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EXHIBIT 10.14
MANUFACTURING AGREEMENT
BETWEEN
EMULEX CORPORATION
AND
MANUFACTURERS' SERVICES, LTD.
CONTENTS
PAGE
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1. DEFINITIONS 2
2. SCOPE OF AGREEMENT 3
3. TERM AND TERMINATION 3
4. EMULEX PROPERTY 4
5. INTELLECTUAL PROPERTY RIGHTS 4
6. APPROVAL OF VENDORS AND MATERIALS 5
7. FORECASTS 5
8. PRICING AND PAYMENT TERMS 5
9. PURCHASE ORDERS 6
10. DELIVERY 6
11. WARRANTY 8
12. ENGINEERING CHANGES 9
13. PRODUCT QUALITY 10
14. INVENTORY MANAGEMENT 10
15. REVIEW AND PLANNING MEETINGS 11
16. CONFIDENTIAL INFORMATION 12
17. INDEMNIFICATION 12
18. LIMITATION OF LIABILITY 13
19. INSURANCE 13
20. MISCELLANEOUS 14
21. ENTIRE AGREEMENT 16
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MANUFACTURING AGREEMENT
This Agreement is entered into by and between Manufacturers' Services, Ltd., a
Delaware corporation, for itself and on behalf of certain of its subsidiaries
("MSL"), and Emulex Corporation ("Emulex"), a California corporation, 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 MSL in accordance with this Agreement. The
parties may add other Emulex products to this Agreement as
mutually agreed upon.
1.2 "Product Documentation" means information required for the
manufacture of the Product, including BOM, 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 MSL 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
that component of the Product having the longest lead time, plus
the time necessary for receiving, inspection, manufacturing,
systems integration, test and shipment, all as agreed by the
parties.
1.5 "Materials" means component line items on the BOM, which are
collectively assembled to produce the Product.
1.6 "BOM" means Emulex's ▇▇▇▇ of Materials.
1.7 "Value Added Replacement Cost" means all costs incurred by MSL
for the repair or replacement of defective parts, including costs
of manufacturing, shipping, and business loss.
1.8 "RMA" means return material authorization.
1.9 "Obsolete Materials" means Materials on hand that can no longer
be used on the Product.
1.10 "Excess Materials" means Materials on hand in excess of six (6)
weeks' forecasted demand resulting from Emulex's cancellations,
reschedules, or other delays or changes.
1.11 "Material Acquisition Fee" means a fee for recovery of costs
related to purchasing Materials. It may include purchasing,
freight-in, freight out, receiving, inspection, Material
handling, and Material control system transaction processing
costs.
1.12 "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 MSL may purchase or
procure Materials.
1.13 "Emulex Materials" means Materials purchased from Emulex by MSL.
2. SCOPE OF AGREEMENT
MSL 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
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and the parties may enter into similar agreements with other parties.
Except for Purchase Orders issued to MSL, Emulex shall not be obligated
to purchase any Products from MSL hereunder.
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 modify or 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 Either party may terminate this Agreement at any time, without
cause, by giving the other party at least six months' prior
written notice. Termination of the Agreement will not relieve the
parties of any obligations incurred prior to the date of
termination. In the event of termination by Emulex, Emulex agrees
to purchase Products ordered prior to termination and to
reimburse MSL for non-cancelable or non-returnable and minimum
buy Materials, and any cancellation and/or or restocking fees
incurred by MSL for the benefit of Emulex and in accordance with
this Agreement, provided that MSL makes reasonable efforts to
minimize the quantities of such items and the amounts of such
cancellation and restocking fees during the six month notice
period.
3.3 In addition to the termination rights specified in sub-Section
3.2, above, either party may immediately terminate this Agreement
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
(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 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 within thirty
days after receiving written notice thereof.
4. EMULEX PROPERTY
4.1 Information Required for Product Manufacture
Subject to the provisions of Sections 5, 12, and 16, Emulex will
provide MSL with the Product Documentation. Emulex reserves the
right to change the content of the Product Documentation at any
time.
