mutually reviewed and agreed to
in writing with Purchaser prior to Manufacturer's implementation.
d. Purchaser will be responsible for all expedite costs associated with
emergency ECO implementation. For non-emergency ECOs, Manufacturer
shall present the cost impacts and material availability issues, to be
mutually reviewed and agreed-to in writing by the parties prior to
Manufacturer's implementation.
e. Manufacturer shall notify Purchaser in writing of any proposed changes
to the Products. If Purchaser has not given approval of any proposed
changes within fifteen (15) calendar days after receipt of such written
notification, Manufacturer will conclusively presume that Purchaser has
disapproved the change. Manufacturer will continue to deliver unchanged
Products in accordance with the provisions of this Agreement should
Purchaser not approve the proposed change.
11. CONFIDENTIALITY
Both parties acknowledge that, by reason of their relationship, they may have
access to certain information and materials concerning the other's business,
plans and Products (including, but not limited to, information and materials
contained in technical data provided to the other party) which is confidential
and of substantial value to the other party, which value would be impaired if
such information were disclosed to third parties. Neither party shall use in any
way, for their own account or the account of any third party, nor disclose to
any third party, any such
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confidential information which is revealed to it by the other party hereto,
without written consent of the other party. Each party shall take every
reasonable precaution to protect the confidentiality of such information
consistent with the efforts exercised by it with respect to its own confidential
information. Each party shall advise the other if it considers any particular
information or materials to be confidential. This provision shall survive
termination of this Agreement.
All written data such as drawings, plans, reports, designs, schematics, bill of
materials, and other specifications supplied by Purchaser to Manufacturer shall
remain the exclusive property of Purchaser. Such data and any copies thereof,
together with all data furnished by Purchaser and any copies thereof, shall be
returned to the extent requested upon completion of the services, in the event
of termination under the Agreement. The confidentiality obligations in this
paragraph shall be in addition to the confidentiality obligations in any
separate non-disclosure agreement between the parties. Should any conflict arise
between any such non-disclosure agreement and the provisions of this paragraph,
such non-disclosure agreement shall control.
12. INDEMNIFICATION
Subject to Section 15.g hereof, Purchaser shall indemnify and defend the
Manufacturer against all claims, suits, losses, damages, expenses (including
attorneys' fees), and liabilities ("Claims") for bodily injury, personal injury,
death, property damage, or intellectual property infringement (unless covered by
Manufacturer's intellectual property infringement indemnity obligation below)
directly or indirectly caused by any Products or the Breach of this Agreement.
Subject to Section 15.g hereof, Manufacturer shall indemnify and defend the
Purchaser against all Claims from third parties of personal injury, tangible
property damage, or death caused by its breach of the warranty in Section 6 of
this Agreement. Manufacturer shall also indemnify and defend Purchaser against
any Claim that the manufacturing processes used by Manufacturer to manufacture
the Product (unless employed in conformity with Purchaser specification)
infringes any intellectual property right of any third party. The party claiming
indemnification rights hereunder shall notify the other party promptly upon
receiving or learning of any claim or action pursuant to which indemnity will be
sought and shall provide reasonable assistance to the indemnifying party, at the
indemnifying party's expense, in the defense of any such action. The
indemnifying party will have sole control over the defense or settlement of
claims indemnified by it. Other than with respect to intellectual property
infringement, both parties shall carry and maintain liability insurance coverage
to satisfactorily cover its obligations under this Agreement.
13. COMPLIANCE WITH APPLICABLE LAWS
Manufacturer and Purchaser have been, and shall continue to be, in material
compliance with the provisions of all federal, state and local laws,
regulations, rules and ordinances to the transactions governed by this
Agreement.
14. FORCE MAJEURE
In the event that performance by either party of its obligations under this
Agreement (other than payment obligations) is prevented due to any Act of God,
fire, casualty, flood, earthquake, war, strike. lockout, epidemic, destruction
of production facilities, riot, insurrection, material unavailability, or any
other cause beyond reasonable control of the party invoking this section -
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and if such party shall give prompt notice to the other party - its performance
shall be excused, and the time or the performance shall be extended for the
period of delay or inability to perform due to such occurrences as stated above.
