Exhibit
10.45
CONFIDENTIAL
TREATMENT REQUESTED
MANUFACTURING
SERVICES AND SUPPLY AGREEMENT
THIS
MANUFACTURING SERVICES AND SUPPLY AGREEMENT (the
"Agreement"), effective this 19th day of February, 2009
("Effective Date") is made and entered into by and between
ADAPTEC, INC., a Delaware corporation having a place of
business at 691 S. Milpitas Blvd., Milpitas, California 95035, on
behalf of itself and its Affiliates (collectively,
"ADAPTEC"), and SANMINA-SCI CORPORATION, a Delaware
corporation having its principal place of business at 2700 North
First Street, San Jose, California 95134, on behalf of itself and
its Affiliates (collectively "SANMINA-SCI). ADAPTEC and
SANMINA-SCI are sometimes individually referred to herein as a
"Party" and collectively referred to herein as the
"Parties".
RECITALS
The Parties
previously entered into an Amendment to the Manufacturing Services
and Supply Agreement, Effective Date: May 23, 2007 (the
"Amendment"), and intend, by this Agreement to terminate the
earlier Manufacturing Services and Supply Agreement dated December
23, 2005 and the Amendment and replace those with this
Agreement.
The Parties are
entering into this Agreement to set forth the terms and conditions
pursuant to which ADAPTEC will purchase from SANMINA-SCI and
SANMINA-SCI will manufacture, supply and sell to ADAPTEC, on a
non-exclusive basis, products listed on the attached Exhibit A
which may be updated from time to time by the Parties as they agree
in writing.
NOW, THEREFORE,
for good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the Parties agree as
follows:
1.
DEFINITIONS
1.1 "
ADAPTEC Controlled Components " means those Components for
which ADAPTEC negotiates the prices and confirms lead times with
vendors which shall be handled by a consistently updated, mutually
agreed list to be reviewed quarterly by the Parties. All other
Components are SANMINA-SCI Controlled Components.
1.2"
Affiliate " means, with respect to any Party, any entity
that directly or indirectly controls, is controlled by, or is under
common control with a Party. For purposes of this definition,
"control" means having: (i) ownership of more than fifty percent
(50%) of the outstanding voting securities entitled to vote for the
election of directors (or, in the case of an entity that is not a
corporation, for the election of the corresponding managing
authority); or (ii) the right to vote for or appoint a majority of
the board of directors or other governing body of such entity. An
entity will be deemed to be an Affiliate only so long as such
control exists.
1.3
"BOM" means bill of materials.
1.4 "
Current Product " means any Product that is in production as
of December 31, 2008 which is listed on the attached Exhibit A, as
revised by the Parties, from time to time, as the Parties agree in
writing.
1.5
"Delivered Cost" means SANMINA-SCI's quoted cost of
Components as stated on the BOM.
1.6 "
E&O List" means the written list provided by SANMINA-SCI
to ADAPTEC notifying ADAPTEC of the Excess Components or Obsolete
Components in its inventory and their Delivered Cost as described
more fully in Section 5.7 plus [******]% mark-up as described in
Section 1.8.
1.7 "
Epidemic Failure " has the meaning set forth in Section 8.7,
below.
1.8 "Excess
Component" means any Component that is not required to meet
ADAPTEC's Order or Forecast (always within Component leadtimes), to
which such Component was initially ordered and includes Excess
Components resulting from any minimum buy quantities, tape and reel
quantities, and multiples of packaging quantities required by the
Vendor less the actual cost (per the BOM) plus a
_______________________________________________________________________________________________________________________________________________________________________________________________
The
symbol [******] is used to
indicate that a portion of the exhibit has been omitted and filed
separately with the Securities and Exchange Commission.
Confidential treatment has been requested with respect to the
omitted portion.
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Components
margin of [******]% on those Components that are returnable to
Vendor (less any cancellation or restocking charges).
1.9 " Excess
Component Liability " means ADAPTEC's liability for Excess
Components.
1.10
"Forecast" means ADAPTEC's nonbinding forecast (excepting in
cases of Component purchases within lead times which are outside of
any [******] week Purchase Agreement Release) for Products for the
ensuing nine-month period. This will be a rolling document issued
once per month with significant updates highlighted
weekly.