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 MSL. If Emulex does not so ▇▇▇▇ the
Equipment, then Emulex will hold harmless MSL from any
damage or loss that may occur to the Equipment. If MSL
purchases such Equipment, Emulex will provide MSL with the
appropriate control numbers and labels to identify it as
Equipment. MSL is authorized to use such Equipment at no
charge in concert with Product Documentation to produce
Product, and shall only be responsible for damage to such
Equipment caused by MSL'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
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calibration of such Equipment shall be the sole
responsibility of Emulex unless otherwise agreed by the
parties.
(b) MSL 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 the expenditure. 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 MSL 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 MSL shall ship, FCA MSL's plant, all such
Equipment at the direction of Emulex prior to upon the
termination or expiration of this Agreement.
5. INTELLECTUAL PROPERTY RIGHTS
5.1 During the term of this Agreement, Emulex grants MSL only those
specific rights and licenses under Emulex's applicable patents,
copyrights, trademarks, trade names, logos, and other
intellectual property rights necessary for MSL to manufacture the
Products for Emulex under this Agreement. MSL's rights and
licenses granted hereunder end upon termination of this
Agreement.
5.2 MSL 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. MSL
will purchase Materials only from the AVL, which will be provided to MSL
by Emulex and updated as changes warrant. Any changes in vendors
proposed by MSL 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 MSL within five days, and if MSL has used
commercially reasonable efforts to purchase Materials from approved
vendors but shortages or allocations exist, MSL shall not be liable for
failing to deliver affected Products on time.
7. FORECASTS
Emulex will provide MSL with a twelve-month rolling forecast, updated
monthly ("Forecast"). Emulex authorizes MSL to procure Materials for
Orders, net of yield losses, including minimum buy and reel quantities
and long lead-time Materials, to support Forecasts. These actions may
result in Excess Materials, which may be subject to the terms of Section
14.2. Emulex may limit its liability hereunder by specifying in writing
a maximum amount of purchases by MSL in excess of Orders. If Emulex
elects to specify a maximum amount, MSL 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 are set forth in Attachment A. Any price
changes (increase or decrease) will be agreed to between the
parties. 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. If such
taxes are applicable, they shall be set out as a separate line
item on MSL's invoice. Emulex agrees to provide to MSL a valid
Reseller's Certificate for exemption from any potentially
applicable sales and use taxes.
8.2 Payment terms shall be net thirty days from the date of Emulex's
receipt of a correct invoice. Payment of an invoice shall not
constitute or imply acceptance of the Product or relieve MSL of
any obligations assumed under this Agreement, nor prevent Emulex
from asserting any other
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rights it may have under this Agreement. Other than occasional
invoices, if payments are more than 10 days late for non-disputed
invoices, or Emulex's financial condition deteriorates to the
extent that MSL reasonably determines that Emulex may be a credit
risk, MSL may, in addition to its rights set forth in Article 3,
Termination, in its discretion, require payments in advance, a
letter of credit, or put shipments on credit hold.
8.3 During the term of this Agreement, MSL and Emulex will meet every
three months to review Product pricing and to reset the price.
The parties may make a prospective price adjustment for
documented Materials price variances occurring as a result of
schedule adjustments, worldwide supply of Materials, BOM changes,
engineering changes, process changes, or changes to Forecasts.
MSL shall permit Emulex to conduct an audit of actual costs
incurred by MSL for Product Orders at the end of each quarter.
Notwithstanding any provision herein to the contrary, MSL will
establish and maintain a plan for ongoing reductions in Product
price. MSL 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.
8.4 MSL will notify and gain Emulex's approval prior to procurement
of any Material when the actual extended cost of any Material
exceeds MSL's quoted cost by more than 1% for any Material. If
approved, MSL will invoice Emulex for the difference between the
actual and quoted cost, and Emulex agrees to pay for all such
approved costs.
