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EXHIBIT 10.9
[PLEXUS LOGO]
Comprehensive Professional Services Agreement
This Agreement is hereby entered into on this 19th day of July, 2000 by and
between Sitara Networks, Inc., of 60 Hickory Drive, Waltham, MA 02451
(hereinafter "Customer") and Plexus Corp. of 55 Jewelers Park Drive, Neenah, WI
54956, (along with its wholly-owned subsidiaries Plexus Technology Group, Plexus
Electronic Assembly, and SeaMED, a Plexus Company hereafter collectively
referred to as "Plexus".)
A. PRODUCT DEVELOPMENT AND PROTOTYPE PHASE INCLUSIVE (Prototype Phase inclusive)
The terms and conditions set forth in this Section A, Product Development and
Prototype Phase, as well as the terms and conditions set forth in Section C,
Standard Terms and Conditions, shall be applicable to this portion of the
Agreement.
1. PROGRAM
Plexus will undertake for the Customer a Program which could also
include a prototype program, defined in the accompanying Proposal which
this Agreement is part of. The activity described in the accompanying
Proposal will be referred to as the "Program". Prototype program, if
applicable, will be defined at the time the program is defined in
writing by the Customer.
a) At the Customers request, Plexus will provide a
bi-monthly or as agreed upon by both parties,
detailed engineering report showing progress of the
agreed to Program and schedule.
b) From time to time, Plexus and the customer may
redefine, revise, enlarge, amend, abandon, or
undertake a new phase of activity as an addition to
the Program. These revisions to the Program shall be
defined in writing and agreed upon by both parties.
Any additional cost associated with the revisions
shall be quoted by Plexus and authorized by the
Customer before work can proceed on them. Except for
appropriate changes in objectives, schedules and
budgets, all additional work shall be conducted under
the terms of this Agreement.
c) Unit cost estimates provided in this Proposal or
during the course of the Product Development Phase
are not binding and are for informal use only.
d) Sections B.1. and B.2.h) also apply to prototype
programs.
2. DRAWINGS, RECORDS AND MODELS
At this time, Plexus will develop all records, sketches, original
drawings, photographs, prototypes, or finished models and the use
thereof are the exclusive property of the Customer. Normally any such
items, which are of continuing value to the Customer, are returned to
the Customer. In order to avoid questions regarding value, the customer
will issue written instructions to Plexus within sixty (60) days
following termination or completion of the Product Development Phase
for the disposition all such items. Plexus is authorized to determine
the disposition of any such items, which are not covered by written
instructions.
At the completion of the Product Development Phase, the customer will
receive hard copies and/or magnetic medium of the files generated as a
result of the Product Development and Prototype Phase. These
deliverables are described in the Proposal. Customer will be
responsible for maintaining and archiving the deliverables in a
suitable environment.
3. COMMITMENT TO MANUFACTURE
Customer understands that Plexus desires to manufacture the product at
the end of the program. Customer understands that manufacturing of the
product by a competitor of Plexus is undesirable to Plexus. Should
Customer manufacture the product outside Customer's facilities,
Customer will work with Plexus in good faith to ensure that Plexus is
awarded the manufacture of the product, provided Plexus is cost
competitive and capabilities analysis is proven.
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4. PROTOTYPE UNITS
Engineering and Pre-production Prototypes: During the Product
Development and Prototype Phase, Plexus may generate several versions
of the unit to verify design concepts. The number of prototypes and/or
pre-production units that Plexus will deliver to the Customer is
outlined in the body of the proposal. These prototypes may or may not
meet the requirements of the product specification. Once these units
are built, any modifications (hardware, software, or mechanical)
required as a result of further testing will be done by Plexus on a
time and material basis.
5. ON-GOING SUPPORT
At the conclusion of the Product Development and Prototype Phase of the
Program, Plexus and the Customer will jointly review the entire Program
to assure compliance with the Program Specifications. When this has
been completed, Plexus will notify the Customer in writing that this
Phase has been completed, and the Customer will have thirty (30) days
to respond by identifying errors or omissions they believe should be
corrected by Plexus under this Agreement. After that period, the
Customer requests for on-going support will be handled on a time and
materials basis at Plexus' then current billing rates.
6. COMPENSATION, CHARGES, AND BILLING
a) Unless other specific arrangements are agreed upon,
Plexus will invoice the Customer each month for
services rendered up to the total amount specified in
the Proposal. Invoices are subject to terms of net
amount due in thirty (30) days following the date of
the invoice.
b) Unless specifically stated to the contrary in the
Proposal, the following parts and/or services are not
included in the base Proposal and may be an
additional billing monthly as costs are incurred as
stated in Customer authorized quotation.
1. Parts, PCBs and freight which may be
required for project, breadboard and/or
prototypes, plus actual cost plus defined
mark-up.
2. Tooling charges for custom components
such as graphics, plastics, metal, etc. -
actual cost plus defined mark-up.
3. Telephone, fax, and travel expenses
incurred by Plexus in pursuing the
customer's objectives and directives -
actual cost.
4. Any travel required by Plexus in pursuing
the Customer's objectives and directives
will be billed at the normal hourly rate of
the personnel performing the work for the
Customer, with a maximum day billing of 8
hours plus any expenses incurred.
5. Services of consultants or other outside
personnel retained by Plexus will be
invoiced to the customer at a rate
commensurate with Plexus' in-house rates or
actual cost plus defined mark-up.
6. NRE and Tooling: Markup percentage on NRE
is 10%. Plexus will make reasonable efforts
to minimize tooling and NRE charges
including competitive quoting. Customer has
the right to review NRE and tooling quotes.
Customer has the right to alternatively
source NRE materials if NRE pricing cannot
be mutually agreed upon between the parties.
7. PRODUCT DEVELOPMENT CANCELLATION
During the Product Development and Prototype Phase, Customer may cancel
this project upon providing forty-five (45) days written notice to
Plexus. In such an event, the Customer shall be responsible for all
expenses incurred through the effective date of cancellation,
including, but not limited to, all labor undertaken and all materials
purchased or ordered prior to said effective date. To help minimize the
impact of cancellation charges, Plexus will attempt to restock
components at the supplier, resell the components, and/or utilize the
components on non-customer assemblies.
