12312001 Form 10-K Exhbit 10.26




                                            Exhibit 10.26






Com21, Inc.


Universal Scientific 


Industrial Co., Ltd.


Supply Agreement


Dated Effective


December 3, 2001
























Com21

Universal Scientific Industrial Co., Ltd.



 

Supply Agreement

TABLE OF CONTENTS







	
AGREEMENT
	
 
	
1

	

1.

	

 DEFINITIONS

	

3


	

2.

	

 PURCHASE AND SALE OF PRODUCTS

	

7


	

3.

	

EXCLUSIVITY

	

7


	

4.

	

  PRODUCTION FILES

	

8


	

5.

	

  PRODUCTION CAPABILITY

	

9


	

6.

	

  PRODUCTION SUPPORT TEAMS

	

13


	

7.

	

   FORECASTS

	

13


	

8.

	

    PURCHASE ORDERS

	

13


	

9.

	

    DELIVERY

	

15


	

10.

	

   LABELING AND PACKAGING

	

15


	

11.

	

  ACCEPTANCE OR REJECTION

	

16


	

12.

	

  PRICING, PAYMENT, AND COST REDUCTION

	

17


	

13.

	

    RECORDS, AUDITS AND REPORTS

	

18


	

14.

	

   PROTOTYPE SERVICES

	

19


	

15.

	

   QUALITY ASSURANCE

	

19


	

16.

	

   REGULATORY COMPLIANCE

	

20


	

17.

	

   PRODUCT WARRANTY; EPIDEMIC FAILURE

	

20


	

18.

	

  WARRANTY CLAIMS AND REPAIR

	

21


	

19.

	

    PARTS SUPPLY

	

22


	

20.

	

  PROPERTY FURNISHED TO MANUFACTURER BY COM21

	

24


	

21.

	

  INTELLECTUAL PROPERTY OWNERSHIP

	

25


	

22.

	

   CONFIDENTIALITY

	

27


	

23.

	

  INTELLECTUAL PROPERTY INDEMNIFICATION

	

29


	

24.

	

    LIMITATION OF LIABILITY

	

30


	

25.

	

    INSURANCE

	

30


	

26.

	

   TERM OF THE AGREEMENT

	

30


	

27.

	

   TERMINATION

	

31


	

28.

	

   REPRESENTATIONS

	

33


	

29.

	

    GENERAL

	

33


	

Exhibits

	

 

	

     Appended

























SUPPLY AGREEMENT



THIS SUPPLY AGREEMENT is made and entered into effective December 3,
2001 ("Effective Date"), by and between Universal Scientific Industrial Co. Ltd
("Manufacturer"), a Taiwanese corporation (141, Lane351, Taiping Road, Sec. 1, Tsao
Tuen, Nan-Tou, Taiwan), and Com21, a Delaware corporation ("Com21") (each a "Party"
and collectively the "Parties").



RECITALS



A. Com21 is and has been engaged in the business, among others, of the
development, manufacture, marketing and sale of cable modem products for various
markets worldwide.


B. Manufacturer is and has been engaged in the business, among others, of
manufacturing its customers' products on a contract basis.


C. The Parties intend by this Agreement to provide for Manufacturer to manufacture
certain of Com21's products.


NOW, THEREFORE, the Parties, intending to be legally bound, agree as follows:



AGREEMENT



1. DEFINITIONS


In addition to the definitions appearing elsewhere in this Agreement, the following
words and phrases shall have the meanings indicated:


1.1. "Affiliates" shall mean any entity directly or indirectly controlling, controlled
by or under common control with that party where control means the
ownership or control, directly or indirectly, of more than fifty percent (50%) of
all of the voting powers of the shares (or other securities or rights) entitled to
vote for the election of directors or other governing authority or otherwise
having power to control such entity's general activities, but only for so long
as such ownership or control shall continue.


1.2. "Ancillary Technology" shall mean all test programs, tooling, fixtures, and
other items provided to Manufacturer by Com21 as described on Exhibit  1.2.



1.3. "Com21 Proprietary Component" shall mean any component which
Manufacturer cannot license or purchase without Com21's express
authorization, including but not limited to, Com21 proprietary software.


1.4.  "Com21 Vendor" shall mean any producer or supplier of all or any portion
of a Part that has been identified by Com21 on Com21's approved vendor
list (or "AVL") for such Product as the source of certain Parts to be used
by Manufacturer in the manufacture of such Product.


1.5. "Create" when used with reference to Proprietary Information means to
conceive, make, develop, reduce to practice, author, or otherwise
materially and substantially contribute to the existence of such Proprietary
Information, such that the Proprietary Information that results can be fairly
and reasonably attributed in whole or in material part to such contribution.
Other forms of the word "Create" (e.g., Created, Creation, etc.) shall have
substantially the same meaning as required by the context. Proprietary
Information that is "Created Jointly" shall apply to all Proprietary
Information that (i) qualifies for patent protection in any jurisdiction under
which jurisdiction's laws the signature or cooperation or identification of
more than one Party or their respective employee(s), agent(s) or
contractor(s), as an inventor, is appropriate or required, or must or should
be sought or made in connection with any related application, to obtain
such protection, or (ii) was Created in whole or in material part by
employee(s), agent(s) or contractor(s) of both Parties acting in concert or
cooperation.


1.6. "Delivery Leadtime" shall mean the number of days between the date a
purchase order is delivered by Com21 to Manufacturer and the date the
relevant Product is delivered to the appropriate delivery location.


1.7. "Derivative" shall mean (i) for copyrightable or copyrighted material, any
translation, abridgment, revision or other form in which an existing work
may be recast, transformed or adapted; (ii) for patentable or patented
material, any improvement thereon; and (iii) for material which is
protected by or is a Trade Secret or is otherwise Proprietary Information,
any new material derived from such existing Trade Secret material or
Proprietary Information, including but not limited to new material which
may be protected by copyright, patent or Trade Secret.


1.8. "Design Specification" shall mean all or any part of a description of a
Product's physical, functional or technical elements, attributes,
requirements or performance, related to or used in its design,
manufacture, testing, operation and repair, whether in human, machine-
readable or other form. Without limiting the foregoing, a "Design
Specification" may include, without limitation, bills of materials; schematic
diagrams, approved vendor lists, parts, general and special fabrication
and assembly drawings and procedures; computer aided design and
manufacturing files; unique material specification control drawings;
manufacturing materials and chemistry; test procedures, software and
equipment; component and other source control drawings; quality plans
including source inspection procedures, yield targets and process audit
plans; mechanical models; standard assemblies; estimated process flows
and times; assembly fixtures and special tools and drawings.


1.9. "Disclose" shall mean to use, deliver, communicate or provide, or to use
or benefit in any way or form including, by way of example and without
limitation, in writing; electronically; in machine readable form; by
demonstration; in tangible form; by access to plans, diagrams or
equipment; or orally. Other forms of the word "Disclose" (e.g., Disclosure,
Discloses, etc.) shall have substantially the same meaning as required by
the context.


1.10. "Disclosing Party" shall mean a Party hereto that discloses its Proprietary
Information to the other Party.


1.11. "Dispose" shall mean to practice, make, have made, use, license, grant
rights to sublicense, lease, sell, Disclose, assign, encumber, dispose or
otherwise exercise an incident of ownership. Other forms of the word
"Dispose" (e.g., Disposition, Disposal, etc.) shall have substantially the
same meaning as required by the context.


1.12. "Effective Date" shall mean the date of execution of this Agreement as
first above written.


1.13. "Exclusivity Termination Trigger" shall mean the occurrence of an event
described in Paragraph 3.2.


1.14.  "Flexibility Parameters" shall have the meaning described in Exhibit 8.2.


1.15. "Incorporate" shall mean include as a constituent part. Other forms of the
word "Incorporate" (e.g., Incorporated, etc.) shall have substantially the
same meaning as required by the context.


1.16 "Invention" shall mean any invention, discovery, process, art, method
(including mathematical algorithms), machine, manufacture, composition
of matter, or improvement thereof, whether or not patented or patentable,
to the extent that it is or is qualified to be the subject of an intellectual
property right or intellectual property protection under the laws of any
applicable jurisdiction under any applicable legal theory, including but not
limited to rights or protections under patent, trade secret, or copyright
laws or principles.


1.17 "LIBOR Rate" shall mean the rate appearing on the Telerate page 3750
or on any successor page as the London Interbank offered rate for
deposits in US dollars.


1.18 "Made Known" shall mean made known, received, developed, possessed
or communicated, at any time before or after the Effective Date.
"Rightfully Made Known" shall mean Made Known without, and
"Wrongfully Made Known" shall mean Made Known with, any violation of
any legally protectable and/or enforceable express or implied right, title,
duty or obligation of the owner of such Proprietary Information or third
Parties from, by or through whom such knowledge passed.


1.19 "Manufacturing Specifications" shall mean COM21's written specifications
regarding the processes for the manufacture of the Products provided to
Manufacturer.  In cases where the specific processes are not covered by
these specifications, industry standard specifications shall apply including
IPC-A-610-C.


1.20 "Manufacturing Standards" shall mean information that describes the
processes, procedures and requirements specifically related to the
manufacture of any Product. Without limiting the foregoing, a
"Manufacturing Standard" may include assembly machine programs;
reflow profiles; assembly aids; process flows; standard assembly
instructions; process control plan; overall process definition; work
instructions; process and machine capabilities; design review report; first
article inspection reports; personnel qualification requirements, and
Quality Improvement Plan.


1.21 "Owning Party" shall mean a Party to the extent that such Party has an
ownership interest in any Proprietary Information.


1.22 "Part" shall mean any materials, parts or components used in the
Products.


1.23 "Product" shall mean any of those products identified in Exhibit 1.23
attached to this Agreement.


1.24 "Production File" shall mean the definitive manufacturing specifications for
each Product and shall include the most recently effective Design
Specification and Manufacturing Standards.


