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EXHIBIT 10.3
This Amendment Agreement ("Amendment") is the Second Amendment to the
Manufacturing and Engineering Services Agreement dated January 11, 1999 between
Netro Corporation ("Netro") and Microelectronics Technology, Inc. ("MTI") (the
"Agreement")
The parties desire to amend and supplement the Agreement as set forth in this
Amendment and accordingly agree as follows:
1. Effective Dates
This Amendment shall govern purchases by Netro from MTI for the period
from July 1, 2000 to December 31, 2001 (the "Commitment Period"). It is
expressly applicable retroactively to all purchase orders placed by Netro
since July 1, 2000.
2. Purchase Commitment
Netro agrees to order a minimum of 25,000 units of Products during the
Commitment Period for delivery within the lead times specified in Section
5 of the Amendment. This commitment shall be represented by a blanket
purchase order to be issued by Netro within two weeks following the
signing of this Amendment (the "Blanket Purchase Order"). Releases of
Product shall be subject to the issuance of specific releases subject to
the Blanket Purchase Order and the terms of this Amendment. In the event
unforeseen market conditions result in a shortfall in releases by Netro
on December 31, 2001 (the occurrences of which shall be reasonably proved
by Netro with written records) Netro shall have up to an additional three
months to release the committed quantity. In case there is still a
shortfall after this extension, Netro is liable for compensation to MTI
for reasonable unmitigated all costs and expenses incurred to satisfy the
Blanket Purchase Order, including but not limited to the un-consumed
inventory resulting from the unreleased quantity.
3. Pricing
Pricing for AirStar 26GHz radios shall be as follows:
<TABLE>
<CAPTION>
Quantity Price per Unit
-------- --------------
<S> <C>
Up to 3,000 units $****
3,001 to 10,000 units $****
10,001 to 20,000 units $****
20,001 to 25,000 units $****
</TABLE>
For purposes of calculating quantities pursuant to the above schedule,
sales of radios of all frequencies, including both complete radios and
radio units that are substantially complete except for packaging shall be
included.
These prices shall apply to both BRU's and SRU's in all antenna
polarizations and configurations. In the case of Slimline versions, the
price will be adjusted by an amount to be mutually agreed between the
parties reflecting only the change in material costs between AirStar and
Slimline packages to MTI.
**** Confidential treatment has been requested for the redacted portions. The
confidential redacted portions have been filed separately with the
Securities and Exchange Commission.
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The above prices shall be fixed for the volumes specified during the
Commitment Period. Variances of any kind, including production and
material variances, will be borne by MTI, and MTI shall enjoy the benefit
of any cost reductions initiated by MTI, including the cost reduction
plan submitted to Netro on June 27, 2000. However, savings from
engineering changes initiated by Netro will be deducted from the price
specified on a dollar for dollar basis, provided that these engineering
charges are presented to MTI for review and assessment of cost and
schedule impacts prior to release.
Prices for the first 1,000 units of each frequency (aggregating all
polarizations and configurations of that frequency) other than 26 GHz
shall be the same as the initial price for 26GHz radios (i.e. $****), but
Netro will also pay to MTI the amount per unit specified below as a
non-recurring engineering expense:
<TABLE>
<CAPTION>
Frequency NRE per unit
--------- ------------
<S> <C>
10GHz $****
28GHz $****
38GHZ $****
</TABLE>
Upon the completion of sale of 700 units of Product in any of the above
frequencies, the parties shall negotiate in good faith for 30 days to
establish volume pricing of that Product beyond the 1,000 unit level
based on pricing for the 26GHz Products, adjusted either up or down only
for actual cost differences to MTI between that Product and the 26GHz
Products. In the event the parties are unable to agree on such price, the
issue shall be submitted for mediation by a neutral third party agreed
upon by the parties. If after mediation no agreement is reached on volume
pricing for frequencies other than 26GHz, Netro shall have the option to
reduce its purchase commitment pursuant to Section 2 on an equitable
basis reflecting the exclusion of the frequencies for which no agreement
on volume pricing has been reached. In such event the minimum commitment
shall be at least 15,000 units, however.
4. Changes in Configuration
Netro shall have the right at any time and without charge or expense to
change the mix of frequencies, configurations and antenna polarizations
("Changes") reflected in the Blanket Purchase Order for which releases
have not yet been issued; provided that such Changes made by Netro are
pursuant to Section 4.a and 4.b of the Agreement.
Netro shall at all times release at least the next 2-month's worth of
Product deliveries under the Blanket Purchase Order. With respect to
Products for which a release has been issued, Netro shall have the right
to request changes among frequencies, configurations and antenna
polarizations, and MTI shall use its best efforts to comply with any such
changes on the same schedule as originally ordered. However, Netro shall
be liable for any additional costs and expenses incurred as a result
Changes to released Products so requested by Netro. In
**** Confidential treatment has been requested for the redacted portions. The
confidential redacted portions have been filed separately with the
Securities and Exchange Commission.
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addition, releases may be rescheduled pursuant to the terms of Section
4.b(iv) of the Agreement
5. Lead Times
Provided that releases of Products pursuant to the Blanket Purchase Order
are reflected in the latest Netro forecast (including a flex plan of up
to 30%) delivered pursuant to Section 4.a of the Agreement, MTI agrees to
deliver Products within four weeks of the date of release of such
Products by Netro.
6. First Articles
With respect to approximately 25 units of 28GHz Products and 20 units of
39 GHz Products designated as first articles, Netro agrees to pay to MTI
an additional amount to be mutually agreed between the parties for
non-recurring engineering expenses and purchase price variances.
Both parties understand that MTI has purchased limited quantities of 28
and 39 Ghz material at lower volume and higher cost and has proposed an
additional purchase price variance to Netro. This proposed variance will
be settled by both parties negotiating in good faith within two weeks
after the signing of this Amendment.
7. Non Compete
The quantities specified in this Amendment are agreed to be sufficient to
require MTI to comply with the provisions of Section 14 of the Agreement.
8. Capitalized Terms
Capitalized terms used in this Amendment shall have the meanings
specified in the Agreement.
9. Effect on Agreement
Except as expressly amended by this Amendment, the Agreement shall remain
in full force and effect.
The parties have signed this Agreement as of the date indicated in the preamble.
Netro Corporation Microelectronics Technology, Inc.
By: /s/ Michael T. Everett By: /s/ Chi C. Hsieh
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Michael T. Everett Dr. Chi. C. Hsieh
Executive Vice President Vice Chairman
and Chief Financial Officer
/s/ Gideon Ben-Efraim /s/ Wesley Huang
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