OEM Purchase Agreement - Netpliance Corp. and Quanta Computer Inc.
Netpliance/Quanta
AGREEMENT #NP1
DATED:__ September 10, 1999
OEM PURCHASE AGREEMENT
BETWEEN NETPLIANCE, INC. AND
QUANTA COMPUTER
FOR NETPLIANCE INTERNET PERSONAL ACCESS DEVICE
This Agreement is made effective as of the August 15, 1999 by and between
Netpliance Corporation, 7600A N. Capital of Texas Highway, Austin, Texas, U.S.A
and Quanta Computer, Incorporated having its principal place of business at No.
188. Wen Hwa 2nd Rd., Kuei Shan Hsiang, Tao Yuan Shien, Taiwan, R.O.C.
(hereinafter referred to as "Supplier"), which shall include Supplier's
subsidiaries.
1.0 DEFINITIONS
1.1
"Subsidiary" will mean a corporation, company, or other entity more than
fifty percent (50%) of whose outstanding shares of securities (representing
the right other than as affected by events of default, to vote for the
election of directors or other managing authority) are now or hereafter
owned or controlled, directly or indirectly, by a party hereto. But such
corporation, company, or entity will be deemed to be a subsidiary only so
long as such ownership or control exists.
1.2
"Product(s)" will mean Internet Personal Access Devices and Assemblies;
Part Numbers as described in the Attachment A set forth in this Agreement,
or such other Part Number, which may be subsequently assigned by Netpliance
Order or Order alteration.
1.3
"Spare Part(s)" will mean any part, assembly or subassembly of the Product.
1.4
"Delivery" will mean delivery of Products or Spare Parts to a destination
designated by Netpliance.
1.5
"Billback" will mean any re-invoicing or changes to increase the price paid
for products by Supplier that are the result of Netpliance failure to
purchase certain quantities of products.
2.0 DELIVERY
2.1
Supplier will deliver product to Netpliance's Designated Destination based
on the requested delivery date advised on the Order release. Supplier
shall not deliver the product more than 5 days early or 0 days late, based
on the requested delivery date without prior approval from Netpliance. If
there is a specific delivery date request, on before or after a certain
date, Supplier commits to deliver on that specific date. If deliveries are
made without Netpliance prior approval, Netpliance may elect to delay
receipt or passage of title until the requested delivery date or return the
Product at Supplier's expense. In any event, payment shall be based upon
the requested delivery date advised on the Order Release or actual delivery
date, whichever is later. Supplier will be responsible for management of
the logistics carrier and will ensure that the carrier is committed to
delivery 100% of the product to the end customer within 72 hrs from pick up
at Suppliers facility.
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Netpliance/Quanta
AGREEMENT #NP1
DATED:__ September 10, 1999
2.0 DELIVERY (Continued)
2.1
Deliver performance will be measured against the key order milestones, as
follows:
D0 - Netpliance releases Order to Supplier (cut off time 6pm Central
Time Standard, 8am Taiwan Time)
D1 - Supplier receives and confirms Order (day difference due to time
zones)
D2 - Supplier Ships Order (logistics carrier cut off at 11 am)
Supplier commits to shipping 90% of the systems on day two (D2) and the
remaining 10% by day three (D3) if order is receive day is D1. Performance
will be reviewed after the initial 3 months shipments.
2.2
Supplier shall not deliver any Product without an Order Release from
Netpliance, without prior written authorization. Shipments made without
Order Release or prior written authorization are subject to return or
delayed receipt by Netpliance, at its own discretion. Netpliance may
return all or any portion of such shipments; or, delay receipt of all or
any portion of such shipments. In any event, payment shall be due based
upon the date of actual delivery date or scheduled delivery, whichever is
later.
2.3
Supplier is expected to maintain a one hundred (100%) percent on-time
delivery per Section 2.1. Supplier shall notify Netpliance immediately of
any anticipated late deliveries and any impending plant or facilities
shutdown for any reason, including vacation, tool repair, labor
difficulties, or government order. In the event Supplier is delinquent on
delivering product to Netpliance in accordance with a mutually agreed upon
delivery schedule, for reasons other than Force Majeure, Supplier shall
deliver Product to Netpliance in the most expeditious manner possible. In
this regard, Supplier agrees to cooperate by taking extraordinary measures
at Suppliers expense to minimize any delivery delays which shall include
but is not limited to expedited manufacture, expenditure of premiums for
parts, expenditure of premium labor cost and the payment of premium
transportation costs associated with the delivery of the Product.
2.4
Netpliance will release Orders to Supplier based on actual receipts of
Customer Orders. Upon release of an order from Netpliance, Supplier will
ship the product to the designated destination based on the schedule
described in Section 2.1. If product is needed at the destination at a
different time, Netpliance will notify the supplier upon Order Release.
With the exception of late delivery by Supplier, Netpliance will pay for
the actual additional freight cost associated with the expedited shipment.
2.5
Unless otherwise set forth in the Order, title and risk of loss will pass
to Netpliance upon Supplier's delivery to Netpliance's designated
destination. Supplier will be responsible for the management of the
logistics carrier and will be responsible for the product until it arrives
at the designated destination.
