Exhibit 10.36

 

 

CONFIDENTIAL PORTIONS OMITTED

 

MANUFACTURING SERVICES AND SUPPLY AGREEMENT

 

BETWEEN

 

VENTURE CORPORATION LIMITED

 

AND

 

POWERWAVE TECHNOLOGIES, INC.

 

** INDICATES THAT CONFIDENTIAL PORTIONS ARE OMITTED AND FILED SEPARATELY WITH
THE COMMISSION

 

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TABLE OF CONTENTS

 

                  Section

 

                  Recitals

 

1.

  

Definitions

2.

  

Master Purchase Agreement/Purpose

3.

  

Scope of Services/Operating Model

4.

  

Term and Termination

5.

  

Nature of Agreement/Forecasts

6.

  

Ordering Process for Discreet Purchase Orders

7.

  

Shipping and Packing and Risk of Loss

8.

  

Quality Control and Inspection

9.

  

Non-Conforming Products, RMA Returns

10.

  

Warranties and Epidemic Failures

11.

  

Prices, Payment Terms, Invoicing

12.

  

Changes

13.

  

Weekly Releases, Rescheduling, Flexibility, Delivery Delays, and Performance

14.

  

Cancellation, Excess and Obsolete Materials

15.

  

New Product Introduction

16.

  

Tooling and Consigned Equipment

17.

  

IT Systems Support

18.

  

Strategic Suppliers and Approved Vendors

19.

  

Disaster Recovery Plan

20.

  

Force Majuere

21.

  

Industrial Property Rights

22.

  

Publicity

23.

  

Insurance

24.

  

Confidential Information

25.

  

Indemnification

26.

  

Limitations of Liability

27.

  

Governmental Compliance

28.

  

Miscellaneous

 

List of Exhibits.

 

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A

  

Product Attachment

B

  

Quality Plan

C

  

Long Lead Time and NCNR Materials

D

  

NPI Procedures

E

  

Disaster Recovery Plan

 

 

 

 

 

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Manufacturing Services and Supply Agreement

 

This Manufacturing Services and Supply Agreement (the “Agreement”) is entered
into this 13th day of January, 2003 by and between Powerwave Technologies, Inc.
(“Powerwave” or “Buyer”) and Venture Corporation Limited (“Seller” or
“Venture.”)

 

Recitals

 

A. WHEREAS, Seller is engaged in contract manufacturing of electronic products
that have applications in commercial markets. Seller desires to manufacture,
test and deliver and service on behalf of Powerwave the Products described in
this Agreement.

 

B. WHEREAS, Powerwave desires to purchase the Products manufactured by Seller
specifically for Powerwave pursuant to the terms and conditions of this
Agreement.

 

C. WHEREAS, Powerwave is relying upon Seller’s stated expertise and experience
in providing services related to the manufacture, assembly, testing and delivery
of high quality complex electronic assemblies.

 

D. WHEREAS, to avoid repetitive negotiations, the parties desire to enter into
this Agreement establishing the terms and conditions which will be applicable to
the contract manufacturing services to be provided by Seller.

 

NOW THEREFORE, in consideration of the mutual promises hereinafter set forth,
the parties agree as follows:

 

1. Definitions.

 

A. “Material” shall mean any components and other materials comprising or
comprised in Products.

 

B. “Product” means the printed circuit boards and other items listed on Exhibit
A hereto (“Product Attachment.”)

 

C. “Order” or “Purchase Order” means a single purchase order or blanket purchase
order submitted by Powerwave to Seller, subject to the terms of this Agreement.

 

D. “Product Requirements Specification” shall mean Bills of Materials,
schematics, assembly drawings, process documentation, software, tooling provided
by Powerwave, technical and functional information and processes, quality
control, regulations, test specifications and procedures, product quality, and
Approved Vendor lists for the Products, agency requirements, and packaging
requirements.

 

E. “Delivery Date” means the date when Product is to be delivered to the
designated delivery location as specified on Powerwave’s Orders.

 

F. “Project Plan” shall mean the plan mutually developed and agreed to by
Powerwave and Seller for the purpose of preparing product and process for
manufacture at Seller. The Project Plan will include a statement of work and
development schedule, and any other information required to guide the

 

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development activity, such as resource assignments and responsibilities. These
Project Plans will be developed on an as needed basis, but will generally be per
Product to be manufactured by Seller.

 

G. “Business Days” shall mean those days, from Monday through Friday, which are
not declared as national holidays in the countries where the Seller manufactures
the Products.

 

H. “Calendar Days” shall mean all days, Sunday through Saturday, which appear on
the calendar from January 1 through December 31 in the countries where the
Seller manufactures the Products.

 

I. “Quality Plan” shall include all documentation, processes and procedures
necessary to manufacture, inspect, and accept Products as well as delivery and
service the Products. The Quality Plan includes (1) IQA inspection and ECO
control of material, (2) manufacturing and process procedures, and (3)
manufacturing process control and quality control systems.

 

J. “Acceptance of Product” are the quality audits and out of box audit (AOB)
used by Seller as final acceptance for Products prior to shipping Products to
Powerwave.

 

K. “Process Documentation” means documentation provided by Powerwave or
developed by Seller to be used to manufacture Products including: bills of
material, approved manufacturer list (AML), assembly drawings, line layouts,
process documentation, quality and inspection plans, test processes, and
packaging requirements.

 

L. “RMA” means a return material authorization to be provided by Seller to
Powerwave.

 

M. “Affiliate” means with respect to a party hereto, a corporation that directly
or indirectly controls, is controlled by or is under common control with that
party.

 

N. “Intellectual Property” or “IP” means, throughout the world, all copyrights
and any rights in the nature of copyright (including, without limitation, so
called “neighboring rights,” database rights and other “sui generis” rights),
all patents, utility models, design patents, registered designs and other design
rights, trade secrets and other intellectual or industrial proprietary rights
including, without limitation, the right to apply for, file or register any of
the foregoing and rights under such applications, filings or registrations.

 

2. The Master Purchase Agreement/Purpose.

 

2.1 The purpose of this Agreement is to set forth the terms and conditions under
which, during the term hereof, Seller shall manufacture certain Products. Unless
otherwise agreed by both parties in writing, this Agreement applies to all
Orders which Powerwave may place with the Seller for the Products during the
term of this Agreement and any renewals thereof. The terms and conditions of
this Agreement shall apply to any Order placed by Powerwave, whether or not this
Agreement or its terms and conditions are expressly referenced in the Order.
Unless otherwise agreed by both parties in writing for a specific transaction,
no inconsistent or additional conditions in any Order, sales acknowledgement,
confirmation, correspondence or release shall be applicable to a transaction
within the scope of this Agreement. Both parties agree that any terms on their
purchase or sale documents used as releases hereunder which are in any way
inconsistent with this Agreement (or the exhibits to the Agreement) shall be
inapplicable and the terms of this Agreement shall govern. Neither party shall
require (i) waivers or releases of any personal rights or (ii) execution of
documents which conflict with the terms of this Agreement from employees of the
other party in connection with visits to its premises.

 

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2.2 From time to time Powerwave or its Affiliates may wish to purchase services
from Seller. Such services may include, but shall not be limited to:
development, design, engineering, out-of-warranty repair, prototyping,
distribution or other services as Powerwave may request and Seller may provide
from time to time and which may be described in more detail in various
statements of work or Orders. Unless otherwise agreed to in writing between the
parties, Seller shall perform all Services in accordance with the terms and
conditions set forth in this Agreement and at a mutually agreed upon price.

 

3. Scope of Services/Operating Model.

 

3.1 Seller shall manufacture, assemble, test and deliver Products that meet
agreed to specifications provided by Powerwave. Seller will purchase material at
lead-time per the Powerwave AML necessary to manufacture Products per Powerwave
Orders and forecasts. It is Powerwave’s intention to involve Seller in the
vendor selection process. Seller is responsible for all inventory management and
quality control of Material used in the production of the Product. Seller agrees
to provide incoming visual inspection and obtain certificates of compliance (C
of C’s) where appropriate to ensure that only parts conforming to the component
specification are used to manufacture products for Powerwave. Seller will be
responsible for securing and maintaining sufficient plant and equipment and
qualified assemblers, technicians and management to fulfill all obligations
contained in the Agreement. Seller will provide detailed manufacturing and
quality plans as agreed to between the parties that include a description of
processes, equipment, data collection and reporting required to ensure Powerwave
Products will meet the agreed to specifications. Seller agrees to support
Product launch activities with technical support on design for manufacturability
and testability, agency documentation and compliance, quality and project
management support.

