Document:

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: ____________________AGREEMENT

AGREEMENT

This Agreement (this "Agreement") is made as of March 20, 2002 by and between Celestica International Inc. (the "Supplier") and Com21, Inc. (the "Customer").

R E C I T A L S

The Supplier and the Customer are parties to an Agreement for Manufacture, dated January 1, 1999 (the "Manufacturing Agreement"), and have agreed to modify certain terms of the Manufacturing Agreement as set forth specifically in this Agreement.

Capitalized terms used but not otherwise defined in this Agreement shall have the meanings ascribed to such terms in the Manufacturing Agreement.

NOW THEREFORE, for valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:

1.Cancellation; Continuing Orders.

(a)The Customer hereby cancels all Orders placed by it for Products and Services under the Manufacturing Agreement other than those Orders specifically identified on Schedule A (the "Continuing Orders").  The Supplier and the Customer agree that the Continuing Orders remain subject in all respects to the terms and conditions of the Manufacturing Agreement (including, without limitation, the provisions of Articles 9, 10, 13, 15 and 16 of the Manufacturing Agreement) and remain in full force and effect without modification of their terms, except as specifically provided in this Agreement.

(b)The Supplier agrees that it shall not be entitled to any payments from the Customer under Article 8 or Article 14 of the Manufacturing Agreement in respect of the Orders cancelled pursuant to Section 1.1 except as provided in Article 3 of this Agreement.

2.Termination of Manufacturing.  Effective March 20, 2002 (the "Effective Date"):

(a)The Supplier will cease all manufacturing activities under the then outstanding Orders other than the Continuing Orders.  Cessation of manufacturing activities related to the Orders shall not affect Supplier's manufacture of the Continuing Orders.

(b)The Customer shall have no further obligation pursuant to Section 3.1 of the Manufacturing Agreement to provide the Supplier with monthly Forecasts or monthly Product Orders, and the Supplier shall have no further obligation to accept Orders under the Manufacturing Agreement.

3.Excess Products and Excess Materials.

3.1Payments to the Supplier.

(a)The Customer acknowledges and agrees that any Materials acquired by the Supplier to support Orders and Forecasts under the Manufacturing Agreement (the "Excess Materials") or which have been ordered by the Supplier to support such Orders and Forecasts (each, an "Excess Purchase Commitment"), and in either case are in excess of the Materials required to complete the Continuing Orders, have been rendered obsolete and/or surplus as of the Effective Date and the Customer agrees to pay the Supplier the actual cost of the Excess Materials to Supplier (the "Excess Materials Amount") and the actual value of the Excess Purchase Commitments (the "Excess Purchase Commitment Amount") in the manner provided in Article 5 of this Agreement.  .

(b)The Customer agrees to pay the Supplier the full Product Price for any finished Product or work in progress (collectively, the "Excess Products") completed or commenced by the Supplier at the Effective Date in connection with any Order that has been cancelled pursuant to Section 1.1 of this Agreement (the "Excess Product Amount").

3.2Supplier's Invoice.

(a)Within seven days of the Effective Date, the Supplier shall  deliver to the Customer a statement (the "Invoice") setting forth (i) a list of the Excess Materials, Excess Purchase Commitments and Excess Products and (ii) the Invoiced Amount.  For purposes of this Agreement, the "Invoiced Amount" shall equal the Excess Materials Amount plus the Excess Purchase Commitment Amount plus the Excess Product Amount.

(b)If requested in writing by the Customer during the 15-day period immediately following its receipt of the Invoice, the Supplier shall, within 45 days of its receipt of the Customer's request, conduct a physical inventory of the Excess Materials and the Excess Products.  A representative designated by the Customer may be present at such inventory.  In addition, the Customer shall be permitted, during the 60-day period following its receipt of the Invoice (the "Inspection Period"), to inspect the relevant portions of the Supplier's books and records for purposes of verifying the items and prices listed on the Invoice.  Any inspection requested by the Customer pursuant to the preceding sentence shall take place during the Inspection Period at the Supplier's facilities in Monterrey, Mexico during the Supplier's regular hours of operation.

(c)Prior to expiration of the Inspection Period, the Customer may deliver to the Supplier a written notice (the "Dispute Notice") which disputes any item set forth on the Invoice (each, a "Disputed Item") and sets forth in reasonable detail the basis for such dispute.  All items set forth in the Invoice (including, without limitation, the Invoiced Amount) other than Disputed Items shall be deemed to have been agreed upon by the Customer and the Supplier and shall be binding and conclusive on the parties.  For the avoidance of doubt, if the Customer does not give a Dispute Notice in accordance with this Section 3.2(c), then the Invoice and Invoiced Amount shall be binding and conclusive on the parties.

(d)(i)If the Customer delivers a Dispute Notice to the Supplier in accordance with Section 3.2(c), the Customer and the Supplier shall negotiate in good faith to reach an agreement with respect to each Disputed Item.  If the Customer and the Supplier fail to agree upon each Disputed Item within 15 days after the Supplier's receipt of the Dispute Notice, Supplier and the Customer shall submit the remaining Disputed Items to PriceWaterhouseCoopers (the "Accountants") for resolution of each remaining Disputed Item and to calculate the Invoiced Amount (being the amount theretofor agreed by the parties plus the sum of the Disputed Items).  Each party shall furnish to the Accountants such work papers and other documents and information relating to the Disputed Items as the Accountants may request and are available to that party and shall be afforded the opportunity to present to the Accountants any material relating to the determination and to discuss the determination with the Accountants.  The Accountants will be requested to make their determination within 30 days, or as soon thereafter as practicable.  The determination of the Disputed Items and the calculation of the Invoiced Amount by the Accountants, as set forth in a written notice to be delivered to both parties by the Accountants, shall be binding and conclusive on the parties.  The fees, costs and expenses of the Accountants shall be borne by the party whose positions generally did not prevail in such determination or, if the Accountants determine that neither party could be fairly found to be the prevailing party, then such fees, costs and expenses shall be borne 50% by each party.