1.11
"Intellectual Property Rights" means all rights in patents,
copyrights, trade secrets, trademarks and other similar
rights.
1.12
"Components" means any raw material, component, part or
other item used in the manufacture of the Products.
1.13 " New
Product " means Products in production after December 31, 2008
and which are released with a new model number and for which the
BOM includes 80% new Components.
1.14 "
Manufacturing Specifications" means the written
specifications that describe the manner in which a Product is
manufactured and tested, and excludes all other
Specifications.
1.15
"Obsolete Component" mean any Component that is not
currently used to manufacture a Product (whether as a result of an
ECO or otherwise) and for which there is no demand and the cost of
which is the actual cost (per the BOM) of those Components less the
amounts for those Components that are returnable to Vendor (less
any cancellation or restocking charges).
1.16
"Order" is a document provided by ADAPTEC that stipulates
Product, Pricing, Delivery Point, Validity Period and Target
Quantity and includes a Purchase Agreement Release. Purchase
Agreements require Purchase Agreement Releases to determine
delivery quantity and date.
1.17
"Purchase Agreement" means the nonbinding agreement issued
by ADAPTEC to SANMINA-SCI listing Product, Pricing, Delivery Point,
Validity Period and Target Quantity.
1.18 "
Purchase Agreement Release" means the binding document
provided by ADAPTEC that determines delivery quantity and
date.
1.19
"Products" means Current Products and New Products as
described below and listed on the attached Exhibit A which may be
updated from time to time by the Parties as they agree in writing
which are manufactured by SANMINA- SCI.
1.20
"Scheduled Release" means the date on which SANMINA-SCI and
ADAPTEC agree Products are available for delivery and release to
ADAPTEC and which will be released only in accordance with the
Purchase Agreement Release.
1.21
"Specifications" means the written specifications that
describe the design, functionality, configuration and/or
performance requirements of a Product except for Manufacturing
Specifications.
1.22
"Vendor(s)" mean seller(s) of Components.
1.23 "
Warranty Period" means the period of [******] from the date
of manufacture of the Product as more fully described in Section
8.1.
_______________________________________________________________________________________________________________________________________________________________________________________________
The symbol
[******] is used to indicate that a portion of the exhibit has been
omitted and filed separately with the Securities and Exchange
Commission. Confidential treatment has been requested with
respect to the omitted portion.
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TERM
The term of
this Agreement commences on the Effective Date and continues for
three (3) years thereafter (" Initial Term ") and
renews thereafter in 1 year increments (" Renewal Term ,"
collectively, " Term ") unless sooner terminated in
accordance with the terms of this Agreement.
3 .
APPOINTMENT
ADAPTEC and
SANMINA-SCI agree that the Manufacturing Services and Supply
Agreement between the Parties, signed December 23, 2005 ("2005
Agreement") is terminated concurrent with the Effective Date.
Notwithstanding Section 11.6 of the 2005 Agreement, Sections 8,
10.1, 10.2 and 14 of the 2005 Agreement survive termination and
remain in full force and effect. Termination of the 2005 Agreement
does not affect the prices of Products listed in Purchase Agreement
Releases issued to SANMINA- SCI by ADAPTEC prior to the Effective
Date. The Parties further agree that SANMINA-SCI will manufacture,
supply and sell to ADAPTEC and ADAPTEC will buy from SANMINA-SCI
the Products on a non-exclusive basis during the Term in accordance
with this Agreement. Products will only be manufactured in
SANMINA-SCI's Singapore or Batam Plant unless the ADAPTEC otherwise
first agrees in writing which may require adjustment of the
financial terms resulting from manufacturing relocation. ADAPTEC
may buy the Products from sources other than
SANMINA-SCI.
4. PRICES AND
PAYMENT
4.1.
Prices. During the Term and subject to Section 3, above, the
prices for all Products will be determined solely in accordance
with the terms and conditions set forth in the New Product MVA
Matrix and Current Product MVA Matrix included in the attached
Exhibit A.