 

3.2 Both Seller and Powerwave will appoint one or more program managers for its
respective project activities to act as commercial and technical liaisons with
the other party. Each party will assign appropriate personnel, as it shall deem
necessary in its sole discretion; provided, however, that each party shall use
its reasonable commercial efforts to perform the activities for which, by the
terms of this Agreement, it is responsible. Both parties shall provide
manufacturing, test and quality engineering support, if needed, at each others
facilities as mutually agreed upon. Seller agrees to work with Powerwave to
further develop cross-company processes in the following functional areas:
project management, supply chain planning, procurement, order management,
manufacturing operations, logistics, quality control, documentation and ECO
control, service operations and information technology (IT.) Seller and
Powerwave shall meet once per calendar quarter at an agreed upon location to
hold quarterly business reviews of the performance under this Agreement.

 

4. Term and Termination.

 

4.1 This Agreement shall become effective when signed by an authorized
representative of Powerwave and Seller and the term of this Agreement is twenty
four (24) months from the effective date. This Agreement will automatically
renew for additional one (1) year terms after the expiration of the initial term
unless either party receives from the other, at least six (6) months prior to
the end of the initial term or any renewal term, written notice to terminate
this Agreement at the end of the then current term.

 

4.2 This Agreement may be cancelled in whole or in part by either party by
providing six (6) months advance written notice, provided, however, that the
parties hereto may agree in writing to a shorter notice period. In the event of
termination pursuant to this section 4.2: (a) termination of this Agreement will
not prejudice accrued rights and liabilities (including payment for Product
delivered) of either party; (b) on termination or other discharge of this
Agreement, Seller, will following Powerwave’s request, deliver to Powerwave all
Powerwave property; (c) Seller will stop work pursuant to this Agreement to the
extent specified in the termination notice or as otherwise agreed to between the
parties;

 

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(d) Seller will terminate all subcontracts and orders that relate to terminated
work; and (e) Seller will complete the work in progress for all non-terminated
work.

 

4.3 Either Powerwave or Seller may terminate this Agreement upon the other
party’s material breach of this Agreement, provided that (a) the non-breaching
party first shall have sent written notice to the breaching party describing the
breach in reasonable detail and requesting it be cured, (b) the breaching party
does not cure the breach within sixty (60) days following its receipt of such
notice and (c) following the expiration of the sixty-day cure period, the
non-breaching party sends a second written notice to the breaching party
indicating that the non-breaching party has terminated the Agreement. The
following will be considered a material breach of this Agreement: (i) the
failure of either party to perform or observe any material term, condition or
covenant to be performed by it under this Agreement; or (ii) an unauthorized
assignment of this Agreement.

 

4.4 Powerwave or Seller may terminate this Agreement immediately, if either
party becomes insolvent or is declared bankrupt, or if a receiver and manager,
liquidator, trustee in bankruptcy or other officer with similar powers is
appointed over all or a substantial part of the assets of that party, or if that
party files a proposal or notice of intention to make a proposal under the
Bankruptcy and Insolvency Act or any similar law or any equivalent event occurs
under any relevant jurisdiction. The termination of this Agreement will not
affect any Order which has been dated and acknowledged prior to the effective
date of termination.

 

4.5 Upon any termination, the parties will use commercially reasonable efforts
to cooperate in the orderly wind down of operations of Powerwave, taking into
account Powerwave’s need to avoid interruption of supply. Upon termination of
this Agreement, the Seller agrees to meet in good faith with Powerwave to create
and execute a transition plan which may include: (i) a transfer of all Materials
at a price to be agreed upon; (ii) a transfer of all tooling and equipment
bought specifically for Powerwave’s Product at a price to be agreed upon; (iii)
transfer of all Powerwave’s tagged assets and any equipment bought on behalf of
Powerwave; (iv) a schedule to complete the remaining Orders; and (v) any other
items to be agreed upon between the parties. Subject to the Seller’s
confidentiality obligations and security requirements, Powerwave may audit the
Seller during the winding down of operations concerning any Powerwave tagged
assets or any equipment bought on behalf of Powerwave.

 

5. Nature of Agreement; Forecasts. This Agreement does not create any obligation
on the part of Powerwave to purchase any particular quantity or dollar amount of
Products from Seller until an Order has been placed for the Products by
Powerwave. Powerwave may periodically issue blanket purchase orders to cover the
purchase of Products up to the maximum dollar amount or quantity specified on
the blanket purchase order. Seller agrees that the quantities or dollar amounts
listed on the blanket Purchase Order are the maximum quantities or dollar
amounts of Products that can be purchased by Powerwave under the purchase order
and are not commitments to buy any specific dollar amount or quantity of
Products. Orders for Products only can be placed by Powerwave submitting a
written purchase order or a release against a blanket purchase order. Seller
should not rely on oral statements of Powerwave employees, as Powerwave only
places orders for Products through written purchase orders or a release against
a blanket purchase order. Subject to the terms of this Agreement, Powerwave may
from time to time provide Seller with forecasts, such forecasts are for planning
purposes only and shall not be considered a commitment by Powerwave to purchase
the Product shown in the forecast, except as may otherwise be provided in this
Agreement.

 

6. Ordering Process for Discreet Purchase Orders.

 

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6.1 From time to time, Powerwave may place orders for discreet quantities of
Products on scheduled delivery dates by issuing one or more discreet Purchase
Orders. Seller shall not consider verbal orders as valid until Seller receives
an approved written Purchase Order. The principal method of Seller delivery
notification shall be weekly releases against blanket purchase orders as
described in section 13 of this Agreement.

 

6.2 Seller will acknowledge receipt of Orders and the vendor delivery schedule
report within two (2) Business Days after receipt and notify Powerwave of
acceptance or non-acceptance of Orders and vendor delivery schedule report
within three (3) Business Days of receipt. In case Seller’s confirmation of an
Order or Seller’s invoice or Powerwave’s Orders contains terms and conditions
which are in conflict with or attempt to amend this Agreement, such conflicting
or additional terms and conditions shall be regarded as null and void, unless
specifically accepted by Powerwave or Seller in writing.

 

7. Shipping and Packing and Risk of Loss.

 

7.1 Except as otherwise agreed, all Products sold to Powerwave are delivered
Delivery Duties Paid (DDP) Santa Ana, California USA (Incoterms 2000). Seller
shall follow Powerwave’s reasonable shipping instructions and use Powerwave’s
recommended freight carriers. Seller will use its commercially reasonable
efforts to timely ship the Product to meet the agreed Delivery Dates. If due to
Seller’s failure to fulfill its obligations, the specified method of
transportation will not permit Seller to meet the Delivery Date specified in an
Order, the Products affected shall be shipped by air transportation or other
expedient means acceptable to Powerwave and Seller will pay for any resulting
increase in freight costs over the specified method of transportation. Shipments
shall be made to the following location unless otherwise specified:

 

Powerwave Technologies, Inc.

1395 S. Lyon Street

Santa Ana, CA 92705

 

7.2 The following information shall be listed on all packing lists:

 

  •   Blanket Purchase Order No.

 

  •   Line Item

 

  •   Powerwave Part No.

 

  •   Seller Part No.

 

  •   Date of Shipment.

 

  •   Quantity

 

7.3 Tariff Provisions.

 

Seller shall make all shipments in conformity with governing tariff rules and
regulations and packaging specifications, except where otherwise specifically
required by provisions of this Agreement.

 

7.4 Routing Instructions.

 

Seller shall request prior routing instructions for delicate equipment or for
emergency shipments. Seller shall not declare any value for carriage or
insurance. Shipments shall be released to minimum value of governing
classification or tariff, or insured for minimum value for tractability. Except
where not feasible, Seller shall consolidate all shipments to the delivery point
specified herein, for any one-day, on one bill of lading. Where multiple
packages comprise a single shipment, Seller shall consecutively number each
package (e.g., “1 of 3”).

 

 

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7.5 Packing and Packaging.