(ii)Notwithstanding the provisions of Section 3.3(d)(i), any Disputed Item that arises from a disagreement as to whether Materials were, in fact, acquired by the Supplier to support Orders and Forecasts under the Manufacturing Agreement shall be referred to and finally resolved by arbitration under the Commercial Rules of the American Arbitration Association.  The place of arbitration shall be Santa Clara County, California.  The parties shall mutually select an arbitrator.  In the event the parties cannot agree upon the choice of an arbitrator, each party shall  appoint one individual representative and the two party representatives shall, between themselves, choose an  arbitrator. The arbitrator(s) shall conduct hearings in English; permit cross-examination of all witnesses; and, by majority vote, render a written decision stating reasons therefor within 45 days after the request for arbitration. The award shall be final and enforceable, and may be confirmed by the judgment of a competent court.  Each party shall bear its own costs and legal fees incurred in connection with the arbitration.  

3.3Disposition.

(a)The Supplier shall deliver all Excess Products to the Customer, in accordance with Article 5 of the Manufacturing Agreement, as soon as practicable after the Effective Date.

(b)The Supplier warrants that is has used and will continue to use commercially reasonable efforts to mitigate the liability of Customer by (i) attempting to use the Excess Materials to satisfy the requirements for other customers of Supplier using any such materials, and (ii) promptly attempting to (x) cancel Excess Purchase Commitments and (y) return Excess Materials to vendors (provided, that such vendors have agreed to return any amounts paid by the Supplier with respect to such Excess Materials).

(c) The Supplier and the Customer shall each cooperate and use their reasonable efforts to have all Excess Purchase Commitments remaining after the Effective Date cancelled as soon as practicable.  To the extent that the Supplier is unable to obtain cancellation of any Excess Purchase Commitment, or is required to pay any cancellation penalty or other amount to effect a cancellation, any Material acquired by the Supplier pursuant to any Excess Purchase Commitment shall be considered Excess Materials and the amount payable to effect a cancellation shall be deemed to be costs of Material payable by the Customer.

(d)If at any time subsequent to the Effective Date the Supplier determines it can sell all or any portion of the Excess Materials to a third party, the Supplier shall deliver a written notice (a "Sale Notice") to the Customer specifying the Excess Materials to be sold and the price to be paid to the Supplier.  (The Customer acknowledges that such third party may be another customer of the Supplier, and that the Supplier may be selling the Excess Materials to such customer and then using the Excess Materials to produce products for that customer.)  Unless, within five business days of the Customer's receipt of a Sale Notice, the Supplier receives written notice from the Customer directing the Supplier not to complete the sale identified in the Sale Notice, the Supplier may complete such sale and shall apply the amount actually received by the Supplier for such Excess Materials as a pre-payment on account of the next following monthly payment(s) on the Note (as defined in Section 5.1(a)).

(e)The Customer may at any time, upon written notice to the Supplier, direct the Supplier to deliver all or any portion of the Excess Materials to the Customer in accordance with Article 5 of the Manufacturing Agreement, provided, that the Supplier has not otherwise sold or entered into an agreement to sell such Excess Materials in accordance with Section 3.3(c) of this Agreement.

(f)Notwithstanding anything to the contrary contained in this Agreement, the Supplier shall be entitled to deliver all or any portion of the Excess Materials to the Customer, in accordance with Article 5 of the Manufacturing Agreement, after the earlier to occur of:  (i) the 6-month anniversary of the Effective Date and (ii) the date the Supplier has determined, in its sole discretion, that it must ship the Excess Materials in order to comply with Mexican law.

(g)The Customer agrees that it will use its commercially reasonable efforts to assist the Supplier in transferring all Excess Products and Excess Materials pursuant to this Section 3.3.

3.4Monthly Statements.  On or prior to the 7th day of each calendar month (or, if the 7th day is not a business day, the first business day following the 7th day), the Supplier shall send a statement to the Customer (each, a "Monthly Statement") setting forth the following with respect to the immediately preceding calendar month:  (a) a brief description of the nature of the disposition of any Excess Materials and/or Excess Purchase Commitments by the Supplier, including, without limitation, the cancellation of any Excess Purchase Commitments or the conversion of any Excess Purchase Commitment into Excess Materials as contemplated by Section 3.3(b); (b) the amount, if any, received by the Supplier in connection with any sale of Excess Materials as contemplated by Section 3.3(c); and (c) the cancellation penalty or other amounts payable by the Supplier with respect to any Excess Purchase Commitment cancelled during such month (if applicable).  The Supplier shall not be required to deliver any Monthly Statement with respect to any calendar month after the calendar month in which all Excess Materials have been sold or delivered to the Customer and all Excess Purchase Commitments have been cancelled.

4.Outstanding Accounts Payable.

