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Exhibit 10.11
MANUFACTURING AGREEMENT
THIS MANUFACTURING AGREEMENT is effective as of February 01, 1999
between NEXT LEVEL COMMUNICATIONS, LLP (hereinafter referred to as BUYER)
located at 0000 Xxxxx Xxxx Xxxxx, Xxxxxxx Xxxx, XX 00000 and CMC MISSISSIPPI,
INC. (hereinafter referred to as CMC or SELLER) located at 0000 Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxxxxx 00000. The term of this Agreement shall be for a period of
three (3) years from the effective date hereof, but shall automatically extend
to include the term of any ATTACHMENTS herein.
1. SCOPE OF WORK
1.1 This Agreement defines the terms and conditions under which
purchases of the product described in Attachment B (the
"Product") by BUYER from SELLER will be made. This Agreement
is not a commitment by BUYER to purchase any Products.
Commitments to purchase Products will be made by the issuance
of BUYER purchase order as described in ATTACHMENT C.
1.2 SELLER agrees to sell BUYER such quantities of Products as
BUYER may order, SELLER warrants that it possesses sufficient
production capacity to deliver Products in such quantities.
1.3 Each Product purchased under this Agreement by BUYER will be
provided as a turnkey product per the specifications set forth
in ATTACHMENT B (the "Specifications").
1.4 SELLER may not sell or otherwise provide the Product or any
similar product to any third party.
2. PRICES AND DELIVERY
2.1 Prices are as defined in ATTACHMENT A and are based on the
configuration specified in ATTACHMENT B. Pricing is valid for
all deliveries occurring during the term of this Agreement
unless otherwise specified.
2.2 Product ordering shall be in accordance with ATTACHMENT C.
Unless otherwise specified in ATTACHMENT A, prices include
SELLER designed packaging, which shall conform to good
commercial standards. Each Product shipment shall be delivered
to the location specified by BUYER,
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F.O.B. SELLER's place of business in Corinth, Mississippi,
freight prepaid. BUYER shall reimburse SELLER for reasonable
shipping costs. SELLER shall purchase insurance for any
Product shipments as requested by BUYER, and BUYER shall
reimburse SELLER for the cost of such insurance.
2.3 SELLER shall deliver each product order in accordance with the
delivery date set forth in the relevant Purchase Order. If
SELLER fails to deliver a Product within [ * ] of
the delivery date set forth in the relevant Purchase Order,
SELLER shall credit to BUYER an amount equal to [ * ]
of the total purchase price of any such order. If SELLER fails
to deliver such Product within [ * ] of the
delivery date set forth in the relevant Purchase Order, SELLER
shall credit BUYER an additional [ * ] of the
purchase price of any such order. To the extent that any
Product deliveries are delayed due to actions by BUYER or as a
result of non performance by third party identified an BUYER's
approved vendor listing, such delays shall not be counted
against SELLER in determining whether SELLER is obligated to
provide BUYER with any credits pursuant to Section 2.3.
3. PAYMENT TERMS
SELLER shall issue invoices to BUYER for Products ordered and actually
delivered hereunder upon shipment of such Products. Payment shall be
made (45) days net from date of invoice.
4. TESTING AND ACCEPTANCE
4.1 SELLER shall test all Product units prior to shipment. SELLER
shall conduct such tests using equipment and test procedures
provided by BUYER, and shall promptly provide BUYER with all
test data and results. Upon receipt of a Product shipment,
BUYER and/or its representative may conduct additional
inspections and tests on the Product units. Buyer or its
representative shall have the right to conduct such tests at
sellers manufacturing location.
4.2 BUYER may reject any Product units not conforming to
Specifications. Any Product units so rejected shall be
promptly returned to SELLER upon receipt of a return materials
authorization (RMA) from SELLER, with a statement of the
reason for rejection. SELLER shall promptly issue a RMA for
such return. The returned Product units shall be in the
original shipping container, and the RMA number shall be
displayed on the
* Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portion.