1.25 "Proprietary Information" shall mean information or material relating to the
existing or prospective business of Manufacturer, Com21 or third parties
or to this Agreement, any information contained therein or Created
therefrom, and any Derivatives thereof, including, by way of example and
without limitation, technical, and/or business information such as
processes, methods, techniques, systems, subroutines, source code,
object code, documentation, diagrams and flow charts, analyses
(including computer simulations), results, reports and information of all
kinds Disclosed in writing by the Disclosing Party to the Receiving Party
to permit the Parties to perform their obligations under this Agreement.
"Proprietary Information" shall also include Inventions, Works and Trade
Secrets. Proprietary Information shall not include any information or
material to the extent that the Receiving Party proves by a preponderance
of the evidence that such information or material has been or becomes:


1.25.2 Rightfully Made Known to the Receiving Party without obligation of
confidence; or


1.25.3 Rightfully Made Known to third parties who are neither under obligation of
confidence nor who treat such Proprietary Information confidentially.


1.26 "Proprietary Rights" shall mean, in any country, (i) the right to file patent
applications and any rights under patent applications; (ii) rights under a
grant of letters patent or any similar form of statutory protection for
inventions, such as utility model protection and industrial design
protection; (iii) rights under copyright, trade secret, mask work or
trademark law; and (iv) any other protectable intellectual property rights.


1.27 "Prototype" shall mean a pre-production or pilot prototype, engineering or
design sample, or production verification prototype.


1.28 "Purchase Order" shall mean a Com21 purchase order issued to
Company A pursuant to the provisions of this Agreement.


1.29 "Receiving Party" shall mean a Party hereto that receives Proprietary
Information of the other Party hereto.


1.30 "Standard Material Cost" shall mean the unburdened current cost of
inventory calculated in a similar manner to the formula in Exhibit 1.30.
This should accurately reflect the cost of material to Manufacturer  net of
any discounts, rebates, favorable payment terms, and the like.


1.31 "Term" shall mean the period of time that begins on the Effective Date
and ends upon Termination.


1.32 "Termination" means the time at which this Agreement terminates as
provided or referenced in Paragraph 26.


1.33 "Trade Secret" shall mean information Made Known to either Party, that is
maintained by a Party in reasonable confidence such that it is not
generally known and used in the Party's industry, and which gives or may
give the Party a competitive, technical or other business advantage over
the other Party, or third parties, who do not possess, know or use it.


1.34  "Work" shall mean a work of authorship protectable under the copyright
laws of an applicable jurisdiction, or a mask work protectable under the
semiconductor chip protection laws of any applicable jurisdiction.





2. PURCHASE AND SALE OF PRODUCTS


During the Term and subject to the provisions of this Agreement, Manufacturer
shall manufacture and deliver or provide to Com21, and Com21 shall purchase
from Manufacturer, Products, and such other goods and services as this
Agreement requires or as the Parties may otherwise mutually agree in writing.


3. EXCLUSIVITY


3.1. Products


During the period commencing on the Effective Date and expiring six (6)
months thereafter ("Exclusivity Period"), Com21 shall purchase from
Manufacturer all Com21's requirements for Products except as otherwise
expressly provided in this Agreement. After the Exclusivity Period, or after
an Exclusivity Termination Notice, Com21 shall only be obligated to
purchase from Manufacturer such of the Products and in such quantities
as Com21 may determine in its sole discretion. Nothing in this Agreement
shall be construed or deemed to require Com21 to order any particular
quantity of any Product, nor constitute any warranty or representation by
Com21 in that regard.


Nothing in this Agreement shall require Com21 to purchase any Product
from Manufacturer to the extent such requirement would violate, prevent
or frustrate the purpose or benefit of any extraordinary Com21 contract or
business relationship that may arise after the Effective Date, including
those requiring local manufacturing, or those which arise in connection
with any business acquisition or change of control.




3.2. Exclusivity Termination Triggers


In addition to any other rights or remedies available to Com21, the
following events shall constitute Exclusivity Termination Triggers:


3.2.1. Manufacturer's material breach of this Agreement that is by its
nature incurable or that remains uncured after notice and
reasonable opportunity to cure;


3.2.2. Manufacturer's breach of Paragraph 12.1.4 or 12.1.5;


3.2.3. Manufacturer's failure to maintain price competitiveness with
regard to its manufacturing services, or failure to undertake cost
reductions strategies as herein described. Com21 agrees that as a
baseline, the prices agreed between the Parties as of the Effective
Date are deemed competitive; and


3.2.4. Manufacturer's failure to ensure the manufacturing and assembly
of Com21 Products, including all associated data, is wholly
segregated and protected from any product built on behalf of any
competitor to Com21.




3.3. Exclusivity Termination Process

In the event of an Exclusivity Termination Trigger, Com21 shall provide
written notice thereof to Manufacturer, and within three (3) business days
thereafter the Parties' most senior business executives then available
who have decisional authority over this Agreement shall meet and confer
regarding such Exclusivity Termination Trigger and the consequences
thereof. If within five (5) business days after such notice the Parties have
not mutually agreed upon a resolution of the circumstances that constitute
or relate to the Exclusivity Termination Trigger, Com21 may deliver to
Manufacturer an Exclusivity Termination Notice. Such Exclusivity
Termination Notice shall have the effect described elsewhere in this
Agreement.



4. PRODUCTION FILES


4.1. Design Specifications


Within a reasonable time following the Effective Date, Com21 shall
furnish to Manufacturer any Design Specifications, Manufacturing
Specification and any Manufacturing Standard, in the form historically
used by Com21 to produce each Product.


Manufacturer acknowledges that, although Com21 will furnish the Design
Specifications, Manufacturing Specification and any Manufacturing
Standard in the form historically used by Com21 to produce each
Product, Com21 makes and has made no representations or warranties
with respect to Manufacturer's ability to produce Products or achieve any
particular results from its use of such Design Specifications,
Manufacturing Specifications and any Manufacturing Standards furnished
by Com21.



4.2. Manufacturing Standards

Manufacturer at its expense shall review each Design Specification and
Manufacturing Standard submitted by Com21 promptly upon receipt and,
consult with Com21 and its subcontractors as necessary or advisable for
the purposes of this Paragraph 4. Promptly thereafter, and from time to
time during the Term, Manufacturer shall advise and make
recommendations to Com21 regarding all relevant matters that may affect
each Design Specification and Manufacturing Standard as such matters
may relate to Manufacturer's preparation of preliminary or final
Manufacturing Standards, or changes thereto, including but not limited to
sourcing and qualifying components, cost analysis, and Product
modifications for unit cost reduction. Com21 may, at its option, participate
in all such Manufacturer activities.


For each Product, Manufacturer shall submit to Com21 preliminary
Manufacturing Standards that comply with the relevant Design
Specification and Manufacturing Specifications within a reasonable time
after Com21 delivers its Design Specification to Manufacturer.


As soon as practicable after Manufacturer delivers the preliminary
manufacturing procedures to Com21, Com21 and Manufacturer shall
review them jointly. Manufacturer shall deliver proposed final
Manufacturing Standards to Com21 within one (1) week after Com21's
approval of the preliminary Manufacturing Standards and, upon Com21's
approval of the proposed final Manufacturing Standards, such
Manufacturing Standards shall be deemed established as to the relevant
Product.



4.3. Production File


Manufacturer shall maintain, for each Product, a Production File that (i)
includes the Design Specifications and final Manufacturing Standards;
and (ii) complies with all relevant provisions of this Agreement, including
the Manufacturing Specifications. Manufacturer shall promptly identify to
Com21 any Production File information that Manufacturer considers
Manufacturer's Proprietary Information.



5. PRODUCTION CAPABILITY


5.1. Capacity


During the Term and as otherwise provided in this Agreement,
Manufacturer shall maintain the labor, materials and facilities necessary
to produce and deliver to Com21 all Products, services, activities and
other things required of Manufacturer under this Agreement. The Parties
will amend Exhibit 1.23 ("Products") to appropriately manage end-of-life,
inactive or discontinued Products.



5.2. Materials


Manufacturer shall provide or acquire all Parts necessary to perform
Manufacturer's obligations under this Agreement from the applicable
Com21 Vendor(s). Com21 may instruct Manufacturer to change specific
Parts or procedures for the manufacture or assembly of any Product(s) by
following the change procedure described in Paragraph 5.4, subject to
reasonable adjustment of price and delivery schedule equitably
attributable to such change.


Com21's liability for such Parts shall be limited to the provisions of Exhibit
8.2.



5.3. Product Manufacture


Manufacturer shall manufacture, assemble and test each Product in
accordance with its Production File at a Manufacturer facility that has
been approved by Com21 in writing. Manufacturer will not change the
location of manufacture, including without limitation different facilities or
different production lines within the same facility, without Com21's prior
written approval.


Manufacturer shall not subcontract or delegate any portion of the
manufacture, assembly or testing of the Products to third parties without
Com21's express written approval, which may be granted or withheld by
Com21 in its sole discretion.


Manufacturer shall not, without Com21's prior written approval, include
electronic components in the Products: (i) which have a component
manufacturer's date code which is older than eighteen (18) months; OR
(ii) that were received by the Manufacturer more than 12 months  prior to
the planned date of assembly. The Manufacturer may request a waiver
for specific parts by demonstrating that the components pass a
solderability test per IPC J-STD-002.  The components may be used after
the Manufacturer has received written approval from Com21.


Manufacturer shall keep documentation sufficient to verify its compliance
with this Paragraph 5.3 and shall promptly provide such documentation to
Com21 upon request.



5.4. Production File Changes


5.4.1. Initiated by Com21


From time to time during the Term, Com21 may issue a change request
by giving an Engineering Change Order ("ECO") to Manufacturer that
states one or more changes to a Production File or the Manufacturing
Specifications.


Com21's ECO shall specify whether Com21's requested change is a
Class 1 ECO or Class 2 ECO. A "Class 1 ECO" is an engineering change
that must be implemented within Twenty Four (24) hours after receipt of
notice and before additional Products are delivered to Com21. A "Class 2
ECO" is an engineering change that will be implemented at a mutually
agreeable time.


Manufacturer shall, without additional charge to Com21 and within the
time specified in the ECO but generally not more than two (2) business
days from Com21's issuance of the ECO, provide information regarding
factors that may affect implementation of the changes described in the
ECO.  This shall include any special costs associated with
implementation or special research required to validate the proposed
change, and any cost impact on the Product.


If, after receiving Manufacturer's response, Com21 wishes to implement
the changes described in the ECO, Com21 shall issue a Final or
Released ECO to Manufacturer.