4.1From the Supplier to the Customer.  The Supplier and the Customer agree that at the Effective Date the Supplier owes the Customer $3,988,496.64 (the "Supplier's Accounts Payable") as payment in respect of Materials purchased by the Supplier from the Customer in connection with the Manufacturing Agreement.  The parties agree that the Supplier shall pay the Supplier's Accounts Payable to the Customer in the manner provided in Section 5 of this Agreement.

4.2From the Customer to the Supplier. The Customer and the Supplier hereby agree that at the Effective Date the Customer owes the Supplier the amounts set forth on Schedule B as payment in respect of Products and Services provided by the Supplier under the Manufacturing Agreement, including, without limitation, the Products being provided pursuant to the Continuing Orders (the "Customer's Accounts Payable Amount").  The parties agree that the Customer shall pay the Customer's Accounts Payable Amount to the Customer in the manner provided in Section 5 of this Agreement.

5.Manner of Payment.

5.1Promissory Note.

(a)Simultaneously with the execution and delivery of this Agreement, the Customer is delivering to the Supplier (a) a duly executed promissory note (the "Note") substantially in the form of Exhibit A, dated the Effective Date and in a principal amount equal to $20,000,000.00 (the "Note Amount") which amount consists of: (i) $20,000,000.00, such amount representing the Supplier's good faith estimate at the Effective Date of the Invoiced Amount (the "Estimated Invoiced Amount"); plus (ii) the Customer's Accounts Payable Amount; minus (iii) the Supplier's Accounts Payable; minus (iv) the Cash Amount, as defined in Section 5.4.

In the event that the Customer is required or permitted to execute and deliver a replacement promissory note (a "Replacement Note") to the Supplier in connection with any adjustment of the Note Amount pursuant to Section 5.1(b) or Section 5.1(c), the terms and conditions of each Replacement Note shall be identical in all respects to the Note being delivered to the Supplier on the Effective Date other than with respect to the Note Amount and the Repayment Schedule set forth therein which may be amended as mutually agreed upon by Supplier and Customer in writing.   Upon its receipt of any Replacement Note from the Customer in accordance with this Section 5.1, the Supplier shall promptly mark the Note then in its possession "cancelled" and the Replacement Note shall thereafter be the "Note" for all purposes of this Agreement.  The Supplier shall return all cancelled Notes to the Customer within three business days after their cancellation.

(b)Upon the final determination of the Invoiced Amount in accordance with Section 3.2 (the "Determination Date"), the Note Amount shall be increased by the amount by which the Estimated Invoiced Amount is less than the Invoiced Amount or decreased by the amount by which the Estimated Invoiced Amount is greater than the Invoiced Amount, as the case may be.  Within three business days of the Determination Date, the Supplier shall prepare and deliver to the Customer a Replacement Note reflecting the increase or decrease in the Note Amount and the Customer shall execute and deliver the Replacement Note to the Supplier within three business days after the Customer's receipt thereof.

(c)On the date of receipt, the Supplier shall apply, as a pre-payment on account of the next following monthly payment on the Note, the amount of proceeds actually received by it in connection with any disposition of Excess Materials pursuant to Section 3.3(d) of this Agreement and the amount of Excess Purchase Commitments cancelled during the preceding calendar month (net of any cancellation penalties and other amounts payable by the Supplier in connection therewith), in each case as set forth in the Monthly Statement.  If the amount of such proceeds are greater than the amount of the next following monthly payment, the Supplier shall apply the balance of such proceeds as a pre-payment on account of the next following monthly payment(s) on the Note.

5.2Letter of Credit.  Supplier acknowledges and agrees that Customer has delivered to Supplier an irrevocable standby letter of credit (the "Letter of Credit")with an initial face amount of $10,000,000 (the "Initial LC Amount") and which shall be in a form reasonably satisfactory to the Supplier.  The Customer agrees that the Letter of Credit (a) shall remain issued in favor of the Supplier at all times until the entire balance (principal and interest) of the Note shall have been paid in full, (b) shall provide that it is immediately cashable upon presentation by the Supplier in the event of its non-renewal and (c) shall at all times have a face amount at least equal to the lesser of (i) the remaining balance (principal and interest) of the Note and (ii) $10,000,000 (the "Minimum LC Amount").  The Supplier shall cooperate with the Customer if the Customer desires to obtain a replacement Letter of Credit, provided, that the replacement Letter of Credit is issued by a bank with a credit rating acceptable to the Supplier in its sole discretion and otherwise complies, in Supplier's judgment exercised in its sole discretion, with the requirements of this Section 5.2.

Notwithstanding anything to the contrary contained in this Agreement, in the event that the commercial bank issuing the Letter of Credit (including any replacement Letter of Credit) delivered by the Customer to the Supplier pursuant to this Section 5.2 at any time fails to have a short-term senior unsecured debt rating of at least "P-1" by Moody's Investors Service, Inc., "A-1" by Standard & Poor's and, if rated by Fitch, Inc., "F-1", the Supplier may obtain confirmation of the Letter of Credit by a financial institution selected by the Supplier in its sole discretion and the Customer shall, upon the Supplier's request, immediately reimburse the Supplier for any costs and expenses incurred in connection with obtaining such confirmation.

5.3Warrant.  Simultaneously with the execution and delivery of this Agreement, the Customer shall issue and deliver to the Supplier a warrant to purchase 200,000 shares of the Customer's common stock, par value $.001 per share, substantially in the form of Exhibit B (the "Warrant"), and which incorporates registration rights as mutually determined by the parties.

