VA Research Manufacturing Contract - VA Linux Systems Inc. and SYNNEX Information Technologies Inc.
VA RESEARCH MANUFACTURING CONTRACT
This Manufacturing Agreement ("Agreement") is entered into this 5/27 day of
1999 by and between VA Linux Systems Inc., having its place of business at 1380
Bordeaux Drive, Sunnyvale, CA 94089. ("VA Linux Systems") and SYNNEX
Information Technologies, Inc., having its place of business at 3797 Spinnaker
Court, Fremont, CA 94538.
1.0 WORK, LICENSE
Synnex agrees to use reasonable commercial efforts to perform the work
(hereinafter "Work") pursuant to Blanket Purchase Orders or changes thereto
issued by VA Research and accepted by Synnex. Synnex acknowledges that time is
of the essence in the performance of Work".
Work shall mean to procure components, materials, equipment and other supplies
and to manufacture, assemble, and test products (hereinafter "Products")
pursuant to detailed written specifications for each such Product which are
provided by VA Research and accepted by Synnex and to deliver such Products. For
each Product or revision thereof, written specifications shall include but are
not limited to bill of materials, schematics, assembly drawings, process
documentation, test specifications, current revision number, and approved
vendor list (hereinafter "Specifications") as attached hereto.
Synnex is granted by VA Research a non-exclusive license during the term of this
Agreement to use all of VA Research's patents, trade secrets and other
intellectual property required to perform Synnex' obligations under this
Agreement.
2.0 FORECASTS, ORDERS, MATERIAL PROCUREMENT
2.1 FORECASTS
See Addendum A
2.2. ORDERS
See Addendum A
The parties agree that the terms and conditions contained in this Agreement or
Addendum A shall prevail over any terms and conditions of any Blanket Purchase
Order, acknowledgement form or other instrument.
2.3 MATERIAL PROCUREMENT. VA Research's accepted Blanket Purchase
Orders will constitute authorization for Synnex to procure, using standard
purchasing practices, the components, materials and supplies necessary for the
manufacture of Products ("Inventory") covered by such Blanket Purchase Orders.
See Addendum A
3.0 SHIPMENTS, SCHEDULE CHANGE, CANCELLATION
3.1 SHIPMENTS. All Products delivered pursuant to the terms of this
Agreement shall be suitably packed for shipment in accordance with VA
Research's Specifications, marked for shipment to VA Research's destination
specified in the applicable Daily Release Order and delivered to a carrier or
forwarding agent. Shipment will be F.O.B. Synnex' facility at which time risk
of loss and title will pass to VA Research. All freight, insurance and other
shipping expenses, as well as any special packing expenses not included in the
original price quotation for the Products will be paid by VA Research.
3.2 QUANTITY INCREASES AND SHIPMENT SCHEDULE CHANGES
See Addendum A
3.3 CANCELLATION.
VA will not cancel any Daily Release Orders. For cancellation of Blank Purchase
Orders, Synnex will use reasonable commercial efforts to return unused
inventory to its vendors and to cancel pending orders for such inventory.
Synnex will also use reasonable commercial efforts to sell any excess inventory
caused by the cancellation through its
<PAGE> 2
distribution channel to minimize the loss. *
4.0 ENGINEERING CHANGES
VA Research may request, in writing, that Synnex incorporate engineering changes
into the Product. Such request will include a description of the proposed
engineering change sufficient to permit Synnex to evaluate its feasibility and
cost. Synnex' evaluation shall be in writing and shall state the costs and time
of implementation and the impact on the delivery schedule and pricing of the
Product. *
5.0 TOOLING, NON-RECURRING EXPENSES, SOFTWARE
* All software which VA Research provides to Synnex is and shall remain
the property of VA Research. VA Research grants Synnex a limited license during
the term of the agreement to copy, modify and use such software as required to
perform Synnex' obligations under this Agreement. All modifications to such VA
Research software shall be the exclusive property of either VA Research or VA
Research's vendor, as the case may be. Synnex shall reasonably assist VA
Research to secure such proprietary rights to such modifications at VA's
expense. All software developed by Synnex to support the process tooling or
otherwise shall be and remain the property of Synnex.