 

Seller shall preserve, package, handle, and pack the Products so as to protect
the Products from loss or damage, in conformance with good commercial practices,
Powerwave’s specifications, government regulations and other applicable
requirements. Seller shall be responsible for any Product damage caused by any
failure to comply with packaging specifications. Seller shall provide a detailed
packing list attached to each pallet or container enclosed in a weatherproof
package marked “Packing Slip Inside.” The packing slip and other documentation
shall bear the applicable PO number and shipping destination. Cartons or pallets
shall be consistently labeled and facing the same direction. Seller shall be
responsible for any loss or damage due to its failure to properly preserve,
package, handle or pack the Products. Hazardous materials must be packed and
labeled as required by the appropriate government and carrier regulations.
Machined surfaces must be given special protection against rust, corrosion, or
any physical damage. Where applicable, all sides of the package shall be
stenciled, using waterproof ink, with the appropriate marks, in English, listed
below:

 

— FRAGILE

— HANDLE WITH CARE

— THIS END UP (Stencil and arrow pointing up.)

 

If Buyer directs Seller to mark or label any Parts with a trade name, trademark,
or logo owned or licensed by Powerwave, Seller shall apply the marking or
labeling only on the quantity of Products and in the manner specified in
Powerwave’s written instructions.

 

7.6 Delivery and Title.

 

Subject to the terms of this Agreement, if Seller makes any shipment more than
four (4) Business Days prior to the scheduled delivery date by the specified
method of transportation, Powerwave may delay processing the invoice until the
delivery date. Seller warrants that, upon delivery of the Products to Powerwave,
title will pass to Powerwave free and clear of all liens, claims, security
interests or encumbrances and that no Products purchased hereunder shall be
subject to any agreement under which any interest therein or encumbrance thereon
is retained by any third party. If Seller and Powerwave mutually agree to
implement a vendor managed inventory (“VMI”) program, Seller and Powerwave shall
execute an amendment to this Agreement which contains the terms and conditions
related to such VMI program.

 

8. Quality Control and Inspection.

 

8.1 Powerwave’s quality target is to accept only Products fully conforming to
the Product Requirements Specification. Seller shall provide a formal Quality
Plan for each Product that includes manufacturing process and capability
metrics, product certification, in process and final test procedures, data
collection, data reporting and quality control procedures for the manufacturing
process that could be used to accept/reject Products. Quality plans must be
agreed to prior to initial production shipments and shall include the items
listed on Exhibit B and such other items as mutually agreed between Seller and
Powerwave.

 

 

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8.2 Seller shall manufacture the Products to the Process Documentation and
quality control standards established by Powerwave and mutually agreed to by
Seller and Powerwave. Seller shall inspect all Products prior to shipment to
Powerwave to determine whether such Products meet the agreed upon process
controls, test yields, end-of-line audits and out-of-box audits. Inspections
will be held according to the following documents in order of precedence:

 

  •   Powerwave Source Control Drawing

 

  •   Powerwave Fabrication Drawing

 

  •   Seller Generated Special Drawing

 

8.3 Seller shall keep and maintain manufacturing process inspection and test
records for the manufacture of Powerwave’s Products, which shall be available
for inspection for Powerwave and allow copies to be made and extracts to be
taken and shall furnish any information which may be reasonably required by
Powerwave with respect thereto.

 

8.4 Powerwave may also perform specific incoming inspection and out-of-box
audits at its facilities to determine whether the Products meet the Product
Requirements Specification. Such inspections shall be completed by Powerwave
within ten (10) Calendar Days after delivery of Product to Powerwave. It is
expressly agreed that inspections and/or payments prior to delivery will not
constitute final acceptance. If the Products delivered do not meet the Product
Requirements Specification, then Powerwave shall have the rights as specified in
Section 9.

 

8.5 Powerwave reserves the right during regular business hours and following
reasonable advance notice to Seller and subject to Powerwave’s confidentiality
obligations, to inspect Seller’s facilities or quality control procedures and
perform reasonable source verifications and quality assurance audits, both prior
to the first delivery of Products and periodically thereafter, in order to
verify compliance with the Product Requirements Specification and Process
Documentation. Any such inspections or audits shall not relieve Seller of its
obligation to deliver conforming Product in accordance with specified delivery
dates.

 

8.6 All Materials used to manufacture Products have been inspected (visual)
using reasonable commercial practices and agreed to internal quality control
standards.

 

9. Non-Conforming Products, RMA and Returns.

 

9.1 If a Product fails out of the box within thirty (30) days following
delivery, Powerwave may return the defective Product for credit.

 

9.2 If Powerwave believes that any shipment of Product has failed the incoming
inspection, fails out of the box or should be rejected because it is a
Noncomplying Product (as defined below) or does not comply with the applicable
warranties as outlined in Article 10, Powerwave will give Seller written notice,
giving sufficient details of the failure or rejection. All returned Product
shall include documentation describing the nature of the defect, how it was
discovered and under what conditions it occurred. In the event of failing to
meet incoming inspection, Seller shall be entitled to receive a reasonable
number of samples of the Noncomplying Product. Powerwave requires an RMA from
the Seller prior to returning any Product. An RMA will be provided by Seller to
Powerwave within three (3)

 

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Business Days of Powerwave’s request. The Seller’s issuance of an RMA will not
be unreasonably withheld. Upon return of the Noncomplying Products, Seller will,
at its election either repair, replace or credit Powerwave for the Noncomplying
Products. The cost associated with any such repair, replacement, or credit will
be the responsibility of the Seller. Powerwave and Seller shall work together to
develop a blanket RMA process.

 

9.3 If any Product is defective or otherwise not in conformity with the Product
Requirements Specification (“Noncomplying Product”), Powerwave may (i) return
the Noncomplying Product to Seller at its place of manufacture of the Product or
at a designated repair facility for the Product (Santa Ana, California USA) for
replacement or reworking at Seller’s expense, or (ii) repair the Noncomplying
Product and recover its reasonable expenses of repair provided that Seller
authorizes the repair in writing. Seller shall, if Powerwave selects the
alternative in clause (i) above, return replacement or reworked Product no later
than ten (10) business days after receipt of the Non-Complying Product from
Powerwave. If Seller fails to repair and deliver the Product to Powerwave within
thirty (30) Calendar Days after receipt, Powerwave may reject the Product and
Seller will issue a credit for the affected Product. The parties agree to review
the status of Product repairs and repair cycles at their quarterly business
reviews or more frequently as mutually agreed.

 

9.4 Seller will provide a quarterly summary report showing all repairs made
during the period. The report will include model number, serial number,
completion date of warranty service, description of failure condition, parts
required to make repair. If Seller becomes aware of any quality issues, design
or manufacturing defect, other issues, whether Seller or supplier related, which
may impact Seller’s compliance with the Product Requirement Specification or
Process Documentation then Seller will promptly notify Powerwave of the nature
of such issues and provide the known technical details. Powerwave reserves the
right to suspend Product shipments until resolution of the above issue.

 

10. Warranties.

 

10.1 Seller warrants that all Products are: (i) free from defects in
workmanship; (ii) new, unused and in good working order; (iii) manufactured in
accordance with and conforming to the Product Requirements Specification; and
(iv) free of all liens and encumbrances. In addition, Seller warrants that any
Products furnished by Seller have undergone or have been subject to quality
control activities and procedures, including performance measurements, testing,
quality process reviews or inspections as detailed in section 8 of this
Agreement and Exhibit B to this Agreement.

 

10.2 With respect to Materials incorporated in the Products that are acquired
from third parties, Seller will pass through the benefit to Powerwave of all
manufacturer warranties, to the extent permitted. Seller, upon reasonable
request by Powerwave, will provide copies of the manufacturer product warranty
to Powerwave.

 

10.3 Seller warrants that all services will be performed in compliance with
applicable specifications and with the skill, care and diligence and in
accordance with the applicable standards currently recognized in Seller’s
industry or profession.

 

10.4 All warranties specified in this Section 10 shall (i) survive any
inspection, delivery, test, acceptance, use or payment by Powerwave; (ii) be in
effect for the ** (**) month period following delivery to Powerwave. Powerwave
shall promptly after discovering the defect notify the Seller. Any defective
Product shall be returned prepaid to Seller’s designated repair location (Santa
Ana, California USA) within the warranty period, except where the defect is
discovered in the last month of the warranty, where Powerwave notifies the
Seller in accordance with this Section and returns the defective Product no

 

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later than thirty (30) Calendar Days after the expiration of the warranty
period. Any repaired Product shall be warranted for the remainder of the
warranty period or ninety (90) Calendar Days, whichever is the greater.