5.4.Cash Amount.  The Customer shall pay to the Supplier $3,537,017.02 in cash (the "Cash Amount"), by wire transfer of immediately available funds to the Supplier's account (Bank: Harris Trust and Savings Bank; 111 West Monroe Street, Chicago, IL, USA, 60603; ABA: 071-000-288; SWIFT: HATRUS44; Beneficiary Name: Celestica Corporation; Beneficiary Account No.: 2061703) in two equal installments of $1,179,005.67 each payable on April 30, 2002 and May 31, 2002 and a third installment of $1,179.005.68 payable on June 30, 2002.  The Customer and the Supplier acknowledge that they have not fully resolved the items identified on Schedule C (the "Unresolved Items"), and that resolution of the Unresolved Items may increase or decrease the Cash Amount.  If the Unresolved Items are resolved by April 30, 2002, then the Cash Amount (and the April 30, 2002, May 31, 2002 and June 30, 2002 payments) shall be adjusted accordingly.  If the Unresolved Items are resolved after April 30, 2002 but before May 31, 2002, then the payment required on April 30, 2002 shall be $1,179,005.67 and the May 31, 2002 and June 30, 2002 payments shall be adjusted accordingly.  If the Unresolved Items are resolved after May 31, 2002 but before June 30, 2002, then the June 30, 2002 payment shall be adjusted accordingly.  If the Unresolved Items are not resolved on or before June 30, 2002, then the payment required on June 30, 2002 shall be $1,179,005.68.  If the Unresolved Items are not resolved by June 30, 2002, then immediately upon their resolution (or the resolution of any one of them), the Customer shall immediately pay to the Supplier any required increase in the Cash Amount (such payment to be in cash, as set forth in the first sentence of this Section 5.4) or, if all of the Unresolved Items are resolved and the resolution requires a decrease in the Cash Amount, then the Supplier shall treat the amount of such decrease as a pre-payment on account of the next following monthly payment on the Note.

5.5Full Satisfaction.

(i)The Supplier acknowledges and agrees that the delivery by the Customer of the Note, the Letter of Credit, the Warrant and the Registration Rights Agreement (each, the "Related Documents"), and the timely performance of its obligations under each Related Document, together with the payment by the Customer of the Cash Amount to the Supplier in accordance with Section 5.4, shall be in full satisfaction of all of the Customer's obligations under the Manufacturing Agreement as of the Effective Date. 

(ii)The Customer acknowledges and agrees that the deduction of the Supplier's Accounts Payable from the Note Amount (as provided in Section 5.1(a) of this Agreement) shall be in full satisfaction of the Supplier's obligation to pay the Supplier's Accounts Payable to the Customer.

6.Condition to Effectiveness.  It shall be a condition to the effectiveness of this Agreement that the Customer shall have delivered the Note, the Letter of Credit and the Warrant to the Supplier simultaneously with its execution and delivery of this Agreement.

7.Subsequent Orders.  In the event the Customer desires to place any Orders under the Manufacturing Agreement subsequent to the date hereof, the following modifications to the Manufacturing Agreement shall apply:

7.1All references to the terms "Forecast" or "Forecasts" appearing in the Manufacturing Agreement shall be deleted (together with any conjunctive language employed in connection with the use of such terms).

7.2Article 3 of the Manufacturing Agreement shall be amended and restated in its entirety as follows:

"3.ORDER PROCEDURE

(a)The Customer may at any time place an Order for Products and/or Services with the Supplier.  The Supplier agrees to notify the Customer of acceptance or rejection of Orders within 5 days of receipt.  The Supplier shall have no obligation to accept any Order, and it may reject any Order in its sole discretion.  The Supplier's acceptance of any Order  shall not represent a waiver by the Supplier of its right to reject any subsequent Order in its sole discretion.  If the Order is not acknowledged by the Supplier within five days of its receipt, then the Order shall be deemed to have been rejected by the Supplier.  The Supplier's acceptance of any Order shall not represent a waiver by the Supplier of its right to reject any subsequent Order in its sole discretion.

Notwithstanding any provision to the contrary in Article 10 or any other term of this Agreement, the Supplier may condition its acceptance of any Order upon (i) its prior receipt of cash for all or any portion of the Product Price, and/or (ii) the Customer's agreement to pay the full Product Price in cash against delivery of the Products, and/or (iii) the Customer's agreement to the amendment or waiver of any other term of this Agreement, but specifically excluding the amendment or waiver of the terms of Sections 3 (except as amended by an agreement between the Customer and Supplier dated as of March 20, 2002), 5, 6, 11 through 13, 15, 16, 18 through 20 or 22.

(b)Each Order shall include:  the description and Price per unit of Product; the quantities ordered; delivery requirements; Product revision details; and such other information as the parties may agree upon from time to time.  Orders may be issued in writing, by mail or facsimile, or by electronic means as the parties may from time to time agree."

7.3Section 4.2 of the Manufacturing Agreement shall be deleted in its entirety and the words "Intentionally Omitted" shall be substituted therefor.

7.4Section 8.2(d) of the Manufacturing Agreement shall be amended by deleting the words "provided that Supplier shall not be entitled to value-add for Product built to support more than thirty (30) days of Order requirements" appearing at the end thereof.

7.5All of the other terms and provisions of the Manufacturing Agreement shall remain unchanged and continue in full force and effect as to any Orders placed under the Manufacturing agreement after the Effective Date.

8.Miscellaneous.

8.1Severability.  If any provision or any part thereof contained in this Agreement is for any reason held to be invalid or unenforceable in any respect under the laws of any jurisdiction where enforcement is sought, such invalidity or unenforceability will not affect any other provision of this Agreement and this Agreement will be construed as if such invalid or unenforceable provision or part thereof had not been contained therein.