2.6
In the event of a shortage or shortages in allocated quantities of
components, common to Supplier's other product lines and utilized in the
manufacture of the Product, Supplier agrees to allocate components to
Netpliance, based on the proportional share of Netpliance prior three (3)
months of shipments.
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Netpliance/Quanta
AGREEMENT #NP1
DATED:__ September 10, 1999
2.0 DELIVERY (Continued)
2.7
If Supplier does not or will not be able to deliver an Order on time,
Netpliance shall have the right to cancel the delinquent product without
liability. If Netpliance agrees to accept the product, Supplier will pay
all expedite costs. In the event of a price change, Netpliance will pay
the lower cost.
3.0 TERM
The initial Term of this Agreement will commence on August 15, 1999 and
expire on August 15, 2002. Thereafter, Netpliance will have the option to
renew this Agreement for periods of one (1) year each, upon 30 days prior
written notice to the supplier.
4.0 STATEMENT OF WORK
Supplier agrees to sell and Netpliance agrees to purchase the Products in
accordance with the terms and conditions of this Agreement. Supplier will
build and deliver to Netpliance only that quantity of Products ordered by
Netpliance Order Releases.
Supplier will provide all parts, labor, and materials necessary to perform
Supplier's obligations hereunder. Netpliance may request, subject to
mutually agreeable adjustment of price, that Supplier purchase specific
material or parts for the manufacture or assembly of the Product. The
foregoing notwithstanding, Supplier agrees to manufacture and assemble
Products in accordance with the Specifications detailed in Attachment A of
this Agreement.
5.0 CONTINGENCY PLANS
Supplier will develop and implement contingency plans in order to ensure
Netpliance an effective and efficient continuity of supply on the Product
and all components thereof. The parties will negotiate the specific
details of such plans in good faith within forty-five (45) days after
execution of this Agreement.
6.0 ORDERS
6.1 Forecast.
Netpliance agrees to provide a (13) thirteen-week Order forecast to
Supplier on a weekly basis to allow Supplier to support the planning and
purchase of material to lead-time. In addition, a (6) six-month rolling
forecast will be provided for reference only. The (6) six-month rolling
forecast if for planning purposes only, and shall not be construed as a
guarantee or a minimum purchase amount. Netpliance makes no commitment
with respect to the amount of Products to be purchased under the Agreement.
6.2 Order Release.
Products will only be shipped by Supplier after receipt of an Order Release
from Netpliance. Such Order Releases will be subject to the terms and
conditions of the Agreement, and will contain, at a minimum, the following
information:
(i) Product description, including quantity of Products ordered;
(ii) Desired shipping date and delivery location (in most cases the
end-user address);
(iii) Method of shipment and designated carrier; if different from
current logistics carrier
6.3 Freight
All Orders shall ship complete and freight pre-paid unless Netpliance
authorizes otherwise. Freight invoices will be paid monthly after receipt
of invoice, based on fax.
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Netpliance/Quanta
AGREEMENT #NP1
DATED:__ September 10, 1999
7.0 PRICE AND PAYMENT
7.1
With exception to the payment terms, as set forth in Attachment H, the unit
price to be paid by Netpliance for Products hereunder will be expressed in
U.S. dollars and negotiated monthly with agreement to be reached at least
five (5) days prior to the first day of the following month; otherwise,
prices will remain constant during the following month. Quoted prices will
remain firm for the deliveries shipped from Supplier on the first calendar
day through the last calendar day of the applicable month unless otherwise
mutually agreed.
7.2
With exception to the payment terms, as set forth in Attachment H,
referencing the initial product shipments, Supplier will invoice
Netpliance, upon receipt of Product at Netpliances' designated destination.
For the first 90 days, of the Term, the Payment Terms shall be net 30 days
from receipt of invoice by Netpliance. The payment performance will be
reviewed monthly. One Hundred and Eighty (180) days after 1st Shipment the
parties will review the payment history to determine whether payment terms
may be extended to net 45 days from receipt of invoice.
7.3
Notwithstanding Subsection 7.1, Netpliance may elect to negotiate a new
Price during any given month on the basis of market place conditions that
significantly decrease the market price for the Product or similar items.
The negotiated Price will be agreed to by both parties and incorporated
into this Agreement. Supplier and Netpliance will mutually agree on an
effective date for the new price to be implemented.
7.4
Supplier warrants that the prices specified in this Agreement do not and at
all times shall not, exceed Supplier's price to any other customer during
the term of this Agreement for a substantially similar product in
substantially similar volumes, and under commercial terms and conditions
similar to those of this Agreement. In the event that Supplier should sell
or offer to sell Products to customers other than Netpliance at prices
lower than those agreed Supplier shall: 1) notify Netpliance in writing
within five (5) days of the offer or sale (such notice shall include the
price, quantity, payment terms, and other material conditions allowing for
such lower price), and 2) make available to Netpliance the option to
purchase Product at such lower price under the same terms as those offered
to other customers.
