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ACT MANUFACTURING, INC.
MANUFACTURING SERVICES AGREEMENT
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EXHIBIT 10.11
Confidential Materials omitted and filed with the Securities and
Exchange Commission. Asterisks denote omissions.
This agreement between ACT and Redstone Communications is in effect for a period
of one year as of 12/3/98
It is automatically renewed each month unless written notice is received.
ACT will require written notice 90 days in advance in order to cancel this
agreement.
1. ORDER ADMINISTRATION AND FORECAST MANAGEMENT
REDSTONE COMMUNICATIONS must have [**] worth of purchase orders in place
at all times. Customer must also have an additional [**] of forecast in
place at all times. Purchase orders must specify part number, quantity, rev
level, price and requested delivery dates. First 30 days are
non-cancelable, but can be rescheduled within the same Quarter. ACT will
schedule all material to arrive 21 days prior to requested in-house date at
Redstone Communications. Days 31-60 are non-cancelable but can be
rescheduled out to a maximum of 90 days one time only, as long as it
remains within the same Quarter (refer to guidelines below). Days 61-90 are
fully reschedulable/cancelable within the following guidelines:
Redstone Communications will be responsible for all excess custom and
unique material bought on their behalf. Redstone Communications will be
responsible for all excess created by non-cancelable/non-returnable items.
Redstone Communications will be responsible for all excess created by
purchasing of minimum order quantities and minimum package sizes. ACT will
plan material to support the forecast provided by Redstone Communications.
Redstone Communications must convert forecast at [**]% or be responsible
for NC/NR's, and custom/unique parts purchased to support orders and
forecast.
ACT will charge [**]% per month for items carried in inventory greater than
7 weeks as a result of reschedules.
ACT will charge [**]% for material returned to suppliers on the customers
behalf due to reschedules or cancellations.
ACT will charge a [**]% handling charge (based on the unburdened cost) for
excess or obsolete material which must be returned to the customer.
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ACT MANUFACTURING, INC.
MANUFACTURING SERVICES AGREEMENT
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Confidential Materials omitted and filed with the Securities and
Exchange Commission. Asterisks denote omissions.
2. PRICING
ACT will submit a formal quote to set pricing for the upcoming quarter. ACT
and Redstone Communications will meet every three months to review process and
material cost changes. New pricing for the upcoming quarter will be set at that
time. Major changes may be negotiated by either party during the quarter when
necessary.
All prices are F.O.B. shipping point, on any product not delivered directly by
ACT owned vehicles. Payment terms are Net 30 days.
Material cost reductions negotiated solely by ACT on behalf of the customer will
be split [**]% to each party for a period of one year.
3. FLEXIBILITY
ACT agrees to provide a [**]% upside in any given quarter commencing three
weeks from receipt of request. Redstone Communications will be informed in
advance of any charges associated with holding critical components in stock
(boards/ASICS/sheet metal, etc.). Redstone Communications assumes all risk for
ECO's to critical parts held in stock to support flexibility. Should Redstone
Communications exercise the full [**]% flexibility it will not again be
available until the lead time of the longest lead-time component.
4. CUSTOMER DELIVERABLES
Unless otherwise stated in writing, Redstone Communications agrees to
provide to ACT all information required to properly manufacture the product
(Attachment A). Redstone Communications agrees to provide all unique test
equipment, test procedures and software code required to isolate defects. ACT
disclaims liability for any non-manufacturing related defects, which such tools
did not isolate.
In the event that ACT is unable to debug particular product, after
exercising all resources internal to ACT, the customer is to provide Engineering
support necessary to ACT which shall culminate in the shipment of the product to
the customer. In said cases that both ACT and customer Engineering/Technical
support are unable to bring the subject product into working condition, the
product shall become the customer's responsibility. The product shall be
shipped, as is, to the customer, against an existing, open purchase order, and
will be tagged accordingly to identify it as a non-functioning product. The
"determined maximum time" spent on the board will be identified by part number,
and will become part of an attachment at a later time.
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ACT MANUFACTURING, INC.
MANUFACTURING SERVICES AGREEMENT
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Confidential Materials omitted and filed with the Securities and
Exchange Commission. Asterisks denote omissions.
5. APPROVED MANUFACTURERS
ACT will only purchase components specified and approved by CUSTOMER. Any
changes are subject to CUSTOMER's advance written consent. If CUSTOMER refuses
to give such consent or fails to respond within ten days of ACT's request
therefor and ACT has used its reasonable efforts to purchase from the approved
manufacturers and shortages or allocation sexist, ACT shall not be liable for
failing to deliver the affected Product.
6. WARRANTY
a) ACT warrants that the product provided under this Agreement will be free
of manufacturing defects for a period of one year from date of shipment. ACT
will, if permitted to do so, pass through to CUSTOMER any warranties for
components purchased for CUSTOMER. The warranty period for returned Product
shall be the balance of the original warranty period or ninety (90) days,
whichever is greater. CUSTOMER's sole remedy and ACT's sole obligation shall be
to repair or replace (at its option) the defective Product. Any Product returned
to ACT which, after inspection and test by ACT, is found to be free of defects
shall be subject to a "no Defect Found Charge."
b) This warranty is void if Product(s) have been subjected to abuse,
misuse, accident, alteration, neglect, operation outside the parameters or
environment identified in CUSTOMER's product specifications, or unauthorized
repair, installation or alternations by anyone other than ACT.
c) CUSTOMER shall contact ACT for a RMA prior to returning any Product for
repair. ACT will provide the RMA with [**] ([**] for priority requests) of
receipt. CUSTOMER will forward the defective Product to ACT freight prepaid. ACT
will return the repaired or replaced Product, freight prepaid, to CUSTOMER as
quickly as practical but no later than [**] from the date ACT received the
defective Product.
d) If ACT determines the warranted product is unrepairable-repairable or
ACT no longer possesses tools and equipment necessary to perform the repairs,
ACT shall have the option to refund the Purchase Price in lieu of repair or
replacement.
e) If ACT, after performing all customer defined testing to the subject
RMA, is unable to identify ANY failures with the product, the RMA shall be
returned to the customer as a "No Fault Found". Any RMA product returned to the
customer as a "No Fault Found" will be accompanied by a "NFF fee", to be paid to
ACT by said customer. This will be a standard compilation of testing and
assembly costs incurred by ACT and will be identified and tracked by part number
in an attachment to this document. This paragraph pertains to Production Built
boards only.