6.0 PRODUCT ACCEPTANCE AND WARRANTIES
6.1 PRODUCT ACCEPTANCE. The Products delivered by Synnex will be inspected and
tested as required by VA Research within * of receipt. If Products are found to
be defective in material or workmanship, VA Research has the right to reject
such Products during said period. Products not rejected during said period will
be deemed accepted. VA Research has the right to reject such Products during
said period by notifying Synnex in writing at the address provided above,
attention President. VA Research may return defective Products, freight collect,
after obtaining a return material authorization number from Synnex to be
displayed on the shipping container and completing a failure report. Rejected
Products will be promptly repaired or replaced, at Synnex' option, and returned
freight pre-paid. If the Product is source inspected by VA Research prior to
shipment, VA Research will inspect goods within * of its request date.
6.2 EXPRESS LIMITED WARRANTY. Synnex warrants that the Products will conform to
VA Research's applicable Specifications and will be free from defects in
workmanship for a period of * from the date of shipment. Synnex shall warrant
the materials to the same extent that the manufacturer warrants the materials to
Synnex. This express limited warranty does not apply to (a) materials consigned
or supplied by VA Research or Synnex; (b) defects resulting from VA Research's
Specifications or the design of the Products; (c) any other defects not caused
by Synnex; or (d) Product that has been abused, damaged, altered or misused (not
used as in accordance to the product specification) by any person or entity
after title passes to VA Research. With respect to first articles, prototypes,
pre-production units, test units or other similar Products, Synnex makes no
representations or warranties whatsoever. Notwithstanding anything else in this
Agreement, Synnex assumes no liability for or obligation related to the
performance, accuracy, specifications, failure to meet specifications or defects
of or due to tooling, designs or instructions produced or supplied by VA
Research and VA Research shall be liable for costs or expenses incurred by
Synnex related thereto. Upon any failure of a Product to comply with the above
warranty, Synnex' sole obligation, and VA Research's sole remedy, is for Synnex,
at its option, to promptly repair or replace such unit and return it to VA
Research freight collect. VA Research shall return Products covered by the
warranty freight pre-paid after completing a failure report and obtaining a
return material authorization number from Synnex to be displayed on the shipping
container.
SEE ADDENDUM A
SYNNEX MAKES NO OTHER WARRANTIES OR CONDITIONS ON THE PRODUCTS, EXPRESS,
IMPLIED, STATUTORY, OR IN ANY OTHER PROVISION OF THIS AGREEMENT OR COMMUNICATION
WITH VA RESEARCH, AND SYNNEX SPECIFICALLY DISCLAIMS ANY IMPLIED WARRANTY OR
CONDITION OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
* Confidential treatment has been requested by the Registrant as to certain
portions of this exhibit. The omitted portions have been separately filed
with the Commission.
<PAGE> 3
7.0 PAYMENT TERMS, ADDITIONAL COSTS AND PRICE CHANGES
7.1 PRICE AND PAYMENT TERMS. The price for Products to be manufactured will be
set from time to time for reference purposes through Blanket Purchase
Orders issued by VA Research and accepted by Synnex. The actual sale price
of all Products shall be established through Daily Release Orders provided
by VA Research and accepted by Synnex. All prices quoted are exclusive of
federal, state and local excise, sales, use and similar taxes, and any
duties, and VA Research shall be responsible for all such items. Payment
for any Products, services or other prior agreed costs to be paid by VA
Research hereunder is due in * from the date of invoice and shall be made
in lawful U.S. currency.
SEE ADDENDUM A
8.1 TERM. The term of this Agreement shall commence on the date hereof above
and shall continue for one (1) year thereafter until terminated as provided
in Section 8.2 or 10.9. After the expiration of the initial term hereunder
(unless this Agreement has been terminated) this Agreement shall be
automatically renewed for separate but successive one-year terms.
8.2 TERMINATION. This Agreement may be terminated by either party for any
reason upon one hundred twenty (120) days written notice to the VA Research.
Termination of this Agreement for any reason shall not affect the obligations of
either party that exist as of the date of termination. Notwithstanding
termination or expiration of this Agreement, Sections 6.2, 8.0, 9.0, and 10.0
shall survive said termination or expiration.
9.0 LIABILITY LIMITATION
9.1 PATENTS, COPYRIGHTS, TRADE SECRETS, OTHER PROPRIETARY RIGHTS. VA Research
shall defend, indemnify and hold harmless Synnex from all claims, costs,
damages, judgments and attorneys' fees resulting from or arising out of any
alleged and/or actual infringement or other violation of any patents,
patent rights, trademarks, trademark rights, copyrights, trade secrets,
proprietary rights and processes or other such rights related to the
Products. Synnex shall promptly notify VA Research in writing of the
initiation of any such claims.
