CONFIDENTIAL TREATMENT REQUEST
* Portions denoted with an asterisk have been omitted and filed separately
with the Securities and Exchange Commission pursuant to a request for
confidential treatment.
EXHIBIT 10.25
WAREHOUSING AGREEMENT
BETWEEN
NETGEAR, INC.
AND
APL LOGISTICS AMERICAS, LTD.
TABLE OF CONTENTS
1. TERM OF AGREEMENT.......................................................... 1
2. APLL'S RESPONSIBILITIES..................................................... 1
3. NETGEAR'S RESPONSIBILITIES.................................................. 3
4. RATES AND CHARGES........................................................... 3
5. LIABILITIES AND INDEMNIFICATION............................................. 4
6. PHYSICAL INVENTORIES AND ADJUSTMENTS........................................ 5
7. FORCE MAJEURE............................................................... 6
8. DEFAULT..................................................................... 7
9. EARLY TERMINATION........................................................... 7
10. RECORDS..................................................................... 9
11. INDEPENDENT CONTRACTOR...................................................... 9
12. COMPLIANCE.................................................................. 9
13. SUCCESSORSHIP............................................................... 9
14. APPLICABLE LAW; ATTORNEYS' FEES; SEVERABILITY; SAVINGS...................... 9
15. ENTIRE AGREEMENT; AMENDMENT; CAPTIONS....................................... 9
16. NOTICES..................................................................... 10
17. WAIVER...................................................................... 10
18. NON-RECRUITMENT............................................................. 10
19. CONFIDENTIALITY............................................................. 10
20. COOPERATION................................................................. 10
21. EXECUTION IN COUNTERPARTS; FACSIMILE SIGNATURES............................. 11
SCHEDULES AND ATTACHMENTS
Schedule "A" -- Description of Services
Schedule "B" -- Rate Schedule
Schedule "C" -- Operating Parameters
Schedule "D" -- APLL Equipment/Systems
Schedule "E" -- Insurance Schedule
Schedule "F" -- Start-up Charges
Attachment #1 -- Mutual Confidentiality, Non-Disclosure and
Non-Recruitment Agreement
CONFIDENTIAL TREATMENT REQUEST
* Portions denoted with an asterisk have been omitted and filed separately
with the Securities and Exchange Commission pursuant to a request for
confidential treatment.
WAREHOUSING AGREEMENT
AGREEMENT made as of July 5, 2001, by and between NETGEAR, INC.
("NETGEAR") having an office at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and APL LOGISTICS AMERICAS, LTD, f/k/a GATX Logistics, Inc.,
having its principal office at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ ("APLL").
WITNESSETH:
WHEREAS, NETGEAR is a corporation organized and existent in accordance
with the laws of the State of Delaware, and is engaged in the manufacturer of
hardware for computer networks;
WHEREAS, APLL is a corporation organized and existent in accordance
with the laws of the State of Florida, and is engaged in the business of
providing logistics services, including, among others, warehousing services; and
WHEREAS, NETGEAR and APLL each represent and warrant that its
representative herein is duly empowered and authorized to execute this Agreement
on its behalf;
NOW, THEREFORE, for and in consideration of the mutual agreements
herein contained, it is hereby mutually agreed as follows:
1. TERM OF AGREEMENT
The term of this Agreement shall commence on July 16, 2001, and
continue in effect until the close of business on July 15, 2004, with an option
by NETGEAR to terminate on July 15, 2003 after giving APLL sixty days written
notice of its intent to terminate. If NETGEAR either exercises its option to
terminate or this Agreement expires, NETGEAR agrees to pay APLL a balloon
payment for unamortized capital and/or other fixed expenses in Schedules "D" and
"F" or subsequently agreed upon in writing by both parties. If NETGEAR does not
exercise its option, the Agreement shall renew automatically from year to year
until either party shall serve upon the other party written notice of
termination at least ninety (90) days prior to the expiration date of the then
current term.
2. APLL'S RESPONSIBILITIES
2.1 SERVICES. During the term of this Agreement, APLL agrees to provide for
NETGEAR certain warehousing services described in Schedule "A" hereto
at the facilities identified on Schedule "A"(each such facility being
hereinafter referred to as "Warehouse"). The services to be provided
hereunder are those described in this Agreement, subject to the terms
and conditions of this Agreement, and the attached Schedules "A", "B",
"C", "D", "E" and "F" and attachments which are made a part hereof (or
any substitutions or modifications thereto mutually agreed to in
writing), and to accept and keep in a safe, neat and orderly condition
such goods (the "Products") as from time to time may be tendered by
NETGEAR for warehousing or handling (the "Services"). APLL further
agrees to furnish and/or obtain sufficient personnel, equipment, and
other accessories necessary to perform the Services herein described.
The operating parameters and assumptions are set forth in Schedule "C".
2.2 WAREHOUSE OPERATIONS. The Parties agree that, except as specifically
modified herein, APLL will be a warehouseman as described in Article 7
of the Uniform Commercial Code ("UCC") as enacted in the state(s) where
the Warehouse(s) are located and is entitled to all rights and subject
to all obligations described therein with the exception that APLL has
waived its right to Warehouseman's Lien in exchange for the Letter of
Credit provided for in Section 4.5. APLL's standard of care for the
Services performed hereunder shall be the customary and usual
warehousing practices as performed in the community in which the
Warehouse is located; provided that in no event will the standard of
care be less than the industry standard and practices of skill and care
customarily observed by similar companies in similar circumstances.
1
The Warehouse space will be utilized by APLL as efficiently as
practical without creating inefficiencies in handling operations. All
Products shall be segregated by stock keeping unit, date, lot number,
or other characteristics or combination of characteristics, as agreed
upon (a "stock keeping unit" being the lowest level for which inventory
material handling records are maintained for purposes of this
Agreement). NETGEAR shall notify APLL of stocking limitations, Products
to be accounted for separately, and any other Product peculiarities in
writing, prior to delivery of such Products to the Warehouse. In the
event of any inconsistencies or conflicts between the terms contained
in this Agreement and Article 7 of the UCC (as codified in the State of
California), the terms of this Agreement shall be given preferential
deference in determining the intent of the parties.
2.3 TRANSFER OF PRODUCTS. No Products shall be delivered or transferred
except upon receipt by APLL of one of the following: 1) completed
shipping documents from NETGEAR; 2) packing slips from suppliers for
inventory product deliveries; or 3) packing slips from customers for
Return Material Authorization ("RMA"). Instructions to transfer
Products on the books of APLL shall not be effective until said
Instructions are delivered to APLL and all charges relating to APLL's
Services to NETGEAR, including the receipt, storage, servicing,
handling and transfer of the Products, shall be chargeable to NETGEAR.
2.4 TLS SOFTWARE. APLL will utilize its proprietary TLS software system in
support of and in connection with its Services under this Agreement.