8. ADVANCED PROCUREMENT OF COMPONENTS/TOOLING
Plexus may, with customer prior approval on dollar value exceeding $500
procure for assemblies for either Prototype or Risk Reduction any items
that requires Customer to meet ship date requirements. Any deviation
from the Supplied Approved Vendor List "AVL" (or franchised
distributor) requires Customer prior approval.
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B. MANUFACTURING PHASE
The terms and conditions set forth in this Section B, Manufacturing Phase,
Section A, Product Development Phase, as well as the terms and conditions set
forth in Section C, Standard Terms and Conditions, shall be applicable to this
portion of the Agreement.
1. DEFINITIONS
For the purpose of this Manufacturing Phase:
"Long Lead Time Component(s)" shall mean all of those individual parts
and materials whose current lead times extend beyond forty (40)
business days. The Long Lead Time Components may, from time to time, be
reviewed by Plexus and Customer, at the request of either party due to
possible changes in market conditions of supply and demand affecting
the procurement by Plexus of the Components and/or Long Lead Time
Components for the assemblies hereunder. Any changes resulting from
such review shall be with the mutual written agreement of Plexus and
Customer.
"NCNR Component(s)" shall mean those parts that are not cancelable once
placed on order with Plexus suppliers, and are not returnable once
delivered to Plexus. The NCNR Component(s) may, from time to time, be
reviewed by Plexus and Customer, at the request of either party due to
possible changes in market conditions of supply and demand affecting
the procurement by Plexus of the Components and/or NCNR Component(s)
for the assemblies hereunder. Any changes resulting from such review
shall be with the mutual written agreement of Plexus and Customer.
"Special Component(s)" shall mean those parts that have special
procurement conditions such as limited change parameters or other
special liability conditions that are required by Plexus' suppliers.
The Special Component(s) may, from time to time, be reviewed by Plexus
and Customer, at the request of either party due to possible changes in
market conditions of supply and demand affecting the procurement by
Plexus of the Components and/or Special Component(s) for the assemblies
hereunder. Any changes resulting from such review shall be with the
mutual written agreement of Plexus and Customer.
"Monthly Rolling Quantity Forecast of Delivery Requirements" shall mean
the written documents provided to Plexus by Customer each month
indicating the delivery requirements projected for the next twelve (12)
months.
"Obsolete Components" shall mean all material used in Buyer's product
for which there is no current or future demand.
"Inactive Components" shall be all material which is non-obsolete
material with a balance that is greater than zero after all demand has
been met.
"Excess Components" shall be all material with a balance that is
greater than zero after six (6) months that will be consumed by demand
beyond six (6) months.
2. AUTHORIZATION OF WORK PROCUREMENT OF MATERIALS
The following terms will apply:
a) The purpose of this section is to define the methods
under which Plexus will procure materials to support
manufacturing of product for the Customer. The intent
is to provide the Customer with flexibility to alter
and/or cancel schedules within a reasonable period of
time while at the same time minimizing Plexus
liability that is a result of those alterations and
cancellations. In order to offer the best possible
price, Plexus does not attempt to build unanticipated
carrying charges into its price. When changes in
Customer requirements occur that cause Plexus to
incur unanticipated expenses that are the result of
Customer actions, the Customer is expected to
reimburse Plexus for the costs incurred.
b) For each assembly and/or board level to be
manufactured, Plexus establishes a manufacturing lead
time, which is the number of business days it will
take, an average, to receive and kit all
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components, assemble, test and ship the lot, unless
moved to Finished Goods Inventory ("FGI"). Unless
otherwise noted, this manufacturing lead-time is
twenty (20) business days. Plexus agrees to review
the manufacturing lead-time after three (3) months of
production of the product, and thereafter mutually
agree to any adjusted manufacturing lead-time. Plexus
schedules all components for a particular lot of
assemblies to arrive one manufacturing lead-time
prior to the Customer due date. Plexus then uses this
information, together with the Forecast and Purchase
Order information as defined below, to place
commitments to its suppliers for materials.
c) At the beginning of each month, Customer will provide
a twelve (12) month rolling forecast of total
requirements listing top level assembly and/or board
level assembly requirements by month. This monthly
rolling forecast shall be used by Plexus to determine
the Components and/or the Long Lead Time Components,
NCNR Components and/or Special Components that Plexus
must obtain and/or procure and/or inventory, and
unless otherwise agreed to, Plexus will negotiate
pricing contracts with its suppliers based upon the
forecast.
d) For purposes herein current month shall mean a
rolling four (4) week window. Changes from the
previous month's Purchase Orders are allowed to the
current Purchase Orders as follows:
i) Current Month: No change allowed.
ii) Second Month: Up to 50% reduction
or increase.
iii) Third Month: Up to 75% reduction
or increase.
iv) Fourth Month (and beyond) As required;
increase or decrease.
Changes in excess of these parameters may be mutually
agreed to by Plexus and Customer.
Changes to the monthly rolling Forecast may result in
an excess inventory position (due to component market
conditions), the impact for which is not considered
in the original cost of the assembly. In addition,
Plexus may have to place orders for quantities of
components in excess of that required to support
Customer requirements. This may be as a result of
minimum order size requirements or standard package
sizes from the supplier. In the event that the
monthly rolling Forecast does not define component
consumption of sufficient magnitude to eliminate the
excess inventory within sixty (60) business days,
Plexus will notify Customer of its excess inventory
position of Components and/or Long Lead Time
Components, NCNR Components and/or Special Components
that Plexus has procured and is inventorying and/or
has on order with its suppliers. Upon receipt of such
notification, Customer will purchase the excess
inventory at Plexus' actual cost plus the agreed upon
quoted material mark-up. Payment terms are net thirty
(30) days.
e) At the end of each quarter, Customer will issue
Purchase Orders ("POs") for top level and/or board
level assemblies in accordance with, but not limited
to the monthly rolling Forecast of total
requirements. These POs will cover the next quarter's
total requirements. The pricing for that quarter's
POs will be reviewed for cost reductions the last
month of the prior quarter. There is a targeted price
reduction at a minimum of every other quarter. If
Plexus reduces cost, they keep 50/50% - if Customer
reduces cost it is all passed along to the Customer.
f) Plexus shall procure in advance of Customer POs for
assemblies pursuant to the monthly rolling Forecast
for each top level and board level assembly, the
Components and/or Long Lead Time Components, NCNR
Components and/or Special Components, as required for
each top level and board level assembly. Plexus shall
purchase all components in accordance with Customer's
approved vendor list (AVL), exclusively. Any
deviation from the AVL must be authorized in writing
by Customer prior to purchase by Plexus.
g) Customer may request that Plexus purchase from
Customer certain components that the Customer has in
its inventory as a result of the transfer of new
business to Plexus. Plexus and Customer will
negotiate in good faith to determine pricing and
title transfer of such inventory. In addition, open
component purchase order(s) with Customer's suppliers
may be transferred to Plexus upon mutual agreement.
