Manufacturing Services Agreement

Exhibit 2.11


EXECUTION COPY


MANUFACTURING SERVICES AGREEMENT


BETWEEN


ADAPTEC, INC.


AND


ROXIO, INC.


EFFECTIVE AS OF MAY 5, 2001


MANUFACTURING SERVICES AGREEMENT


TABLE OF CONTENTS


PAGE ARTICLE 1 DEFINITIONS.........................................................1
1.1 ANCILLARY AGREEMENTS.................................................1
1.2 COMPONENTS INVENTORY.................................................1
1.3 CONFIDENTIAL INFORMATION.............................................1
1.4 CUSTOMER.............................................................2
1.5 DELIVER, DELIVERED OR DELIVERY.......................................2
1.6 DELIVERY POINT.......................................................2
1.7 FINISHED GOODS INVENTORY.............................................2
1.8 GUIDELINES...........................................................2
1.9 INVENTORY............................................................2
1.10 LEAD TIME............................................................2
1.11 MASTER SEPARATION AND DISTRIBUTION AGREEMENT.........................2
1.12 MINIMUM ORDER SIZE...................................................2
1.13 PACKAGING SPECIFICATIONS.............................................2
1.14 PRODUCT..............................................................3
1.15 QUARTERLY REVIEW MEETING.............................................3
1.16 ROXIO DOCUMENTATION..................................................3
1.17 ROXIO TECHNOLOGY.....................................................3
1.18 ROXIO WAREHOUSE......................................................3
1.19 SERVICE FEE..........................................................3
1.20 SERVICE ORDERS.......................................................3
1.21 SERVICES.............................................................3
1.22 SPECIFICATIONS.......................................................3
1.23 STANDARD COST........................................................3
1.24 WORK IN PROCESS......................................................4 ARTICLE 2 TERM OF AGREEMENT...................................................4 ARTICLE 3 PERFORMANCE OF SERVICES..............................................4
3.1 RETENTION............................................................4
3.2 PERFORMANCE OF SERVICES..............................................4
3.3 LEAD TIME; RESCHEDULING; ALLOCATION..................................4
3.4 PROVISION OF ROXIO DOCUMENTATION AND ROXIO TECHNOLOGY................4
3.5 PACKAGING............................................................5
3.6 MEETINGS.............................................................5
3.7 CONTRACTORS..........................................................5 ARTICLE 4 SERVICE FEES.........................................................5 ARTICLE 5 FORECASTS, ORDERING AND ADJUSTMENTS.................................6
5.1 FORECASTS............................................................6
5.2 SERVICE ORDERS.......................................................6
5.3 SERVICE ORDER ADJUSTMENTS............................................6
5.4 LIABILITY FOR INVENTORY..............................................6
5.5 AGREEMENT CONTROLS...................................................7 ARTICLE 6 DELIVERY, CARRIER & RISK OF LOSS....................................7
6.1 DELIVERY OF PRODUCT; RISK OF LOSS....................................7
6.2 SHIPMENT.............................................................7 ARTICLE 7 PAYMENTS............................................................8 ARTICLE 8 QUALITY AND INSPECTION..............................................8
8.1 ADAPTEC'S PROCESS....................................................8
8.2 ROXIO INSPECTION.....................................................8


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ARTICLE 9 ACCEPTANCE AND REJECTION OF PRODUCTS................................8 ARTICLE 10 WARRANTY...........................................................9
10.1 MATERIALS AND WORKMANSHIP............................................9
10.2 WARRANTY REPLACEMENT.................................................9
10.3 RMA PROCEDURES.......................................................9
10.4 NO LIABILITY.........................................................9
10.5 DISCLAIMER OF WARRANTIES.............................................9 ARTICLE 11 PRODUCT CHANGES...................................................10
11.1 ON ADAPTEC'S NOTICE.................................................10
11.2 AT ROXIO'S REQUEST..................................................10
11.3 CHANGE MANAGEMENT...................................................10 ARTICLE 12 OWNERSHIP OF ROXIO TECHNOLOGY.....................................10 ARTICLE 13 INTELLECTUAL PROPERTY INDEMNITY...................................10 ARTICLE 14 GENERAL INDEMNITY.................................................11 ARTICLE 15 TERMINATION.......................................................11
15.1 TERMINATION WITHOUT CAUSE...........................................11
15.2 EFFECT OF TERMINATION WITHOUT CAUSE.................................11
15.3 TERMINATION FOR DEFAULT.............................................11
15.4 EFFECT OF TERMINATION IN GENERAL....................................12
15.5 TRANSITION ASSISTANCE...............................................12 ARTICLE 16 CONFIDENTIALITY...................................................13 ARTICLE 17 LIMITATION OF LIABILITY...........................................13 ARTICLE 18 DISPUTE RESOLUTION................................................13 ARTICLE 19 GENERAL...........................................................14
19.1 NOTICES.............................................................14
19.2 ASSIGNMENT..........................................................14
19.3 DAMAGE LIMITATION...................................................15
19.4 ALLOCATION OF RISK..................................................15
19.5 EXPORT CONTROL......................................................15
19.6 WAIVER..............................................................15
19.7 GOVERNING LAW.......................................................15
19.8 DESCRIPTIVE HEADINGS................................................15
19.9 SEVERABILITY........................................................16
19.10 FORCE MAJEURE....................................................16
19.11 ENTIRE AGREEMENT.................................................16
19.12 CONFLICTING AGREEMENTS...........................................16
19.13 CONTROLLING DOCUMENT.............................................16
19.14 RELATIONSHIP.....................................................17
19.15 AMENDMENT AND EXECUTION..........................................17


