Manufacturing And Supply Agreement

InFocus Corporation



And



Hon Hai Precision Industry Company Limited





Manufacturing and Supply Agreement



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This Agreement, having an "Effective Date" of September 1, 2005 is made and entered into by and between:



InFocus Corporation, a corporation organized under the laws of Oregon, U.S.A., having its principal office at 27700B SW Parkway Avenue, Wilsonville, Oregon 97070, USA (herein "InFocus"); and Hon Hai Precision Industry Co. Ltd., a corporation organized under the laws of Taiwan, with registered trade name Foxconn, having its principal office at 2 Tzu Yu St. Tu-Cheng City, Taipei, Taiwan (herein "Supplier").



Whereas, Supplier manufactures certain product for InFocus, this Agreement sets forth the terms and conditions under which InFocus will purchase from Supplier and Supplier will manufacture and sell to InFocus Products, Service Parts and perform related services.



IN WITNESS WHEREOF, the parties have caused this Agreement to be executed in duplicate by their duly authorized representatives on the dates set forth below, effective as of the day and year first above written.



ACCEPTED AND AGREED: ACCEPTED AND AGREED:




Hon Hai Precision Industry Co, Ltd InFocus Corporation

By By
(Signature) (Signature)

Name Name
(Type or Print) (Type or Print)

Title Title

Date Date





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Section 1 : Definitions





"Authorized Purchaser" means InFocus, its affiliates or "an entity authorized by InFocus" in writing to procure Product and Services under this Agreement. Authorized Purchasers are listed in Exhibit B 96 Authorized Purchasers



"Bill of Materials" or "BOM" means the bill of materials approved by InFocus, which includes all Materials required to produce particular goods - product , commodity or service unit.



"InFocus Logistics Center" 96 refer to Exhibit A.



"PO Lead Time" means the amount of time identified in this document between the placement of a purchase order and the time the Product leaves the factory.



"Transit Lead time" means the amount of time identified in this document between the Product leaving the Supplier factory and arriving at the destination.



"Materials" means materials, components and subassemblies for specified Product, as identified in the BOM, which Supplier or sub tier suppliers provide.



"MPS" means the master production schedule, issued by InFocus for the Product.



"Product" means any and all goods, devices, or products requested by InFocus for manufacture by Supplier under the terms of this Agreement.



"Quality Requirements" means the quality requirements for the Product specified in this Agreement or as InFocus otherwise specifies in writing.



"Ship Date" means the date specified by InFocus on which Supplier shall ship Product.



"Specifications" means the design requirements for the Product agreed to in writing by Supplier and InFocus.



"Test Equipment" means test fixtures and equipment required to produce Product and verify that Product meet Specifications and Quality Requirements.



"Tooling" means the development and manufacturing tooling and inspection equipment required to produce Product.



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Section 2 : Pre 96 Production



2.0 Disclosure Supplier shall declare the complete details under which it trades in all regions in the world, including the names of the companies and the trading addresses.



2.1 Confidentiality . Both parties agree to maintain all Confidential Information and intellectual property provided by either party in confidence and not to disclose such information to any other person or use such information for any purpose other than in connection with this Agreement, without either party92s prior written consent. The parties recognize that Supplier and its personnel will, in performing this Agreement, necessarily become conversant with certain trade secrets and other confidential or proprietary information regarding InFocus and/or the Products (all of such information, trade secrets and other proprietary information, except for any portion thereof that becomes generally available to the public other than by reason of disclosure in violation of this Agreement, is referred to in this Section 2.1 as "Confidential Information"). Supplier acknowledges and agrees that all Confidential Information is and shall continue to be the exclusive and permanent property of InFocus, whether or not prepared in whole or in part by Supplier and whether or not disclosed or entrusted to Supplier in connection with the performance of its duties hereunder.



Each party shall deal with Confidential Information so as to protect it from disclosure with a degree of care not less than that used by it in dealing with its own information intended to remain exclusively within its knowledge and shall take reasonable steps to minimize the risk of disclosure of Confidential Information which shall include, without limitation, ensuring that only those persons who have a bona fide need to know such Confidential Information for purposes permitted or contemplated by this Agreement shall have access thereto.