NETGEAR shall protect the confidentiality of the TLS Software and
documentation. NETGEAR shall not make available the TLS Software and
any documentation supplied hereunder, in any form, to any person or
firm directly or indirectly, including NETGEAR's employees, agents and
subcontractors, without APLL's prior written consent. However, NETGEAR
shall have the right to use the APLL packing list and commercial
invoice documents to facilitate shipments. NETGEAR shall not sell,
assign, pledge, lease, sublease, transfer, license or otherwise
encumber the TLS Software, nor shall NETGEAR transmit, copy, recreate,
or reproduce, in whole or in part, in any manner, any part of the TLS
Software or documentation, or permit any person, firm, corporation or
entity to do so except as expressly permitted in writing by APLL.
NETGEAR may not modify or attempt to modify the TLS Software or any
portion thereof or merge or attempt to merge the TLS Software or any
part thereof into other computer programs. All patents and copyrights
applicable to the TLS Software or any documentation supplied by APLL
hereunder shall be retained by APLL. NETGEAR will not divulge or
disclose to any third party any information concerning the TLS Software
at any time unless such Information becomes publicly available through
no fault of NETGEAR. The Systems rates and charges set forth on
Schedule "B" include any initial TLS enhancements and customization for
NETGEAR, Any additional development requested by NETGEAR to deliver new
or altered TLS Software capabilities will be performed at a cost
mutually agreed to by NETGEAR and APLL prior to the commencement of any
additional development, such cost to include consulting rates plus
reasonable travel and other out-of-pocket expenses.
2.5 EXPORTS AND CUSTOMS. Each party agrees that it will not knowingly (I)
export or re-export, directly or indirectly, any technical data (as
defined by the U.S. Export Administration Regulations), including
software received from the other under this Agreement or (II) export or
re-export, directly or indirectly, any direct product of such technical
date, including software, to any destination to which such export or
re-export is restricted or prohibited by U.S. or applicable non-U.S.
law without obtaining prior authorization from the U.S. Department of
Commerce and/or other competent government authorities to the extent
required by those laws. This clause shall survive termination or
cancellation of this Agreement
Unless otherwise set forth in this Agreement, APLL shall take all
administrative actions required to product commercial invoices, packing
list and export declarations that comply to U.S. Export Regulations. If
a shipment includes products having different countries of origin, the
different countries of origin must be identified on the commercial
invoice and packing list. NETGEAR will be responsible to provide APLL
with the required information (HTS codes, ECCN codes, country of origin
list, countries to which no U.S. company can export to (Lybia, Cuba,
North Korea, etc.)) so that APLL can be in compliance. Fines assigned
to NETGEAR by the U.S. government resulting from APLL's failure to
follow NETGEAR's instruction to comply with U.S. Export Regulations
will be charged to APLL. If the fine to NETGEAR was the result of
NETGEAR providing incomplete or incorrect information to APLL, then
NETGEAR will absorb the cost of these fines.
2
3. NETGEAR'S RESPONSIBILITIES
3.1 DELIVERY AND SHIPMENTS; PACKAGING. NETGEAR will advise APLL of its
warehousing needs in sufficient time to allow APLL to make necessary
preparations for such warehousing. NETGEAR will also provide APLL with
instructions for shipments from the Warehouse, which information will
constitute NETGEAR's instructions for shipment of Products. All
Products tendered for warehousing will be properly marked and packaged
for handling according to the product specifications provided to APLL
by NETGEAR.
3.2 PRODUCT CHARACTERISTICS/REFUSAL TO ACCEPT PRODUCTS. NETGEAR shall
promptly notify APLL of the characteristics of any of NETGEAR's
Products that (a) require special handling instructions, material,
equipment or precautions; (b) may be hazardous or dangerous to APLL's
employees, subcontractors or agents, whether by handling or exposure;
(c) are defined as hazardous materials under any federal, state or
local law or regulation governing the environment including but not
limited to The Resource Conservation and Recovery Act (RCRA). The
Comprehensive Environmental Response, Compensation, and Liability Act
of 1980, as amended (CERCLA), or Department of Transportation Research
and Special Programs Administration (RSPA including IATA, ICAO and
IMDG); or (d) are or should be reasonably believed or known to be
likely to cause damage to APLL's premises or equipment. NETGEAR's
Products, or to other goods that may be stored by APLL. APLL may refuse
to accept any Products that are identified per the above categories or
that reasonably might cause infestation, contamination, or damage to
other goods in its custody. APLL shall promptly notify NETGEAR of such
refusal and shall have no liability for any demurrage, detention,
transportation or other charges by virtue of such refusal.
3.3 PROHIBITION OF CONSIGNMENT. NETGEAR agrees not to ship Products to APLL
as the named consignee. If, in violation of this Agreement, Products
are to be shipped to APLL as named consignee, NETGEAR agrees to notify
carrier, in writing and prior to such shipment, that APLL named as
consignee is a warehouseman under law and has no beneficial title or
interest in such Products. NETGEAR will also deliver a copy of such
notice to APLL prior to such shipment.
3.4 APLL COMPENSATION. NETGEAR shall pay APLL compensation for the Services
provided by APLL and the charges made by APLL under the terms of
Schedule "B" (or any substitutions or modifications thereto which are
mutually agreed to in writing).
4. RATES AND CHARGES
4.1 GENERAL. Rates and charges for contract Warehousing Services are set
forth in Schedule "B".
4.2 START-UP CHARGES. NETGEAR will pay expenses incurred to start up the
Services covered by this Agreement as provided in Schedule "F".
4.3 RATE AND CHARGE MODIFICATION. The rates and charges set forth in
Schedule "B" are based upon the current in and out handling
characteristics and operating assumptions detailed in Schedule "C". Any
significant changes in the operating parameters that affect APLL's cost
of providing the Services may require rate adjustments agreed upon by
both Parties.
APLL shall, after the initial year of this Agreement, periodically
review the rates and charges set forth in Schedule "B" and may revise
such rates and charges upon sixty (60) days notice to NETGEAR. Upon
receipt of such notice, NETGEAR may either accept the new rates and
charges or terminate this Agreement upon ninety (90) days written
notice to APLL, during which period the prior rates and charges shall
apply, unless APLL elects to continue to perform pursuant to the then
current rate structure, in which case this Agreement shall continue in
accordance with its terms. An exception to the above is the situation
where volumes fluctuate plus or minus twenty (20%), in which case APLL
may revise such rates and charges upon thirty (30) days notice to
NETGEAR.
4.4 TERMS OF PAYMENT. Except as may otherwise be specifically stated in any
of the applicable Schedules, APLL shall invoice NETGEAR for all
Services performed and costs incurred by APLL under this
3
Agreement during the preceding month. APLL shall provide NETGEAR with a
monthly statement of account reflecting balance due and days
outstanding. Upon APLL's request, NETGEAR shall provide APLL with a
copy of its most recant audited financial statements. NETGEAR shall pay
the amount invoiced within thirty (30) days from the date of such
invoice. Payment shall be considered made when payments have been
received by APLL.
In the event NETGEAR disputes any invoices (or any part thereof),
NETGEAR shall provide APLL with written notice of such dispute within
thirty (30) days of receipt of such invoice. NETGEAR shall, however,
pay that portion of the invoice not in dispute. Any such amount not in
dispute and not paid within thirty (30) days shall bear interest at the
rate of one percent (1%) per month.