 

10.5 The Seller agrees that it will, without charge, during the warranty period
following delivery, repair, replace or credit, at the Seller’s option, any,
Products which do not comply with the above warranties. Powerwave will pay for
the return of Products to the Seller’s designated premises. Seller will pay for
the redelivery to Powerwave’s premises as directed by Powerwave of all repaired
or replaced Products.

 

10.6 If Powerwave experiences an annualized field failure rate of **% or more
for any cause Powerwave will promptly inform Seller of the nature of such
failure, provide the known technical details at the time and the parties agree
to meet together to address the issue.

 

If, at any time prior to ** (**) years after the delivery date by Seller of
Product, Powerwave experiences an annualized field failure rate (measured over a
6-month period) of three percent or more and if such failure(s) have resulted
from Seller’s workmanship, material purchased from a supplier not part of the
AML, or improper manufacture or assembly of the Product, such failures shall be
considered an Epidemic Failure.

 

If the cause for such Epidemic Failure is Seller’s workmanship, improper
manufacture or assembly of the Product or component purchased from a supplier
not part of the AML, then Seller will work with Powerwave in a proactive and
professional manner to remedy the situation with the goal to minimize the impact
to Powerwave’s customers. The parties will work together on a recovery plan that
addresses the repair and replacement of the affected Product within a reasonable
time frame and allocates the cost to carry out the recovery plan based on degree
of responsibility.

 

10.7 The above warranties do not apply to Products which have been misused,
modified, damaged or subjected to any repair not authorized in writing by Seller
in advance.

 

10.8 The Seller will use its reasonable commercial efforts to support Powerwave
in resolving non-warrantable issues such as a defect in a component, or a
malfunction in a component and resolving quality issues with third party
component manufacturers. The parties shall cooperate in good faith to find the
cause of such defects and take remedial measures. If there is a defect in a
component Seller agrees to pay for the labor costs for reworking the Product
with a new or repaired component, not to exceed $US** per occurence.

 

10.9 SECTIONS 9-10 SETS OUT SELLER’S SOLE OBLIGATION FOR CLAIMS BASED ON DEFECTS
IN OR FAILURE OF ANY PRODUCT OR SERVICE OR THE SUBJECT MATTER OF ANY PRODUCT OR
SERVICE AND REPLACES ALL OTHER WARRANTIES OR CONDITIONS, EXPRESS OR IMPLIED,
INCLUDING BUT NOT LIMITED TO IMPLIED WARRANTIES OR CONDITIONS OF MERCHANTABILITY
OR FITNESS FOR A PARTICULAR PURPOSE PROVIDED ALWAYS THAT SELLER DOES NOT EXCLUDE
OR LIMIT ITS LIABILITY FOR DEATH OR PERSONAL INJURY RESULTING FROM ITS
NEGLIGENCE NOR LIABILITY FOR BREACH OF ANY TERM IMPLIED BY STATUTE TO THE EXTENT
THAT SUCH LIABILITIES CANNOT BY LAW BE LIMITED OR EXCLUDED.

 

11. Prices; Payment Terms; Invoicing.

 

 

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11.1(a) The initial unit prices for the Products are specified on the Product
Attachment and the prices include packing, labeling and part marking. The price
for each Product will be quoted in US Dollars using an agreed upon pricing model
whereby the materials cost information is agreed to and the assembly/test labor
rates, SG&A, profit and overhead rates are per Exhibit A. Under the pricing
model, the material cost and supplier selection information for all purchased
materials will be shared with the intention of selecting the components and
suppliers that provide the lowest total bill of material cost, subject to the
supplier being on the AML. Payment may be refused by Powerwave for any
additional work performed which is not within the Product price as shown in the
Product Attachment, or cost incurred in excess of the Product unit price unless
authorized in writing by an authorized Powerwave representative.

 

11.1(b) Prices will be subject to review by the parties on a quarterly basis
(and at such other times as may be agreed) at the Quarterly Business Review to
be arranged by the authorised representatives of the parties. Price adjustments
may be implemented as the parties agree. Changes to Prices, and the manner and
timing of their implementation, will be agreed by the parties on a fair and
reasonable basis at such review meeting including how to address inventory
variances resulting from price changes.

 

11.2 All invoices shall include the following information:

 

  •   Blanket Purchase Order Number

 

  •   Powerwave Part Number and description

 

  •   Unit price and extended total

 

  •   Date of shipment

 

11.3 Products shall be invoiced upon shipment or upon receipt of a pull signal
from Powerwave in the case of a VMI program. Payment terms shall be forty-five
(45) Calendar Days payable in US Dollars, from the date of invoice. Powerwave
may deduct from Seller’s invoices any moneys owed Powerwave by Seller. Powerwave
may withhold payment for amounts claimed under invoices that it in good faith
believes are in excess actual amounts owing.

 

11.4 Powerwave may request a price decrease based on market conditions,
manufacturing economies of scale, lower material costs, currency rate
fluctuations, or any other reasonable factors at any time with firm price
negotiations to be conducted every three (3) months at a mutually agreed upon
time and location. Upon receiving such request Seller will consider the proposal
and negotiate a mutually agreeable resolution in good faith. Seller and
Powerwave will use their reasonable efforts to achieve a cost reduction target
of **% per calendar quarter for each Product. Seller and Powerwave agree to
implement an aggressive price reduction program that targets specific areas of
the Product that shall include but is not limited to a pass-through of cost
savings derived from manufacturing efficiency improvements, quality
improvements, and material cost savings.

 

11.5 Unless Powerwave provides appropriate exemption certificates, Powerwave
will be responsible for and will pay all taxes including value added taxes,
duties or other governmental or regulatory charges in any country resulting from
the performance of this Agreement, except for any income related taxes for which
Seller is directly liable. Seller shall notify Powerwave of any such tax
liabilities incurred on behalf of Powerwave or arising in connection with doing
business with Powerwave as soon as practicable and will make all reasonable
efforts to minimize the amount of any such tax liabilities.

 

11.6 If Seller offers a better price or pricing formula to any third party for
similar Products, based on similar volumes, under substantially similar terms
and conditions and in similar geographies then theSeller agrees to offer such
price or pricing formula to Powerwave retroactively as of the date first offered
to the third party. The Seller agrees to fulfill its obligations in this Article
in good faith.

 

13

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12. Changes.

 

12.1 Engineering Changes Proposed By Seller.

 

Seller may not discontinue the manufacture of any Product nor make any changes
that affect the form, fit, function quality, reliability, or interchangeability
of any Product without the prior written approval of an authorized
representative of Powerwave’s supplier quality department. Seller shall notify
Powerwave of any proposed change to any Product and shall supply a written
description of the expected effect of the change, including the effect on price,
and any cost savings permitted by the change. In addition, Seller shall provide
Powerwave with sample builds reflecting the change as well as a product
evaluation test for the sample builds that includes yield and test results for
the sample builds. Powerwave shall approve or disapprove the proposed changes
within ten (10) Business Days after receipt of Seller’s written request and the
supporting information described above. Seller may not change or modify the
Product without Powerwave’s prior written consent. Changes shall not be binding
upon Powerwave except when specifically confirmed in writing signed by an
authorized representative of Powerwave’s supplier quality department.
Information, advise, approvals or inspections given by Powerwave’s technical
personnel or other representatives shall be deemed expressions of personal
opinions only and shall not affect Powerwave’s and Seller’s rights and
obligations. Upon approval by an authorized representative of Powerwave’s
supplier quality department such changes shall be documented and incorporated
into the Product Requirements Specification and Process Documentation. In
addition Seller may not change Seller’s manufacturing site or process without
the prior written approval of Powerwave.

 

12.2 Engineering Changes Requested By Powerwave.

 

Powerwave reserves the right at any time, to change by a written notice (ECN),
the Product Requirements Specification or Process Documentation. Powerwave also
may make changes to the packaging and assembly and test procedures. Finally,
Powerwave may make changes in the amount of any property or services furnished
by Powerwave. When Seller receives an ECN it will provide a detailed response
within five (5) Business Days of receipt. If any such change causes an increase
or decrease in the price of Products under this Agreement or in the time
required for Seller’s performance, Seller shall promptly notify Powerwave and
assert its claim for adjustment within ten business (10) days after the change
is ordered, and an equitable adjustment shall be made.