7.5
Supplier shall offer Netpliance pricing that equivalent to or below those
offered to the Supplier's other customers for similar products and/or
components. Supplier shall, whenever possible, combine purchases of
similar components to obtain best market pricing and provide Netpliance
with this pricing. Should the Supplier fail to offer such pricing to
Netpliance, Netpliance reserves the right to audit Suppliers' records and
seek adjustments for Price variances, when appropriate. Should Supplier
fail to offer such pricing to Netpliance, Netpliance reserves the right to
terminate this agreement without consequence.
7.6
Billbacks by Supplier do not apply to this Agreement.
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Netpliance/Quanta
AGREEMENT #NP1
DATED:__ September 10, 1999
8.0 PACKAGING
Supplier will package each Product according to the Netpliance Packaging
Specification Guidelines as set forth as an Attachment C to this Agreement.
In packaging Products, Supplier will also take any additional steps needed
to ensure maximum protection from damage due to rough handling and other
hazards which might occur during transit.
9.0 RECORDS AND AUDIT
Supplier will maintain complete and accurate accounting records, in a form
in accordance with generally acceptable accounting practices, to
substantiate Supplier's charges hereunder. Such records, related to
Supplier's obligations under this Agreement, will include material cost,
tooling invoices and material component invoices. Supplier will retain
such records for a period of three (3) years from the date of final payment
hereunder. Netpliance will have access to such records for purposes of
audit, during normal business hours, for the three-(3) years following
final payment hereunder. Netpliance will provide at least one (1) week
notification to Supplier for Audit.
10.0 ORDER CANCELLATIONS AND RESCHEDULING
10.1
Netpliance may cancel Order(s) or any portions thereof for any reason by
notifying Supplier in writing prior to the scheduled Delivery date on the
purchase order(s) in compliance with the flexibility terms shown below.
Cancellation will be effective upon Supplier's receipt of the written
cancellation notice from Netpliance, or thereafter upon the date specified
in such cancellation notice. Supplier will cease work on affected Order(s)
in accordance with the cancellation notice. Netpliance will have no
liability for canceled Orders other than as set forth in Subsection 10.2.
10.2
Flexibility Terms, Supplier and Netpliance will use the following table as
a guideline for the reschedule and cancellation of an Order. However, in
the event of a reschedule or cancellation request, Supplier agrees to make
best efforts to redirect, return or resell the components to minimize
Netpliance's liabilities. Certain market conditions (e.g. worldwide
allocation) that do not allow Supplier to meet the agreed guidelines, will
be taken into consideration and both Netpliance and Supplier will mutually
agree to new guidelines/schedule.
Upside Downside
0-2 Weeks Fixed Fixed
3-4 Weeks 25% 10%
5-6 Weeks 45% 30%
7-12 Weeks 75% 50%
13 Weeks + 100% 100%
Supplier agrees to purchase material to actual lead times in support of the
forecast. Supplier will minimize on-hand inventories according to actual
lead times and forecasted demand. Supplier will ensure it will have enough
material to support the forecast provided from Netpliance, in accordance
with the Flexibility Terms above. In the event of reschedules and/or
cancellations of deliveries by Netpliance, exceeding the agreed to
Flexibility Terms, material held by the Supplier for more than 30 days may
be charged an inventory holding fee. The inventory handing fee will be
assessed in the form of interest, at .8% per month, based on the actual
amount of excess material inventory on-hand beginning on day 31. Supplier
agrees to notify Netpliance immediately of any potential excess inventory
and Netpliance and Supplier will review the complete list monthly.
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Netpliance/Quanta
AGREEMENT #NP1
DATED:__ September 10, 1999
10.0 ORDER CANCELLATIONS AND RESCHEDULING (Continued)
10.3
In the event of a cancellation under Subsection 10.1, Supplier shall make
every effort to utilize all work in process to minimize cancellations
costs. Subject to the foregoing, Netpliance will pay Supplier for the
actual materials cost incurred by Supplier pursuant to cancelled Orders
prior to the effective date of the cancellation, and Supplier will deliver
to Netpliance all completed Products, assemblies in process, and all
components procured on account of subject Orders. In the event of a
cancellation, Netpliance and Supplier will use the material liability
guidelines in Attachment I. The actual liability will be based on actual
lead-times for the purchase of material at that time. Any material
procured outside of lead-time without prior consent from Netpliance, will
be the sole responsibility of Supplier. Prior to payment, Netpliance may
audit Supplier's records at reasonable times or require Supplier to provide
reasonable documentation and invoices to substantiate any and all charges
to Netpliance under this Section.
10.4
Supplier will immediately notify Netpliance if and when, for any reason,
Supplier is unable or refuses to perform its obligations under this
Agreement or Order(s) issued hereunder. Such obligations include, but are
not limited to the delivery schedules set forth in Netpliance Orders, the
Product Specifications, and the Supplier Quality Assurance Requirements.