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h) Customer will communicate a monthly Production
Schedule to Plexus outlining the top level assembly
and/or board level production requirements. The
Production Schedule will be firmed for the current
month fifteen (15) business days prior to the start
of that month, will be within Forecasted quantities,
and have a six (6) month rolling horizon. Changes to
the Production Schedule are allowed as follows:
(1) Current Month: No change Allowed.
(2) Second Month: Up to 50% reduction.
(3) Third Month: Up to 75% reduction.
(4) Fourth Month (and beyond) As required; increase
or decrease.
Changes to the Production Schedule within the current
month may be mutually agreed to by Plexus and
Customer.
i) At any time during the current month,
Customer may exercise an increase or
decrease in delivery requirements
(Flexibility Quantity). This Flexibility
Quantity is limited to a maximum
accumulation of the Flexibility Percentage
outlined in Attachment A (to be defined) for
each top level and board level assembly, for
the current month's production based on the
average of the current sixty (60) business
days of the Forecast. This Flexibility
Quantity will be available within ten (10)
business days of the Customer request.
Additional Flexibility Quantity may be
mutually agreed to between Plexus and
Customer Any finished goods inventory (FGI)
at the end of the current month will be
netted from the Forecast in accordance with
the change provisions of this Agreement.
Customer understands and agrees that there
may be associated costs with the efforts
regarding this section and imposed by
Plexus, which shall be borne by the
Customer.
ii) For Production Schedule decreases issued
within the current month beyond the
allowable Flexibility Quantity decrease, the
Customer will pay full price and accept
title and risk of loss for completed
assemblies and any work in process materials
and labor.
(1) Accept shipment of the completed
assemblies within the current month
as originally scheduled; or
(2) Pay full price and accept title and
risk of loss for completed
assemblies any work in process
materials and labor.
iii) For Production Schedule decreases issued
outside the current month and beyond the
allowable Production Schedule decrease
parameters, the Customer will:
(1) Pay for and accept title and risk
of Loss for the value of the
components (cost plus the agreed
upon quoted material markup) which
Plexus is unable to return or
reschedule to meet the new schedule
requirements; and
(2) Pay Plexus for any additional cost
from supplies resulting from the
prescheduling.
iv) For Production Schedule increases beyond the
allowable Flexibility Quantity, Plexus will
make its best effort to obtain the
components necessary to meet Customer
requirements. However, Plexus may be
unsuccessful in obtaining all of the
components required to meet the Customer's
increased requirements at which Plexus will
provide satisfactory evidence to Customer of
such inability to meet such requirements. In
that situation, Plexus reserves the right to
Customer payment of the value of all
inventory in house as of the delivery date
that is a result of the increased
requirement, which will be agreed upon by
Plexus and Customer.
i) Engineering Change
The term "Engineering Change(s)" (hereinafter called
"EC" or "EC's") shall mean those mechanical,
software, or electrical design and/or specification
and requirement changes which, if made to the
assemblies to be delivered hereunder, would affect
the schedule performance,
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reliability, availability, serviceability,
appearance, dimensions, tolerance, safety or purchase
price of such assemblies or which would require
additional approval test.
Plexus may determine that Engineering Changes
will affect its ability to maintain the delivery
schedule, due to the lead time of newly specified
parts and/or the impact of substantial rework or
modification. Under these circumstances, Plexus
reserves the right to define a new Production
Schedule for delivery and treat this as a
Production Schedule Change, with the Customer
liability as defined under Section 2 (g)
(ii)(iii) and (iv) above.
Upon receipt, Plexus shall review Customer's
proposed EC and Plexus shall give to Customer a
written evaluation of the EC, stating Plexus'
cost to implement the EC (including the cost to
modify any tooling), the excess quantity of
Components (including Long Lead Time Components,
NCNR Components and/or Special Components) Plexus
has inventoried and/or has on order with its
suppliers that are excess due to the EC, and
associated costs and expenses such Components
and/or Long Lead Time Components, NCNR Components
and/or Special Components that Customer shall be
liable for and the cost savings, if any,
resulting from the EC, and the expected effect on
the Production Schedule, availability and/or
purchase price of such assemblies, or which may
require additional approval tests by Customer.
Plexus will submit its written evaluation to the
Customer within five (5) business days after
receipt of the proposed EC, or in conjunction
with Customer's stated timeframe.
j) Customer Supplied Parts
The Customer may provide certain components required
to build Customer's assemblies. The Customers
inability to provide parts in a timely manner may
effect Plexus' ability to meet its delivery schedule
and may cause Plexus to incur extraordinary expenses
to hold Plexus purchased material and/or labor in
process. Under these circumstances, Plexus reserves
the right to define a new Production Schedule for
delivery based upon component availability
information from the Customer and treat this as a
Production Schedule change, with the Customer
liability as defined under Section 2 (g) (ii)(iii)
and (iv) above.
k) Minimum Component Purchases
Plexus may have to place order for quantities of
components in excess of that required to support
Customer requirements. This may be as a result of
minimum order size requirements or standard package
sizes from the supplier. The customer will agree to
have the cost of the excess components amortized over
a maximum of six (6) month's requirements, or will
place a purchase order separately for the excess
components.
1) Obsolete, Inactive and Excess Inventory coverage
Customer and Plexus agree to review obsolete,
inactive and excess component(s) inventory on a
monthly basis, and to agree to disposition of such
material. Customer further agrees to issue monthly
Purchase Orders for actual purchase price plus margin
of all obsolete, inactive and excess materials(s),
due to changes in Customer's demand.
m) Cancellation
Customer may cancel requirements defined in orders
and/or forecasts at any time before the scheduled
delivery date. Any assembly requirements canceled
within the manufacturing lead-time of the scheduled
delivery date will be invoiced at the full agreed to
price for the completed assembly.