5.4.2. Initiated by Manufacturer


If Manufacturer wishes to initiate a change to a Production File or the
Manufacturing Specifications, Manufacturer shall furnish to Com21 a
proposed change notice ("Proposed Change Notice") together with
information regarding factors that may affect implementation, and cost
associated with implementation (one-time and on-going). Manufacturer
shall supplement the Proposed Change Notice with such additional
information as Com21 may reasonably request at any time
("Supplemental Information"). Com21 shall not be deemed to have
completed its assessment, and shall be under no obligation to respond to
a Proposed Change Notice, until Com21 has received and analyzed the
Proposed Change Notice, the Supplemental Information, and such other
information regarding the business, financial and technical particulars as
Com21 may in its sole discretion deem necessary or advisable. Com21
may decline any Proposed Change Notice in Com21's absolute
discretion. If Com21 wishes to implement an engineering change as
described in Manufacturer's Proposed Change Notice, Com21 shall issue
a Final ECO to Manufacturer.


For change requests initiated by Manufacturer, Manufacturer will be
responsible for all tooling and other costs incurred and will reimburse
Com21 for all expenses incurred by Com21 to qualify changes to such
materials, locations or processes that are requested by Manufacturer,
except as the Parties may otherwise expressly agree in writing.


5.4.3. Final ECO


A Final ECO shall be incorporated into the Production File for the
applicable Product(s) on the specified implementation date. Manufacturer
shall not change or modify the processes for the Products as provided in
the Production File without a Final ECO from Com21.


5.4.4. Charges


For purposes of this Paragraph 5.4, any cost identified by Manufacturer
as a "cost associated with implementation" shall not include, and Com21
shall not be liable for, any charges for Manufacturer's review,
administration and management of an ECO.



5.5. Allocations


Manufacturer understands that by entering into an exclusive relationship,
Com21 is relying solely on Manufacturer to provide a supply of Products.
Therefore, with respect to any allocations of components, materials, labor
or production capacity made in connection with orders placed by Com21
under this Agreement; Manufacturer warrants and agrees that during a
period of shortage or unavailability, Com21 will receive from Manufacturer
allocations that are commensurate with this exclusive relationship and are
at least as favorable as any allocation provided to any other customer of
Manufacturer.



5.6. Manufacturing Support


Each Party shall perform its manufacturing support services as described
in Exhibit 5.6.



5.7. Manufacturer's Relationship with Com21 Vendors


Manufacturer shall manage its relationships with Com21 Vendors in a
manner that will enhance long-term relationships with such vendors and
produce benefits for both Manufacturer and Com21. Manufacturer shall
use reasonable efforts to manage relationship with vendors in a manner
that will not adversely impact the long-term relationships that Com21 has
developed with the Com21 Vendors.


Without limiting the foregoing, Manufacturer shall, at a minimum, comply
with the following obligations to ensure good component material
management for the Products:


5.7.1. Ensure component level failure analysis is performed by the
Com21 Vendors,


5.7.2. Expedite component returns, failure analysis and corrective
actions regarding defective components with Com21 Vendors and
promptly communicate this information to Com21,


5.7.3. Work with Com21 Vendors to reduce leadtimes and Standard
Material Costs,


5.7.4. Address poor component yields with Com21 Vendors and
promptly provide analysis and corrective plans regarding same to
Com21,


5.7.5. Provide regular performance feedback to Com21 Vendors, with a
copy to Com21,


5.7.6. Provide Com21 with copies of all Com21 Vendors newsletters via
e-mail,


5.7.7. Permit Com21 to participate in discussions with Com21 Vendors
regarding issues related to Parts Standard Material Cost and
availability, and to Manufacturer's performance of this Agreement,


5.7.8. Initiate and maintain vendor qualification, performance and
corrective action programs with the Com21 Vendors,


5.7.9. Assist Com21 as Com21 may reasonably request with Com21's
vendor conference, and


5.7.10. Provide to Com21 any information relating to Part quality,
technology trends, and such other information that Manufacturer
may have and Com21 may reasonably require to maintain a
competitive position in its markets.


Manufacturer shall provide each of the Com21 Vendors with non-binding,
forward looking, rolling forecasts for each of the Parts and shall update
such forecasts on a monthly basis, or more frequently as necessary to
support Com21's business needs. Such forecasts shall reflect the share
of business awards specified by Com21 for each Com21 Vendor.
Manufacturer further agrees that the purchase orders placed by
Manufacturer with such Com21 Vendors shall be in accordance with the
business awards percentages specified by Com21.



6. PRODUCTION SUPPORT TEAMS


On or before the Effective Date each Party shall establish a team of skilled and
experienced employees ("Production Support Team") which shall be the primary
Product and technical interface with the other Party and serve as the focal point
for the identification and resolution of any problems that may surface during the
course of this Agreement. Manufacturer shall consult with Com21 and comply
with Com21's reasonable requests regarding the personnel that Manufacturer
designates or intends to designate as Manufacturer's Production Support Team,
including the opportunity to interview and reject proposed Production Support
Team candidates prior to Manufacturer assigning them to the Production Support
Team. Production Support Teams shall not have the authority to amend or
modify the terms of this Agreement. The Production Support Teams shall meet
periodically, electronically, telephonically or otherwise as reasonably agreed by
the Parties, and at least quarterly for a general review of the Parties'
performance under the relationship and to establish any corrective action plans
necessary to meet performance criteria set forth in this Agreement.


Manufacturer's Production Support Team shall be responsible for providing
support in the following areas: (i) Com21 Vendor management; (ii) inventory
control; (iii) engineering services; (iv) master scheduling; (v) document control;
(vi) quality assurance; and (vii) customized reporting.
In addition to the obligations described above, Manufacturer's Production
Support Team shall be able to (i) respond to normal inquiries within twenty-four
(24) hours, (ii) provide an initial response for urgent requests within one (1) hour,
and (iii) comply with the order acknowledgment and RMA procedures set forth
elsewhere in this Agreement.


7. FORECASTS


Within three (3) business days after the Effective Date, Com21 shall deliver to
Manufacturer a non-binding, forward looking, six (6) month rolling forecast
("Forecast") for orders of the Products, and update such Forecast from time to
time during the Term, but no less frequently than once each calendar month.
Each Forecast shall state Com21's anticipated orders for each Product during
the Forecast period.


8. PURCHASE ORDERS


8.1. Submission; Content


From time to time during the Term, Com21 may deliver Purchase Orders
to Manufacturer in writing, via telefax or electronically, via procedures to
be mutually agreed or in the same manner as specified in this Agreement
for the delivery of notices. Such Purchase Orders shall include the
following information ("Basic Information"), as and if applicable, and such
other information as may be relevant to such Purchase Orders:


8.1.1. Deliverables (which shall include Com21 part number(s));


8.1.2. Quantities of each deliverable;


8.1.3. Unit and total prices then in effect;


8.1.4. Delivery date(s) within the applicable Product Delivery Leadtime;


8.1.5. Delivery location(s);


8.1.6. Any special packaging or shipping requirements.


Any terms, conditions or information appearing on or accompanying any
of Com21's or Manufacturer's purchase orders or acknowledgments or
related correspondence, other than the Basic Information, shall be of no
effect unless (i) expressly permitted under this Agreement, or (ii) Com21
and Manufacturer expressly agree otherwise in a separate, signed
writing.



8.2. Delivery Leadtimes


Delivery Leadtimes for each Product shall be determined by the Product's
applicable delivery category specified on, and subject to change as
provided in, the attached Exhibit 8.2.



8.3. Confirmation.


For all Products, Manufacturer shall notify Com21 of receipt of a
Purchase Order by telephone or facsimile (and promptly confirm in
writing) within two (2) business days after receipt of Com21's Purchase
Order.



8.4. Order Acceptance.


A Purchase Order in the form described in Paragraph 8 above, which
complies with the terms of this Agreement, (a "Complying Order") shall be
deemed accepted by Manufacturer upon receipt regardless of whether or
not confirmed or acknowledged by Manufacturer as provided in
Paragraph 8.3. Manufacturer shall not be obligated to accept a purchase
order that is not a Complying Order, nor shall Manufacturer be obligated
to accept a purchase order which states quantities in excess of those
Forecast and Flexibility Parameters (any of the foregoing a "Non-Complying
Order"), and such a Non-Complying Order shall not be
deemed accepted by Manufacturer unless Manufacturer expressly
accepts it in writing. If Manufacturer determines that any purchase order
is a Non-Complying Order, Manufacturer shall notify Com21 as described
in Paragraph 8.3 above, and the Parties shall use their mutual reasonably
diligent efforts to cause the Purchase Order to be a Complying Order, at
which time it shall be deemed accepted by Manufacturer and
Manufacturer shall so confirm to Com21 in writing.



8.5. Purchase Order Changes


8.5.1. Com21 shall be entitled to cancel any Purchase Order in whole or
in part, or change all or any part of the Basic Information
applicable to any Purchase Order, by delivering notice thereof to
Manufacturer in the same manner as a Purchase Order may be
delivered, and Manufacturer shall comply with any such change or
cancellation. Any such change or cancellation shall be without
liability to Com21 if it is within the Flexibility Parameters and, if it is
not, such change or cancellation shall be subject to any relevant
liability as described in Exhibit 8.2.


8.5.2. For increases or decreases in quantities ordered which fall outside
of the parameters set forth in Exhibit 8.2, Manufacturer agrees to
use best efforts to accommodate Com21's requested changes.
8.6. Manufacturer and Com21 agree to discuss at a mutually agreeable date
the terms and conditions, if any, under which the Parties may agree to
implement a kanban or demand-pull form of delivery system for the
Products.



9. DELIVERY.


9.1. For purposes of this Agreement, a Product shall be deemed delivered "on
time" if it conforms to the relevant warranty and acceptance criteria, was
produced in conformity with the applicable Production File, and is
delivered to the required delivery location or common carrier, as
applicable, on or not more than three (3) days before the delivery date
specified in the applicable Purchase Order.