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shipping container. SELLER shall replace such Product units
within fifteen business days from receipt and deliver them at
SELLER's expense, F.O.B. the location specified by BUYER.
5. RESPONSIBILITY
Unless otherwise stated, BUYER bears design responsibility for the
Product. SELLER bears responsibility for good workmanship and
operational performance as it is affected by proper manufacture,
procurement of materials and testing for compliance with
Specifications.
6. CHANGES
6.1 In addition to the Product prices set forth in Attachment A,
BUYER will be responsible for the following costs due to BUYER
actions:
(a) Costs of carrying inventory of Product units rendered
obsolete as a result of an Engineering Change (as
described in Section 6.2); provided, however, that
upon BUYER's request, such obsolete inventory shall
be delivered to BUYER by SELLER in accordance with
the shipment procedures set forth in Section 2.2;
(b) Costs of materials purchased by SELLER for Product
units that, following an Engineering Change, are no
longer useable in manufacturing the Product;
provided, however, that (i) this Section 6.1 (b) (and
any other provision of this Agreement requiring BUYER
to pay or reimburse SELLER for, or be responsible
for, the cost of materials) shall not apply to such
materials to the extent that they can be returned by
SELLER to the supplier or can be used by SELLER to
manufacture other products (for BUYER or for SELLER's
other customers) at any of SELLER's manufacturing
sites, and (ii) upon BUYER's request, such materials
shall be delivered to BUYER by SELLER in accordance
with the shipment procedures set forth in Section
2.2; and
(c) Expenses actually incurred by SELLER due to BUYER
packaging requirements that are in addition to the
SELLER designed packaging described in Section 2.2.
6.2 BUYER may request, in writing, that SELLER implements a design
or engineering change ("Engineering Change") into the Product.
Such request will include a description of the proposed
Engineering Change sufficient to permit SELLER to evaluate its
feasibility. SELLER'S
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evaluation shall be delivered to BUYER in writing within five
(5) working days and shall state the decrease or increase in
SELLER's actual costs, if any, expected to result from the
Engineering Change, and the amount of time it will actually
take SELLER to implement such Engineering Change. SELLER shall
not implement the Engineering Change unless and until it
receives written instructions to do so from BUYER, in which
case the Specifications will be amended to reflect the
Engineering Change, and the Product pricing set forth in
Attachment A will be recalculated by inserting into the
pricing formula set forth in Attachment A (the "Pricing
Formula") values for the "Material" and "Labor' variables that
fully reflect the decrease or increase in SELLER's actual
costs as identified in SELLER's evaluation (provided that any
amendment to such Product pricing shall only apply to Product
units incorporating the Engineering Change). SELLER shall not
refuse to implement any Engineering Change requested by BUYER
unless SELLER reasonably deems such Engineering Change to be
technically unworkable.
6.3 SELLER shall, as appropriate, make suggestions for cost saving
design changes. SELLER shall not implement any such design
changes without the prior written approval of BUYER.
6.4 SELLER shall use commercially reasonable efforts to minimize
the cost of materials used in connection with the manufacture
of the Product ("Product Materials"). Without limiting the
generality of the foregoing, if BUYER identifies for SELLER an
alternate supplier for any Product Materials, SELLER shall
purchase such Product Materials from such alternate supplier
to the extent that purchasing such Product Materials from such
alternate supplier rather than SELLER's then-current
supplier(s) would reduce SELLER's overall cost for such
Product Materials.
6.5 If any design change requested by BUYER or any identification
by BUYER of an alternate supplier for Product Materials
results in a reduction in Product Material cost or the amount
of time needed to manufacture the Product, the price for
Product units incorporating such design change or manufactured
using Product Materials as purchased from such alternate
supplier shall be recalculated downward by inserting into the
Pricing Formula, as applicable, a value for the "Material"
variable that fully reflects such cost reduction and/or a
value for the "Labor" variable that fully reflects such time
reduction.