For assembly requirements canceled outside the
manufacturing lead time of the scheduled delivery
date, Customer's liability to Plexus will be the
value of the components in Plexus' inventory
(including the full markup as defined in the Plexus
quotation), and other components for which Plexus has
liability but which are not in Plexus inventory, as
well as payment for any and all in-process
manufacturing costs and expenses, and reasonable
administrative costs and expenses. Plexus will
deliver an itemized list of these costs to customer.
Customer agrees to pay the costs identified by Plexus
within thirty (30) business days of notification of
such costs. To help
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minimize the impact of cancellation charges, Plexus
will attempt to restock components at the supplier,
resell the components, and/or utilize the components
on non-customer assemblies.
n) Cost Reduction
Cost Reductions will be reviewed by both parties
quarterly. Plexus initiated cost reductions will be
shared 50/50 for the term of this Agreement. Customer
initiated reductions will be passed through at full
value. Actual cut-in reduction will based upon, at
minimum, inventory at Plexus and committed on-order
Product with Plexus' suppliers.
o) Customer Property
Tooling and consigned material - Plexus has the
responsibility to have proper security, and material
storage. Customer shall be responsible for repairing,
upgrading, replacing and/or maintaining the materials
and/or equipment consigned to Plexus. However, Plexus
shall provide routine maintenance, of which
associated costs are borne by the Customer.
p) Cost Increases or Changes
Parties will meet quarterly to discuss cost increases
or changes due to parts demand and availability.
3. PACKAGING AND SHIPPING
a) Product will be shipped to the customer in a manner
that meets industry standard packaging requirements.
Plexus is not liable for design related packaging
issues but is liable for products improperly
packaged. Customer is responsible for the selection
of the shipping company unless otherwise directed.
b) Distribution Services: Plexus will provide Customer
with "Direct Ship" Distribution Services for the
specified product(s) identified in the Pricing Model
(Attachment D ), attached hereto and made a part
hereof. Prior to expanding these services for
additional product(s), Plexus and Customer must
review and mutually agree upon written changes to
this Agreement.
c) Upon manufacturing completion of Direct Ship product,
Plexus will invoice Customer and identify/store
product as Customer's Finished Goods Inventory in an
approved storage location. Consequent to the invoice
transaction, Customer assumes complete title,
liability, and ownership of the Customer's Finished
Goods Inventory, which includes insurance coverage
and loss of product. Plexus assumes no liability for
Customer's Finished Goods Inventory on the premise or
in transit.
d) At some point in time the Customer will provide
completely functional computer terminals, with
applicable hardware and software, dedicated printer,
and access to Customer's computer system.
Additionally, Customer will provide necessary
training and on-going computer support. At such time
immediately following the invoice transaction, Plexus
will "receive" Direct Ship product onto Customer's
computer system.
e) When Plexus receives signal to direct ship product,
Plexus will complete appropriate actions and
transactions on Customer's computer system to
package, per specifications, and ship product. Plexus
to ship product 3rd party. Freight charges related to
this activity shall be borne by Customer. Plexus will
guarantee same business day shipment of product for
domestic locations, if signal is received prior to
2:00 p.m. CST. For signals received after 2:00 p.m.
CST, Plexus will make every effort to ship domestic
locations the same business day, but will guarantee
next business day shipment. Plexus will guarantee
shipment of product for all international locations
within two (2) business days. If any order(s) or
combination of orders exceed agreed upon Finished
Good Inventory "FGI" levels this subsection 3(e) does
not apply and shall not be enforced.
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The cost to provide these Direct Ship Distribution
Services will be included in the unit price of each
assembly shipped. Payment terms and conditions shall
be pursuant to this Agreement.
g) Any EC's that will require re-work and/or upgrade for
Customer Finished Goods Inventory shall be the sole
liability of the Customer and follow standard
re-work/upgrade policies and procedures as specified
in this Agreement.
4. FINISHED GOODS INVENTORY
a) Finished Goods Inventory Introduction
The Customer has requested Plexus to begin building a
finished goods inventory ("FGI") of Customer's
product(s)hereinafter "finished assemblies or
product(s)") and store ("warehouse") such finished
assemblies on site at Plexus' facilities and/or
warehouse(s) after issuance of Customer's purchases
orders, for indefinite periods of time, until higher
level assembly or delivery instructions are issued by
the Customer.
b) Payment Terms related to FGI
Customer further agrees to and understands that once
Product(s) is receipted into FGI, Plexus shall issue
an invoice for that Product(s) and payment terms
shall be as set forth in Section 5 of this Agreement.
c) Cancellation of Purchase Orders related to FGI
The Parties agree that cancellation by the Customer
of any of the Purchase Orders issued to Plexus
relating to such finished goods inventory will create
material liability on behalf of the Customer, and
Customer agrees to abide by all the terms and
conditions set forth in Section C "Standard Terms and
Conditions" of this Agreement regarding cancellation
of Purchased Orders in the event of such
cancellation.
d) Purchase Orders related to FGI
The finished goods inventory quantities will be
determined by the purchase orders issued by Customer
to Plexus. Plexus agrees to place this product in FGI
based on the same terms and conditions set forth in
Section C "Standard Terms and Conditions" of this
Agreement.
e) Location of FGI
Plexus agrees to make available to Customer a
secured, segregated area at Plexus' facility for the
purpose of maintaining and storing Finished Goods
Inventory (hereinafter "FGI"). Plexus will furnish
sufficient heat and electricity, without charge to
Customer to adequately store such FGI. Plexus agrees
to maintain the storage area of the FGI in a clean
and orderly manner.
f) Storage of FGI
Customer agrees Plexus shall be allowed, without
Customer's prior consent written or otherwise, to
make any alterations, additions, or improvements in
or to the storage area premises storing Customer's
FGI, as Plexus deems necessary for any reason. If for
the safety of the FGI Plexus is forced to relocate
Customer FGI, Customer agrees to allow Plexus access
to the FGI as needed and as required by Plexus.
g) Stocking of FGI
Plexus shall stock FGI inventory in such a manner, in
Plexus' sole discretion, that is acceptable by the
Customer, and in Plexus' normal storage methods
relating to its engineering and manufacturing
services. Stocking requirements of customer may be
amended from time to time by mutual consent of both
parties and after a reasonable history of production
levels and/or demand is established. Shipments of FGI
inventory to the Customer's dock shall be handled in
the same manner as set forth in this Agreement. Such
inventory will remain the property of Plexus and
Plexus shall retain title and risk of loss to the FGI
until Customer issues a Purchase Order for such FGI
and Plexus invoices Customer for such FGI. Upon
issuance of Customer PO and invoice of FGI all title
and risk of loss shall be passed to the Customer.