4.2 Payment
Terms . ADAPTEC
agrees to pay all undisputed amounts included in SANMINA-SCI's
invoice within [******] days after date of the invoice. Late
payments for undisputed amounts accrue interest at the lesser rate
of 1.5% per month or maximum amount permitted by law. Unless
otherwise stated, all prices are stated in and all payments shall
be made in U.S. Dollars.
4.3
Setoffs . Except as expressly agreed to in writing by the
Parties, neither Party shall be entitled to set-off any amount
owing from the other Party to such Party against any amount payable
to the other Party from such Party, under this Agreement or arising
out of any other Agreement or transaction between the Parties. For
purposes of this Section 4.6, a Party shall be deemed to include
the Parties to this transaction and each of the Party's
Affiliates.
4.4 Credit
Limit . SANMINA-SCI's Credit Department shall provide ADAPTEC
with an initial credit limit, which shall be reviewed (and, if
necessary, adjusted) from time to time. SANMINA-SCI shall have the
right to reduce the credit limit upon 10 business days' prior
written notice to ADAPTEC if ADAPTEC has not provided SANMINA-SCI
with reasonable assurances in response to its written request. In
the event ADAPTEC exceeds this credit limit or has any outstanding
invoice for undisputed amounts more than fifteen (15) business days
after written notice to ADAPTEC has expired and ADAPTEC fails to
make any payment, SANMINA-SCI may stop shipments of Product to
ADAPTEC until ADAPTEC makes a sufficient payment to bring its
account within the credit limit provided.
4.5
Pricing for Small Builds . For purposes hereof, "Small
Build" means any Product that ADAPTEC requests SANMINA-SCI to
manufacture in quantities of 300 or less of the same board
assembly. For clarification, all Products in any Small Build must
be from the same Product family (i.e., the same PCB) with no builds
within the previous two months or no subsequent Orders looking
forward to the next three months. The pricing set forth in
Exhibit A will apply to Small Builds; provided,
however, that SANMINA-SCI will be entitled to charge an additional
amount for each Small Build to cover its costs in producing small
volume Products of no more than [******] ("Setup Fee").
SANMINA-SCI will advise ADAPTEC of the amount of the Setup Fee
within five (5) business days after a request from ADAPTEC
("Request").
_______________________________________________________________________________________________________________________________________________________________________________________________
The symbol
[******] is used to indicate that a portion of the exhibit has been
omitted and filed separately with the Securities and Exchange
Commission. Confidential treatment has been requested with
respect to the omitted portion.
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5
.
FORECAST, PURCHASE ORDERS AND RESCHEDULE
5.1
Forecast. (a) ADAPTEC shall provide SANMINA-SCI with a
Forecast on a monthly basis for a rolling nine month period. This
Forecast will include an estimated breakdown of Forecasted Product
requirements on a weekly basis for the first three months of the
Forecast period. Any quantities listed in any Forecast or other
correspondence between the Parties are only estimates made as an
accommodation for planning purposes and do not constitute a
commitment on ADAPTEC'S part to purchase such quantity. ADAPTEC may
revise any Forecasts in its sole discretion. Any expenditures or
commitments by SANMINA-SCI in anticipation of ADAPTEC'S
requirements are at SANMINA-SCI'S sole risk and expense except as
the Parties otherwise expressly agree in this Agreement. Within 10
business days of ADAPTEC providing the monthly Forecast (or as
agreed to by the Parties), SANMINA-SCI will take all actions to
procure, reschedule and cancel SANMINA-SCI's orders for Components.
Any action not taken within this time frame results in
SANMINA-SCI's sole liability and responsibility unless the Parties
otherwise agree to extend the time.
5.2
Orders . ADAPTEC will issue written Orders and/or Purchase
Agreement Releases specifying the number of Products to be
manufactured and shipped during the period covered and other terms
as mutually agreed. Orders will cover a [******] week period and
will include, as applicable: (i) the delivery date or shipping
schedule; (ii) the location to which the Products are to be
shipped; and (iii) transportation instructions. Each Order and/or
Purchase Agreement Release will reference this Agreement.