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MANUFACTURING SERVICES AGREEMENT


This MANUFACTURING SERVICES AGREEMENT ("Agreement") is made by and between Adaptec Manufacturing Singapore on its own behalf and on behalf of each of its parent, Adaptec, Inc. and its majority owned subsidiaries, exclusive of Roxio, Inc. ("Adaptec"), and Roxio, Inc., a Delaware corporation, on its own behalf and on behalf of each of its majority owned subsidiaries ("Roxio"), and is effective as of 12:01 a.m. Pacific Standard Time, May 5, 2001 (the "Separation Date").


RECITALS


WHEREAS, the Boards of Directors of each of Adaptec and Roxio have determined that it is appropriate and desirable for Adaptec to contribute and transfer to Roxio, and for Roxio to receive and assume, directly or indirectly, substantially all of the assets and liabilities currently associated with the Roxio Business and the stock, investments or similar interests currently held by Adaptec in subsidiaries and other entities that conduct such business (the "Separation");


WHEREAS, Adaptec has caused Roxio to be incorporated in order to effect the Separation and Adaptec currently owns all of the issued and outstanding capital stock of Roxio; and


WHEREAS, the parties desire that Adaptec perform certain services for Roxio with respect to the products manufactured by the Roxio Business prior to the Separation and such additional products as the parties may from time to time agree.


NOW, THEREFORE, in consideration of the foregoing and the covenants and agreements set forth below, the parties hereto agree as follows:


ARTICLE 1


DEFINITIONS


1.1 ANCILLARY AGREEMENTS. "Ancillary Agreements" shall have the meaning set forth in the Master Separation and Distribution Agreement.


1.2 COMPONENTS INVENTORY. "Components Inventory" means the inventory of raw material and other Product components consistent with Roxio's forecast, as provided in Section 5.1.


1.3 CONFIDENTIAL INFORMATION. "Confidential Information" shall have the meaning set forth in the Master Confidential Disclosure Agreement between Adaptec and Roxio.


1.4 CUSTOMER. "Customer" means Roxio's customer who is purchasing a Product and who is identified in the Service Order or in a subsequent written communication from Roxio designating the "ship to" point.


1.5 DELIVER, DELIVERED OR DELIVERY. "Deliver, Delivered or Delivery" means the delivery by Adaptec of the Products manufactured pursuant to a particular Service Order to the Delivery Point for shipment or pull in accordance with Roxio's instructions, as provided in accordance with the Guidelines.


1.6 DELIVERY POINT. "Delivery Point" means (a) the San Francisco Bay Area, with respect to Products destined for shipment to a location in the Americas, including the United States, Canada, Mexico and South America; (b) Singapore, with respect to Products destined for shipment to a location outside the United States; and (c) the Roxio Warehouse, with respect to Products to be held at the Roxio Warehouse for pull by the Customer.


1.7 FINISHED GOODS INVENTORY. "Finished Goods Inventory" means the inventory of completed goods consistent with the outstanding Service Orders.


1.8 GUIDELINES. "Guidelines" means the written guidelines provided by Adaptec to Roxio, as may be amended from time to time upon the agreement of the parties, with respect to (a) the placement of Service Orders and adjustments thereto, and (b) the provision of forecasts.


1.9 INVENTORY. "Inventory" means the Components Inventory, Work in Process and Finished Goods Inventory.


1.10 LEAD TIME. "Lead Time" means the minimum amount of time prior to the requested Delivery of a Product that a Service Order must be provided to Adaptec to initiate the performance of Services. The Lead Time as of the Separation Date is eleven (11) days.


1.11 MASTER SEPARATION AND DISTRIBUTION AGREEMENT. "Master Separation and Distribution Agreement" means the First Amended and Restated Master Separation and Distribution Agreement dated February 28, 2001 between Adaptec and Roxio.


1.12 MINIMUM ORDER SIZE. "Minimum Order Size" means the minimum quantity of each type of Product for which Services may be initiated, as specified in EXHIBIT A.