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h) Title and Risk of Loss related to FGI
Customer will assume all risk of loss or damage,
regardless of cause, to any of its property or any
property belonging to its employees upon transfer of
title and risk of loss of FGI to the Customer as
discussed previously. Plexus will at all times carry
adequate Worker's Compensation Insurance and such
appropriate insurance to cover its employees that are
mandated by federal or by state law of the state(s)
in which the employees perform work relating to
Customer's FGI. Plexus agrees to take all necessary
precautions to prevent injury or death to persons or
damage to property during the course of its
performance under this Agreement regarding Customer
FGI. However, Customer will maintain adequate risk of
loss, all, general liability, or other insurance, as
appropriate, for all FGI of which title and risk of
loss has been transferred to the Customer. Customer
shall name Plexus as additional insured, as evidenced
by a Certificate of Insurance, and evidencing such
policies, within thirty (30) days after execution of
this FGI Agreement and upon request by Plexus
thereafter.
i) Quantity related to FGI
The FGI inventory and quantity of FGI to be
maintained by Plexus shall be mutually agreed upon
during the term of this Agreement and will be
specified by the purchase orders issued by the
customer to Plexus. Plexus may delete or discontinue
any type of FGI inventory from its storage area in
Plexus' facilities at any time, with sixty (60) days
prior written notice to Customer, or mutual written
agreement between the parties.
j) Taxes related to FGI
Notwithstanding anything to the contrary, Customer
further agrees to and is responsible for the payment
of personal property taxes, or additional corporate
income taxes, if any, incurred by Plexus, on FGI
inventory sold to Customer resulting from the sale of
FGI. Customer further agrees to assist Plexus with
the reporting requirements of any personal property
or corporate income taxes upon Plexus' request, if
necessary.
k) Plexus Personnel related to FGI
The storage area of Customer's FGI will be operated
by Plexus' personnel who will remain employees of
Plexus and on Plexus' payroll and will not be
considered employees of Customer. All of Plexus'
employees shall be subject to the reasonable rules
and regulations at any time promulgated by Plexus for
the safe, orderly, and efficient conduct of
operations of Customer's property. Customer shall
designate a specific managerial or person regarding
Customers FGI.
1) UCC Filing related to FGI
Customer may, after prior written approval of Plexus,
and only after title and risk of loss has been
transferred to the Customer, file a Uniform
Commercial Code Form 1 (UCC-1), or any other UCC
form, as evidence of its title, or the creation of a
lien, of its inventoried FGI Product in Plexus'
facility, with any governing federal, state or city
agency or public records office, as necessary. Plexus
agrees to assist Customer, at Customer's sole
expense, with any necessary paperwork to secure such
notice of lien and/or evidence of title, as requested
by Customer.
5. PRICING AND PAYMENT
As full compensation for the assemblies provided by Plexus hereunder
and its obligations contained herein, Customer will make payments
subject to terms of net amount due twenty (20) days following the date
of the invoice. Plexus and Customer will review the status of credit
history on a regular basis, and, after sufficient credit history is
established by the Customer, Plexus may amend payment terms at its sole
discretion. Unless stated otherwise, prices quoted are F. 0. B. Plexus'
manufacturing facility. Unless specifically stated otherwise, all
quoted prices are firm for thirty (30) days from the date of quotation.
Quotations are based on drawings, specifications, and other written
information available to Plexus at the time of quotation. Any
additional data supplied at the time of purchase may necessitate price
adjustments. Any manufacturer's tax, retailer's occupation tax, use
tax, sales tax, excise tax, or tax of any nature whatsoever imposed on
or measured by the transaction between Plexus and Customer shall be
paid by the Customer in addition to the prices quoted or invoiced. In
the event Plexus is required to pay such tax, the Customer shall
reimburse Plexus therefore, within ten (10) days of written demand by
Plexus to the Customer for such reimbursement. If the transaction
between
Sitara Networks-Final Execution Comprehensive Professional Services Agreement
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<PAGE> 10
Plexus and the Customer is exempt from all such taxes, Customer shall
provide Plexus with a tax exemption certification or other document
acceptable to all taxing authorities at the time the order or contract
is submitted.
The parties further agree to the credit terms and conditions set forth
in Attachment A, "Payment Terms", dated February 3, 2000, and attached
hereto and made a part hereof. Plexus and Customer will review the
status of credit history on a regular basis, and, after sufficient
credit history is established by the Customer, Plexus will remove the
credit restrictions set forth in Attachment A, "Payment Terms", and all
business shall resume subject to the payment terms and provisions set
forth in this Section 3 Payment, above.
6. WARRANTY
PLEXUS EXPRESSLY WARRANTS THE WORK AS SET FORTH HEREIN. PLEXUS MAKES NO
OTHER WARRANTIES, EITHER EXPRESS OR IMPLIED (INCLUDING WITHOUT
LIMITATION WARRANTIES AS TO MERCHANTABILITY OR FITNESS FOR PARTICULAR
PURPOSES). IN ADDITION, THE FOLLOWING SHALL CONSTITUTE THE EXCLUSIVE
REMEDIES FOR CUSTOMER FOR ANY BREACH BY PLEXUS OF ITS WARRANTIES
HEREUNDER.
Plexus warrants the assemblies against all defects in ) workmanship -
where the assemblies do not conform to the agreed upon manufacturing
specifications, for a period of fifteen (15) months from date of
shipment, provided agreed upon testing is conducted by Plexus prior to
shipment, except as set forth below. If the materials (components)
furnished contains a manufacturer's warranty, Plexus hereby extends, to
the extent possible, such Component Manufacturers' warranty to
Customer. Plexus shall repair or replace, at Plexus' option and free of
charge, any portion of the assemblies which is returned to Plexus'
factory securely packaged, insured and with freight pre-paid within the
warranty period, and which upon examination Plexus determines in its
sole discretion to be defective in workmanship. Plexus will return the
repaired or replaced assemblies to customer with freight pre-paid.