SANMINA-SCI will notify ADAPTEC of rejection of any Order within
three business days after receipt of the date of the Order or the
Order is deemed rejected. If SANMINA-SCI does not accept or reject
the Order within the three business day period, the Order shall be
deemed rejected by SANMINA-SCI. Notwithstanding the foregoing,
SANMINA-SCI shall not reject an Order for Forecasted Products
(including Upside Demand). Once accepted by SANMINA-SCI, Orders may
not be changed except as otherwise stated herein. The Parties agree
that the terms and conditions contained in this Agreement shall
prevail over any terms and conditions of any Purchase Order,
acknowledgment form or other instrument except as such writing is
signed by each Party's authorized representative.
5.3
Component Liability . ADAPTEC will be financially
responsible for all Components ordered by SANMINA-SCI per ADAPTEC's
Purchase Agreement Release and all Components ordered by
SANMINA-SCI per Adaptec's forecast within the then- current agreed
lead-times.
5.4
Reschedule. ADAPTEC may reschedule all or part of a
scheduled delivery at any time which will be communicated through
the Parties' respective designated personnel for up to 60 days from
the initial agreed-upon Delivery Date. SANMINA-SCI shall use
reasonable commercial efforts to accommodate any upside schedule
changes beyond the firm Order periods.
5.5 Meeting
Demand for Un-Forecasted Products . Subject to the terms set
forth herein and in Exhibit A SANMINA-SCI will manufacture
Products to meet any un-Forecasted demand.
5.6 Upside
Demand . , SANMINA-SCI will commit to manufacture Products
having consistent demand on at least three consecutive Forecasts to
meet any un-Forecasted demand up to the percentages specified below
(the "Upside Demand Percentage") beyond the quantities set
forth in the applicable Forecast, subject to the limitations
contained in this Section:
|
0-7
Days
|
[******]% (of a
specified one-Month Demand)
|
|
8-30
Days
|
[******]% (of a
specified one-Month Demand)
|
|
31-60
Days
|
[******]% (of a
specified one-Month Demand)
|
|
61-90
|
[******]% (of a
specified one-Month Demand)
|
Any Purchase
Price Variance ("PPV") will be settled quarterly when PPV is a
result of un-Forecasted upside requests, "pull-ins" of then-current
Forecasts .
All PPVs are
subject to audit verification by ADAPTEC.
5.7
Excess and Obsolete Inventory. On a monthly basis utilizing
ADAPTEC's current monthly Forecast and Scheduled Release,
SANMINA-SCI shall provide ADAPTEC with the E&O List. The
E&O
_______________________________________________________________________________________________________________________________________________________________________________________________
The symbol
[******] is used to indicate that a portion of the exhibit has been
omitted and filed separately with the Securities and Exchange
Commission. Confidential treatment has been requested with
respect to the omitted portion.
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List will
contain a comprehensive where-used analysis and rationale for the
excess (e.g. MOO, cancelled Order or Forecast, ECO) and list all
Obsolete Components and Excess Components. Within ten (10) business
days of receiving SANMINA-SCI's E&O List, ADAPTEC shall advise
SANMINA-SCI of any Component on the E&O List that it believes
is not Excess or Obsolete. Within fifteen (15) business days after
receiving SANMINA-SCI's E&O List, SANMINA-SCI and ADAPTEC shall
finalize the E&O List, and ADAPTEC shall issue to SANMINA-SCI
an Order for all Components agreed upon in the finalized E&O
List or an Order for Product that will consume the Excess
Components. ADAPTEC shall pay SANMINA-SCI its Delivered Cost plus
[******]% Component handling mark-up for Components on the E&O
List along with any undisputed liability for Excess Components
within forty-five (45) days of the date of invoice. In the event
the Parties cannot agree as to the Components on the E&O List,
ADAPTEC shall pay SANMINA-SCI for all non-disputed Components in
accordance with this Section. SANMINA-SCI shall use commercially
reasonable efforts to minimize ADAPTEC's Component Liability by
attempting to return Components to the Vendor or using the
Components on other Products or on products that SANMINA-SCI
manufactures for third parties in the same manufacturing facility.
ADAPTEC shall be responsible for any Vendor return charges for
Excess or Obsolete Components.
6.
DELIVERY AND ACCEPTANCE
6.1
Delivery. All Product shipments (including shipments made in
accordance with Section 8 (Warranty)) shall be Ex Works (Incoterms
2000), SANMINA-SCI's facility of manufacture (or repair). Title to
and risk of loss or damage to the Product shall pass to ADAPTEC
upon SANMINA-SCI's tender of the Product to the common carrier.