If for any reason other than "Force Major", Supplier is unable or refuses
to continue delivering products as required by Netpliance Order(s) or if
Supplier is otherwise in default of this Agreement and fails to correct
such default within ten (10) days of Netpliance's written notice,
Netpliance will have the right to cancel Order(s) or portions thereof by
written notice. If Netpliance cancels Orders under this Subsection 10.4,
Netpliance 's only obligation is to pay for Products already delivered at
the time of Netpliance cancellation notice. Netpliance may, at its sole
option, purchase from Supplier's supplier materials or parts already
acquired by Supplier, or committed to Supplier from its supplier(s) for the
manufacture of Products or Spare Parts.
11.0 TERMINATION
11.1
Supplier and Netpliance have the option to terminate this Agreement and/or
any Order, in whole or in part, in the event that:
11.1.1
Either party becomes insolvent, file, or have filed against it a
petition in bankruptcy or undergo reorganization pursuant to a
petition in bankruptcy filed with respect to it.
11.1.2
Either party will have all or a substantial portion of its capital
stock or assets expropriated by any government.
11.1.3
Either party will be dissolved or liquidated or have a petition for
dissolution or liquidation filed with respect to it.
11.1.4
Either party will be subject to property attachment or court
injunction or court order, which substantially and negatively affects
its operations.
11.1.5
Either party will be unlikely to fulfill its obligations under this
Agreement because of significant changes of its assets, credit, or
business position; or
11.1.6
Either party defaults or breaches any material provision of this
Agreement and does not remedy the default or breach within thirty (30)
days after written notice by the other party
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Netpliance/Quanta
AGREEMENT #NP1
DATED:__ September 10, 1999
11.0 TERMINATION (Continued)
11.2
If any event in Subsection 11.1 occurs, either party will have the right to
file a security interest in such property or to invoke any other legal or
equitable remedy available to protect its interest in the property.
11.3
If Netpliance terminates this Agreement for any of the reasons in
Subsection 11.1 Supplier will:
11.3.1
Immediately cease all assembly operation and production required by
Netpliance Orders issued under this Agreement.
11.3.2
Deliver all completed Products manufactured pursuant to Netpliance
Order instructions;
11.3.3
Return, at Netpliance's expense, all loaned or leased equipment
provided to Supplier by Netpliance under this Agreement;
11.3.4
Prepare and submit to Netpliance an itemization of all partially
completed Products, assemblies in process, and parts inventories
(including parts, which Supplier is committed to purchase from its
subSuppliers) which are allocated to the Netpliance Orders placed
under this Agreement. Netpliance will pay Supplier the price agreed
with Netpliance for the current month for the completed Products
delivered pursuant to Subsection 11.3.2. Netpliance may, at its sole
option, elect to purchase any or all of those items identified under
Subsection 11.3.4, however, Netpliance will not be obligated to
purchase any such items and will bear no cost or liability with regard
to any items it elects not to purchase. If Netpliance elects to
purchase any items in Subsection 11.3.4, the parties will negotiate in
good faith a reasonable price for such items, however, such negotiated
prices shall not exceed the amount established by the cancellation
schedule in Subsection 10.2.
11.4
If Supplier terminates this Agreement for any of the reasons in Subsection
11.1 Netpliance will:
11.4.1
Pay Supplier for all the delivered products including the due payment.
All Product delivered at that time must be based on Order Releases
only.
11.4.2
Pay Supplier for any material liabilities based on the cancellation
Terms in Section 10.
12.0 TEST EQUIPMENT
12.1
In the event Netpliance considers it necessary to insure quality assurance
requirements are met, the parties agree that at Netpliance 's sole
discretion, Netpliance may consign test equipment for functional
verification of the Product(s) at Supplier's location, subject to the terms
and conditions of the Equipment Loan Agreement, as set forth in Attachment
F of this Agreement. In this event, Supplier will provide all reasonable
assistance requested by Netpliance in the development and installation of
the test equipment. The test equipment will only be utilized by Supplier
to verify functional operation of the Products purchased by Netpliance.
Netpliance will assist Supplier in installing and calibrating the test
equipment
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Netpliance/Quanta
AGREEMENT #NP1
DATED:__ September 10, 1999
and will provide operator training and maintenance instructions, if
requested. Supplier will thereafter maintain the test equipment utilizing
Netpliance provided spare parts.
12.0 TEST EQUIPMENT (CONTINUED)
12.2
Nothing contained herein will limit Supplier's obligation to supply
Products that meet the requirements of the Supplier Quality Assurance
Requirements and the Product Specification, as set forth in Attachment A
and E of this Agreement.
13.0 MARKETING RIGHTS WARRANTY
13.1
Supplier warrants that it has the unrestricted worldwide right to
manufacture, sell, and deliver to Netpliance the Product and Spare Parts
that are the subject of this Agreement. Further, Supplier hereby warrants
that it is under no restriction, and that it will not assume or assert any
such restriction, which would prevent Netpliance and its Subsidiaries from
marketing the Product and Spare Parts, anywhere in the world.
13.2
Nothing in this Agreement will limit the right of Netpliance to develop,
have developed, procure and/or market Products or services now or in the
future which may be competitive with those which are the subject of this
Agreement.