Within thirty (30) days after the termination of this Agreement, each party shall (and shall cause its Affiliates92 Representatives and its Affiliates to) return to the other party or destroy all related documents and tangible items then in its possession which it has received from the other party or any affiliate or representative thereof pertaining, referring or relating to the other party92s Confidential Information.



2.2 Quality Verification Audit

Supplier agrees that InFocus can audit the Supplier location and manufacturing process with ten (10) business days notice on a twice yearly basis. InFocus will provide results of audit to Supplier within ten (10) business days of the Audit. InFocus requires that one member of the Supplier quality team participates in the audit procedures.



2.3 Supplier Point of Communication, and Escalation.

InFocus will designate a Supplier manager as a contact point for all communications related to both Product and the Supplier. Supplier must also provide a senior Supplier representative as a contact point for InFocus.



2.4 Documentation and Change Process.

InFocus requires a complete set of up to date documentation on its system in support of the manufacture and design of its products, this includes manufacturing processes, bills of materials, suppliers, technical specifications etc. InFocus and Supplier shall use a pre-agreed process to communicate changes it seeks in its processes. InFocus must have final approval on all changes suggested by Supplier. Supplier must implement all changes requested by InFocus within 5 days from receipt of the request for change or acknowledge receipt of the request in writing, and highlight concerns.



2.5 Response Times. Relative to product, production and quality issues, Supplier shall promptly provide InFocus with any requested information and respond to any notice or request that InFocus may classify as an "emergency" within two (2) hours, " urgent" within six (6) hours, and "request for information" within twenty-four (24) hours. Purchase orders must be acknowledged in writing within 24 hours.



2.6 Specifications. Supplier shall ensure that InFocus is in receipt of the latest copies of the Product and component technical specifications.



2.7 Certifications. InFocus will provide Supplier with a list of required Product and or component certifications by ship to destinations. InFocus and Supplier will agree who is responsible for obtaining each certification and in what timeline. This agreement will be documented on a product-by-product basis.



2.8 Quarterly Business Reviews. Supplier will be provided with a copy of the InFocus quarterly business review (QBR) format as detailed in Exhibit E 96 QBR Reporting. Supplier will prepare data for review and return to InFocus the first week of each new quarter (InFocus calendar, provided). InFocus will review and highlight areas of disagreement or concern prior to QBR. InFocus will schedule a review each quarter. Reviews will alternately be scheduled in Supplier or InFocus location.



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2.9 ISO Certification. Supplier shall ensure that all its sites and manufacturing facilities used to perform services under this agreement are ISO 9000/ISO 14001 certified and provide certificates of authenticity to InFocus. If a location designated to provide products under this Agreement is not ISO certified, Supplier must take steps to obtain certification and provide documentary evidence of actions to InFocus. Supplier shall communicate a corrective action plan and implementation dates to InFocus with seven (7) days from notification that a site or facility has failed an ISO audit or an InFocus audit.



2.10 Product Cost Management. * From time to time InFocus will provide cost reduction opportunities to Supplier. Supplier must work with InFocus to implement this cost reduction opportunities.



2.11 Component Packaging . Supplier shall develop the packaging specifications for all Products and components manufactured by the Supplier. These solutions must be the most cost-effective packaging and transportation solutions, must be designed in compliance with all laws and within the safety and engineering specifications provided by InFocus. Prior to tool development, specifications must be approved in writing by InFocus.



2.12 Suppliers and Component sourcing. Supplier must provide complete BOM details to InFocus. This must cover component part numbers, authorized manufacturers and specifications. All amendments to this list through out the term of this Agreement must be communicated to InFocus. BOM details must be refreshed at least once a month during Product development.



2.13 Design Services. During the design phase of the project, Supplier will provide InFocus with the following information on a regular basis. Supplier will also appoint a project manager to cover both product development and new products introduction (operations). Both will work with InFocus to ensure an on time ramp.