ADAPTEC shall be the exporter and importer of record for all
shipments of Products, including any repaired or replacement
Products. SANMINA-SCI is not the importer or exporter of the
Products. SANMINA-SCI shall mark, pack, package, crate, transport,
ship and store Products to ensure (a) delivery of the Product to
its ultimate destination in safe condition, (b) compliance with all
requirements of the carrier and destination authorities, and (c)
compliance with any special instructions of ADAPTEC. SANMINA-SCI
shall use reasonable efforts to deliver the Products on the
agreed-upon delivery dates and shall use commercially reasonable
efforts to notify ADAPTEC of any anticipated delays. SANMINA-SCI
will pay for expedited shipment for delayed Products if requested
by ADAPTEC.
6.2
Acceptance. Acceptance of the Product shall occur no later
than fifteen (15) days after shipment of Product and shall be based
solely on whether the Product passes a mutually agreeable
acceptance test procedure or inspection designed to demonstrate
compliance with the Manufacturing Specifications. In the event of
conflict between any of the foregoing, the following order of
precedence shall apply: (i) Order as agreed to between ADAPTEC and
SANMINA-SCI; (ii) 100% compliance with all Assembly/Test plan
criteria or component drawing (as applicable); (iii)
industry-recognized workmanship standard; and (iv) other applicable
referenced documents. Products cannot be rejected based on criteria
that were unknown to SANMINA-SCI or based on test procedures that
SANMINA-SCI has not approved or does not conduct. Notwithstanding
anything to the contrary, Products shall be deemed accepted if not
rejected within this fifteen-day period. Once a Product is
accepted, all Product returns shall be handled in accordance with
Article 8 (Warranty). Prior to returning any rejected Product,
ADAPTEC shall obtain an Return Material Authorization("RMA") number
from SANMINA-SCI, and shall return such Product in accordance with
SANMINA-SCI's instructions; ADAPTEC shall specify the reason for
such rejection in all RMA's. In the event a Product is rejected,
SANMINA-SCI shall have a reasonable opportunity to cure any defect
which led to such rejection.
7.
CHANGES
7.1
General. ADAPTEC may upon sufficient notice make changes
within the general scope of this Agreement. Such changes may
include, but are not limited to changes in (i) drawings, plans,
designs, procedures, Specifications, test specifications or BOM,
(ii) methods of packaging and shipment, (iii) quantities of Product
to be furnished, (iv) delivery schedule, or (v) ADAPTEC- Furnished
Items (defined in Section 9.1). All changes other than changes in
quantity of Products to be furnished shall be requested and
finalized in an Engineering Change Order ("ECO"). If any such
change causes either an increase or decrease in SANMINA-SCI's cost
or the time required for performance of any part of the work under
this Agreement (whether changed or not changed by any ECO) the
Prices and/or delivery schedules shall be adjusted in accordance
with the Parties' written agreement.
_______________________________________________________________________________________________________________________________________________________________________________________________
The symbol
[******] is used to indicate that a portion of the exhibit has been
omitted and filed separately with the Securities and Exchange
Commission. Confidential treatment has been requested with
respect to the omitted portion.
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7.2
ECO's.
(i) SANMINA-SCI
will respond to [******] ECO requests per quarter for production
ECO's and [******] ECO requests per month for pre-production ECOs
without a non-recurring administrative fee. Responses to additional
ECO's will incur an administrative fee of [******] each. Within
five (5) business days after an ECO is received, SANMINA-SCI shall
advise ADAPTEC in writing (a) of any change in Prices or delivery
schedules resulting from the ECO and (b) the Delivered Cost plus
mark-up as indicated in Exhibit A of any finished Product,
Work-in-Process or Components rendered Excess or Obsolete as a
result of the ECO (collectively the "ECO Charge"). Unless
otherwise stated, ECO Charges are valid from thirty (30) days from
the date of the ECO Charge.