Additionally, if any disputed portion of such invoice is later paid by
NETGEAR, or is determined subsequently to be due and owing to APLL,
NETGEAR shall also pay APLL interest on such amount from the original
due date at the rate of one percent (1%) per month. NETGEAR agrees to
pay, in the event its account becomes delinquent and is turned over to
any attorney for collection, reasonable attorneys' fees, plus all
consultant fees, court costs, and attendant collection costs.
4.5 [*].
5. LIABILITIES AND INDEMNIFICATION
5.1 GENERAL - WAREHOUSE. APLL shall be responsible for loss or injury to
all Products under its care, custody and control in the Warehouse as
provided in the UCC.
APLL agrees to indemnify, save harmless, and defend NETGEAR from and
against any and all claims for loss, damage or injury and from and
against any suits, actions, or legal proceedings brought against
NETGEAR for or on account of any loss or damage to the tangible
property of third parties, or for or on account of any injuries
received or sustained by any person, including but not limited to,
employees of APLL and employees and agents of NETGEAR, caused by, or
arising out of, any intentional, reckless or negligent act or omission
of APLL or its employees, agents or invitees in performing the
Services. This Indemnity shall not apply to any such loss, damage or
injury to the extent such loss, damage or injury is caused as a result
of the sole or partial negligence of any other party.
NETGEAR shall indemnify and hold harmless APLL from any and all claims
for unpaid transportation charges, including undercharges, demurrage,
detention, or charges of any nature, in connection with NETGEAR's
Products shipped to or from the Warehouse, except for such claims
caused by APLL's failure to exercise the standard of care as identified
in Section 2.2 above.
In addition, NETGEAR agrees to Indemnify, save harmless, and defend
APLL from and against any and all claims for loss, damage or injury and
from and against any suits, actions, or legal proceedings brought
against APLL for or on account of any loss or damage to the tangible
property of third parties, or for or on account of any injuries
received or sustained by any person, including, but not limited, to
employees of NETGEAR and employees and agents of APLL, caused by, or
arising out of, any intentional, reckless or negligent act or omission
of NETGEAR or its employees, agents or invitees, as well as from any
claims, expenses or demands of any kind made by NETGEAR's employees,
agents, servants or contractors while at the Warehouse in connection
with the performance of this Agreement, except to the extent such claim
arises from the negligence or intentional act of APLL, its employees.
4
agents or servants. In addition, this indemnity shall not apply to any
such loss, damage or injury, to the extent such loss, damage or injury
is caused as a result of the sole or partial negligence of any other
party. For claims which have been established to fall under NETGEAR's
indemnification obligation. NETGEAR has the sole right to control the
defense, settlement, and/or discharge of the claim. Further, NETGEAR
agrees to secure a waiver of subrogation from NETGEAR's workers'
compensation insurance carrier in support of the above.
APLL and NETGEAR agree to provide timely written notice of any claim to
the other party when indemnification is sought and to provide
reasonable assistance to the indemnifying party in defending, settling
and/or discharging the claim. In the event of any inconsistencies or
conflicts between the terms contained in this Agreement and Article 7
of the UCC (as codified in the State of California), the terms of this
Agreement shall be given preferential deference in determining the
intent of the parties.
5.2 DEMURRAGE: DETENTION. APLL shall not be liable for demurrage,
detention, or delays in obtaining and loading cars or vehicles for
outbound shipments unless APLL has failed to exercise reasonable care
and judgment as determined by industry practice or failed to act in a
timely manner. If detention occurs for which APLL is liable, payment of
such detention shall be made by APLL to the carrier.
5.3 CLAIMS BY NETGEAR. Claims by NETGEAR for loss or damage to Products
must be presented in writing to APLL by no later than the earlier of
(a) ninety (90) days after delivery of the Products by APLL or (b)
ninety (90) days after NETGEAR is notified that loss or damage has
occurred. APLL shall not be liable to NETGEAR where such loss or damage
is caused by events of Force Majeure as provided in Article 7 below,
the act of NETGEAR, its employees or agents, or the inherent vice or
nature of the Products. APLL will be afforded a reasonable opportunity
to inspect damaged Products, research shortages, investigate claims,
and respond to NETGEAR. No legal action may be maintained by NETGEAR
against APLL for loss or damage to Products or regarding the charges
hereunder unless timely written claim has been made as provided above
and, in any event, unless such action is commenced within the earlier
of (a) one (1) year after the date of delivery by APLL or (b) one (1)
year after NETGEAR is notified that loss or damage has occurred.
5.4 LIMITATION OF LIABILITY. It is understood and agreed that in the event
of loss or damage to Products for which APLL is liable, the measure of
damage for the first $10,000 of loss per annum will be NETGEAR
inventory standard cost, and for all amounts above $10.000 it will be
the manufacturer's cost of the Products involved, plus a prorated
portion of transportation charges; HOWEVER, APLL's legal liability
shall be limited per any one loss to the maximum amount of legal
liability insurance in full force and effect with APLL's insurance
carrier at the time such loss is incurred. If APLL pays any claim of
NETGEAR for damaged products, APLL or its insurer shall take title to
the damaged Products and/or obtain credit for the salvage value as
mutually agreed. Except as otherwise may be specifically provided for
in this Agreement or any Schedules, neither party shall be liable to
the other for any consequential, indirect or punitive damages arising
from the breach or termination of this Agreement.
5.5 INSURANCE. APLL shall maintain at all times during the life of this
Agreement a policy or policies of insurance in full force and effect
with companies and in amounts identified on Schedule "E" hereto,
covering warehouse legal liability for loss or damage to NETGEAR's
Products due to negligence of APLL. APLL does not otherwise insure
NETGEAR's Products. APLL agrees to furnish, at NETGEAR's request,
certificates of all policies of applicable insurance, such certificates
to name NETGEAR as certificate holder and to stipulate that the
insurance will not be canceled or substantially changed prior to
termination of this Agreement.
6. PHYSICAL INVENTORIES AND ADJUSTMENTS
6.1 PHYSICAL INVENTORIES. Joint NETGEAR-APLL physical inventories shall be
performed quarterly. All shipping, receiving and inventory transaction
processing will be terminated during the period of the physical
inventory to insure a simultaneous cut-off of all activity. APLL shall
▇▇▇▇ NETGEAR for the physical inventories on an hourly basis. Charges
for hourly warehouse personnel will be per Schedule "B".
5
6.2 INVENTORY ADJUSTMENTS. If stock differences are found in any count,
APLL and NETGEAR will list gains as receipts, and losses as deductions,
thus correcting the book record to agree with the actual stock on hand.
Those changes will be based upon counts agreed to and signed by
NETGEAR's representative and APLL's representative.
A. For purposes of determining the net balance of physical units
on APLL's account, all shortages and overages for the period,
shall be reconciled by stock keeping unit.