Report name Regularity
Ramp schedule (volume and timelines and issues) Weekly
Engineering status Weekly
NRE charges (budget vs actual) Monthly
Product cost (Bom Cost) Monthly




InFocus regards the commitment to ramp date as key. Any deviations from the ramp date must be fully explained and all avenues exhausted to resolve issues as they arise.



2.13.1 If the Design services provided by Supplier include development of new product lines which are not merely insubstantial modification of the current Product, the parties agree to enter into a Design Services Agreement. Any product development under this Agreement, including enhancements and improvements to the InFocus Products shall be deemed Product Design and such Product Design and all rights to such Product Design shall be owned by InFocus.





2.14 Lead Times. All current material lead times and manufacturing lead times must be published to InFocus in accordance with the format laid out in Exhibit J. All updates to lead time information must be communicated and accepted by InFocus.



2.15 NRE Charges. *



2.16 Ownership of Tooling. * In the event that InFocus wishes to move tooling from one location to another, Supplier will actively engage in the transfer. Supplier will obtain InFocus approval prior to moving any tooling and shall periodically update all tooling locations.



2.17 Subtier Supplier Lead Times. Supplier will provide InFocus with an updated list of subtier supplier leadtimes on a monthly basis. Changes to terms within the sub-tier base must be communicated to InFocus.






*Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions.



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2.18 Design and Intellectual Property Ownership . InFocus and Supplier agree that the rights to the Intellectual Property developed and owned by InFocus prior to the effective date of this Agreement shall remain the Intellectual Property rights of InFocus and that the Intellectual Property rights to all improvements or enhancements to the Product Design made by or for Supplier at any time under this Agreement shall be deemed "works for hire" performed solely for the benefit of InFocus, and Supplier hereby assigns, transfers and releases to InFocus all of Supplier92s right, title and interest in such improvements or enhancements and * . If and to the extent that applicable law does not permit or would limit the foregoing assignment, transfer and release, Supplier hereby waives irrevocably and without further payment the assertion of any residual Intellectual Property claims it may have against InFocus or any of its officers, directors, employees, agents, affiliates or authorized assignees or licensees. Any and all intellectual property rights in and to the Product Design shall belong to InFocus regardless if new or jointly created unless it relates specifically to Supplier92s manufacturing process.



2.19 Intellectual Property shall mean any invention, discovery, concept, expression or work, whether or not patented or patentable, including, without limitation, discoveries, compositions, know-how, procedures, technical information, processes, methods, devices, formulas, protocols, techniques, designs and drawings, any physical embodiment thereof, and any patent (and applications therefore), copyrights (and applications therefore), trademarks, industrial designs and utility models, trade secret or other intellectual property right related thereto, including each party92s Confidential Information and trade secrets.



2.20 Initial Inventory Purchase. InFocus will direct Supplier to purchase certain work-in-progress and materials specified by InFocus on or before the date of Supplier92s production start. This purchase includes without limitation, excess finished raw materials at past suppliers92 locations and long lead-time materials. Supplier will also assume from past suppliers certain open purchase orders for materials matching the BOM as specified by InFocus.





Section 3: Production





3.0 Product Lead Time . From a standing start, Product lead time will be 8 weeks



3.1 Forecasts, Planning and Flexibility. InFocus will provide a 12 month rolling MPS plan to Supplier on Monday each week. The first three months of the forecast will be broken down by week. The last nine months will be in monthly buckets. The forecast is a shipment plan from the factory and therefore must be offset by manufacturing/material lead time in order to ensure materials and production take place in time to meet the shipment deadlines. All lead times used must be those published to InFocus.



A confirmation of receipt must be provided immediately against each MPS provided on a Tuesday. Within 3 days from receipt of each MPS a response plan must be provided to InFocus, no later than 5:00 p.m. Thursday.



Supplier will place purchase orders for components to lead-time to cover the MPS needs. Where component shortages are revealed, the Supplier will drive materials to the MPS.



3.2 Contract Purchase Order. *



Adjustments Period Allowable Increase/Decrease

Weeks 1 & 2 *
Weeks 3 & 4 *
Weeks 5 through 8 *
8 weeks + *




*






* Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions.