1.13 PACKAGING SPECIFICATIONS. "Packaging Specifications" means the packaging process and format to be agreed upon by the parties with respect to each Product and set forth in the applicable specification.


1.14 PRODUCT. "Product" means a completed product to be manufactured as a result of the Services, initially as set forth in EXHIBIT A, as it may be amended in accordance with Article 5 from time to time.


1.15 QUARTERLY REVIEW MEETING. "Quarterly Review Meeting" shall mean a meeting between Roxio and Adaptec for the purpose of reviewing production, forecasts, fees, inventory liability and related matters.


1.16 ROXIO DOCUMENTATION. "Roxio Documentation" means the Specifications, Packaging Specifications, approved Bill of Materials ("BOM"), artwork,


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manuals, Golden Master and related documentation and materials to be provided to Adaptec by Roxio with respect to the Products.


1.17 ROXIO TECHNOLOGY. "Roxio Technology" means technical information specific to the Products, including the Roxio Documentation and software code.


1.18 ROXIO WAREHOUSE. "Roxio Warehouse" means the Roxio Warehouse in the Netherlands.


1.19 SERVICE FEE. "Service Fee" means the fee to be charged Roxio by Adaptec to perform Services with respect to each Product, initially as set forth in EXHIBIT A, or determined in Article 4.


1.20 SERVICE ORDERS. "Service Orders" means written or electronically transmitted Service Orders for Products placed by Roxio with Adaptec in accordance with the Guidelines, including the description, quantity, Customer, Delivery Point, requested Delivery date, ship to point and other relevant information relating to the order and shipment.


1.21 SERVICES. "Services" means the operations services performed by Adaptec hereunder with respect to the Products, including procurement, demand fulfillment, planning, forecasting, manufacturing, packaging, shipping, receiving, internal warehousing, invoicing and engineering/document control.


1.22 SPECIFICATIONS. "Specifications" means the respective specifications for each Product provided by Roxio.


1.23 STANDARD COST. "Standard Cost" means the standard cost of performing Services with respect to a component or Product, as set forth in Adaptec's SAP system, at the Separation Date or such later date as a Service Fee with respect to a Product may be determined in accordance with Article 4.


1.24 WORK IN PROCESS. "Work in Process" means Adaptec's inventory of partially completed Products consistent with Roxio's outstanding Service Orders.


ARTICLE 2


TERM OF AGREEMENT


The term of this Agreement ("Term") shall commence on the Separation Date and shall continue for a period of twelve (12) months, subject to earlier termination as provided in Article 15.


ARTICLE 3


PERFORMANCE OF SERVICES


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3.1 RETENTION. Roxio hereby retains Adaptec to perform the Services in accordance with the terms and conditions of this Agreement and Adaptec hereby consents to such retention.


3.2 PERFORMANCE OF SERVICES. During the Term, Adaptec shall use reasonable commercial efforts to perform the Services in accordance with the terms of this Agreement. Additional Products may be added to this Agreement upon the parties' mutual written agreement with respect to the Product, and its Service Fee and other relevant Product-specific terms and conditions. Services shall not be performed after the Separation Date with respect to any Product that has not been fully production released by Roxio. Adaptec will initiate Services with respect to a Product upon receipt of a Service Order.


3.3 LEAD TIME; RESCHEDULING; ALLOCATION. Adaptec shall use reasonable commercial efforts to accept and perform any Service Order placed in accordance with the terms and conditions of this Agreement, including the applicable Lead Times (which may be revised by Adaptec from time to time upon notice to Roxio). Adaptec may, at its sole discretion, allocate its capacity among Adaptec's customers, but will provide Roxio with priority equivalent to that given to customers purchasing similar services, in similar quantities, using similar processes or materials.


3.4 PROVISION OF ROXIO DOCUMENTATION AND ROXIO TECHNOLOGY. As soon as required after the Separation Date, Roxio will deliver to Adaptec the Roxio Documentation for each Product. Subject to the terms and conditions of this Agreement, Roxio grants to Adaptec and any subcontractor retained by Adaptec in connection with the performance of Adaptec's obligations under this Agreement, during the Term of this Agreement, a non-exclusive, non-transferable license to use the Roxio Technology solely to the extent required to perform the Services. Roxio shall retain all right, title and interest in and to the Roxio Documentation and Roxio Technology.


3.5 PACKAGING. Adaptec will package each Product substantially in accordance with the applicable Packaging Specification, as it may be amended from time to time upon agreement of the parties and subject to approval of the respective engineering organizations of the parties.


3.6 MEETINGS. Commencing on the Separation Date and during the Term, Roxio shall schedule a Quarterly Review Meeting to occur in the second week of each calendar quarter and will prepare the agenda for discussion. In addition, either party may request additional meetings from time to time to address additional issues or problems that have arisen. Each party shall use reasonable efforts to have appropriate personnel attend such meetings in order to conduct a thorough operations review in accordance with the agenda.

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