(ii) In the
event ADAPTEC desires to proceed with the change after receiving
the ECO Charge pursuant to Section 7.2, ADAPTEC shall advise
SANMINA-SCI in writing and shall immediately pay the portion of the
ECO Charge set forth in Section 7.2(i). In the event ADAPTEC does
not desire to proceed with the Change after receiving the ECO
Charge, it shall so notify SANMINA-SCI. In the event SANMINA-SCI
does not receive written confirmation of ADAPTEC's desire to
proceed with the change within thirty (30) days after SANMINA-SCI
provides ADAPTEC with the ECO Charge, the ECO shall be deemed
cancelled.
8.
WARRANTY
8.1
SANMINA-SCI Warranty. SANMINA-SCI warrants that, for the
Warranty Period, the Products will comply with the applicable
Manufacturing Specifications and shall be free from defects in
workmanship. SANMINA-SCI shall, at its option and at its expense,
repair, replace or issue a credit for Products found defective
during the Warranty Period per the remedies described in Section
8.2. In addition, SANMINA-SCI will pass on to ADAPTEC all Vendors'
(and manufacturers') Component warranties to the extent that they
are transferable which does not relieve SANMINA-SCI from its
obligations under this Warranty. In addition, SANMINA-SCI will be
responsible for all reasonable efforts to resolve warranty issues
with such Component Vendors including acting as the point of
contact for all warranty related issues and providing RMA support.
All warranty obligations will cease upon the expiration of the
Warranty Period except any repaired or replaced Product shall be
warranted as set forth in this Section for a period equal to the
greater of (i) the balance of the applicable warranty period
relating to such Product or (ii) sixty (60) days after it is
received by ADAPTEC. ALL CLAIMS FOR BREACH OF WARRANTY (EXCLUDING
CLAIMS FOR EPIDEMIC FAILURE) MUST BE RECEIVED BY SANMINA-SCI NO
LATER THAN THIRTY (30) DAYS AFTER THE EXPIRATION OF THE WARRANTY
PERIOD.
8.2 Warranty
Remedies . For any Products under Warranty that is deemed
"un-repairable," SANMINA-SCI will credit ADAPTEC at the Price paid
for the Product. All returns shall be processed within 15 days of
Products received by SANMINA- SCI.
8.3 RMA
Procedure-In-Warranty Repairs. SANMINA-SCI will concur in
advance on all Products to be returned for repair or rework which
such concurrence shall be reasonable and timely but in no event
later than [******] days from ADAPTEC's request. ADAPTEC shall
obtain a RMA number from SANMINA-SCI prior to return shipment. All
returns shall be processed in accordance with SANMINA-SCI's RMA
Procedure in effect as of the Effective Date and which SANMINA-SCI
has provided to ADAPTEC prior to the Effective Date. Any changes to
SANMINA-SCI'S RMA Procedure requires agreement of the Parties.
ADAPTEC shall pay all transportation costs for returns of the
Products to SANMINA-SCI and SANMINA-SCI shall pay for the shipment
of the repaired or replacement Products to ADAPTEC, and each shall
bear risk of loss or damage to such Products for the leg in transit
for which it pays shipping. ADAPTEC shall pay all shipping charges,
plus a handling charge, for Products returned without an RMA number
or "no defect found" returns.
8.4
Exclusions From Warranty. The warranties set forth in
Section 8.1 do not apply to the extent a failure of a Product to
conform to such warranties results from: (a) ADAPTEC's design
including, but not limited to, design functionality failures,
specification inadequacies; (b) accident, disaster, neglect, abuse,
misuse, improper handling, storage or installation including
improper handling in accordance with static sensitive electronic
device handling requirements by ADAPTEC; (c) alterations,
modifications or repairs by ADAPTEC or third parties not authorized
by SANMINA-SCI; or (d) defective ADAPTEC-provided test
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The symbol
[******] is used to indicate that a portion of the exhibit has been
omitted and filed separately with the Securities and Exchange
Commission. Confidential treatment has been requested with
respect to the omitted portion.
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equipment or
test software. In the event SANMINA-SCI believes that a Product is
not covered by the warranty, it shall advise ADAPTEC of the
specific reasons therefore and, where possible, supply ADAPTEC with
any failure analysis and/or root cause evaluation which supports
its position.