9. PURCHASE ORDERS
9.1 Emulex will provide MSL with Purchase Orders in minimum
increments of three months. Purchase Orders may be submitted in
the form of hard copy, by facsimile, or by electronic transfer if
there is an Electronic Data Interchange ("EDI") Agreement in
place between Emulex and MSL. 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 MSL's
reasonable control; therefore, MSL will notify Emulex immediately
of any change in Manufacturing Lead Time.
9.2 MSL 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.
9.3 Emulex shall have the right to reschedule delivery for each
Purchase Order or partial Purchase Order without MSL's consent,
but MSL must be notified in writing of the delivery rescheduling
at least fifteen calendar days prior to the scheduled delivery
date. Such rescheduled Purchase Orders must be rescheduled for
delivery no later than 45 days after the originally scheduled
delivery date.
9.4 Emulex shall have the right to cancel delivery of a Purchase
Order without MSL's consent, provided however, that MSL must be
notified in writing of the cancellation at least thirty days
prior to the scheduled delivery date.
9.5 Emulex will attempt to minimize the frequency of the changes
described in this Section 9.
9.6 If Emulex elects to purchase materials from MSL that are not
Materials or Products, as defined, MSL will charge and Emulex
will pay a price for such materials as agreed between the
parties, plus an acquisition fee. Such acquisition fee shall be
3% of MSL's purchase price for the materials for MSL's Salt Lake
City, Utah, facility and as agreed between the parties for other
MSL facilities.
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10. DELIVERY
10.1 MSL shall follow all instructions contained in Emulex's routing
instructions, which Emulex will provide to MSL and which is
specified on each Order. Emulex may modify its routing
instructions from time to time and will provide MSL 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. MSL 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 MSL and the contents of this Section 10, the current
routing instructions will prevail. MSL 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 made 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 MSL anticipates or becomes aware that it will not supply the
Product on the delivery date committed by MSL, for any reason to
include but not be limited to Material shortage, process changes,
capacity limitations or causes due to common carriers, MSL shall
notify Emulex immediately after MSL 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 MSL shall obtain Emulex's actual
acknowledgment of the notice of anticipated delay. Emulex and MSL
will jointly develop alternatives to resolve any late delivery of
the Product, including use of premium routing. MSL will develop
recovery plans with new committed delivery dates and communicate
such plans to Emulex within 24 hours of missed deliveries. If MSL
is unable to ship the Product on the committed delivery date
through no fault of Emulex, Emulex may require MSL to use premium
routing and deliver the freight pre-paid at MSL's expense,
provided that MSL is responsible for the late delivery.
10.4 Except as provided for otherwise in sub-Sections 10.1 and 10.3,
above, the terms of sale are FCA MSL's place of manufacture as
specified in Attachment A. All shipments shall be uninsured
unless otherwise specified by Emulex's procurement agents. Prepay
and ▇▇▇▇ shipment shall be used only when specified by Emulex's
procurement agents. In the event that prepay and ▇▇▇▇ is used,
MSL shall indicate the number of shipping containers, weight of
each shipment and carrier name on the invoice. Risk of loss shall
pass to Emulex at the FCA point.
10.5 Each shipment of the Product by MSL shall include a packing slip
which contains, at a minimum, (i) MSL'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 Product shall be packaged, marked and otherwise prepared in
accordance with Product Documentation and applicable government
regulations, and if none are specified or required, with good
commercial practices. Product Documentation will be provided to
MSL at least ninety days prior to implementation. In packaging
Products, MSL shall also take any additional steps needed to
ensure reasonable protection from damage due to rough handling
and other hazards which might occur during transit. Packaging for
export shipments from the United States may also be subject to
specific instructions. MSL will notify Emulex of any charges
incurred by MSL for such export shipments prior to invoicing
Emulex for these charges.