14.0 EXCLUSIVITY
14.1
Supplier will grant Netpliance a (6) six-month exclusivity on products
covered by this agreement, from the date of first production shipments
based on order releases. Exclusivity under this agreement will extend to
all customizations which were developed by or for Netpliance, including
mechanical (including ornamentation and design), electrical and
firmware/software assemblies of the delivered products. After a (6) six-
month period, nothing in the Agreement shall be construed as limiting
Supplier's right to sell derivative products but such right shall not
extend to including mechanical (including ornamentation and design), and
software assemblies of the delivered products. Supplier shall have no
right to sell or otherwise provide the Software and/or Customizations to
any third party without written consent of Netpliance.
14.2
Nothing in the Agreement shall be construed as creating an exclusive
purchase arrangement or requirements contract between Netpliance and
Supplier. Netpliance shall have the right to obtain similar products from
any other manufacturer.
15.0 MANUFACTURING RIGHTS
15.1
Netpliance shall own all rights to the Product hardware and software
created by the Supplier specifically for Netpliance. To the extent that
Netpliance does not own the rights to the Product hardware and software,
the Supplier grants to Netpliance all rights necessary for Netpliance to
produce, manufacture and/or have manufactured quantities of such Product
for distribution by Netpliance. Supplier shall provide to Netpliance
access to and use of all items that are necessary and/or useful in the
manufacture of the Products for distribution by Netpliance, including but
not limited to, Suppliers drawings, software, Bill of Materials, Processes,
Tools and vendor Lists, to enable Netpliance to manufacture and/or have
manufactured Products for distribution by Netpliance.
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Netpliance/Quanta
AGREEMENT #NP1
DATED:__ September 10, 1999
15.0 MANUFACTURING RIGHTS (Continued)
15.2
If Supplier fails to perform its obligations as set forth in this Agreement
Netpliance will have the right to manufacture or have manufactured the
Products at its discretion. Supplier hereby grants to Netpliance a license
under trade secrets, copyrights and patents to access and use all of
Suppliers drawings, bill of material and vendors to make and have made
Products and create improvements to the Products.
16.0 ENGINEERING CHANGES
16.1
Supplier may make Engineering changes to the Product or Spare Parts, or to
the production processes used in their manufacture, which would affect the
performance, reliability, safety, serviceability, appearance, dimensions,
tolerances, firmware/software, or composition of bills of material(s) or
material sources thereof in accordance with subsections 16.2 and 16.3.
16.2
Supplier will notify Netpliance of any Engineering Change proposed to be
made by Supplier to the Product, and will supply a written description of
the expected effect of the Engineering Change on the Product, including its
effect on price, performance, reliability, capability, and serviceability.
Netpliance may elect to evaluate parts and/or designs specified as part of
the proposed change. Netpliance agrees to approve or disapprove Supplier
proposed changes within no more than sixty (60) days of receipt of a
written request. Netpliance shall acknowledge receipt of Supplier's
proposed change within seven (7) days of receipt. Supplier will not change
or modify the Product or Spare Parts without Netpliance prior written
approval. Netpliance and Supplier will make best efforts to expedite the
turn around on the proposed changes.
16.3
Netpliance may request, in writing, that Supplier incorporate an
Engineering Change into the Product, and Supplier will provide to
Netpliance its written proposal within ten (10) calendar days after
Netpliance's request. Supplier's proposal will state the cost savings or
increase, if any, expected to be created by the Engineering Change, and the
effect on the performance, reliability, safety, appearance, dimensions,
tolerances, composition of bills of material, and serviceability of the
Product. If Netpliance requests Supplier to incorporate an Engineering
Change into the Product, the product Specification and Price will be
amended as required. Supplier will not unreasonably refuse to incorporate
Netpliance Engineering Changes into the Product.
17.0 INSPECTION AND ACCEPTANCE
The terms and conditions with respect to quality, inspection and acceptance
are set forth in Attachment E.
18.0 APPLICABLE APPROVALS
Supplier will be responsible for obtaining the certifications and approvals
specified in the Product Specification set forth in Attachment A to this
Agreement. Supplier will submit to sufficient proof of the approvals and
will affix on the appropriate area of each Product a label stating such
approvals if required. Supplier will perform all acts necessary to
maintain these approvals, certifications, and listings while this Agreement
is in effect.
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Netpliance/Quanta
AGREEMENT #NP1
DATED:__ September 10, 1999
19.0 PRODUCT WARRANTY
In addition to the terms and conditions set forth in Attachment G with
respect to Product Warranty, Spare Parts Support and Service Support, the
following terms and conditions shall apply:
19.1
Supplier warrants that title to all Products delivered to Netpliance and to
Netpliance Customers by Supplier shall be free and clear of all liens,
encumbrances, security interests or other claims and that for a period of
fifteen (15) months beginning on the date of receipt at Netpliance or
Netpliances' designated destination, hereunder conform in every respect to
all specifications which are part of this Agreement and will be free from
defects in material and workmanship under normal use and operation.
Supplier will pass on all remaining material warranties provided by
Supplier's subcontractors to Netpliance.