Plexus is responsible for determining root cause of any defective
assemblies, and will work with Customer and material supplier to
develop corrective actions. Customer and Plexus will work cooperatively
in pursuing corrective action if a third party is determined to cause
failures. In the event Customer and Plexus are unable to reach an
agreement for a resolution of a deficiency caused by a third party,
then Plexus will recommend the final solution and/or corrective action
plan to remedy any defect caused by such third party. Plexus will allow
Customer to participate in any discussions with such third party as
requested.
This Warranty does not apply to:
a) Design deficiencies. Plexus expressly disclaims any
warranty responsibility for design deficiency, and
for infringement for the like.
b) Any modifications and/or alterations made to the
Assemblies, or any portion thereof, without the
express written authorization of Plexus obtained in
advance. If this is the case, all warranties made
herein are invalid and Customer shall have no further
remedies hereunder against Plexus.
c) Any defect, loss or damage resulting from theft,
loss, fire, misuse, abuse, negligence, vandalism,
acts of God, accident, casualty, power failures or
surges, alteration, modification or failure to follow
installation, operation or maintenance instructions,
or any other cause beyond Plexus' reasonable control.
d) Any defect, unless written notice of the defect is
given by the Customer to Plexus as soon as practical
after the defect first appears. The right to make a
claim under this warranty expires fifteen (15) months
from the date of shipment. Actions taken by Plexus to
correct any defect shall not extend beyond this
period.
e) Components incorporated into the assemblies.
IN NO EVENT, REGARDLESS OF CAUSE, SHALL PLEXUS BE LIABLE FOR
INCIDENTAL, INDIRECT, SPECIAL, OR CONSEQUENTIAL DAMAGES OR LOSSES OF
ANY KIND, WHETHER IN CONTRACT OR IN TORT, ARISING FROM ITS PERFORMANCE
UNDER THIS AGREEMENT.
Sitara Networks-Final Execution Comprehensive Professional Services Agreement
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<PAGE> 11
7. TEST EQUIPMENT
Unless otherwise noted, any test equipment quoted herein is warranted
to be free from defects in material and workmanship for a period of one
(1) year from the date of certification. After the warranty period the
equipment will be repaired on a time and materials basis. Labor will be
charged at the current billing rate. Parts will be charged at cost plus
markup. Travel expenses will be added to any repairs including travel
between Plexus and/or one of its affiliates. All dedicated test/burn in
fixtures will be progress billed monthly up to 95% of the program cost.
The remaining 5% is due upon fixture certification.
8. DOCUMENTATION
The Customer is responsible for supplying Plexus with complete
documentation. This includes, at a minimum, (three) 3 complete and
current sets of documentation including, at a minimum, all prints,
softwares, artwork, and bill of materials with manufacturer and part
number, and any specifications, including test specializations or
procedure, called for on any customer prints. It is the Customer's
responsibility to assure that Plexus receives timely notification of
any changes to the documentation, and updated prints reflecting the
changes.
9. TOOLING
All tooling produced or obtained for the assemblies delivered hereunder
and paid for by Customer shall become and remain the property of
Customer at the time payment in full is received for the tooling by
Plexus. Such tooling shall be used by Plexus only for the benefit of
Customer, and shall be delivered to Customer upon request. If Customer
requests the return of any tooling from Plexus and Plexus determines
the return of such tooling prevents Plexus from providing the
assemblies to Customer, then Plexus shall inform Customer in writing,
and Customer and Plexus shall negotiate a mutually acceptable
resolution.
Customer, at its sole discretion, may consign to Plexus, items,
including, but not limited to, materials and/or equipment relating to
the production and/or testing of the assemblies at Plexus' location.
The material and/or equipment shall be utilized by Plexus only for the
production and/or testing of the assemblies. Customer shall assist
Plexus in installing the materials and/or equipment and shall provide
training and maintenance instructions, if requested by Plexus or
required by Customer. Customer shall be responsible for repairing,
upgrading, replacing and/or maintaining the materials and/or equipment
consigned to Plexus. However, Plexus shall provide routine maintenance.
All tooling quoted herein is quoted at the cost to Plexus from its
suppliers. A charge of 10% will be added to all tooling with a cost of
less than $5,000, and a 5% charge added to all tooling with a cost of
$5,000 or greater.
10. TERMINATION AND CANCELLATION OF MANUFACTURING PHASE
During the Manufacturing Phase, either party shall have the right to
terminate any or all activities under this agreement for any reason and
at any time upon ninety (90) days prior written notice to the other
party. Plexus agrees to immediately terminate the specified activity
pursuant to this Agreement upon termination or cancellation. If this
entire Agreement is terminated, all existing Customer POs shall be
deemed to have been canceled unless otherwise specified by Customer.
Customer agrees to reimburse Plexus for unrecovered expenses. In
addition, Customer and Plexus shall negotiate a settlement of charges,
if any, for reasonable and allowable expense directly incurred by
Plexus including, but not limited to, manufacturing process ramp down
costs and packaging and transportation costs and expenses, and the
return to Customer of any Customer owned material(s), tools, equipment
and/or any other related items, consistent with Section B2, above.
If this entire agreement is terminated, then Plexus shall:
a) Deliver to Customer all completed assemblies which
conform to the applicable and then current
specifications and requirements; and
b) Return to Customer, at Customer's expense, all
tooling, equipment, Components and/or Long Lead Time
Components, drawings, specifications, documentations
and supplies that are owned by Customer pursuant to
the Agreement; and
c) Prepare and submit to Customer an itemized document
to include the quantity of assemblies in the
production process.
Sitara Networks-Final Execution Comprehensive
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<PAGE> 12
Upon such termination, all existing Customer POs shall be deemed to
have been canceled unless otherwise specified by Customer and Customer,
agrees to reimburses Plexus for unrecovered expenses, consistent with
section B2, above.
C. STANDARD TERMS AND CONDITIONS
The terms and conditions set forth in this Section C, Standard Terms and
Conditions shall be applicable to Product Development and Prototype Phase, and
Manufacturing Phase of this Agreement.
