Standard Manufacturing Agreement

Standard Manufacturing Agreement Fine Pitch Confidential


STANDARD MANUFACTURING AGREEMENT


Fine Pitch Technology ("Fine Pitch") a subsidiary of Solectron Corporation, a Delaware corporation, whose principle place of business is located at 11331 Valley View Street, Cypress CA 90630 and Accelerated Networks, Inc., a Delaware corporation ("Customer") whose principle place of business is located at 301 Science Drive, Moorpark, CA 93021 in their desire to formulate a strategic business relationship and to define their expectations regarding this relationship, hereby agree as follows:


1.0 PRECEDENCE:


1.1 This Agreement is intended by Fine Pitch and Customer to operate as a basic
set of operating conditions regarding their respective business
relationship. Product specific requirements along with specific business
terms and conditions will be mutually agreed to and documented by an
addendum to this Agreement.


1.2 It is the intent of the parties that this Agreement and its addenda shall
prevail over the terms and conditions of any purchase order, acknowledgment
form or other instrument.


1.3 This Agreement may be executed in one or more counterparts, each of which
will be deemed the original, but all of which will constitute but one and
the same document. The parties agree this Agreement and its addenda may not
be modified except in writing signed by both parties.


2.0 TERM


2.1 This Agreement shall commence on the effective date shown on the signature
page of his Agreement, and shall continue for an initial term of one (1)
year. This Agreement shall automatically be renewed for successive one (1)
year increments unless either party requests in writing, at least ninety
(90) days prior to the anniversary date, that this Agreement not be so
renewed.


3.0 PRODUCT FORECAST


3.1 It is agreed that Customer will provide Fine Pitch, on a monthly basis, a
rolling twelve (12) month Product forecast. This section, as appropriate,
may be modified in an addendum to reflect specific Product requirements.


3.2 Customer and Fine Pitch will work together on a plan to ensure that the
first units built by Fine Pitch are built at full turnkey (Fine Pitch will
procure all the necessary material including the Hard Drive). Fine Pitch
will allow Customer reasonable access to their facilities for purposes of
monitoring and working with Fine Pitch quality control, manufacturing
processes and production.


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4.0 MATERIAL PROCUREMENT


4.1 Fine Pitch is authorized to purchase materials using standard purchasing
practices including, but not limited to, acquisition of material
recognizing Economic Order Quantities, ABC buy policy and long lead time
component management in order to meet the forecasted requirements of
Customer. Customer recognizes its financial responsibility for the material
purchased by Fine Pitch on behalf of Customer. This financial
responsibility is more clearly defined in the addendum.


4.2 In the event of a termination or a cancellation of a Purchase Order or
Material Release, and/or discontinuance of Product or excess material
created by an engineering change, Customer agrees to compensate Fine Pitch
for Products and material inventory as follows: (i) the contract price of
all finished Products in Fine Pitch's possession, (ii) the cost of material
inventory (including handling charges and value add), whether in raw form
or work in process, and not returnable to the vendor or usable for other
customers, (iii) the cost of material on order (including handling charges)
which cannot be canceled, and (iv) any vendor cancellation charges incurred
with respect to material canceled or returned to the vendor, or otherwise
set forth in an addendum.


4.3 Fine Pitch shall undertake reasonable efforts to cancel all applicable
component purchase orders and reduce component inventory through return for
credit programs or allocate components for alternate programs if
applicable.


5.0 PURCHASE ORDERS AND PRICE REVIEWS


5.1 Customer agrees to provide Fine Pitch Purchase Orders or Material Releases
four (4) weeks in advance of delivery (or as otherwise provided by an
addendum) and shall become effective upon acceptance of the order by Fine
Pitch which is more clearly defined in the Addendum.


5.2 Fine Pitch and Customer will meet every three (3) months during the term of
this Agreement to review pricing and determine whether any price increase
or decrease is required. Any price change shall apply only to purchase
orders or material releases issued after the effective date of such price
change. However, the Customer Focus Team will meet on a more frequent basis
(monthly) to discuss operational and quality related issues.