19.2 Epidemic Failure
In addition to the foregoing warranty, Supplier warrants the Product
against epidemic failure. An epidemic failure shall mean a Product field
failure exhibiting the same root cause symptom and resulting in a two (2)
percent or greater failure of Netpliance Customer delivered Product during
a ninety-(90) day period. In the event of epidemic failure, Supplier shall
establish within two (2) days notice by Netpliance of such failure a
mutually agreed upon emergency procedure to resolve and replace all
defective Products. Any and all costs associated with the emergency
procedure are to be borne by Supplier. Supplier also agrees to inform
Netpliance in writing of any other epidemic failure occurring in products
sold to Supplier's other OEM customers and Supplier shall take whatever
steps are reasonably necessary to prevent or correct Netpliance Products
from such failure.
20.0 REPLACEMENT PRODUCTS
If, during any Term of this Agreement, Supplier develops and markets a
product that is a replacement for the Product to be provided hereunder,
Supplier agrees to sell said product to Netpliance at Netpliances' option,
for a price to be negotiated between the parties. Both parties also agree
that all appropriate provisions of this Agreement will apply to any such
replacement product. Nonetheless, Supplier agrees to continue to make the
original product available to Netpliance through the end of the last Term
of this Agreement.
21.0 SPARE PARTS
Supplier agrees to sell Spare Parts to Netpliance at a reasonable price and
lead-time until the end of three (3) years after the last Term of this
Agreement expires or is terminated. Supplier should notify Netpliance
immediately when any components are coming to end of life. Supplier should
provide an alternative component at that time to ensure availability of
material for the three (3) year period.
22.0 PRODUCT REPAIR
Supplier agrees to provide Product repair service to Netpliance at a
reasonable price and lead time until the end of five (5) years after the
last Term of this Agreement expires or is terminated, pursuant to terms and
conditions substantially similar to those set forth in the Product Repair
Service Agreement, as set forth in Attachment G to this Agreement.
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Netpliance/Quanta
AGREEMENT #NP1
DATED:__ September 10, 1999
23.0 INTELLECTUAL PROPERTY
23.1 Patent and Copyright Indemnification
Supplier at its own expense, will settle or defend and pay any damages,
costs, attorney's fees, and fines resulting from all proceedings, threats
of proceedings, or claims against Netpliance, its Subsidiaries, and
respective customers by any third party for infringement or alleged
infringement by the products furnished under this Agreement or any part or
use thereof of patents (including utility models and registered designs)
and copyright in any country of the world and U.S. mask works. In meeting
its obligation hereunder, Supplier may procure for Netpliance the right to
continue to market the Products or Supplier may modify the products to be
non-infringing so long as the modified Products meets Netpliance
specifications. In the event the foregoing are deemed impractical by
Supplier and the product(s) continued use is enjoined, Supplier will buy
the Product(s) back from Netpliance at the original purchase price paid by
Netpliance. Supplier's obligations under this Section shall not extend to
any infringement caused solely by a mandatory design change requested by
Netpliance if Supplier's unchanged products do not infringe or allegedly
infringe the patent or copyright in question.
23.2 Trademarks
Any other provisions of this Agreement notwithstanding, neither party
hereto shall have the right to use the trademarks, trade names, or product
names of the other party (including those of Subsidiaries) directly or
indirectly in connection with any product, promotion or publication without
the prior written approval of the other party; provided, however, that
either party may use the other parties trademarks, trade names, and/or
product names to the extent permitted by law and customs regarding their
usage by the general public.
24.0 CONFIDENTIAL INFORMATION
All Netpliance Confidential Information disclosed to Supplier, the results
of Supplier's work and the data deliverable to Netpliance under this
Agreement will be treated by Supplier as Netpliance Confidential
Information pursuant to the provisions of the Non Disclosure Agreement
dated April 16th, 1999 which is incorporated herein by reference.
25.0 GENERAL PROVISIONS
25.1 Communications
All communications between Netpliance and Supplier will be carried out
through the Netpliance and Supplier designated representatives.
25.2 Notice
Any legal notice required or permitted to be made or given to either party
hereto pursuant to this Agreement shall be sufficiently made or given on
the date of mailing if sent to such party by certified mail, postage
prepaid, to a party hereto at its address set forth below, or to such other
party as it shall designate by written notice given to the other party.
For Kent Savage
Netpliance Corporation
7600A Capital of Texas Highway
Austin, Texas 78731
For Supplier: Ted Lu
Quanta Computer Inc.
No. 188, Wen Hwa 2nd Rd.,
Kuei Shan Hsiang,
Tao Yuan Shien,
Taiwan, R.O.C
11
<PAGE>
Netpliance/Quanta
AGREEMENT #NP1
DATED:__ September 10, 1999
25.0 GENERAL PROVISIONS (Continued)
25.3 Taxes
Supplier will be responsible for and pay all taxes imposed on supplier,
except sales, use or similar taxes. Netpliance will be responsible for any
applicable sales, use or similar tax, except Netpliance will have no
liability for any tax for which Netpliance has an appropriate resale or
other tax exemption.
25.4 Assignment
No right or interest in this Agreement will be assigned by either party
without the express written permission of the other, and no delegation of
any obligation of Supplier will be made without prior written permission.