6.6 If any design change suggested by SELLER (as described in
Section 6.3) or any identification by SELLER of an alternate
supplier for Product Materials results in a reduction in
Product Material cost or the amount of time needed to
manufacture the Product, the price for Product units
incorporating such design change or manufactured using Product
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Materials as purchased from such alternate supplier shall be
recalculated downward as follows:
(a) for the six (6) month period commencing on BUYER's acceptance
of such design change or SELLER's identification of such
alternate supplier, such price will be recalculated by
inserting into the Pricing Formula, as applicable, a value for
the "Material" variable that reflects half of such cost
reduction and/or a value for the "Labor" variable that
reflects half of such time reduction;
(b) after such six (6) month period, such price will be
recalculated by inserting into the Pricing Formula, as
applicable, a value for the "Material" variable that fully
reflects such cost reduction and/or a value for the "Labor"
variable that fully reflects such time reduction.
7. BUYER FURNISHED EQUIPMENT AND MATERIAL
BUYER shall provide equipment or materials as outlined in ATTACHMENT D
to SELLER for use in the performance of this Agreement. Any BUYER
furnished equipment or material shall be delivered to SELLER in a
timely manner. SELLER shall not be responsible for schedule delay
caused by late or nondelivery of BUYER furnished items. SELLER shall
use reasonable diligence and care in the use, monitoring and protection
of any BUYER furnished equipment and shall promptly report to BUYER any
failures or wear and tear thereof. Subject to the foregoing, SELLER
shall not be liable for repair or replacement of such equipment due to
normal failure or wear and tear unless agreed to in writing by SELLER.
SELLER agrees to keep such equipment properly calibrated.
8. CONFIDENTIAL DATA
All information and data exchanged between the parties for the purpose
of enabling SELLER to manufacture and deliver product under this
Agreement shall be deemed Confidential Information. The party which
receives such Confidential Information agrees not to disclose it
directly or indirectly to any third party, or to use it for any purpose
other than the manufacture and delivery of the Product, without the
prior written consent of the disclosing party. Confidential Information
disclosed pursuant to this Agreement shall be maintained confidential
for a period of [ * ] after the disclosure thereof. No right or
license either expressed or implied is granted to either party under
any patent, patent application, or any other intellectual property
right as a result of such disclosure.
* Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portion.
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9. ORDER OF PRECEDENCE
When interpreting this Agreement precedence shall be given to the
respective parts in the following descending order:
(1) This Agreement
(2) The Attachments to this Agreement
(3) Delivery dates, quantities, pricing, products to be
manufactured, billing address, shipping address, and purchase
order numbers as specified on the face of BUYER's purchase
order.
10. INDEMNITY AGAINST INFRINGEMENT
10.1 BUYER agrees, at its expense, to defend, hold harmless and
indemnify SELLER from and against direct damages, liability,
losses, costs or expenses (including, without limitation,
product recalls and attorneys' fees) in connection with or
arising out of any (a) third party claim that any
Specifications for the Product provided by BUYER to SELLER
infringe a trade secret of such third party, (b) third party
claim that the Product or any part thereof infringes a patent
of such third party and such infringement is caused by BUYER's
design of the Product, or (c) any product liability claim that
is caused by a defect in BUYER's design of the Product.
10.2 SELLER agrees, at its expense, to defend, hold harmless and
indemnify BUYER from and against direct damages, liabilities,
losses, costs or expenses in connection with or arising out of
any third party claim that processes, methods, software,
equipment or other material utilized in the manufacture of a
Product or any part thereof infringes a patent, trade secret,
copyright, trademark, mask work or other intellectual property
right of such third party.
10.3 Both parties agree to promptly provide the other with prompt
notice of the relevant claims, all reasonable assistance and
cooperation with respect to the defense of such claims, and
full control and authority over the defense and settlement of
such claims (provided that any settlement of such claims must
be approved in writing by the other party).
11. ASSIGNMENT
No assignment of this Agreement (whether voluntary, by operation of law
or
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otherwise) by either party shall be valid without the other party's
prior written consent.
