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Manufacturing Services

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This Agreement ("Agreement") is made as of this 25th day of October, 1996 between: Celestica, Inc ., 844 Don Mills Road, North York, Ontario, Canada M3C 1V7 ("Celestica") and COM21, Inc., 1991 Landings Drive, Mountain View, CA 94043 ("Customer")


a. "Days" means calendar days unless otherwise specified.

b. "Product(s)" means the Celestica part number(s) or assembly(ies) identification numbers specified for the Customer.

c. "Services" means the manufacturing services to be provided by Celestica and other services as may be agreed upon by the parties.

d. "NRE" means the non-recurring expenses including, but not limited to, engineering effort, tooling, fixtures or other similar appurtenances.

2. TERM.

2.1 This Agreement commences on July 1, 1996 and ends on December 31, 1998 unless ended earlier in accordance with this Agreement. Celestica will inform Customer in advance of the expiry date of the initial term of this Agreement.

2.2 This Agreement may be renewed for additional one year terms upon ninety days written notice prior to the end of the initial term or renewed term subject to mutually agreed upon modifications, if any.


3.1 Upon receipt of a purchase order from Customer, Celestica will sell Products and provide Services to Customer in accordance with this Agreement.

3.2 Each purchase order will specify the quantity of Product required, the Services to be provided, if applicable, the prices agreed upon, and the required delivery dates. Celestica will use its best efforts to acknowledge Customer's purchaser order within five (5) business days and indicate the ship date for Product(s).

3.3 Customer will provide Celestica all required information including all drawings, specifications, bills of material, and the Approved Vendors List, if applicable, for use in performance of the Service. Celestica shall not make or incorporate any change in the Prod ucts without the prior written approval of Customer.

3.4 If Customer provides any test equipment or software, Celestica will perform tests using such equipment or software according to Customer's instructions. Celestica assumes no liability for defects in Product(s) where failure to isolate the defect is attributable to such equipment or software.

3.5 Customer may contract with Celestica to develop the required unit functional test procedures and provide the necessary test equipment on mutually agreed upon terms.


4.1 All Products will be shipped F.O.B. Celestica's plant, 844 Don Mills Road, North York, Ontario or other Celestica authorized locations. Celestica will use its best efforts to m eet Customer delivery requirements. Celestica will not be liable for any costs or expenses which might be incurred by Customer as a result of delays in delivery.

4.2 Title and risk of loss to Products will pass to Customer upon delivery to the carrier for shipment to Customer, irrespective of whether or not Celestica has arranged for transportation according to Customer instructions.

4.3 Celestica will accept purchaser orders for different ship locations provided that each sh ip location is identified on the purchase order and provided that a minimum quantity of Product as agreed to by the parties is shipped to each designated location. Customer may change a ship location by providing a minimum seven days prior notice to Celes tica.


5.1 Customer agrees to pay Celestica for the Products and Services at the prices identified in Schedule A. All prices refer to U.S. dollars. Service charges will include one-time non-recurring expenses (NRE). Payment of NRE charges do not c onfer any rights in or title to such tooling, fixtures, or other appurtenances unless otherwise indicated in Schedule A. Payment terms are net thirty days and are subject to a 18% annual late payment charge.

5.2 Customer agrees to pay any taxes, duties or government levies resulting from this Agreement excluding any taxes on Celestica's income.

5.3 Pricing will be reviewed and may be adjusted on a calendar quarterly basis. Any pricing changes will be reflected in revised Schedule A documents.

5.4 Cost reductions in material or manufacturing value-add or assembly and test processes will be shared equally between Celestica and Customer. Cost reviews will be conducted quarterly once Product shipments commenc e with identified reductions to be implemented in the subsequent quarter as reflected in revised Schedule A documents.


6.1 Customer will provide to Celestica purchase orders for a minimum of six mont hs of order activity. Customer will also provide a forecast for an additional twelve months of order activity which will be updated on a monthly basis. Celestica will purchase material to fulfill purchase orders and forecasts based on material lead time a nd pricing considerations.

6.2 Any increase in total quantity of Product ordered constitutes an unplanned order to which normal lead times apply. If Customer requests and Celestica accepts short lead time order(s), Customer is responsible fo r any premium costs incurred by Celestica in fulfilling such orders.


7.1 Customer may not cancel any order scheduled to be shipped within thirty days. In addition, Customer may not cancel any orders for prototypes, pre-production pilot orders, or one-time orders for products unless otherwise agreed to in writing by Celestica.

7.2 Upon written notice to Celestica, Customer may cancel purchase orders for Products in whole or in part. Cancellation charges apply to orders scheduled to ship between 31 days and 90 days from date of the order. Celestica will use reasonable efforts to cancel any components on order and use non-cancelable components to fulfill other customer orders requiring the same components in an attempt to mitigate charges to Customer. Following such efforts, Celestica will advise Customer of the cancellation charges due. Any cancellation charges would not exceed the maximum amounts stated below:

Number of days written notice of Applicable payment for each product

cancellation received prior to cancelled (expressed as a % of the

scheduled ship date purchase order)

- -------------------------------- ----------------------------------

[*] [*]

*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.

Number of days written notice of Applicable payment for each product

cancellation received prior to cancelled (expressed as a % of the

scheduled ship date purchase order)

- -------------------------------- ----------------------------------

[*] [*]

[*] [*]

7.3 In the event of cancellation, in addition to the cancellation charges stated in 7.2, Customer will be responsible for the costs of long lead time components purchased on behalf of Customer which Celestica is unable to mitigate. Celestic a will provide a summary of such costs to Customer within thirty (30) days of notice of cancellation.


8.1 Orders which are scheduled within thirty days of the scheduled shipment date cannot be rescheduled.

8.2 For orders scheduled to ship within 31 to 60 days, [*] of the total quantity of Product may be rescheduled once but not for more than 60 days from the original scheduled ship date.

8.3 For orders scheduled to ship within 61 to 90 days, [*] of the total quantity of Product may be rescheduled once but not for more than 60 days from the original scheduled ship date.

8.4 For orders with multiple ship dates, rescheduling refers to each date designed on th e purchase order(s). Customer will be responsible for a [*] per month carrying charge for material costs incurred by Celestica to meet the original ship date and which Celestica is unable to mitigate.

8.5 If a reschedule represents an accel eration or increase. Celestica will use its best efforts to meet the request subject to material and capacity availability. Any extra costs incurred to meet the request will be the responsibility of the Customer and will be mutually agreed to in writing p rior to Celestica taking any action concerning Custo
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