8.2Variations.  No purported variation or amendment of this Agreement will be valid unless made or confirmed in writing by a duly authorized representative of each party.

8.3Effect on Manufacturing Agreement.  The Manufacturing Agreement is hereby amended, but solely to the extent that any provision of this Agreement is inconsistent with the provisions of the Manufacturing Agreement.  Except as specifically amended by this Agreement, the Manufacturing Agreement remains unchanged and continues in full force and effect.

8.4Notices.  All notices under this Agreement must be in writing and sent by prepaid registered mail, by facsimile or delivered personally to the parties at their respective addresses set out below or such other address as may be notified from time to time by the addressee to the other party.  A notice shall be deemed to have been given on the date of receipt if sent by prepaid registered mail or delivered by hand, and on the date of transmission in the case of facsimile (or, if transmission is after business hours or not on a business day in the place of receipt, then on the next following business day).

 

Notices delivered to the Customer shall be delivered to:

Com21, Inc.

750 Tasman Drive

Milpitas, California  95035

Fax:  408-953-9299

Attn:  Chief Financial Officer

Cc: Corporate Counsel

Notices delivered to the Supplier shall be delivered to:

Celestica International Inc.

12 Concorde Place

Toronto, Ontario  M3C 3R8

Fax:  416-386-7707

Attn:  Senior Vice-President, Marketing

Cc:  General Counsel

8.5Waiver.  The waiver of any term, condition or provision of this Agreement must be in writing and signed by an authorized representative of the waiving party.  Any such waiver will not be construed as a waiver of any other term, condition or provision except as provided in writing, nor a waiver of any subsequent breach of the same term, condition or provision.

8.6Assignment.

(a)Neither party may assign this Agreement or any part thereof without the written consent of the other except that the Supplier may assign this Agreement to any of its Affiliates or to any person who acquires the whole or any part of its business.  Notwithstanding the foregoing, if the Customer is acquired by merger or other form of corporate reorganization (whether or not the Customer survives the consummation of the transaction) or a person or persons acquires all or a substantial portion of the Customer's assets in one or more transactions (each, a "Sale Transaction"), then the Customer may assign this Agreement to the acquiror, but only if the acquiror, prior to the consummation of the Sale Transaction, has, by written instrument satisfactory to the Supplier in its sole discretion (such instrument, a "Guarantee"), assumes all the obligations of the Customer under this Agreement and unconditionally guarantees the obligations of the Customer under the Note (with such guarantee being subordinated only to Senior Indebtedness (as defined in the Note) of the acquiror and only to the extent the Note is subordinated to the Senior Indebtedness of the Customer).

(b)The expressions the "Supplier" and the "Customer" include their respective successors and permitted assigns where the context admits.

8.7Headings.  The headings in this Agreement are inserted for convenience only and do not constitute a part of any Contract nor are they to be referred to in its interpretation.

8.8Governing Law.  This Agreement and all transactions under it will be governed by the laws of the State of New York, USA exclusive of any provisions of the United Nations Convention on the International Sale of Goods and without regard to principles of conflict of laws.  The parties submit to the non-exclusive jurisdiction of the courts of New York, USA.  The parties hereto expressly waive any right they may have to a jury trial and agree that any proceedings under this Agreement shall be tried by a judge without a jury.

[Remainder of Page Intentionally Blank]

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

CELESTICA INTERNATIONAL INC.

 

By: ______________________________

Name:

Title:

 

COM21, INC.

 

 

By: ______________________________

Name:

Title:

 

Schedule A

Continuing Orders

 

As of March 20, 2002, there are no Continuing Orders

 

Schedule B

Customer's Accounts Payable Amount

 

$18,967,711.64

SCHEDULE C

UNRESOLVED ITEMS

 

Invoices in dispute:

	
#15034400
	
$  21,684.00

	
#25049349
	
    34,107.00

	
#25049350
	
    34,107.00

 

	
Invoices being prepared
	
$ 230,788.08

	
  Subtotal
	
$ 320,686.07 (Celestica accounts receivable)

Other adjustments:

	
  Not a Celestica PO
	
$     1,600.00

	
  Amount applied
	
       1,125.00 (?)

	
  Paid with cheque
	
     29,070.00

	
  Rejected
	
   215,836.43

	
  Paid in short
	
     37,903.85

	
  Unknown
	
       3,025.92

	
  Subtotal
	
$ 286,311.20 (Celestica accounts payable)

	
Total unresolved items
	
$ 606,997.27

 

EXHIBIT A

Note

See attached.

 

 

EXHIBIT B

Warrant 

See attached.

 

 

COM21, INC.

(a Delaware corporation)

Amount: $20,000,000March 20, 2002

UNSECURED SUBORDINATED PROMISSORY NOTE

WHEREAS, Com21, Inc., a Delaware corporation ("Borrower"), previously entered into a Manufacturing Agreement by and between and Celestica International Inc. ("Lender")  and Borrower, dated as of January 1, 1999 (the "Manufacturing Agreement").

WHEREAS, Borrow and Lender desire to amend the Manufacturing Agreement with an Agreement, by and between Borrower and Lender, dated as of even date herewith (the "Amendment to Manufacturing Agreement").

WHEREAS, in order to induce Borrower and Lender to enter into the Amendment to Manufacturing Agreement, Borrower hereby agrees to execute this Note and Borrower and Lender hereby agree to execute a Warrant to Purchase 200,000 Shares of Common Stock of even date herewith and a related Registration Rights Agreement (together, the "Warrant").