15. MISCELLANEOUS
a. SEVERABILITY: In the event that one or more of the provisions, or parts
thereof, contained in this Agreement shall for any reason be held to be
invalid, illegal, or unenforceable by a court of competent
jurisdiction, the same shall not be invalidated or otherwise affect any
provision in the Agreement, and the Agreement shall be construed as if
such invalid, illegal or unenforceable provision had never been
contained herein.
b. INTEGRATION AND MODIFICATION: This Agreement constitutes the entire and
exclusive statement by Purchaser and Manufacturer of the terms of their
Agreement, notwithstanding any additional or different terms regarding
any Product that may be obtained in quotation, acknowledgment,
confirmation, order, Purchase Order, invoice or other form of Purchaser
or Manufacturer (and the preprinted terms and conditions of any
Purchase Order used to purchase Products shall be deemed deleted). All
prior and contemporaneous proposals, negotiations, representations and
agreements are merged in the Agreement. These terms of the Agreement
may not be altered, modified, superseded, amended or rescinded, and no
additional terms shall become a part of the Agreement, except pursuant
to a writing specifically referencing the Agreement and signed both
parties.
c. NOTICE: Unless otherwise specified in the Agreement, all notices and
other communications permitted or required by the provisions of those
documents shall be in writing and shall be certified mail, telecopied,
or delivered to the other party at the address set forth below (or at
such other address as either party shall designate in writing to the
other party in the manner set forth in this Section 15.c) and shall be
effective and deemed received: i) if mailed, on the third (3rd) day
following mailing; ii) if telecopied, when actually received, iii) if
telegraphed, when actually received, if personally delivered, when
delivered, if delivered via nationally recognized overnight carrier,
the business day following delivery to such carrier. Each notice to
Manufacturer or Purchaser shall be addressed, until notice of change
thereof as follows:
i) If intended for Manufacturer, to:
Plexus Corp.
Attn: President, Electronic Assembly
55 Jewelers Park Drive
Neenah, WI 54956
With a copy to:
Plexus Corp.
Attn: General Counsel
55 Jewelers Park Drive
Neenah, WI 54956
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ii) If intended for Purchaser, to:
ARRIS International, Inc.
3871 Lakefield Drive
Suwanee, Georgia 3002497
ATTN: ARRIS Operations
For legal notices a copy to:
ARRIS International, Inc.
3871 Lakefield Drive
Suwanee, Georgia 30024
ATTN: Legal Department
d. ASSIGNMENT: This Agreement shall not be assignable by either party
without the prior written consent of the other party, such consent not
to be unreasonably withheld.
e. WAIVER: No failure or delay on the part of either party hereto in
exercising any right or remedy under the Agreement shall operate as a
waiver thereof; nor shall any single or partial exercise of any such
right or remedy. No provision of the Agreement may be waived except in
writing signed by the party granting such waiver.
f. GOVERNING LAW: The Agreement shall be governed by and construed in
accordance with the laws of the State of Illinois.
g. CONSEQUENTIAL DAMAGES: IN NO EVENT SHALL PURCHASER OR MANUFACTURER AND
THEIR RESPECTIVE EMPLOYEES, DIRECTORS, OFFICERS, AGENTS AND SUPPLIERS
BE LIABLE FOR INDIRECT, SPECIAL, INCIDENTAL, EXEMPLARY, PUNITIVE OR
CONSEQUENTIAL DAMAGES, INCLUDING WITHOUT LIMITATION, LOSS OF PROFITS OR
REVENUES OF THE PARTIES OR THIRD PARTIES, EVEN IF ADVISED OF THE
POSSIBILITY THEREOF AND REGARDLESS OF WHETHER SUCH LIABILITY ARISES IN
TORT, CONTRACT, BREACH OF WARRANTY OR OTHERWISE.
h. MISCELLANEOUS: Acceptance or acquiescence in a course of performance
rendered under the Agreement shall not be relevant to determining the
meaning if the Agreement, even though the accepting or acquiescing
Party had knowledge of the nature of the performance and an opportunity
for objection. No course of prior dealing between the Parties and no
usage of the trade shall be relevant to supplement or explain any terms
used in the Agreement. The word "including" as used in this Agreement,
means "including, without limitation". This Agreement may be executed
in counterparts.
16. PRICING
a. The prices for the Products shall be those set forth in quotations
provided by Manufacturer and set forth in Purchaser's Purchase Order(s)
which have been accepted by Manufacturer. Prices are exclusive of all
taxes now in force or enacted in the future
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and therefore are subject to increase equal in amount to any tax
Manufacturer may be required to collect or pay upon the sale or
delivery of any Products or on this transaction with Purchaser's prior
approval.
b. Cost reductions will be sought by Purchaser and Manufacturer for each
Product through the terms of this Agreement. Manufacturer will revise
pricing for each cost reduction as follows:
(i) Purchaser identified cost reductions will be reflected in the
pricing 100% after depletion of Materials.
(ii) 50% of Manufacturer identified cost reductions will be
reflected in the pricing for ninety (90) days after depletion
of Materials, thereby sharing the cost reduction equally with
Purchaser. Thereafter, the full cost reduction will be
reflected in the base Material cost.
c. Pricing will be reviewed and adjusted each calendar quarter by
Manufacturer to reflect as a minimum: ECOs, present market conditions
for material, cost reductions, present process yields, and changes in
demand.
d. Products depicted in Exhibit A will be priced as depicted in Exhibit G
- Product Pricing. Product pricing will be revised from time to time as
agreed by both parties.