THE FOREGOING STATES THE ENTIRE LIABILITY OF THE PARTIES TO EACH OTHER
CONCERNING INFRINGEMENT OF PATENT, COPYRIGHT, TRADE SECRET OR OTHER INTELLECTUAL
PROPERTY RIGHTS.
9.2 PRODUCT LIABILITY. VA Research agrees that, if notified promptly in writing
and given sole control of the defense and all related settlement
negotiations, it will defend Synnex from any claim or action and will
indemnify and hold Synnex harmless from any loss, damage or injury,
including death, which arises from any alleged defect of any Products. VA
Research shall add Synnex as an additional insured under VA Research's
product liability polices for any Products.
9.3 NO OTHER LIABILITY. EXCEPT FOR THE EXPRESS WARRANTIES CREATED UNDER THIS
AGREEMENT AND EXCEPT AS SET FORTH OTHERWISE IN THIS AGREEMENT, IN NO EVENT SHALL
EITHER PARTY BE LIABLE TO THE OTHER FOR ANY INCIDENTAL, CONSEQUENTIAL, SPECIAL
OR PUNITIVE DAMAGES OF ANY KIND OR NATURE ARISING OUT OF THIS AGREEMENT OR THE
SALE OF PRODUCTS, WHETHER SUCH LIABILITY IS ASSERTED ON THE BASIS OF CONTRACT,
TORT (INCLUDING THE POSSIBILITY OF NEGLIGENCE OR STRICT LIABILITY), OR
OTHERWISE, EVEN IF THE PARTY HAS BEEN WARNED OF THE POSSIBILITY OF ANY SUCH LOSS
OR DAMAGE, AND EVEN IF ANY OF THE LIMITED REMEDIES IN THIS AGREEMENT FAIL IN
THEIR ESSENTIAL PURPOSE.
10.0 MISCELLANEOUS
10.1 CONFIDENTIALITY. All written information and data exchanged between the
parties for the purpose of enabling Synnex to manufacture and deliver Products
under this Agreement that is marked "Confidential" or the like, shall be subject
to the NDA agreement between VA Research and Synnex attached hereto as Addendum
B.
10.2 ENTIRE AGREEMENT. This Agreement, including all Addendums thereto,
constitutes the entire agreement between the Parties with respect to the
transactions contemplated hereby and supersedes all prior agreements and
* Confidential treatment has been requested by the Registrant as to certain
portions of this exhibit. The omitted portions have been separately filed
with the Commission.
<PAGE> 4
understandings between the parties relating to such transactions. VA Research
shall hold the existence and terms of this Agreement confidential, unless it
obtains Synnex' express written consent otherwise. In all respects, this
Agreement shall govern, and any other documents including, without limitation,
preprinted terms and conditions on VA Research's Blanket Purchase Orders and
Daily Release Orders shall be of no effect.
10.3 Amendments. This Agreement may be amended only by written consent of both
parties.
10.4 Independent Contractor. Neither party shall, for any purpose, be deemed to
be an agent of the other party and the relationship between the parties shall
only be that of independent contractors. Neither party shall have any right or
authority to assume or create any obligations or to make any representations or
warranties on behalf of any other party, whether express or implied, or to bind
the other party in any respect whatsoever.
10.5 Expenses. In the event a dispute between the parties hereunder with
respect to this Agreement must be resolved by litigation or other proceeding or
a party must engage an attorney to enforce its right hereunder, the prevailing
party shall be entitled to receive reimbursement for all associated reasonable
costs and expenses (including, without limitation, attorneys fees') from the
other party.
10.6 Security Interest. Until the purchase price and all other charges payable
to Synnex hereunder have been received in full. Synnex hereby retains and VA
Research hereby grants to Synnex a security interest in the Products delivered
to VA Research and any proceeds therefrom. VA Research agrees to promptly
execute any documents requested by Synnex to perfect and protect such security
interest. In the event of a default by VA Research, Synnex may exercise any or
all remedies provided under the Uniform Commercial Code or similar statutes or
laws enacted in the jurisdiction within which Synnex seeks to enforce its
rights under this Agreement.
10.7 Governing Law. This Agreement shall be governed by and construed under the
laws of the State of California, excluding its choice of law principles. The
parties consent to the exclusive jurisdiction of the state and Federal courts
in Santa Clara County, California.
10.8 Successors, Assignment. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors, assigns and
legal representatives. Neither party shall have the right to assign or
otherwise transfer its rights or obligations under this Agreement except with
the prior written consent of the other party, not to be unreasonably withheld.