NOW, THEREFORE, in consideration of the mutual promises and covenants set forth hereinafter and in the Amendment to Manufacturing Agreement, all parties hereto agree as follows:

Principal Amount.  For value received Borrower promises to pay Lender the principal sum of Twenty Million Dollars ($20,000,000) (the "Principal Amount").

Interest Rate.  Interest shall accrue from the date hereof on the Principal Amount plus the amount of any accrued and unpaid interest payable hereunder as follows:

Interest shall accrue on the outstanding Residue Amount at the rate of five percent (5%) per annum, compounded monthly.  The "Residue Amount" shall be defined as the Principal Amount less the Excess Amount (as defined below).

The interest rate for the Excess Amount (as defined herein) shall accrue at a rate of fifteen percent (15%) per annum, compounded monthly.  The "Excess Amount" is defined as the amount by which the Principal Amount plus accrued and unpaid interest on this Note exceeds the face amount of the Letter of Credit (as defined in the Amendment to the Manufacturing Agreement) as measured on the last date of each calendar month for which this Note remains outstanding.

Payment.  The outstanding Principal Amount and the scheduled accrued interest thereon (but specifically excluding any interest on any unpaid amount of the Principal Amount or scheduled accrued interest thereon, which shall be payable immediately) shall be paid by Borrower in accordance with the payment schedule attached hereto as Schedule 3. 

The principal amount of this Note and accrued interest thereon may be prepaid in whole or in part at any time without penalty.  Any prepayment will be applied first to the payment of accrued and unpaid interest and second to the payment of principal.  All computations of interest shall be made on the basis of a year of 365 days, or 366 days, as the case may be for the actual number of days (including the first day but excluding the last day) occurring in the period for which such interest is payable.

Anything herein to the contrary notwithstanding, if during any period for which interest is computed hereunder, the amount of interest computed on the basis provided for in this Note, together with all fees, charges and other payments which are treated as interest under applicable law, as provided for herein or in any other document executed in connection herewith, would exceed the amount of such interest computed on the basis of the Highest Lawful Rate (as defined herein), Borrower shall not be obligated to pay, and Lender shall not be entitled to charge, collect, receive, reserve or take, interest in excess of the Highest Lawful Rate, and during any such period the interest payable hereunder shall be computed on the basis of the Highest Lawful Rate.  As used herein, "Highest Lawful Rate" means the maximum non-usurious rate of interest, as in effect from time to time, which may be charged, contracted for, reserved, received or collected by Lender in connection with this Note under applicable law.

All payments hereunder shall be in lawful money of the United States of America at the principal office of the Lender at its address set forth in Section 14, or at such other place as the Lender hereof may from time to time designate in writing to the Borrower, not later than 5:00 p.m. Pacific Standard Time on the due date of the payment as long as such due date is on a Business Day.  A "Business Day" means a day (i) other than Saturday or Sunday, and (ii) on which banks are not required or authorized to close in New York City.  If a payment due date does not fall on a Business Day, then such payment due date shall be the next succeeding Business Day which follows such payment due date.  

Unsecured Note.  This Note is not secured.

Subordinated Note.  The Lender agrees that all payments on account of the principal and interest indebtedness under this Note (the "Subordinated Indebtedness") shall be subordinate and subject in right of payment, to the extent and in the manner set forth herein, to the prior payment in full in cash or cash equivalents of Senior Indebtedness.  As used herein, "Senior Indebtedness" shall mean any indebtedness, liabilities and other obligations of the Borrower (whether as primary obligor or as guarantor) to any person (each a "Senior Lender") with respect to any working capital, revolving credit or other line of credit facility, any term loan facility, or any other extension of credit by a bank, insurance company or financial institution engaged in the business of lending money (whether or not secured).  The terms "indebtedness," "liabilities" and "obligations" are used herein in their most comprehensive sense and include any and all advances, debts, obligations and liabilities, now existing or hereafter arising, whether voluntary or involuntary and whether due or not due, absolute or contingent, liquidated or unliquidated, determined or undetermined.

No Voting Rights.  This Note shall not entitle the Lender to any voting rights or other rights as a stockholder of the Borrower.

Amendment; Waiver.  Any amendment hereto or waiver of any provision hereof may be made only with the written consent of the Borrower and the Lender.  This Note shall inure to the benefit of and bind the successors, permitted assigns, heirs, executors, and administrators of the parties hereto.

Events of Default.  (a) The occurrence of any of the following shall constitute an "Event of Default" under this Note:

the failure to make any payment of principal or interest or any other amount payable hereunder when due under this Note or the breach of any other condition or obligation under this Note, and the continuation of such failure or breach for five (5) days;

the failure by Borrower to make any payment in respect of the Cash Amount (as defined in the Amendment to Manufacturing Agreement) under the Amendment to Manufacturing Agreement, and the continuation of such failure for five (5) days;

a Sale Transaction (as defined in the Amendment to Manufacturing Agreement) is consummated and the Borrower has not previously delivered to the Lender a Guarantee, as required by the Amendment to Manufacturing Agreement; or

the filing of a petition by or against the Borrower under any provision of applicable bankruptcy or similar law; or appointment of a receiver, trustee, custodian or liquidator of or for all or any part of the assets or property of the Borrower; or the insolvency of the Borrower; or the making of a general assignment for the benefit of creditors by the Borrower.