 

13. Weekly Releases, Rescheduling, Flexibility, Delivery Delays.

 

13.1 The principal delivery notification method to be used between Powerwave and
Seller is described below. Powerwave will place a blanket purchase order for
Products and the blanket purchase order typically covers a period of one year.
The blanket purchase order covers the purchase of Products up to the maximum
dollar amount or quantity specified in the blanket purchase order. Seller agrees
that the quantities or dollar amounts listed on the blanket purchase order are
the maximum quantities or dollar amounts of Products that can be purchased by
Powerwave under the purchase order and are not commitments to buy any specific
dollar amount or quantity of Products. Orders for Products can only be placed by
submitting a weekly release as described below. Powerwave will communicate and
update its requirements for Products on a weekly basis by providing Seller with
a Vendor Delivery Schedule Report (VDS). The VDS contains two headings under
each Product number. The heading “Released to Ship” shows the quantity of the
Product to be released to Powerwave for delivery on a specific date. The heading
“Forecast” shows Powerwave forecast needs for the supply of Product on a weekly
basis for the first five weeks and then on a monthly basis for the next four
months. The VDS is typically provided

 

14

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on the close of business on every Tuesday or the second business day of a
standard work week and updated on a weekly basis.

 

The Seller may order Materials with lead-time of more than ** weeks and Material
that is non-cancelable or non-returnable only with Powerwave’s prior written
approval and such approval shall not be unreasonably withheld by Powerwave. On a
monthly basis the Seller will provide Powerwave with a report of Materials with
lead-times greater than (**) ** weeks and Material that is non-cancelable or
non-returnable. Powerwave shall provide its written approval to the Seller
within three (3) Business Days from receipt of the report.

 

Seller is authorized to ship only the quantity listed under the “Released to
Ship” heading. The quantity under the heading “Forecast” is for Seller’s
planning purposes only to assure manufacturing capacity and material planning
and procurement and not to be released to build.

 

13.2 The first ** days on the VDS under the forecast heading represents a
binding commitment as to the quantity of Products ordered by Powerwave and may
not be rescheduled or cancelled (“Firm Commitment.”) [See Chart in section 14.1
under heading “Maximum quantity of a specific Product for which delivery may be
delayed.”] Provided the “release to ship” or “forecast” columns on the VDS are
not revised upward in excess of the flexibility parameters described below, the
“release to ship” and “forecast” columns will roll forward such that at the end
of a week two will be a new Firm Commitment of fifteen days.

 

13.3 The delivery of Product subject to an Order (excluding the Firm Commitment)
may, at the discretion of Powerwave, be revised or delayed for up to ** (**)
Calendar Days without penalty or cost from original scheduled delivery date
based on the percentages in the chart below. Any commitment to delayed Products
shall be considered met once Powerwave takes delivery of the delayed items. If
Powerwave does not take delivery of the delayed Products within **(**) Calendar
Days, the Products will have been cancelled and dealt with in accordance with
Article 14.

 

13.4 Seller shall give Powerwave at least five days advance notice of any
prospective failure to ship Product in time to meet the committed delivery date
specified in any order or release. Such notice shall specify what Products are
delayed and a proposed new Delivery Date. If Powerwave does not agree to the
proposed new delivery date and if the delay is greater than thirty (30) Business
Days, Powerwave shall then have the option of terminating the order without
obligation for payment or for accepting the revised Delivery Date. Seller will
use its commercially reasonable efforts to meet agreed delivery dates and will
bear the cost of any reasonable premium freight charges, material expediting
fees, and overtime labor necessarily incurred solely by Seller to mitigate the
impact on Powerwave of actual or impending late deliveries that are caused by
Seller. If a late delivery, which is caused by Seller leads to a negative impact
on Powerwave revenues or results in the imposition of a customer fee or penalty,
the parties will, in good faith, meet and discuss responsibility for the delay
and mutually agree upon an appropriate financial accomodation.

 

13.5 Powerwave and Seller shall mutually agree on the lead times required in the
initial production order and the ramp up time required to comply with the
initial forecast for each Product. In addition, Seller and Powerwave shall
review the supply chain for the Product to identify any long lead time items and
issues with the production ramp for each Product. The parties shall meet and
mutually agree to a BOM analysis to establish standard lead-times. This should
be done as part of the quarterly review. Seller shall identify items considered
long-lead time items in the course of doing business and based on market
conditions. Seller shall review long-lead time item concerns for supply,
inventory and cost contingency with Powerwave. Contingency arrangements, minimum
purchase quantities, extended periods of purchase for supply, special safety
stock and/or NCNR as hedging for allocation or price

 

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consideration on long-lead time items shall be discussed between Seller and
Powerwave on a routine basis monthly. All components that have a lead time
greater than **(**) weeks, Materials that are non cancelable and non-returnable,
or that have minimum order quantities will be listed on Exhibit C to this
Agreement. This Exhibit shall be updated periodically to reflect changes.

 

13.6 Seller commits to maintain its ability to deliver the Products according to
the flexibility parameters detailed below. The flexibility requirements define
the quantity of Products above the forecast level that Seller shall be ready to
deliver. Seller shall maintain sufficient production capacity to handle a
sustained increase of up **% per week in average weekly demand, provided
Powerwave gives Seller one week prior written notice. For increases that exceed
the above flexibility, Seller and Powerwave shall agree upon production and
delivery schedules on a case by case basis.

 

14. Reschedule, Cancellation, Excess and Obsolete Materials

 

14.1 Powerwave may delay or reschedule deliveries in advance of agreed delivery
dates as follows, subject to the availability of material purchased to support
the forecast based on the VDS.

 

Powerwave’s Days

notice to Seller (prior to

original delivery date

from factory)

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

  

Maximum quantity of a

specific Product

(expressed as a

percentage of the

quantity of that specific Product in an Order) for

which delivery may be

delayed

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

  

Maximum Upside in

Delivery Schedule

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

0-15

  

**

  

**

16-30

  

**%

  

**%

31+60

  

**%

  

**%

60+

  

**%

  

**%

 

*Days = number of Business Days prior to scheduled release date.

 

14.2 Cancellation:

 

In the event of Powerwave’s cancellation of Orders or decrease of forecasts,
Powerwave’s liability shall be as follows: (i) if an Order or part thereof is
cancelled within ** (**) Business Days of the original scheduled delivery date
specified in such Order, Powerwave is liable for 100% of the current price of
all finished Product in Seller’s possession plus work in process and the
material acquisition cost and/or value add on the date the Order(s) (or any part
thereof) was cancelled; (ii) for all cancelled or delayed Orders 100% of the
cost of all Material in Seller’s possession or on order including Obsolete and
Excess Materials, which Seller is unable to mitigate in accordance with this
Agreement; and (iii) any documented vendor cancellation charges incurred by
Seller with respect to Material that is accepted for cancellation or return by
the Material vendor. Seller shall provide itemized detail of all vendor
cancellation charges and the reasons for such charges.

 

Notwithstanding the above, Powerwave’s maximum Material liability under clauses
(ii) and (iii) shall be ** weeks of Material based on the forecast as shown on
the VDS at the date of cancellation or forecast

 

16

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reduction, taking into account minimum order quantities for Material, plus NCNR
and long lead time material (up to the agreed lead time, provided that it is
consistent with the VDS) provided the NCNR, minimum order quantities and long
lead time purchases have been previously approved by Powerwave as specified in
Section 13.1.

 

If Powerwave cancels an order, reduces a forecast, or makes an engineering
change, Seller shall use commercially reasonable mitigation measures and prudent
material management techniques to minimize the impact of the cancellation,
change or reduction in forecast on Powerwave, including canceling outstanding
orders for Material, returning Material to the supplier, and using the Material
for other customers. In the event of a cancellation, change or reduction in
forecast by Powerwave, Seller shall provide supporting documentation for any
charges it seeks to recover from Powerwave and Powerwave shall have the right to
audit Seller’s books, records and premises in connection with such charges.

 

14.3 “Excess” inventory means the increment of Seller’s inventory of Material
that cannot be consumed by Powerwave within six months as reflected on it most
recent VDS. The inventory item in question is associated with an active program.
“Obsolete” inventory means any increment that has no planned usage or forecast
shown on Powerwave’s VDS.

 

The Seller will provide Powerwave with written notification on or about the
fifteenth (15) Calendar Day of the first month of each quarter of a list of
Excess or Obsolete Materials. The notice shall list items of Material considered
excess and/or obsolete. Seller and Powerwave shall work in a cooperative manner
to minimize any Excess or Obsolete Materials.