B. If there is a shortage for the period covered, after netting
across stock keeping units, the dollar amount (number of units
multiplied by the measure of damage as stated in Section 5.4
and subject to the provisions of subsection 6.2 (D) below)
shall be payable to NETGEAR by APLL. If there is an overage on
the account, adjustments will be made to inventory book
records and no claim will be filed by APLL. The period covered
by the physical inventory will be closed to future netting
routines except under the following conditions:
i. proven miscount in physical inventory;
ii. proven clerical error by NETGEAR;
iii. located or recovered mis-shipment;
iv. proven packing or case marking error by
NETGEAR's supplier; or,
C. Inventory adjustments will be calculated quarterly. Financial
reconciliation of inventory variances will be performed twice
per year. Netting will occur between the reconciliation of
quarters one and two and between the reconciliation of
quarters three and four. The reconciliation of quarters one
and two will not be netted against the reconciliation of
quarters three and four. In performing the financial
reconciliation, if the net inventory variance calculated
during the physical inventory is an overage and APLL paid for
a shortage in connection with the preceding physical
inventory, NETGEAR will pay a refund to APLL based on the
overage, but only to the extent that it does not exceed the
shortage for which APLL has paid.
D. The dollar values used to establish the net-money balance
shall be NETGEAR Inventory standard cost for the first $10,000
of loss per annum and manufacturer's cost plus prorated
transportation (if inventory is replenished) for amounts above
$10,000, or the amount stipulated in Section 5.4 above,
whichever is less.
6.3 RECONCILIATION OF INVENTORY RECORDS. If at any time, discrepancies
exist between NETGEAR's records and the physical inventory, APLL and
NETGEAR shall provide to each other their records of all inventory
adjustments from the time of the previous reconciliation to the time of
the inventory count in which the discrepancy was found.
6.4 DUAL SYSTEM ENTRY. APLL will have access to NETGEAR's Sun System as
outlined in Schedule "C" Section (2) Systems. In addition, APLL will
maintain a full warehouse management system of its own to control
inventory to ensure back to back accuracy with NETGEAR's Sun System. If
a variance between the two systems is discovered, APLL and NETGEAR
agree to perform due diligence to analyze the variance as soon as it is
identified. Due diligence consists of auditing the trail of
documentation and system records to pinpoint an error. APLL shall be
accountable for systems for which APLL controls user access but not for
systems for which APLL does not control user access. Regardless of
whether APLL controls user access, APLL will conduct due diligence and
work to resolve any variances.
7. FORCE MAJEURE
A party shall not be responsible for delay or non-performance hereunder
if performance is prevented or delayed by any cause or event beyond its
reasonable control. Without limiting the generality of the foregoing, such
causes or events shall include, directly or Indirectly, without limitation, Acts
of God or elements of nature, fire, floods, other catastrophes, war, public
enemies, seizure under legal process (not resulting from action or inaction of
the non-performing party), strikes, lockouts, labor disorders, riots, sabotage,
explosion, acts of
6
terrorism, civil commotions, closing of public highways, governmental
interference or regulations, embargo, accident, derailment, epidemics or
quarantine restrictions, the act or default of the other party, or any other
reason of a similar or dissimilar nature beyond such party's reasonable control.
In the event there is a default or delay due to Force Majeure per the
above, the non-performing party shall be excused from further performance (other
than payment of previously accrued charges) or observance of the obligation(s)
so affected for as long as such circumstances prevail, provided such party
continues to use its best efforts to recommence its performance or observance
whenever and to whatever extent possible without delay. The party claiming a
Force Majeure event will notify the other party as soon as practicable regarding
the existence, nature and approximate duration of the Force Majeure event, and
will promptly give further notice when the Force Majeure event ceases, whereupon
its duty to perform shall resume.
8. DEFAULT
8.1 AUTOMATIC DEFAULT. In the event bankruptcy, receivership, Insolvency,
reorganization, dissolution, liquidation or other similar proceeding is
instituted by or against either party under the United States
Bankruptcy Code or other law of the United States or any state, then
the other party may, without notice or demand, terminate this Agreement
and exercise all rights granted under applicable law and this
Agreement.
8.2 GENERAL DEFAULT; RIGHT TO CURE. Except for reasons provided in Article
7 and Section 8.1 above, in the event either party fails to perform its
obligations under this Agreement, then the other party may terminate
this Agreement upon ninety (90) days prior written notice to the other;
provided, however, that such notice shall specify all such failures to
perform and allow the party in default no less than sixty (60) days to
correct such failures. However, APLL and NETGEAR agree that breach of
payment terms in Section 4.4 shall constitute default which NETGEAR
agrees to correct within fifteen (15) days of receipt of notice from
APLL.
8.3 EFFECT OF TERMINATION. Termination under this provision, or under any
other provision of this Agreement, shall not relieve or release either
party from any liability which accrued prior to the date of such
termination.
9. EARLY TERMINATION
9.1 OBLIGATIONS. NETGEAR acknowledges that, if this Agreement is terminated
prior to its stated term, APLL will have incurred significant costs and
expenses by reason thereof for which APLL would not be compensated or
reimbursed for as contemplated under this Agreement or the applicable
Schedules. Therefore, notwithstanding anything in this Agreement to the
contrary, if this Agreement terminates prior to its stated term for any
reason whatsoever including, but not limited to, NETGEAR's termination
without cause, a termination because of NETGEAR's default, a
termination because of a Force Majeure event, or a termination because
of the Parties' inability to reach agreement with respect to
compensation or rate adjustments (collectively, "Early Termination"),
APLL will suffer and incur expenses that would otherwise have been paid
through the stated term of this Agreement or which would have been
avoided but for the Early Termination, As a consequence thereof,
NETGEAR agrees, subject to subsection 9.1(G), upon an Early
Termination:
A. To agree to continue to pay to APLL through the end of the
stated term of this Agreement or until APLL refills the
warehouse space, whichever comes sooner, the prorated space
costs associated with the Warehouse square footage occupied by
NETGEAR. NETGEAR shall not be required to pay prorated
Warehouse space costs if NETGEAR exercises its option to
terminate the Agreement on July 15, 2003 after giving APLL
sixty (60) days written notice;
B. To purchase, prior to the mutually agreed to effective date of
the Early Termination, the APLL Equipment listed on Schedule
"D" (or any substitutions or modifications thereto) which is
owned by APLL at the depreciated value of such Equipment;
7
C. To assume, subject only to lessor's consent, APLL's leases for
any APLL Equipment listed on Schedule "D" (or any
substitutions or modifications thereto) which is leased by
APLL and all APLL's obligations thereunder (not including any
liability of APLL for pre-termination lease obligations). In
the alternative, if NETGEAR cannot assume such Equipment
leases, but is allowed by APLL and lessor to continue to use
the Equipment, to continue to pay to APLL through the stated
term of this Agreement (at the same time and in the same
manner as NETGEAR is obligated to pay or reimburse APLL for
such Equipment under this Agreement or any applicable
Schedules), the actual costs and expenses associated with such
Equipment under the lease(s);
D. Prior to the mutually agreed to effective date of the Early
Termination, to pay to APLL the balance of the cost of any
mutually agreed Warehouse improvements not theretofore paid by
NETGEAR to APLL as provided for in this Agreement or any
applicable Schedules (the unpaid balance for Warehouse
improvements, upon such Early Termination, being accelerated);
E. Within 30 days after the date of Early Termination, to pay to
APLL the then outstanding balance of the Startup Charges
(including any TLS/custom computer programming and
installation service costs) not theretofore paid by NETGEAR to
APLL as provided in Schedule "F" (the unpaid balance, upon
such Early Termination, being accelerated); and
F. Within 30 days after the date of Early Termination, to pay to
APLL any other reasonable direct casts and expenses relating
to warehouse improvements, equipment including racking, and
employee severance incurred or expected to be incurred by APLL
by reason of such Early Termination.