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6.0 DELIVERY


6.1 Fine Pitch will target 100% on time delivery, defined as shipment of
Product by Fine Pitch within a window of three (3) days early and zero days
late (of acknowledged date). This section, as appropriate, may be modified
by an addendum to reflect specific Product requirements.


6.2 All shipments are EXW: Fine Pitch Facility, Cypress, CA (Incoterms 2000).


6.3 Fine Pitch and Customer shall agree to delivery schedule flexibility
requirements specific to the Product as documented in the addenda.


6.4 Upon learning of any potential delivery delays, Fine Pitch will notify
Customer as to the cause and extent of such delay.


6.5 If Fine Pitch fails to make deliveries at the specified time and such
failure is caused by Fine Pitch, Fine Pitch will, at no additional cost to
Customer, employ accelerated measures such as material expediting fees,
premium transportation costs, or labor overtime required to meet the
specified delivery schedule or minimize the lateness of deliveries.


6.6 Unless otherwise agreed to and stated in an Attachment to this Agreement,
Fine Pitch will not undertake export activities on behalf of Customer.


7.0 PAYMENT TERMS


7.1 Fine Pitch and Customer agree to payment terms of Net 30 days from the date
of invoice.


7.2 Currency will be in U.S. Dollars unless specifically negotiated and
reflected in the addenda.


8.0 QUALITY


8.1 Fine Pitch shall manufacture the Products in accordance with the quality
requirements, standards and expectations as mutually agreed to and
reflected in the addenda.


8.2 Customer will have a right to conduct source inspection based on reasonable
notice and reasonable timelines.


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9.0 ENGINEERING CHANGES


9.1 Customer may, upon advance written notice to Fine Pitch, submit engineering
changes for incorporation into the Product. It is important that this
notification include documentation of the change to effectively support an
investigation of the impact of the engineering change. Fine Pitch will make
a reasonable effort to review the engineering change and report to Customer
within one (1) week. If any such change affects the price, delivery, or
quality performance of said Product, an equitable adjustment will be
negotiated between Fine Pitch and Customer prior to implementation of the
change.


9.2 Fine Pitch agrees not to undertake significant process changes, design
changes, or process step discontinuance affecting electrical performance
and/or mechanical form and fit without prior written notification and
concurrence of the Customer.


10.0 INVENTORY MANAGEMENT


10.1 Fine Pitch agrees to purchase components according to the Customer approved
vendor list (AVL) including any sourcing plans as provided by the addenda.


10.2 All customer tooling/equipment furnished to Fine Pitch or paid for by
Customer in connection with this Agreement shall:


(a) Be clearly marked and remain the personal property of Customer.


(b) Be kept free of liens and encumbrances.


(c) Unless otherwise agreed, Customer is responsible for the general
maintenance of Customer tooling/equipment.


Fine Pitch shall hold Customer property at its own risk and shall not
modify the property without the written permission of Customer. Upon
Customer's request, Fine Pitch shall redeliver the property to Customer in
the same condition as originally received by Fine Pitch with the exception
of reasonable wear and tear. In the event the property is lost, damaged or
destroyed, Fine Pitch's liability for the property is limited to the book
value of the property. During possession of the property,if required, Fine
Pitch will maintain calibration on the property on a regularly scheduled
basis.


11.0 CONFIDENTIAL INFORMATION


11.1 Fine Pitch and Customer agree to execute, as part of this Agreement, a
Nondisclosure Agreement for the reciprocal protection of confidential
information that will be included in the addendum.


11.2 Subject to the terms of the Nondisclosure Agreement and the proprietary
rights of the parties, Fine Pitch and Customer agree to exchange, at least
semi-annually, relevant process development information and business plans
to include market trends, process technologies, product requirements, new
product developments, available capacity and other information to support
technology advancements by both Fine Pitch and Customer.