9.2. If a delivery is not on time, or if Manufacturer reasonably expects to make
a delivery that is not on time, Manufacturer shall promptly notify Com21,
and unless the delay is caused by Com21, shall at no additional cost to
Com21 employ accelerated measures such as material expediting fees,
premium transportation costs, or labor diversion or overtime required to
meet the specified delivery date or minimize the lateness of deliveries.


9.3. For deliveries to Com21, Manufacturer shall deliver Products F.O.B.
Manufacturer's shipping dock to carrier(s) and freight forwarder(s) of
Com21's choosing addressed to the delivery location specified in the
relevant order, and shall insure against normal transportation risks. The
cost of shipment and insurance shall be added to the amount payable by
Com21.


9.4. Title and risk of loss to all Products shall pass to Com21 upon delivery to
the common carrier at Manufacturer's shipping dock.


10. LABELING AND PACKAGING


10.1. Com21 shall provide to Manufacturer all necessary specifications,
identification and artwork for the labeling of the Products and packaging
under the applicable label.


10.2. Manufacturer shall package and label all Products as specified by Com21
in the Design Specification, without additional cost to Com21. Where
Com21 does not specify packaging and shipping requirements in the
Design Specification, Manufacturer shall package and ship Products to
Com21 in a manner which (i) follows Com21's written instructions, (ii)
follows good commercial practice, (iii) is acceptable to common carriers
for shipment, and (iv) is adequate to ensure safe arrival. Manufacturer
shall mark the outside of each shipment container with the applicable
Com21 part numbers and necessary handling and lifting information.
Each shipment shall be accompanied by a packing slip and source
inspection acceptance report which will include Com21's part numbers,
purchase order and the quantity shipped. Manufacturer further agrees to
label the Products consistent for United States custom requirements for
country of manufacture as well as to provide revision code and
manufacturing date code labeling for the Products in the location and
format specified by Com21.


10.3. If Com21 requests additional marking or labeling information on, or
packaging for, the Products which is not specified in the Design
Specifications and which results in a change in the cost of materials or
production, Com21 and Manufacturer shall negotiate an equitable price
adjustment in good faith.


10.4. Manufacturer shall not pack different Products or different configurations
of the same Products in the same shipment container.


11. ACCEPTANCE OR REJECTION


11.1. Source Inspections.


Upon prior notice to Manufacturer, Com21 or its authorized
representative(s) may conduct source inspections of the Products at
Manufacturer's facility at which Products are being manufactured, during
Manufacturer's normal business hours. Such inspections shall be based
upon IPC-A-610 Class 2; MIL STD. 105, .65 AQL, Normal Inspection,
Level II; and such other standards as Com21 may reasonably elect.
(Note: Com21 may require a more stringent standard (IPC-A-610 Class 3)
for specific products.  In that event, Com21 and Manufacturer will discuss
and agree on additional charges if any.  For those products, inspections
shall be based on IPC-A-610 Class 3.)  The Parties shall mutually agree
upon the timing of such inspections, which shall be conducted in a
manner that does not interfere with Manufacturer's operations.


Manufacturer shall provide sufficient facilities for persons conducting such
source inspections. If any Product fails the test procedure set forth in the
Manufacturing Standards, Com21 may reject the entire lot of any such
Products, and Manufacturer shall promptly take all steps necessary to
correct such failures.


Immediately upon any rejection resulting from a source inspection,
Manufacturer shall identify the cause of the failure and shall promptly take
all reasonable steps to correct any such failure as described in the
Manufacturing Specifications.



11.2. Incoming Inspections.


Com21 or its customers may inspect all Products within forty-five (45)
days after its receipt of such Product ("Rejection Period") and may reject
any Product that fails to meet the Design Specifications or Manufacturing
Standards.


Com21 or its customers may also reject any quantity of goods shipped by
Manufacturer in excess of those ordered, or which are delivered more
than three (3) days before the scheduled delivery date. However, such
overshipments or early shipments, to the extent accepted, shall be
subject to all of the terms and provisions contained in this Agreement.
If Com21 rejects any Products, Com21 shall notify Manufacturer in writing
or follow the RMA procedure described in Paragraph 18.3 within the
Rejection Period. Manufacturer shall promptly credit Com21's account for
all Products rejected by Com21 and returned to Manufacturer.



11.3. General.


Manufacturer shall (i) provide Corrective Action Reports as specified in
Exhibit 15.1 unless otherwise specified by Com21 in the Design
Specifications or Quality Plan for the applicable Products, and (ii) record
date codes, serial numbers, electronic serial numbers ("ESN numbers")
and corrective action for all Products rejected by Com21.
Notwithstanding anything to the contrary contained in this Agreement,
inspection or failure to inspect the Products upon Delivery shall not affect
Com21's rights under the warranty provisions of this Agreement.



12. PRICING, PAYMENT, AND COST REDUCTION


12.1. Prices


12.1.1. The initial unit prices to be paid by Com21 for Product(s) are set
forth in Exhibit 1.23 attached to this Agreement.


12.1.2. During the term of this Agreement, adjustments to the unit prices
for the Products will be made on an ongoing basis in accordance
with the provisions of Exhibit 12.1.


12.1.3. Except as otherwise provided in this Agreement, unit price
includes all charges for the Product(s), any related deliverable
items and services, and packaging.


12.1.4. The Standard Material Cost stated by Manufacturer to Com21
during the Term for any Part supplied or to be supplied by
Manufacturer to Com21 (i) fairly and accurately represents the
price paid by Manufacturer for such Part, and (ii) is determined
under the Method stated in Exhibit 1.30.  Manufacturer warrants
that prices quoted to date reflect fair and accurate prices from
suppliers on  Com21's AVL .


12.1.5. Manufacturer's Method of calculating the Standard Material Cost
of any Part (i) is the method regularly and consistently employed
by Manufacturer for internal financial reporting purposes, and (ii)
includes all elements, and does not omit elements, necessary to
make any statement of Standard Material Cost accurate and not
misleading.



12.2. Payment


Payment shall be made net forty-five (45) days from the later of the date
of shipment or the date of the invoice.  Exhibit 12.2 contains additional
provisions that take precedence over this paragraph.  Payments shall be
made in U.S. dollars unless otherwise agreed upon between the Parties.




12.3. Taxes


Where the law permits, Manufacturer shall treat Com21 as exempt from
applicable state and/or local sales tax for Product(s) purchased pursuant
to this Agreement. Where required by state or local law, Com21 shall
provide Manufacturer with a valid reseller's exemption certificate for each
taxing jurisdiction to which Manufacturer ships Product(s). When Com21
purchases Products for internal use pursuant to this Agreement, Com21
shall notify Manufacturer and shall pay any applicable sales tax to
Manufacturer.



13. RECORDS, AUDITS AND REPORTS


13.1. Manufacturer shall keep complete, correct and accurate books of account
containing all records that are required according to Manufacturer's
business processes and policies or as required to verify performance
under this agreement.   Records shall be maintained for a minimum of
two (2)  years.


Manufacturer shall within three (3) business days after Com21's request
made at any time and from time to time provide to Com21:
13.1.1. A report that identifies, by part number, quantity and such other
attributes as are relevant, all finished goods, work in progress,
Parts and other items held or ordered by Manufacturer (i) for which
Com21 is or may become liable to pay Manufacturer under any
provision of this Agreement, and (ii) in addition to the foregoing,
those that Manufacturer intends to use in producing Products.


13.1.2. Access to the following types of information with respect to
Manufacturer's performance of its obligations under this
Agreement: component Standard Material Costs; component
business awards where such awards are specified by Com21;
labor time standards; yield data at board test and final test; rework
and scrap rates; corrective action reports (CARs), internal audit
results, supplier performance ratings; lot tracking/status
information; factory cycle-time; component lead times; freight
costs; inventory visibility; ECO tracking and effectiveness; and
summaries of shipments and billings.


13.1.3. For the verification of component pricing, Manufacturer shall
provide Com21 Standard Material Cost data for components, at
the Com21 part number level. Com21, at its request, may verify
Manufacturer's process for calculating the Standard Material Cost
by reviewing data relating to receipt and disbursement of a
reasonably representative sample of Parts. All Standard Material
Cost information disclosed between the Parties shall be deemed
Confidential Information. Com21 shall not reveal Standard Material
Cost data to component suppliers, distributors, other contract
manufacturers, or any other third parties, either directly or
indirectly.


13.1.4. The most current Production File for the Product(s).


13.2. Manufacturer shall, on or before the fifth (5th) day of each calendar month
during the Term, deliver to Com21 a Monthly Report as described in the
attached Exhibit 13.2


13.3. Manufacturer shall permit Com21's customers reasonable inspection and
access to data regarding quality, yield data at board test and final test,
rework and scrap rates, lot tracking/status information, summaries of
shipments, and such other non-financial manufacturing information as
Com21's customers may reasonably require to confirm Com21's
compliance with such customers' reasonable manufacturing
requirements.


14. PROTOTYPE SERVICES


From time to time during the Term, Com21 may desire Manufacturer's help in
building Prototypes. In these instances, Com21 shall notify Manufacturer of its
desire, shall furnish to Manufacturer preliminary design information and the
Parties shall cooperate as described in Exhibit 14.


15. QUALITY ASSURANCE


15.1. Quality Improvement Plan


In addition to the Quality Plans that are part of each Production File,
Manufacturer shall establish, maintain and manage a Quality
Improvement Plan for each Product that is consistent with (i) the
provisions of Exhibit 15.1, and (ii) standard industry practices, to ensure
that the overall reliability, quality and performance objectives stated in the
relevant Production File is achieved.



15.2. ISO9000 Certification


Manufacturer shall manufacture the Product(s) at a facility that maintains
ISO 9000 certification.



15.3. Other Requirements


From time to time during the Term, Com21 may request that
Manufacturer obtain such other certifications and meet such other
manufacturing, security, facility and other requirements as Com21 may
specify.



16. REGULATORY COMPLIANCE


Manufacturer represents and warrants that its manufacturing facilities will
comply, its manufacturing processes will be conducted in accordance, and its
performance under this Agreement shall comply, with all applicable federal, state
and local statutes, laws and regulations.