10.9 Force Majeure. In the event that either party is prevented from performing
or is unable to perform any of its obligations under this Agreement (other than
a payment obligation) due to any Act of God, fire, casualty, flood, earthquake,
war, strike, lockout, epidemic, destruction of production facilities, riot,
insurrection, material unavailability, or any other cause beyond the reasonable
control of the party invoking this section, and if such party shall have used
its commercially reasonable efforts to mitigate its effects, such party shall
give prompt written notice to the other party, its performance shall be
excused, and the time for the performance shall be extended for the period of
delay or inability to perform due to such occurrences. Regardless of the excuse
of Force Majeure, if such party is not able to perform within ninety (90) days
after such event, the other party may terminate the Agreement. Termination of
this Agreement shall not affect the obligations of either party which exist as
of the date of termination.
ACCEPTED AND AGREED TO:
VA RESEARCH: SYNNEX INFORMATION TECHNOLOGIES,INC.:
/s/ Daniel R. Shore 5-27-99 /s/ Chih-Kai Cheng 5-27-99
----------------------------------- -------------------------------------
By: Daniel R. Shore By: Chih-Kai Cheng
------------------------------- ---------------------------------
Title: V.P. of Operations Title: V.P. System Integration
---------------------------- ------------------------------
<PAGE> 5
ADDENDUM A
TO VA RESEARCH MANUFACTURING CONTRACT BETWEEN
VA RESEARCH AND SYNNEX INFORMATION TECHNOLOGIES, INC.
THIS ADDENDUM WILL SUPERCEDE THE MANUFACTURING CONTRACT IN THOSE AREAS WHERE
SPECIFIED.
1. VA Research shall provide to Synnex the following:
A. A * Blanket Purchase Order ("Blanket Purchase Order") for Base
Configuration Units, broken down by expected monthly volume. In
addition to this Blanket Purchase Order, VA Research will supply a *
non-binding "sub-forecast" reflecting the anticipated configuration
detail by month.
B. *
C. Daily Release Orders for the specific configurations to be shipped
against the Blanket Purchase Order with all shipping information, and
detail of how it will be shipped
1. Ship to Address
2. Freight Forwarder
3. Unique Shipping Instructions
4. Configuration of Items to be shipped
* All daily shipping information will be supplied by Synnex to VA
Research for tracking purposes, this includes sales order numbers,
serial numbers shipped, and shipper tracking numbers. Tracking
information is to be maintained by the shipping companies.
D. If VA Research decides to consign any material, VA Research will
supply the same Purchase Order and Forecast information to those
suppliers which they will manage.
E. VA Research will be allowed to reschedule orders placed by Blanket
Purchase Order per the following schedule:
Maximum Allowable VA Research variance From Blanket Purchase Order
------------------------------------------------------------------
Quantities/Shipment
-------------------
<TABLE>
<CAPTION>
# of days before Allowable Maximum Maximum
Shipment Date Quantity Reschedule Reschedule
on Blanket Purchase Order Increases Quantity Period
------------------------- --------- ---------- ----------
<S> <C> <C> <C>
* *% *% *
* *% *% *
</TABLE>
* Confidential treatment has been requested by the Registrant as to certain
portions of this exhibit. The omitted portions have been separately filed with
the Commission.
<PAGE> 6
Reasonable commercial efforts by Synnex will be made to support any upside
requirements within this schedule or outside of this schedule.
II. Synnex will provide the following services:
A. Procure all material necessary to support the * Blanket Purchase Order
for Base Configuration Units, and the material needed to support the
forecasted configurations. All material shall be purchased from an
"Approved Vendor List" (AVL) which is supplied by VA Research. Should
Synnex need to purchase material from a source which is not on the AVL,
Synnex will inform VA Research and seek written approval to deviate.
1. All material is to be procured based on Blanket Purchase Orders and
Daily Release Orders received from VA Research. Any material which
Synnex deems necessary to purchase outside of Blanket Purchase Order
coverage will be identified as such to VA Research and purchased
only upon approval of VA Research in writing.
2. All returned inventory by Synnex shall be within a reasonable amount
of time after such inventory receipt and notification of a VA
Research reschedule or cancellation. Synnex shall keep accurate
records containing such necessary information so that VA Research
may either contact such vendor or manufacture.