G. If NETGEAR terminates this Agreement early due to breach by
APLL. NETGEAR will not be liable for the charges outlined in A
through F, but NETGEAR shall be liable for the balance of the
cost of any specialized equipment or data processing expenses
implemented by APLL to provide services to NETGEAR.
9.2 PROCEDURE. All of the costs and expenses to be paid or reimbursed by
NETGEAR per Section 9.1 above are hereinafter collectively referenced
as "Early Termination Costs". Prior to the mutually agreed to effective
data of any Early Termination, APLL and NETGEAR shall enter into a
written agreement evidencing the manner and terms and conditions,
consistent with the provisions hereof, that NETGEAR shall assume APLL's
obligations or pay or reimburse APLL for the Early Termination Costs.
Any assumptions of leases by NETGEAR shall be effective as of the
Effective Date of the Early Termination and, except as provided for
herein, any payments or reimbursements to APLL shall be made prior to
or on the Effective Date of the Early Termination. At APLL's option,
the Early Termination shall not become effective until such agreements
or arrangements are executed. The provisions of this Article 9 and the
separate agreements evidencing the same shall survive the termination
of this Agreement.
9.3 MITIGATION. APLL shall use reasonable efforts to minimize the Early
Termination Costs. Such efforts may include: negotiating for the early
termination of the Warehouse lease or equipment leases. In which event
NETGEAR shall pay any costs, fees or penalties (provided, however, APLL
shall not agree to any such early termination or any such costs, fees
or penalties without NETGEAR's prior written consent); subletting of
all or a part of the Warehouse; utilizing the Warehouse or APLL's
Equipment for other APLL customer-related work; transferring of
personnel; and other agreed-upon measures. APLL shall periodically
provide NETGEAR with information concerning any such endeavors. With
respect to any subletting or alternative usage, it is understood and
agreed that NETGEAR shall only be obligated to pay or reimburse APLL
for the Early Termination Costs that have not been mitigated or reduced
by such efforts. NETGEAR and APLL shall, prior to the effective date of
the Early Termination, meet and fully discuss the action or actions to
be reasonably taken to lessen NETGEAR's liabilities hereunder.
9.4 DUTY TO FULFILL. Notwithstanding any termination or expiration of this
Agreement, APLL agrees to manage all inventory control functions and to
fulfill all orders placed prior to the date of expiration or
8
termination in accordance with the terms of this Agreement if such
orders have not been cancelled previously.
10. RECORDS
APLL shall at all times keep accurate and complete books and records
with regard to receipt, transfer, and other handling of NETGEAR's Products (the
"NETGEAR Files") and shall maintain the NETGEAR Files for a period of two (2)
years. Subject to maintaining the confidentiality of records of any customers
other than NETGEAR, NETGEAR and its authorized representatives shall have the
right, at its own cost and expense, to inspect and audit the NETGEAR files at
any reasonable time. NETGEAR's right to audit the NETGEAR Files shall survive
expiration or termination of this Agreement. NETGEAR shall have the right to
enter upon the Warehouse(s) at all reasonable times for the purpose of
inspecting NETGEAR's Products.
11. INDEPENDENT CONTRACTOR
It is agreed and understood that APLL is entering into this Agreement
as an independent contractor and that all of APLL'S personnel and Contracted
Carrier's personnel engaged in work under this Agreement are to be considered
for all purposes as employees of APLL. Under no circumstances shall employees of
APLL be construed or considered to be employees of NETGEAR. NETGEAR will not be
responsible for acts or omissions of either APLL's employees or agents. The
relationship between the Parties will be, at all times, that of independent
contractors, which status governs all relationships between APLL, NETGEAR and
other third parties.
12. COMPLIANCE
APLL shall at all times comply with all applicable federal, state and
municipal laws and the regulations of the respective regulatory bodies having
jurisdiction over APLL. APLL will procure and maintain all necessary and
applicable operating authorities and licenses.
13. SUCCESSORSHIP
Neither party will have the right or power to assign any of its rights
or delegate the performance of any of its duties under this Agreement without
the express written prior consent of the other party, which shall not be
unreasonably withheld; provided however, that such prior written consent shall
not be required for APLL to subcontract the performance of the Services to any
of its parent, subsidiary or affiliated companies, including APL Logistics
Warehouse Management Services, Inc. (formerly named, GATX Logistics, Inc.).
14. APPLICABLE LAW; ATTORNEYS' FEES; SEVERABILITY; SAVINGS
This agreement, and any disputes arising out of or in connection with
this Agreement, shall be governed by and construed in accordance with the laws
of the State of California, excluding its rules governing conflicts of laws. The
courts located within the State of California shall have exclusive jurisdiction
to adjudicate any disputes arising out of or in connection with this Agreement.
Both parties hereby consent to the personal jurisdiction of the courts located
in the State of California for the resolution of disputes hereunder. The
prevailing party in any proceeding brought by one party against the other party
arising out of or in connection with this Agreement shall be entitled to recover
its legal expenses, including court costs and reasonable attorneys' fees. If any
provision of this Agreement shall be held to be invalid or unenforceable for any
reason, the remaining provisions shall continue to be valid and enforceable. If
a court finds that any provision of this Agreement is invalid or unenforceable,
but that by limiting such provision it would become valid and enforceable, than
such provision shall be deemed to be written, construed, and enforced as so
limited.
15. ENTIRE AGREEMENT; AMENDMENT; CAPTIONS
This Agreement, together with all schedules and attachments, and the
Mutual Confidentiality, Non-Disclosure and Non-Recruitment Agreement dated
February 26, 2001, and executed by both Parties (the "Mutual Agreement"), a copy
of which is attached hereto as Attachment #1, constitutes the entire agreement
between the Parties and may not be amended or changed except by written
agreement signed by APLL and
9
NETGEAR. To the extent that the terms of any warehouse receipts, acknowledgment
forms, order forms, bills of lading, invoices, or similar documents sent and/or
signed by one or both Parties conflict with or are inconsistent with the terms
of this Agreement, the terms of this Agreement shall control. The captions
herein are for convenience only and shall not be construed as interpretive or as
a substantive part of this Agreement.