17. PRODUCT WARRANTY; EPIDEMIC FAILURE


17.1. Performance Warranty.


Manufacturer warrants to Com21 that Product(s) furnished by
Manufacturer to Com21 under this Agreement, and their production, (a)
shall conform to the Production File, (b) shall conform to the
Manufacturing Specifications, and (c) shall be free from defects in
material and workmanship furnished by or through Manufacturer under
normal use and operation for a period of twenty-four (24) months from the
date of delivery by Manufacturer to Com21 or its Customer.



17.2. Epidemic Failure


Except as may otherwise be provided in a Production File, in the event
that, at any time within two (2) years after Delivery, more than one
percent (1%) (Note: the Parties will review the failure data and may revise
this percentage up or down after the first six months of production) of any
given Product sold and delivered to Com21 within any six (6) month
period fails to operate properly due to a similar defect then an Epidemic
Failure shall be deemed to have occurred.  The defect may result from
problems with materials, workmanship, manufacturing processes, and/or
design to the extent that Manufacturer was responsible  for design. Upon
notice by Com21 to Manufacturer of any Epidemic Failure, Manufacturer
shall promptly develop a plan to eliminate the problem in all continuing
production and to correct the problem in all affected units of Product
previously sold and delivered to Com21 during said two (2) year time
period. Manufacturer shall submit such plan to Com21 for Com21's
acceptance. Upon receiving Com21's approval of such plan,


Manufacturer shall implement the corrective action at its expense. If such
plan is not acceptable to Com21, then Com21 can require Manufacturer
to repair or replace, at Com21's option, the affected Product at
Manufacturer's cost. The parties agree to use reasonable efforts to
complete the repair or replacement of the affected Product within twenty
(20) days after written notice of such Epidemic Failure is provided to
Manufacturer. For epidemic failures that are affecting current production,
Manufacturer shall identify the problem and develop a plan to solve it
within twenty four (24) hours of Com21's notice.


In the event of an epidemic failure due to a common cause which is
neither (A) otherwise covered by the previous Paragraph; nor (B) due to
(i) a Com21 Product design, (ii) Com21-supplied test design, or (iii) a
Com21 Proprietary Component; the Parties will use reasonable efforts to
determine, address and resolve such failure and its consequences.
17.3. Manufacturer may from time to time express concerns that a component
supplier on Com21's AVL may not be able to meet quality expectations
based on data the Manufacturer has about historical performance.  The
Manufacturer should submit these concerns to Com21 in writing and
provide sufficient information to allow Com21 to understand the concerns.
Where possible, the Manufacturer should also provide alternate suppliers
that can meet the quality expectations.  Based on the input, Com21 may
choose to have the Manufacturer shift the business to one of the alternate
suppliers.   In the event that Com21 does not move the business, or does
not work with the Manufacturer and the component supplier to correct the
quality deficiencies, then the Manufacturer will be released from
obligations of Paragraph 17.2 for a failure of that specific component from
that specific supplier, for any product produced after the date of
notification to Com21.



Warranty Exclusions



The warranties set forth in this article shall not apply to any claims,
problems or defects which are the result of designs specified in the
Design Specifications, normal wear and tear, mishandling, misuse,
neglect or improper testing or repair by other than Manufacturer or its
authorized representative. These warranties shall survive inspection,
acceptance and payment.


THE WARRANTIES CONTAINED IN THIS ARTICLE ARE IN LIEU OF,
AND MANUFACTURER EXPRESSLY DISCLAIMS AND COM21
WAIVES ALL OTHER REPRESENTATIONS AND WARRANTIES,
EXPRESS, IMPLIED, STATUTORY OR ARISING BY COURSE OF
DEALING OR PERFORMANCE, CUSTOM, USAGE IN THE TRADE OR
OTHERWISE, INCLUDING WITHOUT LIMITATION THE IMPLIED
WARRANTIES OF MERCHANTABILITY, TITLE AND FITNESS FOR A
PARTICULAR USE.



18. WARRANTY CLAIMS AND REPAIR


18.1. Com21 shall promptly notify Manufacturer of any breach or alleged
breach of the warranties contained in Paragraph 17. Manufacturer and
Com21 or Com21's customers shall follow the RMA procedure described
in Paragraph 18.3 below to return to Manufacturer Product(s) that are
defective or that need repair or replacement. Manufacturer, at
Manufacturer's expense and at Com21's option, shall either replace or
repair Products which are or become defective during the warranty period
and Deliver the Products to the location designated by Com21 within five
(5) days after Manufacturer's receipt of the rejected Product(s).


18.2. In connection with warranty repair or replacement, Manufacturer shall:


18.2.1. Use repair/rework processes that are part of the Production File or
otherwise approved by Com21 in writing;


18.2.2. Record and report to Com21, in writing, date codes, serial
numbers, and corrective action for all Product(s) returned for repair
or replacement;


18.2.3. Furnish Corrective Action Reports as required by Exhibit 15.1;

18.2.4. Update Product(s) to the latest engineering change level;


18.2.5. Pay all shipping costs associated with Products returned for
repairs during the warranty period;


18.2.6. Repair or rework any given Product not more than two (2) times;


18.2.7. Retest Products as specified in the Manufacturing Standards prior
to a redelivery;


18.2.8. Return repaired, reworked or replacement Products in separate
shipments from Com21's scheduled Product orders; and


18.2.9. Provide statistics to Com21 on no problem found (or "NPF")
returns on a quarterly basis.


18.3. RMA Procedure


To return a Product to Manufacturer as provided by Paragraphs 11 and
18, Com21 shall, request a Return Material Authorization ("RMA") number
from Manufacturer. Manufacturer shall provide the RMA number in writing
to Com21 within two (2) business hours after receipt of any request.
After receipt of the written RMA number, Com21 shall return to
Manufacturer the rejected or defective Product, freight collect and
properly insured, in its original shipping carton (if available) with the RMA
number displayed on the outside of the carton.
Manufacturer shall, at Com21's request, provide Com21 with pre-issued
RMA numbers.



18.4. In-Field Warranty Repair


Com21 in the exercise of its sound business judgment may from time to
time determine that warranty repair of certain Products or for certain
customers should be undertaken at or near the customer's place of
business. In such event, Com21 shall notify Manufacturer of such
determination and the Parties shall thereupon immediately cooperate with
each other to (i) determine whether the affected Product's condition
constitutes a breach of any Manufacturer warranty and (ii) undertake such
repair. If the affected Product's condition constitutes a breach of any
Manufacturer warranty, Manufacturer shall either undertake such repair,
or reimburse Com21 for its reasonable cost of such repair.



19. PARTS SUPPLY


19.1. By Manufacturer


Manufacturer shall, upon Com21's request made at any time and from
time to time, sell to Com21 or its subcontractors:


19.1.1. During the Term of this Agreement, all finished goods, work in
progress, Parts and other items held or ordered by Manufacturer
(i) for which Com21 is or may become liable to pay Manufacturer
under any provision of this Agreement; and (ii) in addition to the
foregoing, those that Manufacturer intends to use in producing
Products. The prices for any items shall not exceed what Com21's
liability would have been for the items as described in Exhibit 8.2 if
Com21 had canceled its orders for Products.


19.1.2. During the Term of this Agreement, Parts Com21 may reasonably
require for all Products purchased by Com21 from Manufacturer.
Prices for the Products shall not exceed Manufacturer's Standard
Material Cost for procuring the Parts plus the material markup
specified in Exhibit 1.23. Com21 acknowledges that prices for
Parts shall be subject to adjustment for increased costs in
procurement of materials and manufacturing after cessation of
production of the Product for which such Parts are supplied.



19.2. Discontinued Parts.


In addition to its obligations under Paragraph 19.1 above, Manufacturer
shall: (i) inform Com21 of all last-time buy notifications for Parts promptly
(typically within 48 hours) upon Manufacturer's receipt of such
notifications; (ii) advise Com21 if a last-time buy is the most economical
procurement strategy for such Parts as to which such a notification is
received (especially custom Parts which may require tool maintenance
and set-up charges that far outweigh piece part Standard Material Costs);
and (iii) assist Com21 as reasonably requested to negotiate supply of any
Parts subject to a last-time buy. Com21 may then buy, and Manufacturer
will supply, such quantities as Com21 deems necessary to fulfill the
remainder of its Product support requirements (i.e., "last-time buy.") If
Com21 determines that a final buy is not financially favorable due to the
length of the remaining support period for the Part(s), Manufacturer will
assist Com21 in finding a third party supplier that can continue to support
the Part(s) through manufacturing.



19.3. Restricted Materials and Last Time Buys.


Any Parts ordered or obtained by Manufacturer from or for Com21 that
are subject to restricted, limited or otherwise problematic availability,
including those that are subject to last-time buy or limited allocation, shall
be held and used by Manufacturer exclusively to perform its obligations
under this Agreement.



19.4. By Com21


Manufacturer shall purchase, and assist Com21 to Dispose of, Parts from
Com21's inventory before purchasing such Parts from other sources.  All
purchases will be priced at the Standard Material Cost used to establish
product pricing or at a price that the Parties shall mutually agree.  Other
terms and conditions will be consistent with Manufacturer's sale of
Product to Com21.  Manufacturer will continue to buy these Parts from
Com21 until the supply is exhausted or until no forecasted requirements
exists for the Parts.  In the event that Manufacturer does not purchase
Com21 inventory in accordance with the foregoing, (i) Com21 shall be
deemed to have sold inventory on such Parts to Manufacturer and  shall
immediately take a credit against invoices due Manufacturer; and (ii) in no
event shall such Parts be, or be deemed to be, Excess Inventory or
Obsolete Inventory.



20. PROPERTY FURNISHED TO Manufacturer BY Com21


20.1. Com21 Property


Unless otherwise agreed in writing by Com21, and notwithstanding the
provisions of Paragraph 21, all designs, specifications, drawings, special
dies, molds, patterns, jigs, fixtures and any other property furnished to
Manufacturer by Com21, or specifically paid for by Com21, for use in the
performance of this Agreement shall be and remain the sole property of
Com21, shall be marked as Com21 directs to evidence its ownership
thereof, shall be subject to return to Com21 or other disposition at any
time upon Com21's instruction, shall be used exclusively in the furnishing
for Com21 of goods and/or providing of services for Com21 and shall, in
the case of tangible property, be insured by Manufacturer, at
Manufacturer's expense, while in its custody or control in an amount
equal to the replacement cost thereof, with loss payable to Com21.