1. MUTUAL COOPERATION
Plexus represents that it will pursue the Agreement to the best of its
ability and in the best interest of the Customer, and the Customer
represents that it will cooperate with Plexus in reaching the
objectives of the Agreement. Plexus will appoint a project manager that
is acceptable at al times with Customer for the duration of the
Agreement and will require the Customer to establish one person to
coordinate all activities through. In the event that the project
manager is not operating in the best interest of the Customer, the
Customer shall contact Plexus to discuss Agreement related concerns
and/or complaints.
2. CONFIDENTIAL INFORMATION
Plexus and the Customer will use best efforts to prevent the disclosure
of any confidential information, unless specifically instructed
otherwise in writing by the disclosing party, and excepting in such
instances where Plexus may be compelled by law to make disclosures. The
mechanisms for controlling and processing confidential information may
be covered under a separate Confidential Disclosure Agreement (if
required).
3. FORCE MAJEURE
Plexus shall not be liable for any delay in or failure of performance
under this agreement due to any contingency beyond Plexus' control,
including, but not limited to, an act of God, war, insurrection, fire,
riot, strike or labor dispute, sabotage, act of public enemy, flood,
storm, accident, equipment failure, inability to obtain suitable or
sufficient labor or material, laws or regulations, or any other cause
beyond its reasonable control.
4. INTELLECTUAL PROPERTY RIGHTS
All patents, copyrights, trademarks, or other rights pertaining to
inventions, developments, or improvements made in the course of the
work, and funded by the Customer, are the property of Customer. Plexus
will, upon written direction from Customer, execute any and all papers
and documents prepared or submitted by Customer as may be reasonably
required to transfer or secure to Customer full title and authority
over such rights. Plexus will be compensated by Customer for time and
expense as incurred in this obligation at the then current billing
rates for those of its employees necessary for these purposes.
Customer agrees that it shall assume all responsibility for determining
whether the assemblies to be designed and assembled infringe an any
patent, copyright or trademark, and Customer shall indemnify and hold
harmless Plexus from any liability, including legal costs and expenses,
damages and attorney fees arising from any claim demand or suit,
including a claim by Customer, based on allegations or claims that the
assemblies or any design, patent, copyright, or trademark sought to be
obtained or obtained by Customer as a result of this agreement
constitutes an infringement of any patent, trademark or copyright of
the United States or any foreign county.
In the event any such claim or suit is asserted or instituted against
Plexus, Plexus shall promptly notify Customer of the assertion of any
such allegation or claim. Customer shall thereupon assume
responsibility for and conduct the defense of each assertion or suit at
its expense, and reasonable information and assistance for the defense
of same shall be provided by Plexus for which Plexus will be
compensated for time and expenses at its then current billing rate.
Plexus shall have the right, at its expense, to be represented in the
defense of any such assertion or suit by counsel of its own selection.
The prices quoted do not include, unless specifically stated otherwise,
the cost for testing and/or submittals for assembly approvals or any
annual file maintenance fee, such as for UL, VDE, CSA or FCC. Plexus
will assist Customer in obtaining such approvals and charge for same
services at Plexus' current hourly billing rate.
Sitara Networks-Final Execution Comprehensive
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<PAGE> 13
However, if Plexus has done the initial design for Customer, they agree
to use design practices that conform with all standard industry agency
requirements.
5. LIABILITY AND INDEMNIFICATION
Plexus will use its discretion to pursue the Agreement in the best
interest of Customer. Plexus will be under no liability to Customer or
otherwise for its choice of methods employed, the character or tests
and experiments performed, the results obtained, nor for the use which
shall thereafter be made by Customer of such results. IT IS UNDERSTOOD
THAT OTHER THAN THE WARRANTY SET FORTH IN SECTION B4, NO OTHER
GUARANTEES OR WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, ARE GIVEN BY
PLEXUS, INCLUDING, BUT NOT LIMITED TO ANY WARRANTIES OF MERCHANTABILITY
OR FITNESS FOR A PARTICULAR PURPOSE. PLEXUS SHALL NOT BE LIABLE FOR ANY
INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS)
SUSTAINED OR INCURRED IN CONNECTION WITH THIS AGREEMENT.
Customer will fully indemnify and hold harmless Plexus from any and all
liability, claims demands, costs and expense arising out of the use,
publication, and/or marketing of the results of Plexus' efforts, the
functioning of the assemblies or the product(s) which they are a pan
of, or any other matter resulting from Plexus' performance under this
Agreement, whether such liability, claims or demands be in the nature
of patent, trademark or copyright infringement, public or product
liability, contract liability, or otherwise during or following the
terms of this Agreement, and Customer shall, at its own expense, defend
any and all such actions based thereon and shall pay all attorney's
fees and cost and other expenses arising therefrom.
Plexus will not be liable for errors, or expenses which may be incurred
in its performance of this work which results from the engineering
and/or design of the Assemblies, or from Plexus' reliance upon
information, technological records, sketches, drawings, or prototypes
furnished by Customer or Customer's design engineering firm. Customer
will forthwith, during the term of this Agreement, notify Plexus of any
and all information, technology changes, or other facts relevant to any
aspect or phase of the Agreement.
6. ARBITRATION
All rights and remedies conferred by this Agreement, by any other
instrument, or by law are cumulative and may be exercised singularly or
concurrently. If any provision of this Agreement is held by any court
or governmental agency to be invalid, such invalidity shall not affect
the enforceability of any other provision(s) hereof. This Agreement and
any Purchase Orders issued hereunder shall be governed by and
interpreted in accordance with the laws of the Commonwealth of
Massachusetts. Unless otherwise agreed to in writing by the parties,
any controversy or claim arising out or relating to this Agreement, or
the parties' decision to enter into this Agreement, or the breach
thereof, shall be settled by arbitration through the American
Arbitration Association and in accordance with the Commercial
Arbitration Rules of the American Arbitration Association. The
arbitration proceeding shall be conducted and presided over by a single
neutral arbitrator chosen pursuant to American Arbitration Association
procedures. Decision of the arbitrator shall be final, binding, and not
subject to appeal or review; provided that, either party may request
that the arbitrator review and reconsider his or her decision, in whole
or in part. Judgment upon the award rendered by the arbitrator may be
entered in any court having jurisdiction thereof. The arbitration shall
be held in Boston, Massachusetts and the arbitrator shall apply the
substantive law of Commonwealth of Massachusetts except that the
interpretation and enforcement of this arbitration provision shall be
governed by the federal Arbitration Act. The arbitrator shall not award
either party punitive damages and the parties shall be deemed to have
waived any right to such damages.