(b)If any Event of Default shall occur (i) under Sections 9(a)(1), 9(a)(2) or 9(a)(3) of this Note, the Lender may, by notice to the Borrower, declare the entire unpaid principal amount of this Note together with accrued and unpaid interest thereon and all other amounts payable hereunder to be immediately due and payable, whereupon all unpaid principal under this Note, all such accrued interest and all such other amounts shall become and be forthwith due and payable, without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived by the Borrower and (ii) under Section 9(a)(4) of this Note, the entire unpaid principal amount of this Note together with accrued and unpaid interest thereon and all other amounts payable hereunder shall become immediately due and payable, without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived by the Borrower.

(c)During the occurrence of any Event of Default all outstanding amounts (including principal and accrued interest) under this Note shall bear interest at a rate per annum equal to 15%, compounded monthly.  The amount by which the Default Interest Amount exceeds the interest accruing under Section 2 hereof during such Event of Default shall be payable to the Lender from time to time on demand.  

Governing Law.  This Note is made in accordance with and shall be construed under the laws of the State of New York, other than the conflicts of law principles thereof.

Replacement of Lost, Destroyed, Etc. Note.  The Borrower covenants to the Lender that upon receipt of evidence reasonably satisfactory to the Borrower of the loss, theft, destruction, or mutilation of this Note and, in the case of any such loss, theft or destruction, upon receipt of an indemnity reasonably satisfactory to the Borrower, or in the case of any such mutilation upon surrender and cancellation of such Note, the Borrower will make and deliver a new Note, or like tenor, in lieu of the lost, stolen, destroyed or mutilated Note.

Waiver.  The Borrower hereby expressly waives presentment, demand for payment, dishonor, notice of dishonor, protest, notice of protest and any other formality.

Notices. All notices and other communications provided for hereunder shall, unless otherwise stated herein, be in writing (including by facsimile) and mailed, sent or delivered to the respective parties hereto at or to the following addresses or facsimile numbers (or at or to such other address or facsimile number as shall be designated by any party in a written notice to the other parties hereto).

If to the Lender:Celestica International Inc.

12 Concorde Place

Toronto, Ontario  M3C 3R8

Fax:  416-386-7707

Attn:  Senior Vice-President, Marketing

cc:  General Counsel

If to the Borrower:COM21, INC.

750 Tasman Drive

Milpitas, CA  95035

Fax:  408-953-9299

Attn:  Vice-President, Manufacturing

cc:  Chief Financial Officer

All such notices and communications shall be effective (i) if delivered by hand, upon delivery; (ii) if sent by mail, upon the earlier of the date of receipt or five Business Days after deposit in the mail, first class (or air mail, with respect to communications to be sent to or from the United States), postage prepaid; and (iii) if sent by facsimile, when sent.

Enforcement Costs.  The Borrower hereby agrees to pay all reasonable out-of-pocket expenses incurred by the Lender in connection with the enforcement or protection of its rights in connection with this Note, including, all costs and expenses incurred by the Lender in attempting or effecting collection hereunder, including, without limitation, actual attorneys' fees.

Surrendered Payments.  If after the receipt of any payment of all or part of the obligations hereunder, the Lender is for any reason compelled to surrender such payment to any person or entity because such payment is determined to be void or voidable as a preference, an impermissible setoff, a diversion of trust funds or any other reason, the obligations hereunder shall continue in full force, and the Borrower shall indemnify and hold the Lender harmless for, the amount of such payment surrendered until the Lender shall have been finally and irrevocably paid in full. 

IN WITNESS WHEREOF, Borrower has caused this Note to be executed by its officer thereunder duly authorized as of the date first above written.
COM21, INC.

By:

Name: _____________________________

Title:  ______________________________

 

AGREED AND ACCEPTED:

CELESTICA INTERNATIONAL INC.

By:

Name:  _________________________

Title:  ___________________________ 

SCHEDULE 3

Payment Schedule

See attached

 

THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.

WARRANT TO PURCHASE 200,000 SHARES OF COMMON STOCK

of

COM21, INC.

Void after March 19, 2005

This certifies that, in consideration of that certain Amendment to Manufacturing Agreement dated March 20, 2002 by and between Com21, Inc., a Delaware corporation (the "Company") and Celestica International, Inc. or its registered assigns ("Holder") is entitled, subject to the terms set forth below, to purchase from the Company 200,000 shares of the Common Stock of the Company (such shares of Common Stock, as adjusted as provided herein, the "Shares"), as constituted on the date hereof (the "Warrant Issue Date"), upon surrender hereof, at the principal office of the Company referred to below, with the Notice of Exercise attached hereto as Exhibit A duly executed, and simultaneous payment therefor in lawful money of the United States or otherwise as hereinafter provided, at the Exercise Price as set forth in Section 2 below.  The number, character and Exercise Price of such Shares are subject to adjustment as provided below.  The term "Warrant" as used herein shall include this Warrant and any warrants delivered in substitution or exchange therefor as provided herein.

Term of Warrant.  Subject to the terms and conditions set forth herein, this Warrant shall be exercisable, in whole during the term commencing on the Warrant Issue Date and ending at 5:00 p.m., Pacific Standard Time, on March 19, 2005 (the "Expiration Date"), and shall be void thereafter.

Exercise Price.  The Exercise Price at which this Warrant may be exercised shall be $1.15 per Share, as adjusted from time to time pursuant to Section 12 hereof. 

Exercise of Warrant.