17. PROGRAM IMPROVEMENTS
Not withstanding Paragraph 16, Purchaser and Manufacturer will jointly work
towards process improvements in the following areas:
* Cost
* Quality
* Cycle Time
* On-time Delivery
* Communication
* Design improvements on manufacturability, quality, and cost.
* Other
Purchaser and Manufacturer will meet periodically but not less than every six
(6) months to review current worldwide material prices for high dollar
components and make changes with mutual agreement to procurement strategy to
achieve best total pricing. In addition, the items listed above will also be
included in the review cycle.
18. NON-RECURRING EXPENSES AND PURCHASER OWNED EQUIPMENT
a. Upon prior authorization via a purchase order by Purchaser,
Manufacturer shall order and purchase for Purchaser at Purchaser's
expense all of the process tooling, assembly tools, and test fixtures
required to manufacture the Products except for tools consigned by
Purchaser and listed in Exhibit D ("Consigned Equipment"). Manufacturer
shall submit the request for authorization to Purchaser in writing and
Purchaser shall grant or deny the request in writing within ten (10)
days after the date of request. If Purchaser does not
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respond to Manufacturer within the prescribed period for each request,
the request shall be canceled. Manufacturer shall not be liable for the
impact to production schedules should Purchaser not grant authorization
or should not respond to a request in a timely manner. All Purchase
Orders and Forecasts for Products requiring the tooling shall be
mutually reviewed and adjusted accordingly.
b. Manufacturer shall provide or contract for all maintenance and
calibration required for the process tooling, manufacturing tooling and
test equipment whether purchased by Manufacturer or consigned by
Purchaser while in the possession of Manufacturer. Preventative
maintenance shall be at the expense of Manufacturer. Remedial
maintenance and scheduled calibration required shall be at the expense
of the Purchaser.
c. Upon termination of this Agreement Manufacturer all of the process
tooling, manufacturing tooling and test equipment paid for by Purchaser
as well as all consigned tooling and equipment supplied by Purchaser
shall be returned in the manner set forth in Section 8 of this
Agreement.
19. ARRIS CONSIGNED INVENTORY
a. Manufacturer acknowledges that Purchaser may have inventory that will
be consigned to Manufacturer. Manufacturer will warehouse free of
charge Purchaser owned inventory. Beginning balance is established per
part/quantity detail contained on Exhibit E hereto (such inventory, the
"Consigned Inventory"). The list of Consigned Inventory shall be
updated to reflect such inventory as of actual transfer date pursuant
to a physical inventory of the Consigned Inventory to occur as mutually
agreed by both parties (and Exhibit E shall be updated to reflect such
changes).
b. Consigned Inventory will be stored at the designated manufacturing
facility. Manufacturer assumes risk of loss for the Consigned Inventory
with the exception of loss due to spoilage, reduction in moisture
content, and similar items and due to fire, flood, theft, Act of God or
other casualties. Purchaser shall insure the Inventory from such
casualties, and provide Manufacturer, upon request with proof of such
insurance.
c. Manufacturer will procure consigned inventory from Purchaser at
Manufacturer's quoted cost, as required to support Purchasers Forecast
and/or Purchase Orders. There will be monthly reporting on all
transfers of the Consigned Inventory to Manufacturer's production
inventory. Manufacturer will use commercially reasonable efforts to use
products in the Consigned Inventory before purchasing from any other
supplier. Material ending balances will be calculated and reported
monthly.
d. All book to physical adjustments of inventory records for whatever
reason other than normal machine set-up and fallout will be the
financial liability of Manufacturer. Any such book to physical
consigned inventory discrepancy will be corrected by Manufacturer
issuing Purchaser a credit for the quoted cost of those components.
20. Key Employees
The C4 product designs, test process and the AG Com manufacturing
processes include critical technologies that reside in the knowledge and
practices of certain key team members at
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ARRIS - PLEXUS MANUFACTURING AGREEMENT
AG Com. Therefore, Plexus will make reasonable best effort to secure the
employment of the "Key Employees" depicted in Exhibit F - Key Employees.
[Signatures set forth on the following page]
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IN WITNESS WHEREOF, the parties hereto have caused this Manufacturing Agreement
to be executed by their duly authorized representatives as of the date first
written above.
Plexus Services Corp. (Manufacturer) ARRIS International, Inc., (Purchaser)
By: /s/ Paul Ehlers By: /s/ James D. Lakin
-------------------------- -------------------------
Name: Name: James D. Lakin
Title: Title: President