10.7 Emulex will provide the following information about its Products
in writing to MSL: (i) country of origin; (ii) harmonized
scheduled tariff classification number, and (iii) export commerce
control number ("ECCN"). Emulex will provide the commercial
invoice. MSL will prepare all international shipping
documentation, including NAFTA certificate, including NAFTA
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preference criteria, 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 MSL warrants that Products provided under this Agreement will be
free of MSL's manufacturing defects for a period of three years,
from date of delivery. MSL warrants that Products provided under
this Agreement will be free of defects in Materials for a period
of one year from the date of delivery. MSL's liability under this
warranty against defects in Materials is limited to 1% of the
amount MSL invoiced Emulex for Product completions in the same
month as the return of the Product. Such amount is based on the
replacement cost of the defective component and only applies to
the cost of replacement components not warranted to full value by
the component supplier, OEM and/or distributor. MSL will ▇▇▇▇
Emulex for the price paid by MSL for replacement components not
warranted by the component supplier, OEM and/or distributor which
exceed 1% of invoiced Product completions and Emulex agrees to
pay such charges. Upon expiration and/or termination of this
Agreement, where MSL is no longer manufacturing Products for
Emulex, MSL's liability under warranty against defects in
Material for in warranty returns will be limited to 1% of
Emulex's then-current sale price of the Product.
11.2 Subject to Section 11.3 below, Emulex's sole remedy and MSL's
sole obligation shall be to repair or replace, at MSL's option,
Product found to be defective in accordance with Section 11.1.
The warranty period for any Product returned with MSL's
permission for repair or replacement shall be the greater of the
remainder of the original warranty period or six months from the
date that the repaired or replaced Product is delivered to the
Product owner. Products not covered by the warranty in Section
11.1 shall be repaired by MSL and related charges shall be billed
to Emulex. Any Product returned to MSL, which, after inspection
and testing by MSL, is found to be free of defects shall be
subject to the "Defect Not Found Charge" specified in Attachment
A.
11.3 Except for third party repair permitted under Section 11.6, MSL's
warranty shall be void if the Product has been subjected to
abuse, misuse, accident, neglect, installation and/or operation
outside the parameters or environment identified in Emulex's
Product specifications, or unauthorized repair or alterations by
anyone other than MSL.
11.4 Emulex shall contact MSL for an RMA prior to returning any
Product for repair. MSL will provide the RMA within two business
days of receipt [one business day for priority requests] of
Emulex's request. Emulex will forward the defective Product to
MSL freight prepaid, FOB destination. MSL will ship the repaired
or replaced Product to Emulex freight prepaid, FOB destination,
as quickly as is practical, but not later than five days from the
date MSL received the Product.
11.5 THESE WARRANTY PROVISIONS ARE THE EXCLUSIVE WARRANTIES FOR ANY
PRODUCT PROVIDED BY MSL HEREUNDER AND SET OUT THE EXCLUSIVE
REMEDIES FOR CLAIMS BASED ON DEFECTS IN OR FAILURE OF ANY
PRODUCT. NO OTHER WARRANTY, EXPRESS OR IMPLIED, SHALL APPLY. MSL
SPECIFICALLY DISCLAIMS THE IMPLIED WARRANTIES OF MERCHANTABILITY
AND/OR FITNESS FOR A PARTICULAR PURPOSE.
11.6 Product Repair
(a) MSL shall provide in and out of warranty Product repair.
Product repair will be provided during the term of the
Agreement and for a period of not less than seven years
following the last date of MSL's Product manufacture under
this Agreement. Charges for out of warranty Product repair
will be quoted and mutually agreed to within 30 days of
the Effective Date of this Agreement and added to
Attachment A to this Agreement.
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MSL'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.
(b) MSL WILL PROVIDE REPAIR SERVICES FOR EMULEX IN NORTH
AMERICA, EUROPE AND ASIA AS REQUIRED TO SUPPORT EMULEX'S
REPAIR REQUIREMENTS.