 

14.4 Seller may purchase Material from Powerwave, on an as-needed basis, prior
to purchasing Material or inventory from other third party vendors. The purchase
price of Material or inventory shall be at the cost reflected in the then
current Product pricing or as otherwise agreed in writing. Powerwave will pass
through the benefit of all Material supplier warranties to the Seller which it
obtained in acquiring such Materials.

 

In an effort to avoid causing Materials acquired from Powerwave to become Excess
or Obsolete, Seller will use all reasonable efforts to consume the Materials
purchased from Powerwave first before consuming Materials purchased from third
parties. Also, the Seller will use all reasonable efforts to consume the Excess
and Obsolete Material that it is storing for Powerwave before ordering Materials
from third parties.

 

15. New Product Introduction (NPI).

 

When Powerwave desires to launch a new Product and have it manufactured by
Seller, the parties shall follow the new product introduction procedures
outlined on Exhibit D. Such procedures relate to requests for quotations,
defining deliverables, schedules, milestones, quantities, testing, status
reports and costs as well as Powerwave’s engineering development process, IT
requirements for communicating engineering change orders, drawings, bills of
material and schematics.

 

16. Tooling and Consigned Equipment.

 

16.1 Seller, at its own expense, shall furnish, keep in good condition,
calibrate, and replace when necessary all tools and test equipment (“Tools”)
necessary for the production of the Products subject to this Agreement. If both
parties agree Powerwave may be entitled to take possession of and title to the
Tools that are dedicated, custom and special for the production of the Products
upon payment to Seller of a mutually agreed upon price. Any Tools paid for
directly by Powerwave or funded through another mechanism by Powerwave shall be
returned to Powerwave. Upon reasonable notice, Powerwave may

 

17

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require the return or transfer of Tools or equipment that it owns, if any and
Seller shall promptly comply with any such request.

 

16.2 Powerwave may consign certain test equipment, tools (“Consigned Equipment”)
to Seller to enable Seller to manufacture Products. The Tools and Consigned
Equipment may not be used to manufacture products for any party other than
Powerwave and Seller agrees to not use any of the Tools and Consigned Equipment
in the manufacture, testing, assembly or shipping of product for any third
party. In addition, Seller shall not rent or loan any of the Tools and Consigned
Equipment to a third party or do any other act that would infringe the ownership
rights of Powerwave. Seller, at its own cost, shall be responsible for providing
scheduled maintenance and calibration of the Tools and Consigned Equipment and
the parties shall mutually agree upon who shall pay for major repairs to
Consigned Equipment. Seller shall maintain proper and separate books and records
for the Consigned Equipment. Seller shall exercise due care for the Consigned
Equipment and they will be stored in a manner that affords ready inspection and
identification. Powerwave, may upon reasonable notice and subject to security
requirements, request an inspection of the Consigned Equipment. Seller shall
bear the risk of loss of and damage to the Consigned Equipment while in its
possession. Seller shall maintain proper and separate books and records for any
Consigned Equipment.

 

17. IT Systems Support. Seller agrees to facilitate the communication and system
logic links of specific IT functions and data bases with Powerwave systems
including but not limited to quality and shop floor control systems,
documentation and ECO control systems, advanced shipping notices and inventory
and order management systems. Seller will conform to information technology best
practices to ensure the security of intellectual property both residing at
Seller and communicated externally to/from Powerwave. Seller and Powerwave will
jointly develop web based systems to improve communications.

 

18. Strategic Suppliers and Approved Manufacturers.

 

18.1 Seller will purchase materials to manufacture Product for Powerwave per the
Powerwave AML. Certain strategic Material and service providers will be
identified by mutual agreement between the Seller and Powerwave. For these
strategic suppliers, Powerwave will maintain account management
responsibilities, such as contracts, pricing, quality and business performance
feed back and management, as well as corrective and remedial action management.
For these strategic suppliers, Seller shall perform tactical duties as directed
by Powerwave, such as purchasing per the Powerwave/supplier contract, performing
incoming inspections and tracking and supplying supplier quality and business
performance data per Powerwave’s request. For non-strategic suppliers on the
AML, Seller will be responsible for all aspects of supplier management. In the
event any supplier places certain components on allocation, Seller shall
promptly notify Powerwave and work diligently to assure proper allocations for
production for Powerwave. Also, Seller shall promptly notify Powerwave in
writing whenever a supplier announces “end-of-life” for a component. Powerwave
and Seller will work in a cooperative effort to determine the most economic
order quantity and when to make last time buys for components based on such
factors as cost to manufacture, component availability and inventory carrying
costs. Both parties agree to track and measure the overall performance of the
combined Powerwave and Seller supply chains and discuss mutual performance and
corrective or remedial actions at periodic business reviews. Key performance
indicators and targets are to be agreed upon and shall include quality,
flexibility, delivery and cost.

 

18.2 Seller may not acquire any material or components that cost more than the
standard cost without Powerwave’s prior written consent.

 

19. Disaster Recovery Plan. Attached to this Agreement as Exhibit E is Seller’s
disaster recovery plan or disaster recovery procedures (“Recovery Plan.”) The
Recovery Plan defines the actions Seller

 

18

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shall take to resume production of the Products as soon as possible after damage
or destruction of Seller’s factory or other facilities or machinery, personnel,
software, documentation and/or supply management. Such events include without
limitation, fire, flood, power shortage, earthquake or other events of force
majuere. The Recovery Plan shall also include alternative processes for resuming
production of the Products by opening an alternative facility or setting up the
necessary equipment and assembly lines in an existing factory of Seller.

 

20. Force Majuere. Neither of the parties shall be in default for any failure or
delay in performance hereunder when such failure or delay is the result of any
event, which is beyond their control and without its fault or negligence. Such
events (collectively referred to herein as “Excusable Delay”) may include, but
are not restricted to Acts of God, or of the public enemy, acts of government in
either its sovereign or contractual capacity, strikes, lockouts, transportation
disruptions or freight embargoes, and riots, quarantine restrictions, mutinies,
civil commotion, floods, fire, epidemics, power shortages or war. If any
Excusable Delay affects Seller’s ability to perform, Seller shall give immediate
notice to Powerwave. If the delay is greater than sixty (60) Calendar Days then
Powerwave may elect to either: (1) terminate the affected Orders or any part
thereof, or (2) suspend the affected Order(s) or any part for the duration of
the Excusable Delay and cancel any delinquent Orders.

 

21. Industrial Property Rights.

 

21.1 No Products furnished under this Agreement or Consigned Tools, Consigned
Equipment, or equipment or tools designed by Powerwave, plans, designs, or
specifications for producing the same, shall be duplicated or furnished to
others or used to produce products for others without the prior written consent
of Powerwave. Seller shall take appropriate measures to protect Powerwave
proprietary rights in the Products, component parts and designs, as well as
Powerwave IP relating to the Products including the following: (1) restricting
access to the portion of the Seller facility used for manufacturing Powerwave
Products to only Seller’s employees on a need to know basis or need to perform
basis or involved in the manufacture, assembly and testing of the Products or
when specifically approved by Powerwave; and (2) treating all proprietary
information of Powerwave with the same degree of care it uses to protect the
confidentiality of its own information, which shall not be less than reasonable
care. Seller shall not use or disclose any Powerwave intellectual property
except in furtherance of the manufacturing the Product in accordance with the
terms of this Agreement. Seller shall provide secure facilities and segregate
Powerwave’s Products from Powerwave’s competitor’s products within the facility.
Seller shall take the following measures to maintain the security of the
dedicated area related to the Products: (i) maintain walls or partitions to
segregate the physical area; and (ii) restrict access to the segregated area
through card key access or other such security procedures that prevent
unauthorized individuals from entering the work area and keep entry-exit logs.
In addition, during the term of this Agreement and to the extent required to
meet Powerwave’ s Orders and forecasts, Products shall be manufactured by a
Dedicated Work Force. This “Dedicated Work Force” shall be limited to those
engineers, test and debug technicians and assembly process engineers who have
been trained in the test processes, test procedures and debug analysis of
Powerwave products. No member of this Dedicated Work Force shall be permitted to
perform test or de-bug services on any products for Powerwave’s competitors.
However, this Dedicated Work Force can be re-deployed to work on products and
services for non-competitors of Powerwave. Any manufacturing process technology,
improvements developed by Seller exclusively for Powerwave’s Products and at the
expense of Powerwave may not be used to manufacture products for a competitor of
Powerwave at any Seller facility without the prior written consent of Powerwave.