8.5
Out-Of-Warranty Repairs. SANMINA-SCI will confirm the
Product is no longer covered by the SANMINA-SCI warranty and, prior
to undertaking any repair activities, SANMINA-SCI will provide a
cost estimate for repairs which will be provided on a time and
materials basis, using the labor rate as the Parties agree
quarterly. ADAPTEC will provide authorization to proceed if it so
elects. All returns shall be processed within 20 days of Products
received by SANMINA-SCI.
8.6
Remedy. THIS WARRANTY IS THE SOLE WARRANTY GIVEN BY THE
PARTIES TO EACH OTHER AND IS IN LIEU OF ANY OTHER WARRANTIES EITHER
EXPRESS OR IMPLIED. BOTH PARTIES DO NOT MAKE ANY WARRANTIES
REGARDING MERCHANTIBILITY, NONINFRINGEMENT, AND SPECIFICALLY
DISCLAIMS ANY SUCH WARRANTY, EXPRESS OR IMPLIED.
8.7 Epidemic
Failure.
(a) For the
purposes of this Agreement, Epidemic Failure will be deemed to have
occurred if more than [******] of any Products manufactured by
SANMINA-SCI hereunder fail during the Warranty Period or sixty days
thereafter in a manner attributable to the same "root cause" within
any time period of ninety (90) days or if more than [******]
% of any Products
manufactured by SANMINA-SCI hereunder fail in a manner attributable
to the same "root cause" within any time period of thirty (30)
days. In such event,. In such event, without limiting SANMINA-SCl's
obligations and ADAPTEC's remedies under Sections 8.1 and 8.4,
SANMINA-SCI shall (i) promptly deliver to ADAPTEC a reasonable plan
to correct the problem, (ii) SANMINA-SCI shall exert its best
reasonable efforts to diagnose the problem; and (iii) SANMINA-SCI
shall reimburse ADAPTEC for any costs or expenses reasonably
incurred by ADAPTEC to repair, replace or retrofit the defective
Products including but not limited to the cost of recovery and
replacement (or transportation) of such defective Products already
sold to and used by customers, up to an amount not exceeding
$[******]. Upon the acceptance of any such plan by ADAPTEC,
SANMINA-SCI shall implement the plan and deliver to ADAPTEC
progress reports relating thereto.
(b) Upon
ADAPTEC's notification to SANMINA-SCI of an Epidemic
Condition:
(i) ADAPTEC
shall have the right to postpone all or part of the shipments of
unshipped Product that are affected by the Epidemic Condition
without liability, by giving written notice of such postponement to
SANMINA-SCI, pending correction of the Epidemic
Condition.
(ii) SANMINA-SCI will provide ADAPTEC no later than five (5)
business days following the Epidemic Condition a root cause
analysis and corrective action plan. If, after review of the root
cause analysis and corrective action plan, ADAPTEC determines that
the Epidemic Condition necessitates a field stocking recall or
customer based recall or retrofit, ADAPTEC, without waiving any
other rights or remedies, may then elect to have SANMINA-SCI
undertake all action and pay all reasonable costs and expenses
associated with repairing or replacing the affected Product in the
field or by return to SANMINA-SCI's expense within ten (10)
business days from the determination of an Epidemic Condition by
ADAPTEC. Alternatively, if SANMINA-SCI agrees to allow ADAPTEC to
elect to perform repairs or make replacements, SANMINA-SCI will
reimburse ADAPTEC for all reasonable costs and expenses ADAPTEC
incurs for repair or replacement. Such Products, parts or upgrades
will have the highest shipping priority.
(iii) The
remedy for the affected Product will be incorporated in all
subsequent Products (unless ADAPTEC otherwise directs) at no
additional charge to ADAPTEC.
_______________________________________________________________________________________________________________________________________________________________________________________________
The symbol
[******] is used to indicate that a portion of the exhibit has been
omitted and filed separately with the Securities and Exchange
Commission. Confidential treatment has been requested with
respect to the omitted portion.