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, MSL shall use
its best efforts to implement the changes in existing
inventory, work in process, new production of the Product,
and into Product going through MSL's repair process as
instructed by Emulex. Emulex shall provide MSL with
written notice of any engineering change, including new
Product Documentation, as soon as possible after Emulex
knows of such change. For changes implemented within the
Manufacturing Lead Time, the cost of any resulting
Obsolete Materials, Excess Materials, non cancelable non
returnable Materials, restocking fees, and minimum buy
requirements and the cost of any rework shall be borne by
Emulex as provided in Section 14.2. MSL shall bear the
cost of any Obsolete Materials, Excess Materials, non
cancelable non returnable Materials, restocking fees, and
minimum buy requirements for changes implemented outside
the Manufacturing Lead Time.
(b) For implementing engineering changes on previously
delivered Product, Emulex will authorize its customers to
request an RMA number and return the affected Product to
MSL or an authorized repair facility for repair or
replacement at Emulex's expense.
12.2 MSL Requested Changes
(a) MSL 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.
(b) If such proposed change is accepted by Emulex, Emulex
shall respond to MSL's request in writing within ten
business days from date of request. If the proposed change
results in a Product price increase, MSL shall obtain
Emulex's prior written approval before the change is
implemented. If the proposed change results in a price
reduction, MSL shall reduce the price of the Product to
Emulex as soon as the change is implemented. If such
engineering changes affect regulatory agency
certifications, the change shall not be implemented until
the relevant regulatory agencies have investigated and
approved the change. If the proposed change is not
accepted by Emulex, MSL shall continue to produce the
unaltered Product without increasing the Product price.
12.3 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 MSL shall jointly develop and implement a
mutually acceptable quality plan for the manufacture of the Products,
set forth in Attachment B. MSL shall use commercially reasonable
efforts, acceptable to Emulex, to continually meet or exceed the quality
and reliability requirements outlined in the quality plan.
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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 Emulex-Owned Inventory and Product Distribution
Emulex-owned inventory and Product distribution will be managed
in accordance with Attachment C, Logistics and Distribution.
14.2 Excess and Obsolete Materials
14.2.1 If, at any time, Materials on hand and/or on order become
Excess and/or Obsolete Materials, and MSL 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, MSL may require Emulex to purchase such
Materials at MSL's cost, defined as the Materials'
purchase price, plus any cancellation or restocking
charges, plus the Material Acquisition Fee (3% of the
Material purchase price for Salt Lake City, Utah. For
other MSL facilities, such fee will be agreed between the
parties). Emulex will provide to MSL an Order within ten
days of being notified by MSL of Materials on hand and/or
on order that are Excess or Obsolete, and will pay MSL
within thirty days of receipt of MSL's invoice.
14.2.2 If Emulex desires to store Excess or Obsolete Materials at
MSL, MSL will provide a consignment service to Emulex for
a consignment fee to be mutually agreed to by Emulex and
MSL. If Emulex provides MSL with an Order utilizing part
or all of such Excess or Obsolete Materials, such
Materials shall be invoiced by Emulex to MSL at the cost
previously paid by Emulex to MSL in order to avoid
duplicate payment by Emulex for the same Materials.
14.2.3 If Emulex elects not to store Excess or Obsolete Materials
at MSL and instead elects to have such Materials shipped
to Emulex or another destination designated by Emulex, MSL
will ship such Materials FCA MSL's location.
15. REVIEW AND PLANNING MEETINGS
15.1 Emulex hereby appoints its Director of Manufacturing as its
liaison to monitor MSL's performance and delivery of Product
under this Agreement. MSL 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.
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15.2 Emulex's designated liaison will conduct a quarterly performance
and planning review with MSL's Emulex account management team.
The location and times for these meetings will be determined by
MSL and Emulex. The purposes of these meetings are listed below:
(a) Review MSL'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 MSL reports;
(f) Review MSL's quality and reliability improvement plans;
and
(g) Publish minutes to EMULEX and MSL.