16. NOTICES
Any notice or demand required or permitted hereunder shall be given in
writing addressed to NETGEAR or APLL as listed below or to such other address as
may be specified in writing to the other party. Notices shall be given (a) by
certified or registered mail, (b) commercial overnight delivery service, or (c)
facsimile transmission confirmed by certified mailing or overnight delivery
thereof. The notice shall be deemed given upon receipt of the notice by the
intended party of the facsimile (if properly confirmed) or, in the case of
notice by mail, when properly addressed with sufficient postage affixed, three
days after deposit in the U.S. Mail or, for notices sent by overnight delivery
service, when properly addressed and submitted with a sufficient fee, one day
after being left with the carrier.
For notices to APLL: For notices to NETGEAR:
APL Logistics Americas, Ltd. f/k/a GATX NETGEAR, Inc.
Logistics, Inc. ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ Attn.: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Attn.: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Director of Logistics
Sr. Managing Director-Operations Telephone No. (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇ Facsimile No. (▇▇▇-) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
17. WAIVER
Compliance with the provisions of this Agreement may be waived only by
a written document signed by the party granting the waiver. The failure of
either party at any time to require performance by the other party of any
provision hereof shall in no way affect the full right to require such
performance at any time thereafter. Neither shall the waiver by any party of a
breach of any provision hereof be taken or held to be a waiver of any succeeding
breach of such provision or as a waiver of the provision itself.
18. NON-RECRUITMENT
During the period of this Agreement and for a period of one (1) year
thereafter, neither party shall solicit, entice, or attempt to solicit either
directly or indirectly, for employment, or employ, an employee of the other
party without the prior written consent of such other party, provided that this
provision shall not apply to employees that answer generally published
advertisements for employment.
19. CONFIDENTIALITY
The terms and provisions of this Agreement are confidential and
proprietary and either party shall reveal only so much of its contents as shall
be required by law. The Mutual Agreement shall be effective in accordance with
its terms.
20. COOPERATION
The Parties acknowledge that they are both experienced in business and
have entered into this Agreement to establish business relationships intended to
be mutually beneficial and profitable for both Parties. Accordingly, each of the
Parties will work together and cooperate with each other in implementing the
purposes and intents of this Agreement and in attempting to resolve any
questions and settle any disputes hereunder. Both Parties will respond to such
matters in a cooperative and practical, problem-resolving manner. Each will make
every effort (without waiving any rights) to avoid litigation or other legal
process.
10
21. EXECUTION IN COUNTERPARTS; FACSIMILE SIGNATURES
This Agreement and the attached Schedules may be executed in one or
more counterparts, all of which shall be considered one and the same agreement,
and shall become a binding agreement when one or more counterparts have been
signed by each party and delivered to the other parties. A signature to this
Agreement or a Schedule delivered by telecopy or other artificial means shall be
deemed valid and each party agrees to manually sign a copy of such signature and
deliver such original document within ten (10) business days after such telecopy
or other signature is delivered.
IN WITNESS WHEREOF, the Parties have caused this Agreement to be
executed by their respective duly authorized representatives:
APL LOGISTICS AMERICAS, LTD, F/K/A LOGISTICS, INC.
GATX NETGEAR, INC.
By: /s/ W. ▇▇▇▇ ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------ ---------------------
Name Printed: W. ▇▇▇▇ ▇▇▇▇▇▇ Name Printed: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: SR. MANAGING DIRECTOR-OPERATIONS Title: VP & CFO
Date: 7-13-01 Date: 7/12/01
11
CONFIDENTIAL TREATMENT REQUEST
* Portions denoted with an asterisk have been omitted and filed separately
with the Securities and Exchange Commission pursuant to a request for
confidential treatment.
SCHEDULE "A"
DESCRIPTION OF SERVICES
Attached to and made a part of the Warehousing Agreement (the
"Agreement") dated as of July 5, 2001, by and between NETGEAR, INC. ("NETGEAR")
and APL LOGISTICS AMERICAS, LTD. F/K/A GATX LOGISTICS, INC. ("APLL").
1) LOCATION(S):
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
2) BASIC SERVICES TO INCLUDE: (All Services will be in accordance
with APLL standard warehouse operating procedures and
standards unless specifically modified in this Agreement or
any Schedule):
A. Receiving;
B. Inventory Management;
C. Product Fulfillment and Logistics;
D. System Transaction Processing;
E. Receiving Return Materials;
F. Freight Out Transportation Management Services;
G. Product Conversions and Repackaging; and
H. Reporting.
3) WORKDAY, WORKWEEK AND HOLIDAYS: NORMAL OPERATING HOURS:
7:00 a.m. - 5:00 p.m. (PST), Monday through Friday.
Holidays: New Years Day, Memorial Day, Independence Day, Labor
Day, Thanksgiving Day, the day after Thanksgiving, Christmas
Eve, Christmas Day.
Accepted and agreed to by and between the parties set forth below:
APL LOGISTICS AMERICAS, LTD. F/K/A NETGEAR, INC.
GATX LOGISTICS, INC.
By: /s/ W. ▇▇▇▇ ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------ ---------------------
Name Printed: W. ▇▇▇▇ ▇▇▇▇▇▇ Name Printed: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: SR. MANAGING DIRECTOR-OPERATIONS Title: VP & CFO
Date: 7-13-01 Date:7/12/01
12
CONFIDENTIAL TREATMENT REQUEST
* Portions denoted with an asterisk have been omitted and filed separately with
the Securities and Exchange Commission pursuant to a request for confidential
treatment.
SCHEDULE "B"
RATE SCHEDULE
Attached to and made a part of the Warehousing Agreement (the
"Agreement") dated as of July 5, 2001, by and between NETGEAR, Inc. ("NETGEAR")
and APL LOGISTICS AMERICAS, LTD. F/K/A GATX LOGISTICS, INC. ("APLL").
1) GENERAL WAREHOUSE SERVICES:
APLL's actual cost plus fifteen percent (15%) margin ("margin"
is calculated by totaling the charges and dividing by 0.85).
2) RATES FOR MATERIALS OR SPECIAL SUPPLIES USED FOR NETGEAR:
Actual cost plus a fifteen percent (15%) margin.
3) ESTIMATED ANNUAL OPERATING COSTS:
Costs with
----------
Costs Margin
----- ------
Management and Supervision $ [*] $ [*]
Warehouse Labor $ [*] $ [*]
Process Support Personnel $ [*] $ [*]
Equipment $ [*] $ [*]
Information Systems-Hardware $ [*] $ [*]
Space - 50,000 sq. ft. $ [*] $ [*]
Miscellaneous Storage $ [*] $ [*]
Miscellaneous Handling $ [*] $ [*]
Total Estimated Annual Operating Costs $ [*] $ [*]
(Cost Plus)
Accepted and agreed to by and between the parties set forth below:
APL LOGISTICS AMERICAS, LTD F/K/A NETGEAR, INC.
GATX LOGISTICS, INC.