B. Upon receipt of the Daily 850 EDI Release Orders Synnex will notify VA
Research of acceptance of the Daily Release Order via 855 EDI, or
information regarding inability to meet the Daily Release Order, as the
case may be. This notification will be given within one (1) business
day of receiving the Daily Release Orders. This information will
include any material or manufacturing constraints in meeting the
requested shipment date. At this time Synnex will inform VA Research of
the expected ship date for the specific configurations provided in the
Daily Release Order. *
C. It shall be specified by VA Research in the Daily Release Order which
Freight Forwarder will be used, and all costs for freight will be paid
by VA Research directly to the Shipper. * This avoids the need for
additional EDI transactions at the back-end of the process. VA and
Synnex will work together in the next phase to see whether an EDI or
other automated means that can suffice to meet the same requirements
specified by VA.
* Confidential treatment has been requested by the Registrant as to certain
portions of this exhibit. The omitted portions have been separately filed with
the Commission.
<PAGE> 7
D. Warranty:
If a Product comes back to Synnex within the * warranty period there will
be no cost to VA Research to repair and/or replace Product based on material or
workmanship failures as set forth in Section 6.2. Return freight will be paid
by Synnex. Synnex reserves the right to accept or reject such returns as under
warranty based on the condition of the system and the failure analysis of the
unit. VA Research agrees they will not take a credit until Synnex agrees that
it is a warranty repair. If the product was deemed to not be a valid warranty
return, VA Research will reimburse Synnex for the return freight.
Outside of the * warranty period, systems will be returned by the end customer
to VA Research for failure analysis. VA Research will replace the defective
component and send the defective part back to Synnex to return to the supplier.
Any replaced parts will be sent to VA Research for restocking in their Field
Return Unit (FRU) inventory. There will not be any credit taken by VA Research
for these parts unless a reciprocal credit is first given to Synnex by the
supplier.
E. Penalty Clause:
If Synnex is late because of something which is within Synnex control, (assuming
the order was within all schedule lead-times) and it results in a late shipment
(i.e., shipment outside the * cycle time provided below), Synnex will pay the
difference between the standard freight charge (for delivery to that end
customer) and air freight to ship to that end customer. This will not apply to
test fall outs, or design related causes, or any other causes beyond the control
of Synnex.
F. Cycle Time & Capacity:
The agreed to cycle time for shipment of product is * from accepted receipt of
Daily Release Order for a configured product to the date that Synnex places the
Product on its dock for shipment. Initial daily output capacity is established
for *. Should an already accepted Daily Release Order configuration change, the
cycle time will be reset to day one.
Once the process and capacity has been established, VA Research and Synnex will
set up jointly agreed to cycle time and daily capacities for various activities
and standard costs associated with same. Some of these activities may include;
Request for expedited cycle time
Partial orders or back order situation
Overtime requests
These cycle times and capacity requirements will be reviewed monthly.
G. Cost Review:
* Confidential treatment has been requested by the Registrant as to certain
portions of this exhibit. The omitted portions have been separately filed with
the Commission.
<PAGE> 8
VA Research and Synnex agree to review costing information * in an
open book manner as a basis for discussion on cost reduction efforts
and implementation. Synnex agrees to provide evidence of actual
invoice prices paid for materials used in the manufacture of VA
Research products. If material costs have changed since the prior cost
review, a new price list will be provided to VA Research which takes
into account the changes in material cost.*
H. Payment Terms:
Synnex shall invoice VA Research * for all order releases shipped
against the blanket purchase order since the last invoicing period.
Terms shall be *.
III. Pricing:
- Synnex agrees to extend to VA Research the * quoted price structure of:
- *
- *
- *
VA Research will contract with Synnex to purchase approximately *
during the * timeframe and will be at a run rate of *. *
* Confidential treatment has been requested by the Registrant as to certain
portions of this exhibit. The omitted portions have been separately filed with
the Commission.
<PAGE> 9
MUTUAL NONDISCLOSURE AGREEMENT
THIS MUTUAL NONDISCLOSURE AGREEMENT is made and entered into as of 5-14,
1999, between VA RESEARCH, INC. and Synnex Information Technologies Inc.
1. Purpose. The parties wish to explore a business opportunity of mutual
interest and in connection with this opportunity, each party may disclose to the
other certain confidential technical and business information which the
disclosing party desires the receiving party to treat as confidential.