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ACT MANUFACTURING, INC.
MANUFACTURING SERVICES AGREEMENT
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f) THE FOREGOING WARRANTY PROVISIONS SET FORTH ACT's SOLE LIABILITY AND ARE
CUSTOMER's EXCLUSIVE REMEDIES FOR CLAIMS BASED UPON DEFECTS IN, OR FAILURE OF
ANY PRODUCT PROVIDED HEREUNDER I ACT HEREBY SPECIFICALLY DISCLAIMS ANY AND ALL
OTHER WARRANTIES WITH RESPECT TO PRODUCTS SUPPLIED HEREUNDER INCLUDING ANY
WARRANTY OF MERCHANTABILITY AND FITNESS FOR ANY PARTICULAR PURPOSE.
7. FORCE MAJEURE
Neither party shall be considered in default or liable for any delay or
failure to perform under this Agreement due to causes beyond its reasonable
control. If such delay or failure continues for more than thirty (30) days
CUSTOMER and ACT will meet to mutually agree upon the actions to be taken. If
such delay or failure continues for more than ninety days, the other party may
terminate this Agreement and any purchase orders issued hereunder with thirty
(30) days written notice.
8. INSURANCE
a) ACT will maintain adequate insurance to protect from fire, theft and
damage the Material inventory to be used for the manufacture of CUSTOMER
Products. ACT shall maintain adequate insurance to protect from fire, theft and
damage any consigned inventory, in-circuit test fixtures capital equipment,
returned materials and other property of CUSTOMER in the hands of ACT.
b) CUSTOMER agrees to take all necessary precautions to prevent injury to
any persons (including employees of ACT) or damage to property (including ACT's
property) during the term of this Agreement and shall defend, indemnify, and
hold ACT, its officers, directors, agents and employees harmless from and
against any and all claims, losses expenses (including reasonable attorney's
fees), demands, or judgments ("Claims") which result from or arise out of: (1)
the presence of CUSTOMER or equipment or tools used by CUSTOMER in the
performance of this Agreement on the property of ACT; or (2) the performance by
CUSTOMER or its personnel of any effort for or on behalf of ACT; or (3) the
acts, errors, omissions, or negligence of CUSTOMER or CUSTOMER's personnel; or
(4) the use by CUSTOMER of ACT's equipment, tools, or facilities ("Equipment")
whether or not any Claims are based upon the condition of the Equipment of
ACT's, its agent's, or employee's alleged negligence in permitting its use.
Permission by ACT to use the Equipment shall be gratuitous.
9. GENERAL
Redstone Communications and ACT Manufacturing agree to hold a Quarterly Review
which shall include topics such as Quality Data, Performance Data,
Test/engineering Issues, and a "Technology Roadmap" review, to discuss new
technologies and improvements to existing technologies. ACT agrees to make every
effort to work with and support new technologies being pursued by Redstone
Communications. This effort shall pertain to supplying said technology in a
reasonable timeframe determined by both companies.
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ACT MANUFACTURING, INC.
MANUFACTURING SERVICES AGREEMENT
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IN WITNESS WHEREOF, the authorized representatives of the parties have executed
this Agreement under seal as of the date(s) set forth below.
ACT MANUFACTURING, INC. COMPANY NAME
By /s/ Robert M. [Illegible] By /s/ James A. Dolce, Jr.
------------------------------- --------------------------------
(Signature) (Signature)
Robert M. [Illegible] James A. Dolce Jr.
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(Printed Name) (Printed Name)
V.p. Business Development President
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(Title) (Title)
December 7, 1998 Dec. 3, 1998
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(Date) (Date)
List of products covered by this agreement are detailed on ATTACHMENT B.
ATTACHMENT B to be reviewed and updated quarterly.
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ACT MANUFACTURING, INC.
MANUFACTURING SERVICES AGREEMENT
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ATTACHMENT A
CUSTOMER DELIVERABLES
Bill of Material with Reference Designators
AVL Information
Assembly Drawings
Gerber Files
CAD Files
Programs for IC's
Schematics
Test Process
Deviations/Waivers in Writing
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ACT MANUFACTURING, INC.
MANUFACTURING SERVICES AGREEMENT
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ATTACHMENT B
LIST OF PRODUCTS COVERED
BY THIS AGREEMENT
<TABLE>
<CAPTION>
Redstone Part Number ACT Part Number
-------------------- ---------------
<S> <C>
340-00013 RS-340-00013
340-00014 RS-340-00014
340-00023 RS-340-00023
340-00025 RS-340-00025
340-00026 RS-340-00026
340-00027 RS-340-00027
340-00028 RS-340-00028
340-00029 RS-340-00029
340-00031 RS-340-00031
340-00032 RS-340-00032
340-00033 RS-340-00033
340-00034 RS-340-00034
340-00035 RS-340-00035
340-00037 RS-340-00037
</TABLE>
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