By: /s/ W. ▇▇▇▇ ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------- ---------------------
Name Printed: W. ▇▇▇▇ ▇▇▇▇▇▇ Name Printed: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: SR. MANAGING DIRECTOR-OPERATIONS Title: VP & CFO
Date: 7-13-01 Date:7/12/01
13
CONFIDENTIAL TREATMENT REQUEST
* Portions denoted with an asterisk have been omitted and filed separately with
the Securities and Exchange Commission pursuant to a request for confidential
treatment.
SCHEDULE "C"
OPERATING PARAMETERS
Attached to and made a part of the Warehousing Agreement (the
"Agreement") dated as of July 5, 2001, by and between NETGEAR, Inc. ("NETGEAR")
and APL LOGISTICS AMERICAS, LTD. F/K/A GATX LOGISTICS, INC. ("APLL").
1) ASSUMPTIONS:
A. FORECASTS OF EXPECTED RECEIPTS AND SHIPMENTS: NETGEAR
shall provide to APLL a non-binding, rolling,
forecast covering a period of four months beyond the
Build Plan (Forecast"). Each Forecast shall be a good
faith estimate of the anticipated requirements for
the Product(s) anticipated to ship listed for the
periods indicated.
B. RECEIPT: 1,000 pallets per week; 95+ % of this volume
is containerized sea freight. The receipts will be
delivered throughout the week. The remaining is by
ad-hoc airfreight. All pallets are 100 x 120 x
160/200 plywood-shipping pallets. All inbound and
outbound receipts and shipments shall be scheduled
twenty-fours in advance.
APLL shall check all outer cartons immediately upon
delivery thereof to its warehouse for visible loss or
damage and quantity of the delivered outer cartons.
If the Products are damaged or the number of Products
is incorrect, APLL shall remark this on the waybill
or document received from the carrier. Furthermore,
APLL shall notify NETGEAR of the inconsistency within
two working days after receipt of the Products.
Each shipment is to be verified against the packing
list and/or invoice and booked into the storage
location.
The majority of pallets received will contain single
part numbers. Where a pallet contains mixed part
numbers it will be split down into an individual part
number per pallet. Each mixed pallet has to be marked
on all four (4) sides with the label: Mixed Pallet.
Approximately one month's supply of product is held
stock i.e. 2,600 pallets, covering approximately 250
part numbers.
A clear product code identification, not necessarily
a bar code identification, is sufficient to handle
incoming products.
After discharge, the products will be sorted by Stock
Keeping Unit ("SKU") and checked on outer damage and
quantity. The system will create a location and a put
away. For the storage of pallets, APLL will maintain
a random storage system although products of a
customer are stored together as much as possible.
Weekly order volumes are expected to fluctuate by
plus or minus 25% per week, with the third week of
the month seeing the highest volume.
C. INVENTORY MANAGEMENT: NETGEAR will specify shipping
instructions and designate default shipping
instructions. Products will be received into the
NETGEAR inventory Location using purchase order
receipts on NETGEAR's Sun System. APLL will maintain
a full warehouse management system of its own to
control inventory to ensure back to back accuracy
with NETGEAR's Sun System.
All products will require a cycle count by APLL to be
completed on a weekly basis. A joint cycle count to
be performed by representatives of APLL and NETGEAR
will take place quarterly.
14
Products returned from NETGEAR Customers will be
initially received into the NETGEAR Inventory
Location using the Sales Order Return transaction in
Sun System. APLL will have the responsibility to
verify contents, receive, transact and report all
customer product returns.
[*].
[*].
Once per quarter, APLL and NETGEAR will jointly
complete a reconciliation of book inventory (stock
status) and actual on-hand inventory. Positive
variances (additional units found) and negative
variances (missing units) will be netted against each
other. If the total net variance is negative after
netting across stock keeping units, then NETGEAR will
charge APLL at NETGEAR's inventory standard cost for
variances up to $10,000 per annum and at the
manufacturer's cost of the Products involved, plus a
prorated portion of transportation charges for
variances in amounts over $10,000 per annum. Damaged
products are not a part of the quarterly
reconciliation netting process for positive and
negative variances. Damages will be charged as they
take place.
D. ORDER PICKING: The current NETGEAR customer base is
twenty four. The average number of customer order per
month is 700. The average number of lines per
customer order is five (5). Orders are placed over
night and are visible by 7:00 a.m. to APLL at which
time an order requirement report (shippable backlog)
is to be produced. The majority of shipments (83%)
are in full case and pallet quantities, but there are
some shipments that require case breaks.
All orders, provided the orders do not exceed the
average daily order profile, are to be picked, made
ready for dispatch and confirmed on the system by
18:00, with all stock being picked on a FIFO basis.
Weekly order volumes are expected to fluctuate by
plus or minus 25% per week, with the third week of
the month seeing the highest volume.
The required service level is for all Customer orders
to be dispatched from the distribution hub within 24
hours of receipt of order.
E. SHIPMENT QUALITY AND MIS-SHIPS: NETGEAR will specify
shipping instructions and designate default shipping
instructions. All packing list and commercial
invoices will be generated by APLL. Upon delivery of
the Products to the carrier for distribution, APLL
shall check the number of Products stated on the
waybill or other document used by the carrier. In
case of an inconsistency, the number stated on the
waybill or document used by the carrier shall be
amended before departure of the Products from the
warehouse.
Mis-shipments, excluding losses and damages during
transportation, are shipments reported by NETGEAR's
customer that reportedly do not contain what the
packing list declared. In this case, NETGEAR will
immediately credit the customer with an RMA or
invoice them according to the actual contents. The
customer will then either return
15
to NETGEAR the extra units received or receive credit
from NETGEAR for any short shipment. APLL and NETGEAR
will then jointly review the audit trail
documentation associated with the shipment. This may
include a warehouse cycle count for extra units in
relation to book inventory, proof of delivery for the
shipment, pieces, weights, dimensions, shipping
documentation and other related pick and pack
documents.
APLL will provide proof of shipment upon request and
reasonable assistance to NETGEAR in any claim it may
make against a carrier or insurer for misdelivery,
loss or damage to Products.
NETGEAR will not charge APLL for the missing units if
NETGEAR and APLL mutually agree:
A) The documentation audit trail is consistent
to the commercial invoices/customer order.
B) The inventory cycle count does not show
inventory discrepancy for the SKU's under
query.
NETGEAR will charge APLL for the missing units if
NETGEAR and APLL mutually agree:
A) The documentation audit trail is not
consistent to the commercial
invoices/customer order.
B) The inventory cycle count does show
inventory discrepancy for the SKU's under
query.
F. REPORTS: APLL will provide NETGEAR with mutually
agreed to set of standard reports on a daily, weekly
and/or monthly basis as required. Any customized
reports will be at an additional charge. Current
available reports are at no charge. NETGEAR will also
be allowed to run any standard or custom reports
available to NETGEAR for comparison to NETGEAR's Sun
System database. APLL will provide NETGEAR with daily
access to web site and account activity.
2) SYSTEMS:
A. INVENTORY MANAGEMENT: APLL will maintain a full
warehouse management system of its own to control
inventory to ensure back to back accuracy with
NETGEAR's Sun System.