2. "Confidential Information" means any information disclosed by either
party to the other, either directly or indirectly in writing, orally or by
inspection of tangible objects, including without limitation information
relating to any business strategies or arrangements, systems architecture,
software technology, intellectual property, proprietary information, technical
data, trade secrets or know-how, including but not limited to, research,
products, services, customer lists and customers, engineering and hardware
configuration information, or other business information. Confidential
information may also include information disclosed to a disclosing party by
third parties. Information communicated orally shall be considered Confidential
Information if such information is designated as being confidential or
proprietary within a reasonable time after the initial disclosure. Confidential
Information shall not, however, include any information which (i) was publicly
known and made generally available in the public domain prior to the time of
disclosure by the disclosing party; (ii) becomes publicly known and made
generally available after disclosure by the disclosing party to the receiving
party through no action or inaction of the receiving party; (iii) is already in
the possession of the receiving party at the time of disclosure, without
confidentiality restrictions, by the disclosing party as shown by the receiving
party's files and records immediately prior to the time of disclosure; (iv) is
obtained by the receiving party from a third party without a breach of such
third party's obligations of confidentiality; or (v) is independently developed
by the receiving party without use of or reference to the disclosing party's
Confidential Information, as shown by documents and other competent evidence in
the receiving party's possession.
3. Non-use and Non-disclosure. Each party agrees not to use any
Confidential Information of the other party for any purpose except to evaluate
and engage in discussions concerning a potential business relationship between
the parties. Each party agrees not to disclose any Confidential Information of
the other party to third parties or to such party's employees, except to those
employees of the receiving party who are required to have the information in
order to evaluate or engage in discussions concerning the contemplated business
relationship. Neither party shall reverse engineer, disassemble or decompile any
prototypes, software or other tangible objects which embody the other party's
Confidential Information and which are provided to the party hereunder. In the
event that either party or their respective directors, officers, employees,
consultants or agents are requested or required by legal process to disclose any
of the Confidential Information of the other party, the party required to make
such disclosure shall give prompt notice so that the other party may seek a
protective order or other appropriate relief. In the event that such protective
order is not obtained, the party required to make such disclosure shall disclose
only that portion of the Confidential Information which its counsel advises that
it is legally required to disclose.
4. Maintenance of Confidentiality. Each party agrees that it shall take
reasonable measures to protect the secrecy of and avoid disclosure and
unauthorized use of the Confidential Information of the other party. Without
limiting the foregoing, each party shall take at least those measures that it
takes to protect its own most highly confidential information and shall ensure
that its employees who have access to Confidential Information of the other
party have signed a non-use and non-disclosure agreement in content similar to
the provisions hereof, prior to any disclosure of Confidential Information to
such employees. Neither party shall make any copies of the Confidential
Information of the other party unless the same are previously approved in
<PAGE> 10
writing by the other party. Each party shall reproduce the other party's
proprietary rights notices on any such approved copies, in the same manner in
which such notices were set forth in or on the original.
5. No Obligation. Nothing herein shall obligate either party to proceed
with any transaction between them, and each party reserves the right, in its
sole discretion, to terminate the discussions contemplated by this Agreement
concerning the business opportunity.
6. No Warranty. ALL CONFIDENTIAL INFORMATION IS PROVIDED "AS IS". EACH
PARTY MAKES NO WARRANTIES, EXPRESS, IMPLIED OR OTHERWISE, REGARDING ITS
ACCURACY, COMPLETENESS OR PERFORMANCE.
7. Return of Materials. All documents and other tangible objects
containing or representing Confidential Information which have been disclosed
by either party to the other party, and all copies thereof which are in the
possession of the other party, shall be and remain the property of the
disclosing party and shall be promptly returned to the disclosing party upon
the disclosing party's written request.
8. No License. Nothing in this Agreement is intended to grant any rights
to either party under any patent, mask work right or copyright of the other
party, nor shall this Agreement grant any party any rights in or to the
Confidential Information of the other party except as expressly set forth
herein. Should the evaluation of the Confidential Information and the
discussions between the parties not result in a business relationship, the each
party agrees not to file or participate in the filing of, in the United States
or in any other country, patent applications that make reference to patent
applications of the other party which may be disclosed as Confidential
Information hereunder without the prior express written consent of the other
party.
9. Term. The obligations of each receiving party hereunder shall survive
until such time as all Confidential Information of the other party disclosed
hereunder becomes publicly known and made generally available through no action
or inaction of the receiving party.
10. Remedies. Each party agrees that any violation or threatened
violation of this Agreement may cause irreparable injury to the other party,
entitling the other party to seek injunctive relief in addition to all legal
remedies.