Manufacturer shall furnish to Com21 a copy of the policy or certificate of
such insurance upon demand. Manufacturer shall execute and deliver to
Com21 such other or further agreements relative to property furnished by
Com21 to Manufacturer as may be requested by Com21. With respect to
such property, Manufacturer at its expense shall (i) obtain any
consumable material required for its operation, (ii) perform all routine
maintenance, and (iii) perform all repairs necessitated by accident,
misuse, abuse or neglect. Com21 shall be responsible to perform or pay
for repairs due to reasonable wear and tear, provided that Manufacturer
first notifies Com21 of the need for such repairs and cooperates with
Com21 regarding the nature and source of such repairs. Manufacturer
shall, upon Com21's request, furnish to Com21 a written report listing the
Com21 property in Manufacturer's possession.


As of the Effective Date, the property Com21 is furnishing to
Manufacturer under this Paragraph 20.1 is listed on Exhibit 20.1 attached
hereto.



20.2. Technology License


Com21 grants to Manufacturer a revocable, non-exclusive, non-
transferable, non-sublicenseable, royalty-free license to (i) possess, use
and have used the Ancillary Technology exclusively for Com21's benefit;
and (ii) purchase or license from Com21 such of the Com21 Proprietary
Components as is reasonably necessary for Manufacturer to produce
Products exclusively for purchase by Com21 under this Agreement.



20.3. Com21 Trademark License


Subject to the terms and conditions of this Agreement, Com21 hereby
grants to Manufacturer a personal, non-exclusive, non-sublicensable,
non-transferable, royalty-free, license to use during the Term such
Com21 trademarks as may reasonably relate to the Products ("Com21
Marks"), to the extent reasonably required to perform Manufacturer's
obligations under this Agreement.


Manufacturer hereby acknowledges and recognizes Com21's exclusive
worldwide ownership of the Com21 Marks and agrees not to take any
action inconsistent with such ownership. Manufacturer acknowledges that
its use of the Com21 Marks pursuant to this Agreement and any goodwill
established thereby shall inure to the sole benefit of Com21.
Manufacturer shall support Com21 in policing the use of the Com21
Marks and shall cooperate with Com21 in protecting the Com21 Marks,
including cooperating in becoming a registered user of such Com21
Marks. Such cooperation by Manufacturer shall be at the sole expense of
Com21. Manufacturer shall promptly notify Com21 of any infringement of
the Com21 Marks that comes to Manufacturer's attention.
Manufacturer shall not attempt to register with any trademark office,
anywhere in the world, any trademark or other mark that is confusingly
similar to any of the Com21 Marks or that otherwise infringes or dilutes
any of the Com21 Marks.


Manufacturer shall not modify any Product bearing a Com21 Mark in such
a manner as to detract from the favorable reputation enjoyed by the
Com21 Marks. Manufacturer shall not take or permit to be taken any
actions which would detract from the goodwill or favorable reputation
associated with the Com21 Marks.



21. INTELLECTUAL PROPERTY OWNERSHIP


Except as expressly agreed by the Parties in this Agreement, or in a formal
written amendment to this Agreement signed by duly authorized officers of each
Party:


21.1. Ownership of Proprietary Information that is Created solely by one Party.
The "Owning Party" for purposes of this Agreement of all Proprietary
Information owned by a Party or Created solely by a Party, whether
before or after the Effective Date, shall be determined as follows:


21.1.1. All Proprietary Information which is not a Derivative of any
Proprietary Information of the other Party shall be the sole and
exclusive property of, and be deemed the Proprietary Information
of, the Party who owned or Created the Proprietary Information.


21.1.2. All Proprietary Information which is a Derivative of any Proprietary
Information of the other Party but which is not a Derivative of any
Proprietary Information of the Party who so Creates, shall be
Disclosed in writing to the other Party by the Party who so
Created, and shall be deemed the Proprietary Information of the
other Party.


21.1.3. All Proprietary Information which is a Derivative of any Proprietary
Information of the other Party, and which is also a Derivative of
any Proprietary Information of the Party who so Creates, shall be
Disclosed in writing to the other Party by the Party who so
Created, and shall be the Parties' joint property.


21.2. Ownership of Proprietary Information that is Created Jointly by the
Parties.


The "Owning Party" for purposes of this Agreement of all Proprietary
Information Created Jointly by the Parties, whether before or after the
Effective Date, shall be determined as follows:


21.2.1. All Proprietary Information Created Jointly by the Parties which is a
Derivative of any Proprietary Information of one Party who so
Creates, and which is not a Derivative of any Proprietary
Information of the other Party who so Creates, shall be Disclosed
in writing to the Party from whose Proprietary Information it is a
Derivative or whose Proprietary Information it incorporates, and
shall be deemed the Proprietary Information of such Party.


21.2.2. All Proprietary Information Created Jointly by the Parties which is a
Derivative of any Proprietary Information of one Party who so
Creates, and which is also a Derivative of any Proprietary
Information of the other Party who so Creates, shall be Disclosed
in writing by each Party to the other, and shall be the Parties' joint
property.


21.2.3. All Proprietary Information Created Jointly by the Parties which is
not a Derivative of Proprietary Information of either such Party,
shall be Disclosed in writing by each Party to the other, and shall
be the Parties' joint property.


21.3. Ownership of any other Proprietary Information.


21.3.1. Ownership, whether solely by any Party or jointly by the Parties,
and all related rights in, to and of, all Proprietary Information that is
Created under circumstances not specified in Paragraph 21.1 or


21.2 above shall be agreed upon by the Parties in good faith and,
failing such agreement, shall be submitted to arbitration.


21.4. Effect of Joint Ownership on Disposition of Proprietary Information.
Except as provided herein, either Party shall be free to Dispose of any
Proprietary Information that is such Party's joint property, as determined
under this Agreement, independently of and without accounting to any
other Party therefor, subject always to the other Party's equal and
concurrent right to likewise so Dispose of such joint property, provided
always, that neither Party may Dispose of such joint property to the extent
that such Disposition would result in or require Disclosure of the other
Party's Proprietary Information of which the joint property was a
Derivative or which is Incorporated in the joint property, if any.


21.5. Effect of Joint Ownership on Patent and Copyright Prosecution and
Enforcement.


21.5.1. Either Party who jointly owns any Proprietary Information, as
determined under this Agreement, shall cooperate with any other
Party who jointly owns such Proprietary Information (i) in filing and
prosecuting applications for patent and copyright protection of any
jointly owned Proprietary Information that is reasonably subject to
such protection in any jurisdiction any such Party deems
appropriate, and (ii) in enforcing patent rights and copyrights in
such Proprietary Information against others in any jurisdiction the
requesting Party deems appropriate.


21.5.2. Notwithstanding Paragraph above, neither Party may file or
prosecute nor require any other Party to cooperate in the filing or
prosecution of an application for patent protection or copyright,
and neither Party may enforce or require any other Party to
cooperate in enforcing patent rights and copyrights for patent
protection or copyright, to the extent that such filing, prosecution,
cooperation or enforcement would result in or require public or
otherwise damaging Disclosure of any the other Party's
Proprietary Information of which the joint property is a Derivative or
which is Incorporated in the joint property, if any.


21.5.3. Any Party requesting cooperation under Paragraph 21.5.1 or
Paragraph 21.5.2 above shall bear all expenses associated
therewith, except that the Parties who jointly own any Proprietary
Information, as determined under this Agreement, shall equally
bear the expense of filing and prosecuting applications for patent
protection in the United States of America of such jointly owned
Proprietary Information.


21.6. Limitation on Transfer of Proprietary Information. Except as expressly
provided herein, nothing in this Agreement shall operate to create or
transfer an ownership, license or other proprietary interest in any
Proprietary Information, nor require the Disclosure by an Owning Party of
any of its Proprietary Information, nor restrict, inhibit or encumber any
Owning Party's right or ability to Dispose of, use, distribute, Disclose or
disseminate in any way its own Proprietary Information or to release or
modify by further agreement the obligations of the other Party or Others
with respect to such Owning Party's Proprietary Information.


22. CONFIDENTIALITY


22.1. A Receiving Party shall, with respect to an Owning Party's Proprietary
Information:


22.1.1. Restrict access thereto to such of its employees and consultants
who need to know it in order for the Receiving Party to perform its
obligations under this Agreement and who agree to be bound by
an obligation of confidence no less protective of the Disclosing
Party's Proprietary Information than the provisions of this
Agreement;


22.1.2. Not use Proprietary Information disclosed to it pursuant to this
Agreement for any purposes other than those expressly permitted
by this Agreement; and


22.1.3. Not disclose Proprietary Information disclosed to it pursuant to this
Agreement to any third Party.


22.2. Each Receiving Party shall protect the Disclosing Party's Proprietary
Information using at least the same degree of care it employs to avoid
disclosure of its own Proprietary Information of a similar nature, provided
such degree of care is not less than reasonable under the circumstances.
The obligations and restrictions provided in this Paragraph 22 shall
survive expiration or termination of this Agreement.


22.3. A Disclosing Party's Proprietary Information and any tangible or electronic
medium on or by which it is or has been Disclosed to, possessed, or
reproduced by the Receiving Party, shall at all times be the Disclosing
Party's sole and exclusive property. The Disclosing Party may at any
time, by written notice, revoke in whole or in part any permission given to
the Receiving Party under this Paragraph 22 to use, possess or Disclose
its Proprietary Information. Upon such revocation, or upon any written
request, the Receiving Party shall immediately and unconditionally deliver
to the Disclosing Party all of the Disclosing Party's Proprietary Information
and any tangible or electronic medium on or by which it is or has been
Disclosed to, possessed, or reproduced by the Receiving Party.


22.4. Except as otherwise provided in this Agreement, the Disclosure of
Proprietary Information shall not be construed as granting the Receiving
Party any rights with respect to the other Party's Proprietary Information
or any license under any patents, patent applications, copyrights and/or
other intellectual property rights to which the Disclosing Party may then or
thereafter own or hold licensing rights.