7. CONSENT TO JURISDICTION AND APPLICABLE LAW
The parties hereby irrevocably submit to the jurisdiction of the courts
of the Commonwealth of Massachusetts in any action or proceeding
arising out of or relating to this Agreement, and the parties hereby
irrevocably agree that all claims in respect of such action or
proceeding may be determined by such courts. The parties hereby waive,
to the fullest extent possible, the defense of an inconvenient forum to
the maintenance of such action or proceeding, and the parties agree
that a final judgement in any action or proceeding shall be conclusive
and may be enforced in other jurisdictions by suit on the judgement or
in any other matter provided by law.
The parties hereby agree that this Agreement shall be governed by and
will be construed in accordance with the laws of the State of
Wisconsin, irrespective of the conflicts of laws provisions thereof.
Sitara Networks-Final Execution Comprehensive
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<PAGE> 14
8. NO RECRUITING
Plexus and the Customer agree that during the term of this program and
for twelve (12) months thereafter, it shall not solicit or recruit
(even though professional recruiters) the employees of the other. This
shall not preclude an employee of either Plexus or the Customer from
independently pursuing and securing employment opportunities with the
other on such employee's own initiative.
9. ENTIRE AGREEMENT
This Agreement, along with the proposal, and Confidential Disclosure
Agreement and/or quotation (if any) and Plexus' invoices, contains the
entire understanding of the parties pertaining to the subject matter
hereof, and no other agreements, oral or otherwise, shall be deemed to
exist or to bind the parties. Notwithstanding anything to the contrary
contained herein, the parties hereto agree that the terms and
conditions set forth herein and in Plexus' invoices, proposal and
Confidential Disclosure Agreement (if any), shall supersede any and all
terms and conditions submitted by the Customer in any document,
including but not limited to any terms and conditions contained in the
Customer's purchase order. This agreement may not be modified or
terminated orally, and no claimed modification, termination, or waiver
shall be binding unless in writing and signed by both parties.
Accepted and agreed to:
SITARA NETWORKS, INC. PLEXUS CORP.
ENGINEERING AUTHORIZATION:
By: /s/ Michael S. Palin By: /s/ [Illegible]
------------------------------- --------------------------
Title: Chief Financial Officer Title: Executive Vice President
----------------------------- / Tech. Group
------------------------
Date: 7/25/00 Date: 7/19/00
----------------------------- ------------------------
MANUFACTURING AUTHORIZATION
By: /s/ Susan E. Fennell By: /s/ Chuck Williams
------------------------------- --------------------------
Title: Director-Material Operations Title: Vice President
----------------------------- ------------------------
Date: 7/25/00 Date: 7/19/00
----------------------------- ------------------------
Sitara Networks-Final Execution Comprehensive
Professional Services Agreement 14
<PAGE> 15
[PLEXUS LETTERHEAD]
ATTACHMENT A
PAYMENT TERMS
December 13, 1999
Ms. Susan Fennell
Sitara Networks, Inc.
60 Hickory Drive
Waltham, MA 02451
Dear Susan:
I was requested to outline the information that Plexus Electronic Assembly will
require in order to finalize the credit arrangement between Sitara Networks, Inc
and Plexus Electronic Assembly Corporation. Along with the following
information, a standard credit application, including trade and bank references
will need to be completed.
1) Sitara Networks will provide to Plexus Electronic Assembly,
monthly confirmation of the available cash balances under Sitara's
control. Such confirmation shall be from the bank or investment
firm in which the funds are held. This information should be
forwarded to me by the 10th day following each month-end.
2) Sitara Networks will provide to Plexus Electronic Assembly written
confirmation that there are no restrictions against the use of
Sitara's existing cash balances and, that there is no outside
control of the use of these funds. A list of individuals
authorized to disburse these funds should be included.
3) Sitara will provide quarterly financial statements to Plexus
Electronic Assembly for review. Statements will be provided within
20 working days after the close of each quarter. All information
will be strictly confidential and for internal use only.
4) Sitara will provide cash deposits to cover all exposure created by
Plexus Electronic Assembly purchase orders for non-cancelable /
non-returnable material.
5) Initially, all products produced for Sitara will be invoiced after
completion and transfer to finished goods. These goods will become
the property of Sitara Networks, and Sitara will take title and
insurability at that point.
6) Invoice terms will be NET 30 days from invoice date, via wire
transfer. Payment to be received by Plexus Electronic Assembly on
the 30th day.
<PAGE> 16
December 13, 1999
Page Two
7) An initial credit limit of S400,000 has been established for
accounts receivable. If in the course of business this initial
limit is exceeded, you will be contacted and may be required to
pay some invoices before the NET 30 day term so as to remain
within the limit. Any increase in the limit will be based upon
length and status of credit history.
I thank you, in advance, for your cooperation in working to establish credit
standards, and look forward to a mutually beneficial relationship between our
two companies. If you have any questions or concerns, please contact me directly
at (920) 751-3625.
Sincerely,
/s/ Marty Verstegen
Marty Verstegen,
Controller
Plexus Electronic Assembly
Cc: Bob Kronser, Vice President, Sales and Marketing - Plexus Corp.
[PLEXUS LOGO]
The Product Realization Company
<PAGE> 17
ATTACHMENT B
FLEXIBILITY PERCENTAGES PER ASSEMBLY
To be determined at a later date by mutual agreement between the parties.
Customer: /s/ MSP / 7/25/00 Plexus: /s/ CW / 7/19/00
----------------- ----------------
Initial/Date Initial/Date
<PAGE> 18
ATTACHMENT C
REPORTING REQUIREMENTS
To be determined at a later date by mutual agreement between the parties.
Customer: /s/ MWP / 7/25/00 Plexus: /s/ CW / 7/19/00
----------------- ----------------
Initial/Date Initial/Date
<PAGE> 19
ATTACHMENT D
PRICING MODEL
To be determined at a later date by mutual agreement between the parties.
Customer: /s/ MWP / 7/25/00 Plexus: /s/ CW / 7/19/00
----------------- ----------------
Initial/Date Initial/Date