11. Miscellaneous. This Agreement shall bind and insure to the benefit of
the parties hereto and their successors and assigns. This Agreement shall be
governed by the laws of the State of California, without reference to conflict
of laws principles. This document contains the entire agreement between the
parties with respect to the subject matter hereof, and neither party shall have
any obligation, express or implied by law, with respect to trade secret or
proprietary information of the other party except as set forth herein. Any
failure to enforce any provision of this Agreement shall not constitute a
waiver thereof or of any other provision. This Agreement may not be amended,
nor any obligation waived, except by a writing signed by both parties hereto.
VA RESEARCH, INC. SYNNEX INFORMATION TECHNOLOGIES INC.
By: /s/ Daniel R. Shore By: /s/ Chih-Kai Cheng
------------------- -----------------------------
Name: Daniel R. Shore Name: Chih-Kai Cheng
----------------- ----------------------------
Title: VP of Operations Title: V.P.
---------------- --------------------------
<PAGE> 11
VA Linux Systems Manufacturing Agreement
Amendment 1
This Amendment 1 ("Amendment") to the Synnex Manufacturing Agreement and
Addendum dated May 27, 1999 ("Agreement") effective as of the date executed
below between VA Linux Systems, Inc. having its place of business at 1380
Bordeaux Drive, Sunnyvale, CA 94089 ("VA Linux") and SYNNEX Information
Technologies, Inc., having its place of business at 3797 Spinnaker Court,
Fremont, CA 94538 ("Synnex") shall amend the Agreement. All other terms to the
Agreement shall remain in effect unless expressly amended herein in this
Amendment. All terms unless defined herein shall have the same meaning as the
Agreement.
Whereas, Synnex desires to perform additional Work and Customized Work for
VA Linux;
Whereas, VA Linux desires to request and appoint Synnex to perform certain
Customized Work and Work for VA Linux;
Whereas, Synnex desires to participate and invest in the Series B Preferred
Stock issued by VA Linux for the purchase of no less than $1.8 million U.S.
Dollars payable upon and in accordance to such Series B Preferred Stock Purchase
Agreement;
In consideration of the mutual premises and for valuable consideration, the
parties make the following agreements:
1. Paragraph 1.1 shall be added: Any Work performed by Synnex shall include
certain custom systems integration services required by VA Linux from time
to time ("Custom Work"). This "Custom Work" will include custom systems
integration and manufacture of Products and components that are not listed
on the agreed upon "VA/Synnex product and pricing matrix". Such Custom Work
provided by Synnex shall include production labor, capacity, materials
procurement, management and logistics and shipping services related to
certain custom systems integration services. The parties shall agree upon
the price of such Custom Work which shall include as factors to such price:
*. Such price shall be prior agreed upon by the parties. The parties agree,
however, that the hourly labor and overhead shop rate charged by Synnex for
such Custom Work shall be * per hour.
2. Paragraph 2.3 shall be amended to add that materials procured to
manufacture Products (as defined in Section 2 here) shall be purchased and
invoiced by Synnex to VA Linux at * for such materials. VA Linux shall have
a right upon request to Synnex to audit bi-monthly such costs. Materials
shall be purchased to manufacture Products in the following manner in such
categories:
*
VA LINUX SERIES B CONTRACT AMENDMENT FINAL
* Confidential treatment has been requested by the Registrant as to certain
portions of this exhibit. The omitted portions have been separately filed with
the Commission.
<PAGE> 12
*
3. Paragraph 2.2.1 shall be added: The parties agree and acknowledge the
following:
*
4. Paragraph 7.1 shall be added: Synnex agrees that the labor, overhead, and
margin for profit for each Product manufactured except for "Custom Work"
and accepted in accordance to the Agreement shall be as follows:
(i) Synnex labor and overhead shall be * US per system unit, and
profit shall be * for server products; and
(ii) Synnex labor and overhead shall be * US per system unit, and
profit shall be * for desktop products with minimum order of
* or more of one configuration; provided, however, that
for custom configured desktop products, Synnex labor and
overhead shall be * per system unit, and profit shall be *;
(iii) Synnex shall use reasonable commercial efforts to purchase all
materials necessary for the manufacture of the Products at best
commercial prices. Synnex agrees that any price quote shall
reflect the best commercial prices available for the
components.
5. Paragraph 7.2 shall be added: Synnex shall be appointed as reseller for VA
Linux on the conditions and terms set forth in this Amendment:
(i) Synnex shall have the limited right to resell solely in the U.S.