 

21.2 All existing IP owned by or licensed to Powerwave will continue to be owned
by Powerwave. Seller is licensed to use such of the Powerwave IP as may be
necessary only for the limited purpose of performing its obligations under this
Agreement. No ownership rights are granted to Seller and Seller’s

 

19

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permissible use of the Powerwave IP is as stated in this Agreement. All existing
IP of Seller will continue to be owned by Seller and all IP arising in the
course of Seller’s performance of this Agreement relating to Seller’s
manufacturing know-how or manufacturing process will be owned by Seller other
than IP developed based on Powerwave’s IP related to the Products which shall be
owned by Powerwave. With respect to any IP licensed to Seller by third parties,
Seller warrants that such license is in good standing and includes all necessary
rights to permit Seller to perform its obligations under this Agreement. Nothing
contained herein will be deemed to grant to Seller either directly or by
implication, estoppel or otherwise, any license or other right under any
patents, patent applications, or non-patent rights owned by or licensed to
Powerwave or its affiliates, except as necessary only for the limited purpose of
performing its obligations under this Agreement. Powerwave and Seller may not
use any IP of the other party for any other purpose.

 

22. Publicity. Neither party shall, without first obtaining the prior written
consent of the other party, in any manner advertise or publish the fact that
either party has entered to this Agreement, or use any trademarks or trade names
of the other party in advertising or promotional material. In the event that one
party is required by law to make a disclosure or press release the review and
approval of the other party of such press release shall not be unreasonably
delayed or withheld.

 

23. Insurance. Prior to performing its obligations under this Agreement, Seller
shall procure and maintain insurance for the types of coverage and limits of
liability as follows: (a) Commercial general liability, including suppliers,
contractual liability, business interruption insurance, personal injury, broad
form property damage, products/completed operations with limits of at least
$3,000,000 per occurrence and in the aggregate; (b) Workers compensation to the
extent required by statute together with statutory disability benefits liability
in all applicable jurisdictions; (c) such other comparable insurance or other
types of insurance that are required or customary in the jurisdiction where
Seller will perform manufacturing, repair, or testing services for Powerwave.
Powerwave shall be named an additional insured under the general liability
policy. The insuring company must be reputable. All coverages must be primary
and noncontributory, and maintained without interruption during the term of this
Agreement. Upon request, Seller shall provide Powerwave with certificates of
insurance evidencing the above coverages. Seller shall insure the Tools and the
Consigned Material and Consigned Equipment with full fire and extended coverage
insurance as well as theft insurance in the amount of the replacement value
thereof. Upon reasonable notice to Seller, and subject to Seller’s security and
confidentiality requirements Powerwave’s insurance carriers may inspect the
facilities where Powerwave’s Products are manufactured.

 

24. Confidential Information. Seller and Powerwave entered into a Mutual Non
Disclosure Agreement dated as January 13, 2003 (“NDA”) and the relationship of
Seller and Powerwave with respect to each other’s Confidential Information shall
be governed by the NDA. The NDA shall remain in force for the term of this
Agreement including any renewal or extension terms.

 

25. Indemnification.

 

25.1 Seller shall and hereby does defend, indemnify and hold harmless Powerwave,
its Affiliates, officers, directors, employees (all referred to in this section
25 as “Powerwave”) from any and all damages, costs, fees, expenses or losses
including reasonable attorneys fees, to the extent that such damages, costs,
fees and expenses or losses result from an intellectual property infringement
suit, claim or proceeding resulting from Seller’s manufacturing processes used
for Powerwave provided, that Seller is given prompt notice of such suit, claim,
proceedings and Powerwave provides Seller with reasonable assistance and
cooperation in the defense of the claim, suit, proceedings and shall permit
Seller to control the defense of the claim. Powerwave may employ counsel, at its
own expense, to assist in the defense of the claim. Powerwave shall have no
authority to settle any claim on behalf of Seller.

 

20

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25.2 Seller shall and hereby does defend, indemnify and hold harmless Powerwave
from any and all third party claims, damages, costs, fees, expenses, losses,
including reasonable attorneys’ fees to the extent that such claims, damages,
costs, fees, expenses, losses, result from (i) a claim that Seller’s manufacture
of a Product was the cause of any property damage or personal injury or (ii)
death, personal injury or property damage arising from the negligent acts or
omissions of Seller or the willful misconduct of Seller, provided that Seller is
given prompt notice of such claim and Powerwave provides Seller with reasonable
assistance and cooperation in the defense of the claim and shall permit Seller
to control the defense of the claim. Powerwave may employ counsel, at its own
expense, to assist in the defense of the claim. Powerwave shall have no
authority to settle any claim on behalf of Seller.

 

25.3 Powerwave shall and hereby does indemnify, defend and hold harmless Seller,
its Affiliates, officers, directors, employees (all referred to in this section
25 as “Seller”) from and against all third party claims, costs, damages, fines,
losses and expenses (including reasonable attorneys fees) to the extent that
such claims, costs damages, fines, losses and expenses result from: (i) death,
personal injury or property damage arising from Powerwave’s negligent acts or
omissions or willful misconduct; or (ii) any intellectual property infringement
claim arising from any written specifications supplied by Powerwave to Seller,
provided that Seller gives Powerwave prompt notice in writing of the claim,
provides reasonable assistance and co-operation to Powerwave in defense of the
claim and permits Powerwave to control the defense of the claim. Seller may
employ counsel, at its own expense, to assist in the defense of the claim.
Seller shall have no authority to settle any claim on behalf of Powerwave.

 

26. Limitations of Liability.

 

26.1 Neither party excludes or limits its liability for death or personal injury
resulting from its negligence nor liability for breach of any term implied by
statute to the extent that such liabilities cannot by law be limited or
excluded.

 

26.2 IN NO EVENT SHALL EITHER PARTY, WHETHER AS A RESULT OF BREACH OF CONTRACT,
TORT (INCLUDING NEGLIGENCE) OR ANY OTHER THEORY OF LIABILITY, HAVE ANY LIABILITY
TO THE OTHER PARTY OR ANY THIRD PARTY FOR ANY INDIRECT, SPECIAL, INCIDENTAL,
CONSEQUENTIAL, EXEMPLARY OR PUNITIVE DAMAGES, INCLUDING WITHOUT LIMITATION, LOSS
OF PROFITS, LOST SAVINGS, OR LOSS Of USE ARISING OUT OF THIS AGREEMENT.

 

27. Governmental Compliance.

 

27.1 Seller shall (i) comply with all applicable federal, state, local, and
foreign laws, rules and regulations applicable to its obligations under this
Agreement, and (ii) furnish Powerwave with any information held by Seller which
might enable Powerwave to comply with such laws, rules and regulations in its
use of the Products. Seller warrants that the Products that have been
manufactured and produced in the United States comply with the requirements of
the Fair Labor Standards Act of 1938, as amended, and regulations and orders
pursuant thereto issued by the U.S. Department of Labor.

 

27.2 Without limiting the generality of section 27.1 above, Seller warrants that
(i) each chemical substance contained within the Products is on the inventory of
chemical substances compiled and published by the Environmental Protection
Agency pursuant to the Toxic Substances Control Act, and (ii) all material
safety data sheets required to be provided by Seller for Products shall be
provided to Powerwave prior to shipment of the Products and shall be complete
and accurate.

 

 

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27.3 Seller also warrants that neither any of the Products nor any component of
the Products: (i) contains any “class 1 substance” as that term is defined in 42
U.S.C. section 7671(3) as now in existence or hereafter amended.

 

27.4 Seller warrants to Powerwave that no lead, cadmium, mercury or hexavalent
chromium have been intentionally added to any packaging or packaging component
(as defined under applicable U.S. laws) to be provided to Powerwave under this
Agreement and that packaging materials were not manufactured using and do not
contain chlorofluorocarbons. In addition, Seller further warrants to Powerwave
that the sum of the concentration levels of lead, cadmium, mercury and
hexavalent chromium in the package or packaging component does not exceed 100
parts per million. Upon request, Seller shall provide Powerwave certificates of
compliance from the suppliers of the packaging materials certifying compliance
with the requirements in this section.

 

28. Miscellaneous.

 

28.1 The waiver of either party of a breach of any provision of this Agreement
shall not constitute a waiver of any succeeding breach of the same or any other
provision. The failure of either party to require performance by the other party
of any provision of this Agreement shall not affect the right to require such
performance in the future.