25.5 Liability
Supplier is responsible for the acts of its employees. Supplier will
indemnify and save Netpliance harmless from and against any and all suits
or claims of liability and/or property damage arising from the acts of
Supplier, its subSuppliers or anyone directly or indirectly employed by
Supplier arising out of, or in connection with, Supplier's performance
under this Agreement.
UNDER NO CIRCUMSTANCES WILL EITHER PARTY BE LIABLE FOR SPECIAL, INDIRECT,
INCIDENTAL, OR CONSEQUENTIAL DAMAGES, INCLUDING LOST REVENUE OR LOST
PROFITS HEREUNDER, EVEN IF ADVISED OF THE POSSIBILITY THEREOF.
25.6 Supplier's Employees Deemed not Netpliance's
Both parties agree that Supplier is retained as an independent Supplier and
in no event will employees or agents hired by Supplier be or be considered
employees of Netpliance. Matters governing the terms and conditions of
employment of Supplier's employees are entirely within the control of
Supplier. Netpliance will have no right to control any of the actions of
the employees of Supplier. Supplier's matters such as work schedules, wage
rates, withholding income taxes, disability benefits or the manner and
means through which the work under this Agreement will be accomplished are
entirely within the discretion of Supplier.
25.7 Survival from This Agreement
The rights and obligations of the Sections and Attachments entitled
"RECORDS", "MARKETING RIGHTS WARRANTY," "PRODUCT WARRANTY," "INTELLECTUAL
PROPERTY," "CONFIDENTIAL INFORMATION," "Liability," "Attorneys' Fees,"
"Survival From this Agreement," "Public Disclosure," "Forum," "Spare Parts
Agreement," "Product Repair Agreement," and all terms and conditions of
this Agreement as they apply to any outstanding Orders issued hereunder
will survive and continue after any expiration, cancellation, or
termination of this Agreement and will bind the parties and their legal
representatives, successors, heirs, and assigns.
25.8 Force Majeure
Neither Supplier nor Netpliance will be considered in default or liable for
any delay or failure to perform any provision of this Agreement if such
delay or failure arises directly or indirectly out of an act of nature,
acts of the public enemy, freight embargoes, strikes, quarantine
restrictions, unusually severe weather conditions, insurrection, riot, and
other such causes beyond the control of the party responsible for the delay
of failure to perform, provided the affected party notifies the other party
within fifteen (15) calendar days of the occurrence.
25.9 Compliance with Governmental Legal Requirements
Supplier agrees to comply and do all things necessary to enable Netpliance
to comply with all applicable federal, state and local laws, regulations,
and ordinances including but not limited to the regulations of the U.S.
Government relating to the export of technical data insofar as they relate
to the activities to be performed under this Agreement. Supplier agrees to
obtain the required government documents and approvals prior to the export
or re-export of any technical data disclosed to it or the direct product
related thereto.
12
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Netpliance/Quanta
AGREEMENT #NP1
DATED:__ September 10, 1999
25.0 GENERAL PROVISIONS (CONTINUED)
25.10 Public Disclosure
Supplier agrees not to disclose the fact that Supplier has furnished or
contracted to furnish to Netpliance the products and services hereunder, or
the terms and conditions of this Agreement without the express written
consent of Netpliance, except as may be required by law or governmental
rule or regulation, or to establish Supplier's rights under this Agreement;
provided, however, that if Supplier's seeks to disclose for reasons not
requiring Netpliance's consent, Supplier will limit the disclosure to the
extent required, will allow Supplier to review this information disclosed
and will apply, where available, for confidentiality, protective orders and
the like. Any review by Netpliance under this Section will not be
construed to make Netpliance responsible for the content of the disclosure.
Supplier will remain solely responsible for such contents.
25.11 Section Headings
Headings used in this Agreement are for reference purposes only and are not
intended to be a part of or to affect the meaning or interpretation of this
Agreement.
25.12 Order of Precedence
In the event of an inconsistency in the various documents, which govern the
parties' performance, the order of precedence will be:
i) This Agreement
ii) The Confidential Disclosure Agreement
iii) Attachments to this Agreement
iv) The face side of the Order
v) The reverse side of the Order.
25.13 Attorney's Fees
If one party brings suit against the other party, for any cause whatsoever,
and the other party is finally adjudicated not to have liability, the party
bringing suit agrees to pay the other party's reasonable attorneys' fees
and other costs of litigation.
25.14 Waiver
Failure by Netpliance to insist upon strict conformance to any term herein,
or in Orders issued hereunder, or failure by Netpliance in the event of a
breach or default, shall not be construed as a consent or waiver of that
breach or default or any subsequent breach or default of the same or of any
other term contained herein.
26.0 APPLICABLE LAW
This Agreement will be interpreted in accordance with the substantive and
procedural law of the State of Texas, except its conflicts of law
provisions. Both Netpliance and Supplier consent to Texas State Court
jurisdiction.