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*



*



3.2A Call-off Purchase Order. InFocus may use a call-off purchase order for each individual shipment shipped from the point of manufacture to specific destination. These purchase orders will be X-referenced to the contract purchase orders detailed above.



3.3 Cancellations and Liability. *



3.4 On-Time Shipments . Supplier will make Products available to InFocus92 freight forwarder by shipment date specified by InFocus. If Supplier is unable to meet the specified ship date, Supplier will promptly notify InFocus and propose a revised ship date. If shipment is delayed more than 1 day, InFocus may require Supplier to pay any incremental freight charges required to ship the delayed Products using priority airfreight delivery.



3.5 Integration with Freight Forwarder. Supplier will work with an appointed InFocus freight forwarder. All arrangements for pick up and freight space must be made between freight forwarder and Supplier. Supplier will work only with freight forwarders approved or appointed by InFocus. All freight quotes must be approved by InFocus. In the case of any disputes arising between a freight forwarder and Supplier during the course of performing InFocus business, InFocus should be notified.



InFocus may or may not decide to settle the freight bill directly with the forwarder and will communicate the requirements at the time of PO placement.



3.6 Terms of Sale.

*



3.7 Terms of Payment. The standard term of payment will be * days from receipt of Product by InFocus at the ILC. InFocus reserves the right to withhold payment, if invoice is not presented in pre-agreed format. InFocus shall not withhold payment in whole or in part for items which are not in dispute.






* Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions.



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3.8 Quality Standards. InFocus shall provide field failure information to Supplier. In addition, proposed test processes for the InFocus Products must be supplied to InFocus for review. InFocus and Supplier must agree upon the following:



a) if the tests coverage is acceptable, if not, what incremental tests must be put in place.

b) Acceptable threshold of results for each test within a manufacturing period.

c) Format of notification, if results dip below this threshold

d) Coordination of decision on corrective action, implementation timeline, and time to bring results back to threshold

e) Hold shipment/ release process.





Test processes defined and agreed must include customer audit, in-process, burn-in tests, and rolling reliability tests. InFocus will provide a Quality Acceptance Plan.



Agreements for all of the above should be detailed in the Exhibits section of the document.



3.9 Product Warranty & Service Support 96 Agreed to as set forth in Exhibit H



3.10 Reporting Needs . Supplier will provide the following reports on a routine basis.



Reports will be placed on an FTP site (location to be provided by InFocus).



Report name Frequency Owner
Weekly MPS weekly InFocus
Weekly MPS Response weekly InFocus
Production plan v actuals Daily Supplier
Shipment plan v actuals Daily Supplier
In process Quality Results Daily Supplier
RFA receipts/implementations Weekly (fri) Supplier
Open (FG) Purchase order report Monthly Supplier
Clear to build report Weekly (Thu) Supplier
Daily yield reporting Daily Supplier
PO Exposure reporting Monthly(L fri) Supplier




Failure to provide the information as required by 5pm on the due day, will be regarded as a non compliance, and will be recorded as such in the QBR reporting.



3.11 IT Integration. Supplier will need to participate in the development of some electronic data interfaces for the purposes of transmitting accurate and up to date data to and from the Supplier. The implementation of this solution can be time-phased.



3.12 Domestic Sales

Supplier must have a Business license to sell products to InFocus internally in China.



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Section 4: General Terms



4.1. Term and Termination



The term of this Agreement shall be for a period of three (3) years from the Effective Date, unless sooner terminated or further extended as provided herein. The issuance of any Purchase Order from InFocus or any Related Party after expiration or termination of this Agreement shall not operate as a renewal of this Agreement or as a waiver of such expiration or termination. The parties may extend the term of this Agreement by written agreement at least one hundred and eighty (180) days prior to the expiration date of the initial term or any subsequent renewal term.



Termination without Cause . Either party may terminate Agreement without cause with 6 months written notice.