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12.0 WARRANTY


12.1 Fine Pitch warrants for a period of one (1) year from the date of
manufacture of the Product, that (i) the Product will conform to the
specifications applicable to such Product at the time of its manufacture,
which are furnished in writing by Customer and accepted by Fine Pitch; (ii)
such Product will be of good material (supplied by Fine Pitch) and
workmanship and free from defects for which Fine Pitch is responsible in
the manufacture; (iii) such Product will be free and clear of all liens and
encumbrances and that Fine Pitch will convey good and marketable title to
such Product. In the event that any Product manufactured shall not be in
conformity with the foregoing warranties, Fine Pitch shall, at Fine Pitch's
option, either credit Customer for any such nonconformity (not to exceed
the purchase price paid by Customer for such Product), or, at Fine Pitch's
expense, replace, repair or correct such Product. The foregoing constitutes
Customer's sole remedies against Fine Pitch for breach of warranty claims.


12.2 Fine Pitch shall have no responsibility or obligation to Customer under
warranty claims with respect to Products that have been subjected to abuse,
misuse, accident, alteration, neglect or unauthorized repair.


THE WARRANTIES CONTAINED IN THIS SECTION ARE IN LIEU OF, AND FINE PITCH
EXPRESSLY DISCLAIMS AND CUSTOMER WAIVES ALL OTHER REPRESENTATIONS AND
WARRANTIES, EXPRESS, IMPLIED, STATUTORY OR ARISING BY COURSE OF DEALING OR
PERFORMANCE, CUSTOM, USAGE IN THE TRADE OR OTHERWISE, INCLUDING WITHOUT
LIMITATION THE IMPLIED WARRANTIES OF MERCHANTABILITY, TITLE AND FITNESS FOR
A PARTICULAR USE.


13.0 TERMINATION


13.1 If either party fails to meet any one or more of the terms and conditions
as stated in either this Agreement or the addenda, Fine Pitch and Customer
agree to negotiate in good faith to resolve such default. If the defaulting
party fails to cure such default or submit an acceptable written plan to
resolve such default within thirty (30) days following notice of default,
the nondefaulting party shall have the right to terminate this Agreement by
furnishing the defaulting party with thirty (30) days written notice of
termination.


13.2 This Agreement shall immediately terminate should either party; (i) become
insolvent; (ii) enter into or file a petition, arraignment or proceeding
seeking an order for relief under the bankruptcy laws of its respective
jurisdiction; (iii) enter into a receivership of any of its assets or; (iv)
enter into a dissolution of liquidation of its assets or an assignment for
the benefit of its creditors.


13.3 Either Fine Pitch or Customer may terminate this Agreement without cause by
giving One hundred twenty (120) days advance written notice to the other
party.


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14.0 DISPUTE RESOLUTION


14.1 In the spirit of continued cooperation, the parties intend to and hereby
establish the following dispute resolution procedure to be utilized in the
unlikely event any controversy should arise out of or concerning the
performance of this Agreement.


14.2 It is the intent of the parties that any dispute be resolved informally and
promptly through good faith negotiation between Fine Pitch and Customer.
Either party may initiate negotiation proceedings by written notice to the
other party setting forth the particulars of the dispute. The parties agree
to meet in good faith to jointly define the scope and a method to remedy
the dispute. If these proceedings are not productive of a resolution, then
senior management of Fine Pitch and Customer are authorized to and will
meet personally to confer in a bona fide attempt to resolve the matter.


14.3 Should any disputes remain existent between the parties after completion of
the two-step resolution process set forth above, then the parties shall
promptly submit any dispute to mediation with an independent mediator. In
the event mediation is not successful in resolving the dispute, the parties
agree to submit the dispute to binding arbitration as provided by their
respective jurisdiction as more clearly defined in the addendum.