27.0 ENTIRE AGREEMENT
Together with Attachments A through I and Non Disclosure Agreement dated
April 16th, 1999, this Agreement and Order(s) issued from time to time
hereunder will constitute the entire Agreement of the parties respecting
the subject matter hereof and will supersede all previous communications
and understanding, either written or oral, between the parties relative to
the subject matter hereof and will supersede all previous communications
and understandings, either written or oral, between the parties relative to
the subject matter hereof.
This Agreement may only be amended by express written agreement signed by
authorized representatives of both parties.
If any provision of this Agreement is held to be illegal, invalid, or
unenforceable, the legality, validity, and enforceability of the remaining
provisions will not be affected or impaired.
13
<PAGE>
Netpliance/Quanta
AGREEMENT #NP1
DATED:__ September 10, 1999
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their duly authorized representatives as of the day and year first set forth
above.
NETPLIANCE SUPPLIER
By:___________________________ By:________________________________
Title:________________________ Title:_____________________________
Date:_________________________ Date:______________________________
By:___________________________ By:________________________________
Title:________________________ Title:_____________________________
Date: ________________________ Date:______________________________
14
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Netpliance/Quanta
AGREEMENT #NP1
DATED:__ September 10, 1999
ATTACHMENT A
PRODUCT DEFINITION/INVENTORY CLASSIFICATION
A1. Product Definition for Internet Personal Access Device (Netpliance Model
NP 1000)
Reference documentation
1) Quanta Computer, Inc., IA1 Engineering Specification, Revision 1B,
Release Date 7/21/1999
2) Darfon Electronics, Proposal to Quanta/Netpliance, dated July 9, 1999
3) ActionTec, Specifications of V.90/K56flex Controller-based Modem
Module: LF560LKQ, Dated 7/10/99
The Netpliance Model NP1000 system, as shipped from the supplier consists of:
. NP 1000 System Unit
. PS2 Keyboard with integrated pointing device
. 19Volt, 1.84 Amp wall-mount AC Adapter
. RJ-11 Modem Cable
. Netpliance User Manual
. Netpliance Quick Setup Guide
<PAGE>
Netpliance/Quanta
AGREEMENT #NP1
DATED:__ September 10, 1999
ATTACHMENT B
PROJECTED DELIVERY SCHEDULE
This projected worldwide delivery schedule will be an estimate of the monthly
quantities, which are forecasted by. The first Term of the Agreement will
include one year's Deliveries.
Monthly Demand
Forecast
------------------------------------------------------------------
Sept Oct Nov Dec Jan Feb Mar
[*] [*] [*] [*] [*] [*] [*]
------------------------------------------------------------------
[*] CONFIDENTIAL TREATMENT REQUESTED
<PAGE>
Netpliance/Quanta
AGREEMENT #NP1
DATED:__ September 10, 1999
ATTACHMENT C
PACKAGING SPECIFICATION
C1. UNIT PACK COMPONENTS
The components to be packaged for shipment of the Netpliance NP1000 device,
referenced in Attachment A, Section A1, shall consist of:
. NP 1000 System Unit
. PS2 Keyboard with integrated pointing device
. 19 Volt, 1.84 Amp, wall-mount AC Adapter
. RJ-11 Modem Cable
. Netpliance User Manual
. Netpliance Quick Setup Guide
C2. PACKAGING DESIGN AND CERTIFICATION
Supplier will design and test individual unit packaging, capable of single unit
shipments of the unit pack components in C1, the meets or exceeds the
requirements of the Association of Transport Packaging (ISTA); ISTA 2 Series,
version 2A. Supplier will test all packaging with the ISTA 2A procedures and
demonstrate compliance.
Supplier warrants all packaging materials are free of CFC's.
<PAGE>
Netpliance/Quanta
AGREEMENT #NP1
DATED:__ September 10, 1999
ATTACHMENT D
ACCEPTANCE TEST PROCEDURE
To be mutually agreed and completed within 30 days of Agreement being signed.
<PAGE>
Netpliance/Quanta
AGREEMENT #NP1
DATED:__ September 10, 1999
ATTACHMENT E
QUALITY REQUIREMENTS
To be mutually agreed and completed within 30 days of agreement being signed.
<PAGE>
Netpliance/Quanta
AGREEMENT #NP1
DATED:__ September 10, 1999
ATTACHMENT F
EQUIPMENT LOAN AGREEMENT
To be mutually agreed and completed within 30 days of agreement being signed.
<PAGE>
Netpliance/Quanta
AGREEMENT #NP1
DATED:__ September 10, 1999
ATTACHMENT G
PRODUCT REPAIR SERVICE AGREEMENT
To be mutually agreed and completed within 30 days of agreement being signed.
<PAGE>
Netpliance/Quanta
AGREEMENT #NP1
DATED:__ September 10, 1999
ATTACHMENT H
PAYMENT TERMS FOR 1ST 30,000 UNITS
[*]
[*] CONFIDENTIAL TREATMENT REQUESTED
<PAGE>
Netpliance/Quanta
AGREEMENT #NP1
DATED:__ September 10, 1999
ATTACHMENT I
MATERIAL LIABILITY GUIDELINES
To be mutually agreed and completed within 30 days of agreement being signed.