B. NETGEAR has five primary stockroom locations within
the Sun System; IQC, two finished goods locations,
stock rotation and warranty returns. Receipts must be
played into the correct location based on the
specific type of transaction.
C. NETGEAR will send via an EDI 940 transaction all the
information to generate shipment packing list and
commercial invoices to be generated from APLL's
system.
D. NETGEAR will share inventory records (APLL will have
access to NETGEAR's operating system).
E. All receipts and picks/dispatches are to be
transacted daily on NETGEAR's Sun System.
▇. ▇▇▇▇ agrees to have NETGEAR's Sun System installed
at its site and will process transactions according
to NETGEAR requirements. APLL will access NETGEAR's
Sun System through the Internet. If APLL is unable to
connect via the Internet, NETGEAR shall provide a
phone number back-up for secondary access to
NETGEAR's Sun System.
16
▇. ▇▇▇▇ will provide NETGEAR with daily access to web
site and account activity.
H. ACCESS TO SYSTEMS: NETGEAR will be provided with
direct access to service to APLL systems limited to
NETGEAR account information. This would be via web
access or modem access. This would include access to
on-hand inventory, receipts, shipments, RMA's TLS
account information etc.
3) PERFORMANCE REQUIREMENTS:
A. QUARTERLY REVIEWS: APLL and NETGEAR shall, in
conjunction with each other, conduct quarterly
operations reviews of the business processes and
procedures of both APLL and NETGEAR with the intent
to improve overall physical distribution services
performance. The review shall include, at a minimum,
performance measurements of quality, delivery,
customer satisfaction, cost model review,
transportation cost review and update, capacity and
innovations. Staff allocation, and the plan to meet
future requirements in these areas, shall be
reviewed.
B. All Sun System receipt transactions to be manually
data entered on the day of delivery.
C. Trucks/container arriving before 1200 hours will be
off loaded and the goods put on location the same
day. This also applies for the stock update.
D. All orders are to be picked, made ready for dispatch
and confirmed on the system by 15:00, with all stock
being picked on a FIFO basis.
E. All shipments are to be audited to confirm 98.5 %
accuracy to Customer Order and packing/delivery
specifications (which may vary from Customer to
Customer).
F. The required service level is for all Customer orders
to be dispatched from the distribution hub within 24
hours of receipt of order.
▇. ▇▇▇▇ will provide two administrative resources to
play all receipt and shipment transactions in the Sun
System on a daily basis.
▇. ▇▇▇▇ will produce periodic performance, measurement
and activity reports.
Accepted and agreed to by and between the parties set forth below:
APL LOGISTICS AMERICAS, LTD. F/K/A. NETGEAR, INC.
GATX LOGISTICS, INC.
By: /s/ W. ▇▇▇▇ ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------ ---------------------
Name Printed: W. ▇▇▇▇ ▇▇▇▇▇▇ Name Printed: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: SR. MANAGING DIRECTOR-OPERATIONS Title: VP & CFO
Date: 7-13-01 Date: 7/12/01
17
CONFIDENTIAL TREATMENT REQUEST
* Portions denoted with an asterisk have been omitted and filed separately with
the Securities and Exchange Commission pursuant to a request for confidential
treatment.
SCHEDULE "D"
APLL EQUIPMENT/SYSTEMS
Attached to and made a part of the Warehousing Agreement (the
"Agreement") dated as of July 5, 2001, by and between NETGEAR, Inc. ("NETGEAR")
and APL LOGISTICS AMERICAS, LTD. F/K/A GATX LOGISTICS, INC. ("APLL").
The following Equipment has been procured and placed into service by
APLL and Systems costs have been incurred by APLL for exclusive use in
performing its obligations to NETGEAR (excluding final and maintenance):
Date-In-Service Description Amortization Period (Months) Monthly Depreciation
---------------- ----------- ---------------------------- --------------------
July 2001 Forklifts (4) 60
August 2001 Electric Pallet ▇▇▇▇ 60
July 2001 Manual Pallet ▇▇▇▇ (2) 60
SUBTOTAL: $ [*]
July 2001 Racking 84
SUBTOTAL: $ [*]
July 2001 PC (3) 36
July 2001 Printer (2) 36
July 2001 RF Equipment 36
SUBTOTAL: $ [*]
Accepted and agreed to by and between the parties set forth below:
APL LOGISTICS AMERICAS, LTD, F/K/A NETGEAR, INC.
GATX LOGISTICS, INC.
By: /s/ W. ▇▇▇▇ ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------- ------------------------------------
Name Printed: W. ▇▇▇▇ ▇▇▇▇▇▇ Name Printed: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Sr. Managing Director -- Title: VP & CFO
Operations
Date: 7/13/01 Date: 7/12/01
18
SCHEDULE "E"
INSURANCE SCHEDULE
Attached to and made a part of the Warehousing Agreement (the
"Agreement") dated as of July 5, 2001, by and between NETGEAR, Inc. ("NETGEAR")
and APL LOGISTICS AMERICAS, LTD. F/K/A GATX LOGISTICS, INC. ("APLL").
A Certificate of Insurance naming NETGEAR as Certificate Holder
is attached hereto as Attachment E-1.
Accepted and agreed to by and between the parties set forth below:
APL LOGISTICS AMERICAS, LTD, F/K/A NETGEAR, INC.
GATX LOGISTICS, INC.
By: /s/ W. ▇▇▇▇ ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------- ------------------------------------
Name Printed: W. ▇▇▇▇ ▇▇▇▇▇▇ Name Printed: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Sr. Managing Director - Title: VP & CFO
Operations
Date: 7/13/01 Date: 7/12/01
19
CONFIDENTIAL TREATMENT REQUEST
* Portions denoted with an asterisk have been omitted and filed separately with
the Securities and Exchange Commission pursuant to a request for confidential
treatment.
SCHEDULE "F"
Start-Up Charges
Attached to and made a part of the Warehousing Agreement (the
"Agreement") dated as of July 5, 2001, by and between NETGEAR, Inc. ("NETGEAR")
and APL LOGISTICS AMERICAS, LTD. F/K/A GATX LOGISTICS, INC. ("APLL").
The following startup costs have been incurred by APLL for exclusive
use in performing its obligations to NETGEAR:
STARTUP COATS
-------------
Project Management & Testing $ [*]
Site Services $ [*]
Software Purchases $ [*]
Operations Training $ [*]
One-Time Expense $ [*]
Total Startup Costs $ [*]
If NETGEAR has not Initialed In the blank to the left, then
APLL will Invoice the total of the startup costs, above, with
the first invoice for services. If NETGEAR has initialed the
blank, then NETGEAR agrees to pay $2,509 each month for 38
months.
Accepted and agreed to by and between the parties set forth below:
APL LOGISTICS AMERICAS, LTD, F/K/A NETGEAR, INC.
GATX LOGISTICS, INC.
By: /s/ W. ▇▇▇▇ ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------- ------------------------------------
Name Printed: W. ▇▇▇▇ ▇▇▇▇▇▇ Name Printed: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Sr. Managing Director - Title: VP & CFO
Operations
Date: 7/13/01 Date: 7/12/01
20