15.0 LIMITATION OF LIABILITY


IN NO EVENT, WHETHER AS A RESULT OF BREACH OF CONTRACT, WARRANTY, OR TORT
(INCLUDING NEGLIGENCE), STRICT LIABILITY, PRODUCT LIABILITY, OR OTHERWISE,
SHALL EITHER PARTY BE LIABLE TO THE OTHER FOR ANY SPECIAL, INCIDENTAL,
CONSEQUENTIAL, EXEMPLARY DAMAGES OF ANY KIND WHETHER OR NOT EITHER PARTY
WAS ADVISED OF THE POSSIBILITY OF SUCH DAMAGE.


16.0 PATENT, COPYRIGHT AND TRADEMARK INDEMNITY


Each party (the "indemnifying party") shall defend, indemnify, and hold
harmless the other party from any claims by a third party of infringement
of intellectual properties resulting from the acts of the indemnifying
party pursuant to this Agreement, provided that the other party (i) gives
the indemnifying party prompt notice of any such claims, (ii) renders
reasonable assistance to the indemnifying party thereon, and (iii) permits
the indemnifying party to direct the defense of the settlement of such
claims.


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17.0 GENERAL


17.1 Each party to this Agreement will maintain insurance to protect itself from
claims (i) by the party's employees, agents and subcontractors under
Worker's Compensation and Disability Acts, (ii) for damages because of
injury to or destruction of tangible property resulting out of any
negligent act, omission or Willful misconduct of the party or the party's
employees or subcontractors, (iii) for damages because of bodily injury,
sickness, disease or death of its employees or any other person arising out
of any negligent act, omission, or willful misconduct of the party or the
party's employees, agents or subcontractors.


17.2 Neither party shall delegate, assign or transfer its rights or obligations
under this Agreement, whether in whole or part, without the written consent
of the other party. Such delegation, assignment or transfer shall not be
unreasonably withheld. Failure by either party to enforce any provision of
this Agreement shall not be deemed to be a continuing waiver or a waiver of
any other default or other term and condition.


17.3 Neither party shall be liable for any failure or delay in its performance
under this Agreement due to acts of God, acts of civil or military
authority, fires, floods, earthquakes, riots, wars or any other cause
beyond the reasonable control of the delayed party provided that the
delayed party: (i) gives the other party written notice of such cause
within fifteen (15) days of the discovery of the event; and (ii) uses its
reasonable efforts to remedy such delay in its performance.


17.4 This Agreement shall be governed by, and construed in accordance with the
laws of the State of California, excluding its conflict of laws provisions.
In any action to enforce this Agreement, the prevailing party shall be
awarded all court costs and reasonable attorney fees incurred.


17.5 Fine Pitch and Customer will mutually agree on a timeline and language for
a press release announcing their relationship. Any other publicity will
subject to mutual agreement.


17.6 Additional General terms and conditions are set forth in the addendum.


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IN WITNESS WHEREOF, the parties have executed this Agreement and it is effective as of the latest date of execution set forth below.


Fine Pitch Technology, a subsidiary of Accelerated Networks, Inc. Solectron Corporation


By: /s/ Jeff Chiang By: /s/ Ronald A. Hughes
------------------------------- ------------------------------- Name: Jeff Chiang Name: Ronald A. Hughes


Title: General Manager Title: Director of Contracts


Date: 4/16/01 Date: 4/10/01


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ADDENDUM TO STANDARD MANUFACTURING AGREEMENT


This Addendum (hereinafter "Addendum") is effective as of the latest date of execution identified herein and is incorporated by reference into the Standard Manufacturing Agreement (Agreement) executed between Accelerated Networks, Inc. (ACCELERATED) and Fine Pitch Technology, A Solectron Subsidiary, (FINE PITCH) dated on the latest date of execution, collectively "the parties".


The parties desire to clarify Product specific requirements, manufacturing and quality requirements and other specific business terms and conditions.


In consideration of the foregoing and the agreements contained herein, ACCELERATED and FINE PITCH hereby agree as follows:


1.0 Definitions


1.1 "Approved Vendor List shall mean the list of vendors to be used to
supply inventory list of the Bills of Materials included with each
...