7
(c) If SANMINA-SCI is unable to develop a corrective action plan
acceptable to ADAPTEC, or does not adequately take into account the
business interest of ADAPTEC, or SANMINA-SCI refuses to carry out
the agreed upon plan, ADAPTEC shall have the option to: (i) develop
and implement such remedy or engage a third party to do so and, in
such case, all such implementation costs, risk of in-transit loss
and damages incurred by ADAPTEC shall be borne by SANMINA-SCI; (ii)
cancel orders of Products affected by the Epidemic Condition
without liability and return to SANMINA-SCI all Product affected by
such Epidemic Condition for full refund, payable by SANMINA-SCI
within thirty (30) days after receipt of returned Product (with
risk of loss or in-transit damage borne by SANMINA-SCI) and/or
(iii) terminate this Agreement without further
liability.
9. ADAPTEC
FURNISHED EQUIPMENT AND COMPONENTS WARRANTY, LICENSE AND
OWNERSHIP
9.1
ADAPTEC-Furnished Items. ADAPTEC shall provide SANMINA-SCI
with the Product design and related specifications, applicable
regulatory requirements or documentation which are made available
to SANMINA-SCI by accessing ADAPTEC's Agile PDM system.
(collectively the "ADAPTEC-Furnished Items").
9.2
Licenses .
(a) From ADAPTEC.
(i) ADAPTEC grants SANMINA-SCI a limited, non-assignable,
non-transferable, non-exclusive license during the Term to use
ADAPTEC's Intellectual Property delivered to SANMINA-SCI by ADAPTEC
solely in connection with and to the extent required to manufacture
the Products exclusively for ADAPTEC and to otherwise perform its
obligations hereunder. SANMINA-SCI agrees to use all Intellectual
Property licensed hereunder in accordance with the applicable
license agreement or usage guidelines. All Intellectual Property
remains the property of ADAPTEC. All Intellectual Property licensed
to SANMINA-SCI will be listed in the Statement of Work or other
memorandum signed by the Parties. All Intellectual Property will be
maintained as Confidential Information.
(ii) ADAPTEC
Trademarks . For the term of this Agreement and accordance with
the terms and conditions herein, ADAPTEC grants SANMINA-SCI a
personal, non-exclusive, non-transferable, royalty-free, worldwide
license to use those ADAPTEC's trademarks in connection with
SANMINA-SCI's manufacturing of the Product (" ADAPTEC
Trademarks ") in accordance with ADAPTEC's guidelines as such
guidelines may be amended from time to time in ADAPTEC's sole
discretion and of which it has advised SANMINA-SCI in writing.
SANMINA-SCI (A) agrees to implement modifications to ADAPTEC
Trademark guidelines into any materials created and distributed
after receipt of such written notice; (B) acknowledges ADAPTEC's
rights in the ADAPTEC Trademarks and agrees that any use thereof by
SANMINA-SCI inures to the sole benefit of ADAPTEC; and, (C) agrees
to not challenge ADAPTEC's ownership or use of any ADAPTEC
Trademarks, or apply to register any ADAPTEC Trademark or mark
confusingly similar thereto. Nothing in this Agreement should be
construed to grant SANMINA-SCI any other license or rights in the
Trademarks of the other Party.
(b) From SANMINA-SCI. In all Products manufactured by
SANMINA-SCI pursuant to ADAPTEC Orders, SANMINA-SCI grants ADAPTEC
a nonexclusive, worldwide, royalty-free, perpetual license with the
right to sublicense to use, develop, modify, reproduce, distribute
and sublicense SANMINA-SCI's Pre-Existing Intellectual Property
only as incorporated in Products and such other intellectual
property as required for ADAPTEC's rights hereunder.
9.3
Ownership .
(a)
Pre-Existing Intellectual Property Rights. All Intellectual
Property Rights existing prior to the Effective Date will belong to
the Party that owned such rights immediately prior to such date ("
Pre-Existing Intellectual Property Rights "). Neither Party
will gain by virtue of this Agreement any rights of
_______________________________________________________________________________________________________________________________________________________________________________________________
The symbol
[******] is used to indicate that a portion of the exhibit has been
omitted and filed separately with the Securities and Exchange
Commission. Confidential treatment has been requested with
respect to the omitted portion.
8
ownership of
copyrights, patents, trade secrets, trademarks or any other
intellectual property rights owned by the other.
(b)
Ownership . ADAPTEC shall own all right, title, and interest
in the copyrights, patents, tra