Termination with Cause. Either party may upon written notice terminate the agreement immediately for a) material breach not cured within 20 days from date of written notification, b) breach of non-disclosure obligations, c) the other party becomes insolvent, fails to pay its debtors or fails to perform obligations that arise from the normal course of business.



This Agreement may be terminated by InFocus if Supplier relocates any of its manufacturing locations without prior official written approval from InFocus.



Effect of Partial or Complete Termination. Upon termination by either party of this Agreement, in whole or in part, as provided under this Section 4.1:



Except as expressly provided in this Agreement and the relevant termination notice from the party who terminates this Agreement, the parties92 respective obligations and rights shall terminate;

Any and all sums owed by one party to the other party shall become immediately due and payable and such termination shall not affect or reduce the obligations of either party to make such payments;

Subject to Supplier92s breach of this Agreement, InFocus may cancel any Purchase Orders previously placed with Supplier for Products that have not been shipped to InFocus as of the effective date of termination;

Subject to InFocus92 breach of this Agreement, Supplier may, at its discretion, cancel any Purchase Orders previously placed with Supplier for Products that have not been shipped to InFocus as of the effective date of termination and ask InFocus for the cancellation charge as specified in Section 3.3;

Supplier shall immediately discontinue all use of the InFocus Trademarks, and any other marks or names so resembling the InFocus Trademarks as to be likely to cause confusion or mistake; and

Either party shall immediately return the other party92s Confidential Information and all other information and materials relating to the Products. However, Supplier may retain and continue its use of the Design Documentation and/or Manufacturing Documentation to manufacture and sell Products to Third Parties if and to the extent that InFocus and Supplier have executed separate Third Party Sales Licensing
Agreement(s) explicitly licensing Supplier to sell Products to Third Parties and only during the term of such Third Party License(s).



Supplier will furnish InFocus with the latest copies of all relevant specifications. Supplier will continue to ship all remaining outstanding amounts on a Purchase Order to agreed quality standards. Supplier will ship 97 upon instruction from InFocus 96 all tooling and test equipment owned by InFocus to a pre-defined location. InFocus sole obligation in the event of termination is payment of outstanding Product invoices (unless in dispute) and any reasonable costs associated with packing, shipping and disposition of InFocus tooling, test equipment and materials. Supplier will work with the InFocus nominated replacement supplier on a project basis 96to timelines outlined by Supplier and will use reasonable efforts to transfer all component purchase orders to new Supplier.



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No Compensation upon Termination. Except as expressly provided in this Agreement, neither party shall be liable to the other party as a result of a termination of this Agreement, in whole or in part, for any compensation, reimbursement, loss, damages or liability suffered by the other party because of such termination, including, without limitation, any loss of prospective profits or anticipated sales, loss of goodwill, expenditures, investments, commitments, or any other disadvantage incurred or suffered by the terminated party.



4.2 *



4.3 Indemnification.



Supplier shall assume any and all liability and responsibility for the loss or damage to property or the injury or death of a person arising out of or resulting from Product manufactured by Supplier, or arising out of or connected with any act, omission or performance of Supplier under this Agreement, including but not limited to any Supplier noncompliance with or violation of law or regulation. Supplier shall defend, indemnify and hold harmless InFocus, its officers, directors, employees, agents, affiliates, successors and assigns, licensees and customers, from any and all actual or threatened claim, demand, suit or action, whether in contract or tort, investigation, liability, damage, loss, cost or expense, including but not limited to reasonable attorney92s fees, expert witnesses fees, and all litigation costs or expenses. Supplier92s indemnification obligations shall survive the termination of this Agreement.



The foregoing indemnity will not apply to any liability, claim, loss, damage, cost or expense to the extent otherwise attributable to: any negligent act or omission on the part of InFocus in its subsequent resale of a Product; any InFocus or third party performed modification to the Product once received from Supplier; any claim caused by InFocus92 or end user92s Product abuse, misuse, neglect, improper installation, operation, testing, maintenance, repair, or alteration; or unusual deterioration or degradation of a Product or parts thereof due to physical environment beyond the requirements of Product specifications.


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