VA Linux 2U Levi rackmount chassis, power supply, and backplane
components with factory installed non-Linux operating systems
("VA Linux Reseller Product"). A non-Linux operating system must
be factory installed and shipped on any server system built upon
"VA Linux Reseller Product" components and sold under the Synnex
or Mitac brand names.
(ii) Synnex shall have the right to resell VA Linux Reseller
Product under the Synnex and at Synnex's option under the Mitac
brand names. Provided, Synnex shall hold VA Linux harmless and
indemnify VA Linux for any liabilities including but not limited
to intellectual property claims, damages and attorneys fees so
long as such liability did not arise due to any material fault by
VA Linux. Synnex shall further agree to properly place VA Linux
trade mark, copyright or such other notices on the VA Linux
Reseller Product and shall not remove the same. Synnex shall be
solely responsible for customer support, warranty or claims
arising out of VA Linux Reseller Product except for claims arising
out of any material fault of VA Linux.
(iii) Synnex shall pay to VA Linux the following agreed upon payments
within * of invoice by Synnex for any VA Linux Reseller Product
sold by Synnex. Synnex shall pay to VA Linux as follows:
(a) Year 1: * of gross price of all server systems sold that
are built upon "VA Reseller Product" components.
* Confidential treatment has been requested by the Registrant as to certain
portions of this exhibit. The omitted portions have been separately filed with
the Commission.
2
<PAGE> 13
(b) Year 2: * of gross price of all server systems sold that are
built upon "VA Reseller Product" components.
(iv) Synnex shall, upon request by VA Linux, audit Synnex reseller records
relating to VA Linux Reseller Product. Synnex shall provide monthly
reports and no later than (15) days of the last date of the previous
month, to VA Linux stating number of such products sold, price,
purchaser and such information customarily provided by any reseller
to the seller of products. VA Linux shall have the right to audit
Synnex records relating to VA Linux Reseller Products. Any difference
of such audit finding of * or greater of the report made by Synnex
and such auditor shall require Synnex to pay such audit, Synnex to
pay VA Linux within five (5) business days the difference if Synnex
has underpaid by * of such report and penalty interest shall be *
per annum for such difference.
(v) The term of this provision, and solely this Reseller provision, shall
be for * from the date of execution of this Amendment. This provision
may be renewed upon mutual agreement; provided VA Linux may terminate
this provision at any time upon any breach by Synnex or upon thirty
(30) days notice by the parties to each other.
6. Section 11 shall be added: VA Linux shall sublease from Synnex and shall
jointly occupy a certain leasehold on the following terms:
(i) The leasehold shall be approximately 7,000-sq. ft. of custom systems
integration space located in [Bay Area] California. Synnex shall
reserve approximately 3,000 sq. ft. of such lease for the occupation
by VA Operations Management and Engineering personnel.
(ii) The parties each shall agree upon the location and the assignment of
office and cubicle space for each respective personnel.
(iii) VA Linux shall pay to Synnex or such Landlord the following gross
rental payments:
(a) First year - *
(b) * per month for second year
(c) The leasehold period for any lease executed by VA Linux in this
provision shall be no more than a 2 lease with an option on
2 additional years.
(d) Gross rental payments shall include: utilities (1,000 amps),
12-hour security, tax, access to fork lift, and such other
equipment. All VA Linux equipment used within VA Linux tenant
space including phone systems, monthly phone bill, any insurance,
office equipment shall be the sole responsibility of VA Linux.
(iv) The parties shall mutually agree upon and execute a sublease prior to
occupancy by either party.
(v) Tenant improvement: Synnex will reasonably work with VA Linux to
accommodate its needs. All tenant improvement costs of * or less will
be amortized into the leasing period and shall be payable monthly in
addition to the gross rental payments. The parties forecast that such
estimated cost shall be between * for the power, networking, tiles,
etc. Tenant improvements exceeding * shall be payable by VA Linux
upon completion of the work.
(vi) The parties have agreed that the anticipated move-in date to be no
later than the end of October 1999.
VA Linux Systems Synnex Information Technologies Inc.
By: /s/ Daniel R. Shore By: /s/ Chich-Kai Cheng
------------------------- -------------------------
Title: VP of Operations Title: Senior V.P.
---------------------- ----------------------
Date: 10-25-99 Date: Oct 22, 1999
----------------------- -----------------------
* Confidential treatment has been requested by the Registrant as to certain
portions of this exhibit. The omitted portions have been separately filed with
the Commission.
3