 

28.2 All notices required or permitted to be given by Powerwave or Seller to the
other party under the terms of this Agreement shall be written in English and
shall be effective on the day of service if served personally or by facsimile
transmission with confirmation, or three business days after mailing if mailed
by First Class mail, registered or certified, postage prepaid. All notices and
correspondence concerning this Agreement shall be sent to the parties hereto at:

 

Powerwave

  

Seller

Powerwave Technologies, Inc.

  

Venture Corporation Limited

1801 E. St. Andrew Place

Santa Ana, CA 92705

  

Attn: ___________

Attn: Chief Financial Officer

  

Fax: ___________

Fax: 714 466-5801

    

 

28.3 Unless otherwise instructed by Powerwave, all Products shall comply with
federal, state, and local laws and regulations of the United States applicable
to the manufacture, packing, and shipment of such Products and shall comply with
any amendments thereto which may have come into effect prior to the time such
Products are delivered.

 

28.4 This Agreement is for the benefit of the parties hereto and not for any
other person except as specifically provided herein. The invalidity, in whole or
in part, of any article or paragraph hereof shall not affect the validity of the
remainder of such article or paragraph or of any agreement resulting therefrom.
Any rights or obligations under this Agreement which by their nature continue
after termination will remain in effect until they are completed.

 

 

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28.5 The laws of the State of California govern this Agreement and all
transactions hereunder exclusive of any provisions of the United Nations
Convention on the International Sale of Goods and without regard to principles
of conflicts of law. The parties submit to the non-exclusive jurisdiction of the
courts of California. The parties hereto expressly waive any right they may have
to a jury trial and agree that any proceedings under this Agreement shall be
tried by a judge without a jury. In the event of any litigation relating to or
arising out of this Agreement, the prevailing party shall be entitled to recover
its reasonable attorney’s fees and costs.

 

28.6 This Agreement, together with the Exhibits hereto and any other attachment,
constitutes the entire Agreement between the parties hereto with respect to the
subject matter hereof and all prior or contemporaneous oral or written
communications, understandings or agreements with respect to the subject matter
hereof are superseded. This Agreement may not be modified or amended except by
an instrument in writing signed by a duly authorized representative of each of
the parties. In the event of any inconsistency or conflict between this
Agreement and any Order or other forms used pursuant to this Agreement, the
terms and conditions of this Agreement shall prevail. Notwithstanding the
foregoing, the parties may expressly supersede specific terms of this Agreement
with regard to a specific Order by so stating on the face of such Order and by
reference to this Agreement, provided that such Order is mutually signed by
authorized representatives of both parties.

 

28.7 The relationship of Seller and Powerwave as established under this
Agreement and any Orders will be and at all times remain one of independent
contractors, and neither party will at any time nor in any way represent itself
as being a dealer, agent or other representative of the other party or as having
authority to assume or create obligations or otherwise act in any manner on
behalf of the other party.

 

29.8 Neither party may assign this Agreement in whole or in part without the
prior written consent of the other party, and such consent shall not be
unreasonably withheld. Notwithstanding the above, this Agreement may be assigned
without the consent of the other party to any successor corporation or entity
whether by purchase of all or substantially all of the assets or outstanding
capital of a party or by merger or consolidation provided that (a) the
transferee agrees in writing to be bound by and subject to all of the terms and
provisions of this Agreement, and (b) provided that the transferee is not a
competitor of the non-assigning party. Should any of the foregoing conditions
not be met, the assignment shall be null and void, unless the other party’s
prior written consent has been given.

 

29.9 Upon a party’s request, the other party shall provide the requesting party
with an appropriate certification stating the country of origin for the Products
manufactured, sufficient to satisfy the requirements of (i) the customs
authorities of the country of receipt, and (ii) any applicable export licensing
regulations, including those of the United States. Seller or Powerwave will not
use, distribute, transfer or transmit any products, software or technical
information (even if incorporated into other products) provided under this
Agreement except in compliance with U.S. export laws and regulations (the
“Export Laws”). Seller or Powerwave will not, directly or indirectly, export or
re-export the following items to any country which is in the then current list
of prohibited countries specified in the applicable Export Laws: (a) software or
technical data disclosed or provided to the other party; or (b) the direct
product of such software or technical data. Seller or Powerwave agrees to
promptly inform the other party in writing of any written authorization issued
by the U.S. Department of Commerce office of export licensing to export or
re-export any such items referenced in (a) or (b). The obligations stated above
in this clause will survive the expiration, cancellation or termination of this
Agreement or any other related agreement.

 

29.10 Seller shall mark every Product (or the Product’s container if there is no
room on the Product itself) with the country of origin. Seller shall, in
re-marking the Products, comply with the requirements of the customs authorities
of the country of receipt.

 

 

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29.11 In the event that either party makes or receives, directly or indirectly,
any payments, loans, gifts, favors, or other special considerations or forms of
compensation (1) to or from the other party, to its employees, other than
payments set forth in this Agreement, the Order, or in other contractual
agreements between Seller and Powerwave; or (2) to or from any third party for
the purpose of influencing the performance by Powerwave or Seller of its duties
hereunder, then this Agreement may be terminated at the option of the party
after ten (10) days’ written notice to the other party.

 

29.12 Before filing any litigation relating to a claim or controversy, Seller
and Powerwave will attempt to settle any claim or controversy between them
through consultation and negotiation in good faith and with a spirit of mutual
cooperation. After attempts to resolve a dispute by Seller and Powerwave have
failed, before resorting to litigation, either party may, upon notice to the
other, request that such controversy or claim be referred to the appropriate
management personnel of each party for negotiation and resolution. If such a
request is made, the applicable and appropriate management-level personnel of
the parties shall meet in person or by telephone within seven (7) days after
such request and shall review and attempt to negotiate a mutually acceptable
resolution of the claim or controversy in dispute. Nothing in this clause shall
be construed to preclude any party from seeking injunctive relief to prevent
irreparable harm or to preserve the status quo.

 

IN WITNESS WHEREOF, the parties have executed this Agreement on the dates
indicated below.

 

SELLER: VENTURE CORPORATION LIMITED

     

POWERWAVE TECHNOLOGIES, INC.

By:

 

 

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By:

 

 

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

                 

 

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

     

 

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

Name

 

Date

     

Name

 

Date

Title

         

Title

   

         

Address:

         

Address:

               

1801 E. St. Andrew Place

Santa Ana, California 92705

 

 

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CONFIDENTIAL PORTIONS OMITTED

 

Exhibit A – Product Listing

 

25

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Exhibit B – Quality Plan

 

1.   Product must meet all specifications per print/drawing.

 

2.   Seller shall develop an “Advance Quality Plan” and Manufacturing Process
FMEA (Failure Modes Effects Analysis prior to the launch of all new
product/programs for Powerwave.

 

3.   Product must meet Powerwave workmanship standard 090-05002 which includes
IPC-610 Rev C class II requirements.

 

4.   First articles must be submitted per Powerwave document 092-02011.

 

5.   In the event that Powerwave issues a Supplier Corrective Action Request,
Seller must follow all requirements as specified in Powerwave document
096-08009.

 

6.   Seller is required to maintain a quality system compliant with ISO 9000
requirements which includes traceability down to component level.

 

7.   Powerwave reserves the right to assess Seller’s quality system on an as
desired basis pending adequate notification per Powerwave’s Supplier Quality
Audit survey 092-03005.

 

8.   Powerwave reserves the right to reject and return any lot of material that
does not meet Powerwave’s Receiving Inspection Procedure 092-02001.

 

9.   On-going quality levels must be sustained to consistently meet performance
levels as specified in Powerwave’s Supplier Performance Appraisal document
090-09009.

 

10.   With each lot received by Powerwave, Seller must submit a Certificate of
Compliance including ICT, functional, integration test yields and process
capability data as evidence that the lot is compliant to specification.

 

11.   Non-conforming material will be returned to Seller based on the
requirements as specified in section 9 of Powerwave’s MRB procedure 092-02010.

 

12.   Any change that affects form, fit, function, or process location must have
written approval from Powerwave prior to implementation

 

13.   Any alternate source for material specified on any of the Powerwave Bill
of Materials that is not on Powerwave’s Approved Supplier List must have
appropriate qualification and approval from Powerwave Quality Assurance and
Materials groups.

 

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Exhibit C – Long Lead Time and NCNR Materials

 

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Exhibit D – NPI Procedures

 

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Exhibit E – Disaster Recovery Plan

 

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