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 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. 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 MSL in any
suit or action brought or any claim asserted (collectively, a
"Claim") against MSL alleging that any Product or any part
thereof manufactured pursuant to this Agreement and in material
compliance with Emulex's specifications and directions: (i)
directly or indirectly infringes any patent, copyright, trademark
or service ▇▇▇▇; or (ii) has caused injury to the property or
person of any third party, except to the extent directly
attributable to MSL's manufacturing processes. Emulex will
indemnify and hold MSL harmless from and against any loss, cost,
damage or expense, including without limitation reasonable
attorneys' fees (collectively, "Costs"), incurred by MSL as a
direct result of, including defense against, any such Claim.
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17.2 MSL agrees, at its expense, to defend and indemnify Emulex with
respect to any Claim against Emulex to the extent such Claim
alleges that MSL's manufacturing processes (i) directly or
indirectly infringe any patent, copyright, trademark or service
▇▇▇▇; 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 MSL. MSL 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 MSL with respect to any Claim which results
from or arises out of: (i) the presence of Emulex, or Equipment,
or MSL's equipment, tools, or facilities ("Tools") used by Emulex
in the performance of this Agreement on MSL's property; (ii) the
performance by Emulex or its personnel of services for or on
behalf of MSL; (iii) the acts, errors, omissions, or negligence
of Emulex or Emulex's personnel that occur on MSL's property in
performance of Emulex's obligations under this Agreement; or (iv)
the use by Emulex of MSL's Tools, except to the extent that any
Claim is based upon the condition of the Tools or MSL's, its
agent's, or its employee's alleged negligence in permitting such
Tools' use.
17.4 The indemnifications 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; 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 WITH RESPECT TO BREACH OF CONFIDENTIALITY OBLIGATIONS,
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.
19. INSURANCE
19.1 MSL shall maintain insurance against fire, theft and damage to
any Emulex property held by MSL, including without limitation
consigned Materials, in-circuit test fixtures, capital equipment,
returned Materials and other Emulex Product and property in MSL's
possession. MSL shall also maintain errors and omissions
insurance in the amounts of $5 million per occurrence and $10
million in the aggregate for MSL's manufacturing defects. Such
errors and omissions insurance will name Emulex as an additional
insured and will remain in effect for a period of three years
after termination of this Agreement. MSL 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 MSL as
an additional insured and will remain in effect for a period of
three years after termination of this agreement. Emulex will
provide MSL with a certificate of insurance evidencing such
coverage.
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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. MSL further
acknowledges that its breach of Sections 5 and/or 16 of this
Agreement would cause irreparable harm to Emulex. 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.
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 cancels the Purchase Orders in
accordance with this Agreement.
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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 fire,
flood, hurricane, earthquake, explosion, war, strike, embargo,
government law or regulation, action of civil or military
authority, or act of God.
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.
20.10 Attorneys' Fees
If either party commences litigation to enforce any provision of
this Agreement, the prevailing party shall be entitled to recover
reasonable attorneys' fees and expenses of litigation, including
fees and expenses of any appeal.
20.11 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
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Contracts Administration
MSL: Manufacturers' Services Ltd.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: General Counsel
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.
20.12 Headings
The section and paragraph headings of this Agreement are intended
as a convenience only, and shall not affect the interpretation of
its provisions.
20.13 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.
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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.
A Product and Price Schedule
B Product Quality
C Logistics and Distribution
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their duly authorized representatives.
EMULEX CORPORATION MANUFACTURER'S SERVICES, LTD.
By: /s/▇▇▇▇ ▇▇▇▇▇▇ By: /s/▇▇▇▇ ▇▇▇▇▇▇▇
(Signature) (Signature)
Name: ▇▇▇▇ ▇▇▇▇▇▇ Name: ▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------------- ---------------------------------------
(Please Print or Type) (Please Print or Type)
Title: President and CEO Title: Vice President of Sales, North America
-------------------------------------- ---------------------------------------
Date: November 2, 2000 Date: November 1, 2000
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