12. NOTICES
Any notices or other communication hereunder shall be in writing and
shall be deemed given and effective when delivered personally, by fax,
by email or by overnight express mail, addressed to a party at its
address stated below or to such is other address as such party may
designate by written notice to the other party in accordance with the
provisions of this Section.
To BUYER: Next Level Communications
Program Management
0000 Xxxxx Xxxx Xxxxx
Xxxxxxx Xxxx, XX 00000
To SELLER: CMC Mississippi, Inc.
Program Management
0000 Xxxxxx Xxxxx
Xxxxxxx, XX 00000
13. TAXES AND DUTIES
All taxes or charges other than those based on net income imposed by a
taxing authority upon the manufacture, sale, shipment, or use of the
product which SELLER is obligated to pay or collect. Such taxes, when
applicable will appear as separate additional items on the invoice and
are the responsibility of the BUYER, unless SELLER receives from BUYER
a copy of BUYER'S resale certificate or other documents providing an
exemption from such taxes.
14. WARRANTY
14.1 SELLER warrants to BUYER that all work will be performed in a
skillful and professional manner and that all Products
manufactured by SELLER for BUYER will conform to the
Specifications provided by BUYER and will be free from defects
in workmanship for a period of [ * ] from the date of
shipment. Components manufactured by companies other than
SELLER and supplied to BUYER hereunder by SELLER are warranted
solely by their respective manufacturers.
14.2 Upon any breach of the foregoing warranty with respect to a
Product unit, SELLER shall, at SELLER's option, repair the
unit, replace the unit or refund to BUYER all amounts paid by
BUYER in connection with the unit.
* Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portion.
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BUYER must obtain a Return Material Authorization (RMA) number
from SELLER prior to return of any Product units (such RMA
number shall not be withheld or delayed by SELLER). All
shipping and insurance charges for the return to SELLER of
Product units not conforming with the warranty set forth in
this Section 14.1 shall be paid by BUYER. All shipping and
insurance charges to BUYER for replaced and/or repaired units
under Section 14.1 shall be paid by SELLER.
14.3 This warranty shall be void with respect to any Product unit
which has been modified, repaired by unauthorized sources or
subject to misuse, neglect, damage from improper packaging by
BUYER for shipment to SELLER, lightning or excessive voltage,
or which has been operated contrary to current instructions
delivered in writing to BUYER relating to installation,
maintenance or operation of the Product.
14.4 SELLER's liability for damages is limited to those which may
arise solely as the direct legal and natural consequences of
the performance of SELLER's responsibility under this
Agreement. In no event will SELLER be liable to BUYER for any
incidental, consequential, or special damages. Except as
otherwise provided by applicable law, no claim, regardless of
form, arising out of or in connection with this Agreement may
be brought by either party more than two (2) years after the
cause of said action has occurred.
14.5 NO OTHER WARRANTY, EXPRESS OR IMPLIED, INCLUDING BUT NOT
LIMITED TO THE IMPLIED WARRANTIES OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE SHALL APPLY.
15. FORCE MAJEURE
Neither party shall be responsible for any failure to perform due to
unforeseen circumstances or causes beyond its control and without its
fault or negligence. Example of such causes are acts of nature or of
the public enemy, war, riot, embargoes, act of civil or military
authorities, fire, floods, unusually severe weather, accidents, strikes
and shortages of transportation facilities, fuel, labor or materials.
If, however, SELLER fails to perform any of its obligations for reasons
defined above, for a cumulative period of ninety (90) days or more from
the date of SELLER'S notification of BUYER, then BUYER at its option
may extend the corresponding delivery period for the length of the
delay, or cancel this Agreement for convenience without any liability
to SELLER.
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16. RESCHEDULE OF DELIVERIES
16.1 BUYER may reschedule all or part of each scheduled delivery
one (1) time for a period not to exceed [ * ] in accordance
with the table below. At the end of this [ * ] period, BUYER
shall either accept delivery of rescheduled finished units
and/or pay the cost of materials for rescheduled units not yet
built.