22.5. Disclosure of any Proprietary Information by a Receiving Party hereunder
shall not be precluded if such Disclosure is (a) in response to a valid and
legally-enforceable order of a court or other government body or any
political subdivision thereof; or (b) otherwise required by law, provided,
however, that the Receiving Party before making such Disclosure must
first (i) immediately upon receipt of such order notify the Disclosing Party
of such order; and (ii) make and cooperate with the Disclosing Party in
making, if available under applicable law, a good faith effort to obtain a
protective order or other appropriate determination against or limiting
disclosure or use of the Proprietary Information.


22.6. Each Disclosing Party shall endeavor to affix or incorporate in any
tangible Proprietary Information it Discloses to the Receiving Party an
appropriate statement identifying the information as the Disclosing Party's
Proprietary Information, such as "[Disclosing Party] Proprietary
Information", or "[Disclosing Party] Confidential Information", or words of
like meaning, clearly expressed. The Disclosing Party shall, after
Disclosing Proprietary Information other than in tangible form, endeavor
to: (i) promptly confirm the Disclosure, (ii) reduce the Proprietary
Information to writing and (iii) identify the information as the Disclosing
Party's Proprietary Information in the manner described above. However,
the Disclosing Party's failure to so affix or incorporate or confirm shall not
affect such information's or material's character as the Disclosing Party's
Proprietary Information under this Agreement.


23. INTELLECTUAL PROPERTY INDEMNIFICATION


23.1. By Manufacturer


Manufacturer shall defend, indemnify and hold harmless Com21, its
Affiliates and its and their customers from and against any costs,
expenses, damages, judgments and liabilities of any kind, including
reasonable attorneys' fees and costs, arising from or related to any claim,
suit or other action against Com21, any of its Affiliates or its or their
customers to the extent such claim, suit or action is based upon an
assertion that (i) the Manufacturing Standards, Manufacturer's Proprietary
Information or any portion thereof, or (ii) the Product(s) where such claim,
suit or action relates to the Manufacturing Standards or Manufacturer's
Proprietary Information; infringe any third party's copyright, trade secrets,
patent, trademark and/or trade name, and Manufacturer shall pay the
amount of the settlement or the costs, damages and attorneys' fees and
costs finally awarded by a court in any such suit or action, provided that
Com21:


23.1.1. promptly gives Manufacturer notice of any such claim or
threatened or actual suit or action;


23.1.2. gives Manufacturer sole control of the defense and settlement of
such claim, suit or action and related settlement negotiations; and


23.1.3. cooperates in the defense of such claim, suit or action.
In the event that in any such suit or action an injunction is entered
prohibiting the purchase or sales of any Product(s) by Com21, any of its
Affiliates or its or their customers, Manufacturer, at its expense, shall (i)
procure for Com21, its Affiliates and its and their customers the right to
continue to purchase, sell, market, use and have others sell, market and
use the Manufacturing Standards, Manufacturer's Proprietary Information
and/or the Product(s); or (ii) replace or modify the Manufacturing
Standards or Manufacturer's Proprietary Information such that
Manufacturer or Com21 may manufacture or have manufactured
Product(s) that are non-infringing while still conforming to the applicable
Production File(s).



23.2. By Com21.


Com21 shall defend, indemnify and hold harmless Manufacturer and its
Affiliates from and against any costs, expenses, damages, judgments and
liabilities of any kind, including reasonable attorneys' fees and costs,
arising from or related to any claim, suit or other action against
Manufacturer or any of its Affiliates to the extent such suit or claim is
based upon an assertion that the Product(s), Com21's Proprietary
Information or any portion thereof infringe any third party's copyright,
trade secrets, patent, trademark and/or trade name, and Com21 shall pay
the amount of settlement or the costs, damages and attorneys' fees and
costs finally awarded by a court in any such suit or action, provided that
Manufacturer:


23.2.1. gives Com21 notice of any such claim or threatened or actual suit
or action;


23.2.2. gives Com21 sole control of the defense and settlement of such
suit, claim or action and related settlement negotiations; and


23.2.3. cooperates in the defense and settlement negotiation of such suit,
claim or action.


Notwithstanding the preceding sentence, Com21 shall have no obligation
to Manufacturer regarding any such claim, suit or action to the extent that
such claim, suit or action is caused by, arises from or is attributable to (i)
any unauthorized modification of the Com21 Proprietary Information by
Manufacturer; (ii) or Manufacturer's unauthorized modifications to the
Product(s).



23.3. General.


In performing its obligations under this Agreement, each Party agrees that
it will not knowingly infringe any patent, copyright, mask work right or
trade secret of any third party.


This Paragraph 23 shall survive the expiration or termination of this
Agreement in any manner whatsoever. This Paragraph 23 specifies the
exclusive remedies of the parties for any alleged infringement or
misappropriation of any intellectual property rights of any third party by
the Manufacturing Standards or Manufacturer Proprietary Information
provided by Manufacturer to pursuant to this Agreement and by the
Design Specification, Products, Com21 Proprietary Information or Com21
Components provided by Com21 pursuant to this Agreement.



24. LIMITATION OF LIABILITY


EXCEPT AS OTHERWISE PROVIDED IN THIS AGREEMENT, NEITHER
PARTY SHALL BE LIABLE TO THE OTHER, WHETHER IN CONTRACT OR IN
TORT, FOR SPECIAL, INDIRECT, INCIDENTAL OR CONSEQUENTIAL
DAMAGES OF ANY KIND, INCLUDING, WITHOUT LIMITATION, CLAIMS FOR
LOST PROFITS OR LOSS OF GOODWILL, EVEN IF THAT PARTY HAS BEEN
ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, BY REASON OF ANY
BREACH OR DEFAULT UNDER THIS AGREEMENT. Regardless of the
foregoing, this Paragraph shall not apply to either Party's breach of the following
Paragraphs 16, , 20.2, 20.3, 21, 22, and 23.


25. INSURANCE


Manufacturer shall, at its own expense, maintain comprehensive general liability
insurance (including product liability and broad form contractual liability) for not
less than $5,000,000 per occurrence, during the term of this Agreement and for
five (5) years thereafter. Such insurance shall (i) be in a form and with a carrier or
carriers reasonably acceptable to Com21, (ii) list Com21 as an additional named
insured, and (iii) provide that such insurance may not be canceled or altered so
as to affect the interest of any of the foregoing without at least thirty (30) days'
prior written notice to Com21. Promptly following execution of this Agreement,
Manufacturer shall deliver to Com21 satisfactory evidence of such insurance
coverage, or an equivalent self-insurance program.


26. TERM OF THE AGREEMENT


This Agreement shall be effective for a period of one (1) year commencing on the
Effective Date, unless earlier terminated in accordance with its terms.  Thereafter,
this Agreement shall be automatically renewed on its anniversary dates for
successive one (1) year terms subject to a Party providing written notice to the
other Party no later than sixty (60) days prior to any such anniversary date of such
Party's intent not to renew in which event this Agreement shall terminate at the end
of the then current term.


27. TERMINATION


27.1. This Agreement may be terminated:


27.1.1. For Cause.


27.1.1.1. By Com21, in the event of Manufacturer's material
breach of this Agreement, which within thirty (30) days of
Com21's written notice thereof is neither (i) cured, nor (ii)
the subject of a mutually agreed plan to cure, provided,
however, that if a material breach is not capable of being
cured, Com21 may terminate with immediate effect.


27.1.1.2. By Manufacturer, in the event of Com21's material
breach of this Agreement, which within thirty (30) days of
Manufacturer's written notice thereof is neither (i) cured,
nor (ii) the subject of a mutually agreed plan to cure,
provided, however, that if a material breach is not capable
of being cured, Manufacturer may terminate with
immediate effect.


27.1.2. For Com21's Convenience, without cause, upon not less than
ninety (90) days advance written notice to Manufacturer effective
at or after the end of the Exclusivity Period, notwithstanding
Paragraph 26..


27.2. Contents of Notice of Termination


When a Party is permitted or required to give written notice of termination
under Paragraph 27.2.1 above, such notice shall state with reasonable
particularity the nature of the breach, the steps required to cure if such
breach is by its nature curable, and either (i) the Party's intent to
terminate this Agreement if a curable breach is not cured, or (ii) the
Party's election to immediately terminate the Agreement if the breach is
not curable.


27.3. Effect of Termination and Notice of Termination


27.3.1. Neither the expiration nor Termination of this Agreement shall
relieve either Party of any obligation previously accrued, nor any
obligation accruing or arising thereafter under the following
Paragraphs of this Agreement and any other paragraphs that by
their terms so provide: 1 ("Definitions"), 13 ("Records, Audits and
Reports"), 17 ("Product Warranty; Epidemic Failure"), 18
("Warranty Claims and Repair"), 19 ("Parts Supply"), 21
("Intellectual Property Ownership"), 22 ("Confidentiality"), 23
("Intellectual Property Indemnity"), 27 ("Termination"), and 29
("General").


27.3.2. Upon any notice of termination given by either Party for any
reason, the exclusivity provided in Paragraph 3 of this Agreement
with respect to the manufacture of Products by Manufacturer for
Com21 shall immediately terminate.


27.3.3. Upon Manufacturer's termination of this Agreement as provided in
Paragraph 27.1.1.2, Manufacturer at Com21's request shall
continue to supply the Products to Com21, subject to commercially
reasonable terms and conditions of sale, for a period of twelve (12)
months following such termination.


27.3.4. Upon or after any notice of termination, any Termination, or any
Exclusivity Termination Notice, (i) Manufacturer will identify to
Com21 any Products, Parts, finished goods, work in progress,
components or other material for which Com21 is or may become
liable under the terms of this Agreement to pay Manufacturer, and
(ii) Manufacturer at Com21's request will sell and deliver to Com21
those Parts and assemblies as required under Exhibit 8.2 and
such other items as Com21 may elect to purchase, at the price
determined under this Agreement.


27.3.5. Upon any Termination, Manufacturer shall complete the production
of any Products for which Manufacturer has accepted a purchase
order as of the effective date of such Termination and deliver such
completed Products to Com21 within twenty (20) days of the
effective date of such Termination provided, however, that if this
Agreement was terminated by Com21 for Manufacturer's default
under Paragraph 27.1.1.1, Com21 may direct Manufacturer to
refrain from completing such production and in such event Com21
shall be under no obligation, under this Paragraph 27.3.5 or
otherwise under this Agreement, to pay Manufacturer for any such
items or any portions or components thereof. With respect to
purchase orders for components that will not be utilized to
manufacture Products as set forth above in this Paragraph 27.3.5,
Manufacturer shall not cancel any purchase order accepted by its
suppliers for the purchase of Parts, without Com21's prior written
authorization.


27.3.6. Upon any Termination or Exclusivity Termination Notice, Com21
shall have a perpetual, non-exclusive, royalty-free license to use
and have used the Production Files for Product-related purposes
to the extent such use is not otherwise permitted under the terms
of this Agreement. Regardless of the foregoing, in no event will
Com21 have a license to use or disclose any Manufacturer
Inventions or Trade Secrets.


27.3.7. Within fifteen (15) days after a notice of termination is given by
either Party to the other, or at least thirty (30) days before any
expiration of this Agreement, Manufacturer shall provide Com21
with all relevant information concerning its outstanding purchase
orders for Parts. Com21 may, on or before the effective date of
such termination or expiration, elect, at Com21's sole discretion
and in addition to any other rights Com21 may have under this
Agreement, none, any one, or a combination of the following
options:


27.3.7.1. To purchase from Manufacturer some or all Parts.


27.3.7.2. Direct Manufacturer to cancel, to the extent
possible, some or all of the outstanding purchase orders
for Parts; or



27.3.7.3. Obtain from Manufacturer an assignment of
Manufacturer's rights and obligations under the
outstanding purchase orders Parts.


If Com21 instructs Manufacturer to cancel any Manufacturer
purchase order for Parts under Paragraph 27.3.7.2, (i)
Manufacturer agrees to use reasonable efforts to cancel such
purchase order; (ii) Manufacturer shall use reasonable efforts to
negotiate an equitable settlement with its suppliers concerning
Manufacturer's financial liability due to the cancellation of such
purchase order for Parts; and (iii) if Manufacturer is unable to
cancel any outstanding purchase order for Parts, Com21 shall be
liable for Manufacturer's direct financial liability for such purchase
orders and/or their cancellation as provided in Exhibit 8.2.



28. REPRESENTATIONS


28.1. Each Party represents to the other that: (i) it has all requisite power and
authority to enter into this Agreement and to carry out the transactions
contemplated hereby; (ii) it has the rights, licenses, permits and power to
perform all obligations incurred by it under this Agreement; (iii) the
execution, delivery and performance of this Agreement are duly
authorized; (iv) this Agreement has been duly executed and delivered by
it and is a valid and binding obligation of it; and (v) the execution, delivery
and performance of this Agreement and the consummation of the
transactions contemplated hereby do not conflict with or violate its charter
and by-laws, any other contract or agreement to which it is a party, any
applicable law or any order or judgment of any court or governmental
authority. Manufacturer represents that all Product(s) purchased and sold
pursuant to this Agreement shall be (i) free from any liens or
encumbrances and (ii) manufactured, labeled, packaged, sold and
Delivered in accordance with all applicable United States federal, state
and local laws, orders, regulations, codes and standards (whether or not
specifically referenced elsewhere in this Agreement).


28.2. Com21 represents and warrants to Manufacturer that Com21 and its
Affiliates have the right to manufacture and have manufactured the
Products.


29. GENERAL


29.1. Force Majeure.


Neither Party shall be liable to the other Party if the performance of any of
its obligations under this Agreement is prevented or delayed because of
causes beyond its reasonable control including, without limitation, fire,
strike, war, insurrection, act of God, law, regulation and embargo of
government agency, riot, severe weather, restriction on the use of power
or any other cause beyond its reasonable control and not due to such
Party's own fault or negligence (an "Excusable Delay"). A Party shall be
excused from its performance to the extent caused by such Excusable
Delay; provided that such Party (i) gives notice of the Excusable Delay to
the other Party promptly after its occurrence, (ii) uses its reasonable
efforts (including executing any disaster plan) to overcome, mitigate and
remove the cause of the event preventing or delaying performance, (iii)
continues the performance of all its obligations under this Agreement that
are not prevented or delayed and (iv) upon cessation of the Excusable
Delay, promptly performs or completes performance of the obligations
which were prevented or delayed. Notwithstanding the foregoing, if
Manufacturer's performance is delayed for more than five (5) days due to
Excusable Delay, Com21 shall have the right to temporarily and
reasonably procure from any other supplier Product(s) which
Manufacturer is unable to supply.



29.2. Assignment; Binding Effect.


Neither Party shall assign or transfer this Agreement or any rights and
obligations hereunder without the other Party's prior written consent,
which consent may be refused in such Party's absolute discretion. This
Agreement and the transactions and other instruments provided for
herein shall be binding upon and inure to the benefit of the parties, their
legal representatives, successors, and permitted assignees.



29.3. Governing Law and Legal Actions.


This Agreement shall be governed by and construed under the laws of the
State of California and the United States of America without regard to
conflicts of laws provisions thereof and without regard to the United Nations
Convention on Contracts for the International Sale of Goods.  The sole
jurisdiction and venue for actions related to the subject matter hereof shall
be the courts having within their jurisdiction the location of Com21's principal
place of business.  Both parties hereby consent and waive any venue
objections to the jurisdiction of such courts.  The parties agree that process
may be served in the manner provided herein for giving of notices or
otherwise as allowed by California or federal law.



29.4. No Waiver.


Either Party's (i) waiver of any performance by the other, (ii) waiver of any
condition of this Agreement, or (iii) consent to any breach of this
Agreement by the other, shall (a) be effective only if expressly set forth in
a writing signed by the Party alleged to have waived or consented, and
(b) not constitute or require an ongoing waiver of such performance or
condition, or consent to any previous, different or subsequent breach,
regardless of whether such performance, condition or breach is similar,
identical or related, and regardless of the course of dealing which
develops or has developed between the Parties.



29.5. Compliance with U.S. Government Export Controls.


If either Party exports any Product or any Proprietary Information, such
Party shall comply with the United States Export Administration Act as
amended from time to time, with the Export Administration Regulations
promulgated from time to time thereunder, all other export laws and
regulations of the United States and all amendments, modifications or
additions thereto, including all laws and regulations relating to re-export.




29.6. Notices.


All notices, requests and other communications permitted or required to
be given pursuant to this Agreement shall be in writing and shall be
personally delivered, or sent by recognized delivery service or certified or
registered mail with return receipt requested and with all postage prepaid,
to the recipient Party at its address set forth below:



Com21:

Com21 

Attention: CFO

750 Tasman Drive

Milpitas, CA 95035



With Copy To:

Com21 

Attention: Corporate Counsel

750 Tasman Drive

Milpitas, CA 95035



Manufacturer:

Universal Scientific Industrial Co.,Ltd

Attention: Senior Manager, Business 

Development, SPCM 

141, Lane 351, Taiping Road, Sec. 1, 

Tsao Tuen, 

Nan Tou, Taiwan R.O.C.



With Copy To:







Each such notice shall be effective upon delivery or when delivery is
refused. Either Party may, by notice given in compliance with the
provisions of this Paragraph 29.6, designate another address for receipt
of notice.




29.7. Entire Agreement.


This Agreement, together with its exhibits, constitutes the entire
agreement of the Parties respecting its subject matter. It supersedes all
prior and contemporaneous communications and understandings and
agreements, written or oral, between the parties relative to its subject
matter and merges all discussions between them. This Agreement may
only be amended by subsequent written agreement which is duly
executed by the parties.



29.8. Severability


If any provision of this Agreement is determined by any court of
competent jurisdiction or arbitrator to be invalid, illegal, or unenforceable
to any extent, that provision shall, if possible, be construed as though
more narrowly drawn, if a narrower construction would avoid such
invalidity, illegality, or unenforceability or, if that is not possible, such
provision shall, to the extent of such invalidity, illegality, or
unenforceability, be severed, and the remaining provisions of this
Agreement shall remain in effect provided, however, that the court shall
have authority and jurisdiction to add to this Agreement a provision as
similar in terms and intended effect to such severed provision as may be
possible and be legal, valid, and enforceable. If, as a result of the
foregoing, a party's material benefits under this Agreement that would
have existed but for the operation of the preceding sentence are
materially impaired, such party may at such party's election thereafter
terminate this Agreement on not less than three (3) months advance
written notice to the other party.



29.9. Effect of Title and Headings.


The title of this Agreement and the headings of its articles are included
solely for convenience and shall not govern, limit or aid in the
interpretation of any terms or provision of this Agreement.



29.10. Construction


The Parties acknowledge and agree that both Parties have participated in
the drafting and negotiation of all provisions of this Agreement, and each
Party hereby waives and agrees not to assert that any ambiguity should
be construed for or against either Party. Except as otherwise specified,
references in this Agreement to Paragraphs and Exhibits are to
Paragraphs of, and Exhibits attached to, this Agreement. Except where
the context clearly requires to the contrary, "including" shall mean
"including, without limitation".



29.11.  Nature of Relationship


For the purposes of this Agreement, the Parties are deemed to be
independent contractors. It is expressly agreed that this Agreement and
the relationship between the parties hereby established do not constitute
a partnership, joint venture, agency or contract of employment. Neither
Party shall have the authority to make any statements, representations or
commitments of any kind, or to take any action, which shall be binding on
the other, except as authorized in writing by the Party to be bound.
Neither Party shall bind nor attempt to bind the other to any contract or to
the performance of any obligation, nor represent to third parties that it has
any right to enter into any obligation on the other's behalf.



29.12. Publicity.


Neither Party shall make or issue any publicity, news release, public
announcement or communication of any sort with the media, direct or
indirect, written or oral, concerning this Agreement or the transactions
contemplated by this Agreement without the prior written consent of the
other Party, not to be unreasonably withheld.



WITH INTENT TO BE BOUND, Com21 and Manufacturer have executed this
Agreement on the dates indicated below.


Com21:


Com21


By:__________________


Printed Name:  Jeff Jarvis


Title:  Senior VP and GM of Network 

Systems Division, Com21


Dated: ____________________


 


Manufacturer:


Manufacturer


By:__________________


Printed Name: Chen-Yen Wei


Title: Senior VP SPCM Business Group, USI

Dated: ____________________