DAYS BEFORE ORIGINAL PERCENTAGE RESCHEDULE
DELIVERY DUE DATE ALLOWANCE
0-30 [ * ]%
31 -60 [ * ]%
61 -90 [ * ]%
> - 90 [ * ]%
SELLER shall use its best efforts to accommodate any increases
in the number of Product units set forth in any firm order.
16.2 SELLER will make reasonable effort to accommodate any
expedited orders. If any expedited order requires any express
freight charges or overtime charges, SELLER will advise BUYER
in advance and in writing of these charges, and if BUYER
thereafter notifies SELLER in writing of its willingness to
pay such charges, SELLER shall fulfill such order.
17. CANCELLATION
BUYER may cancel this Agreement, and any supplement thereto or purchase
order, at any time, for any reason at its own convenience. In such
case, BUYER will (a) take delivery of any finished Product units
covered by those binding purchase orders affected by such termination,
and (b) be responsible for cancellation charges equal to the costs of
materials plus applicable xxxx up and labor actually incurred by SELLER
for work-in-progress Product units covered by those binding purchase
orders and affected by such termination (such cancellation charges
shall not exceed the then-current price for such units). SELLER shall
make available to BUYER for its inspection, inventory, work-in-process
documents and other evidence bearing on the payment of such
cancellation charges.
18. TERMINATION
(a) Either party may terminate this Agreement for default if other
party
* Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portion.
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materially breaches this Agreement. However, no right of
default shall accrue until [ * ] after the defaulting party is
notified in writing of the material breach and has failed to
cure or give adequate assurances of performance within such
[ * ] period.
(b) This Agreement may be terminated upon mutual written agreement
of the parties.
(c) Either party may terminate this Agreement if the other party
is insolvent or makes any arrangement with its creditors
generally, or has a receiver appointed for all or a
substantial part of its business or properties, or an
insolvency, bankruptcy or similar proceeding is brought by or
against such other party and is not dismissed within sixty
days of its institution, or if such other party goes into
liquidation or otherwise ceases to function as a going
concern.
(d) Upon termination of this Agreement by SELLER, all amounts then
properly owing to SELLER, whether or not then due, shall
accelerate and become immediately due and payable in full and
any shipments after termination may be C.O.D. at SELLER
option. Upon termination of this Agreement by BUYER, BUYER may
cancel any outstanding orders as provided in Section 17.
(e) With respect to any purchase orders outstanding upon
termination of this Agreement, the portion of such purchase
orders that contemplates delivery of Product more than thirty
days after the effective date of termination shall be
automatically terminated.
19. TRANSFER OF OWNERSHIP
In the event of a merger, consolidation, reorganization, or sale of all
or substantially all of BUYER's assets, BUYER and any subsequent owner
agrees to maintain current production for a period of twelve (12)
months following such transfer. In the event that a subsequent owner
moves production from SELLER or it's affiliates, BUYER agrees to be
liable to SELLER for reasonable line utilization expenses and employee
non-productivity costs for the said period that are directly
attributable to the lost production.
20. APPLICABLE LAW
Mississippi law shall govern this Agreement's validity and
interpretation.
* Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has been
requested with respect to the omitted portion.
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21. ENTIRE AGREEMENT
As stated above, this Agreement and all Attachments hereto constitute
the entire agreement of the parties, superseding all previous
agreements covering the subject matter hereof. Each party will discuss
in good faith any amendment to this Agreement proposed by the other
party. This Agreement shall not be changed or modified except by
written agreement, specifically amending, modifying and changing this
Agreement, signed by authorized representatives of SELLER and BUYER.
Without limiting the generality of the foregoing, if BUYER'S purchase
order is used to release product under this Agreement, any terms
contained in BUYER'S purchase order that are inconsistent with this
Agreement shall not apply unless otherwise agreed to by SELLER.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
effective as of the date on page one, by their officers, duly authorized.
CMC MISSISSIPPI, INC. NEXT LEVEL COMMUNICATIONS, LLP
By: By:
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Printed Name Printed Name
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Title Title
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