Cash Exercise.  The purchase rights represented by this Warrant are exercisable by the Holder in whole; such number being subject to adjustment as provided in Section 12 below), at any time, on or prior to the Expiration Date, by the surrender of this Warrant and the Notice of Exercise duly completed and executed on behalf of the Holder, at the office of the Company (or such other office or agency of the Company as it may designate by notice in writing to the Holder at the address of the Holder appearing on the books of the Company), upon payment (i) in cash or by check acceptable to the Company, (ii) by cancellation by the Holder of indebtedness of the Company to the Holder, or (iii) by a combination of (i) and (ii), of the aggregate Exercise Price of the Shares to be purchased.

Net Exercise Election.  In lieu of exercising this Warrant by paying the Exercise Price in cash, by check or by cancellation of indebtedness, the Holder may elect, without payment of any additional consideration, to receive Shares equal to the value of this Warrant or any portion thereof by surrender of this Warrant at the principal office of the Company ("Net Exercise"), together with notice of such election, in which event the Company shall issue to the Holder such number of Shares as is computed using the following formula: 
X  =Y x (A-B)

A

Where:X =the number of Shares to be issued to Holder.
Y =the number of Shares exercised under this Warrant for which the Net Exercise election is made pursuant to this Section 3(b).

A =the Fair Market Value of one Share.

B =the then effective Exercise Price.

For purposes of this Section 3(b), "Fair Market Value" means, as to a Share, (i) the average of the closing prices of sales on the principal securities exchange on which the Shares may at the time be listed, or (ii) if there have been no sales on such exchange on such day, the average of the highest bid and lowest asked prices on such exchange at the end of such day, or (iii) if on such day the Shares are not so listed, the average of the representative bid and ask prices quoted in the Nasdaq National Market as of 4:00 P.M., New York time, on such day, or (iv) if on any day the Shares are not quoted in the Nasdaq National Market, the average of the highest bid and lowest asked prices on such day in the domestic over-the-counter market as reported by the National Quotation Bureau, Incorporated, or any similar successor organization, in each such case averaged over the period of five (5) trading days ending two (2) days preceding the date of the net issue election or other exercise is made pursuant to this Section 3(b).  If at any time the Shares are not listed on any domestic securities exchange or quoted in the Nasdaq National Market or the domestic over-the counter market, the "Fair Market Value" shall be the fair value thereof determined by the Board of Directors of the Company in good faith upon the request of the Holder.

Automatic Net Exercise on Expiration.  To the extent this Warrant is not previously exercised as to all of the Shares subject hereto, and if the Fair Market Value of a Share is greater than the Exercise Price then in effect, this Warrant shall be deemed automatically exercised pursuant to Section 3(b) above (even if not surrendered) prior to the Expiration Date.  To the extent this Warrant or any portion hereof is deemed automatically exercised pursuant to this Section 3(c), the Company shall promptly notify the Holder of the number of Shares or other securities, if any, the Holder hereof is to receive by reason of such automatic exercise.

Certificates.  This Warrant shall be deemed to have been exercised immediately prior to the close of business on the date of its surrender for exercise as provided above, and the person entitled to receive the Shares issuable upon such exercise shall be treated for all purposes as the holder of record of such Shares as of the close of business on such date. Promptly after such date and in any event within twenty (20) days thereof, the Company at its expense shall issue and deliver to the person or persons entitled to receive the same a certificate or certificates for the number of Shares issuable upon such exercise.  In the event that this Warrant is exercised in part, the Company at its expense will execute and deliver a new Warrant of like tenor exercisable for the number of Shares for which this Warrant may then be exercised.]

No Fractional Shares or Scrip.  No fractional Shares or scrip representing fractional Shares shall be issued upon the exercise of this Warrant.  In lieu of any fractional Share to which the Holder would otherwise be entitled, the Company shall make a cash payment equal to the Exercise Price multiplied by such fraction, rounded up to the nearest cent. 

Replacement of Warrant.  On receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction, or mutilation of this Warrant and, in the case of loss, theft, or destruction, on delivery of an indemnity agreement reasonably satisfactory in form and substance to the Company or, in the case of mutilation, on surrender and cancellation of this Warrant, the Company at its expense shall execute and deliver, in lieu of this Warrant, a new warrant of like tenor and amount.

Rights of Stockholders.  Subject to Sections 9 and 11 of this Warrant, the Holder shall not be entitled to vote or receive dividends or be deemed the holder of Shares or any other securities of the Company that may at any time be issuable on the exercise of this Warrant for any purpose, nor shall anything contained herein be construed to confer upon the Holder, as such, any of the rights of a stockholder of the Company or any right to vote for the election of directors or upon any matter submitted to stockholders at any meeting thereof, or to give or withhold consent to any corporate action (whether upon any recapitalization, issuance of stock, reclassification of stock, change of par value, or change of stock to no par value, consolidation, merger, conveyance, or otherwise) or to receive notice of meetings, or to receive dividends or subscription rights or otherwise until the Warrant shall have been exercised and the Shares isssuable upon the exercise hereof shall have been issued, as provided herein.

Transfer of Warrant.

Warrant Register.  The Company will maintain a register (the "Warrant Register") containing the names and addresses of the Holder or Holders.  Any Holder of this Warrant or any portion thereof may change his address as shown on the Warrant Register by written notice to the Company of such change.  Any notice or written communication required or permitted to be given to the Holder may be delivered or given by mail to such Holder as shown on the Warrant Register and at the address shown on the Warrant Register unless the Holder has given written notice to the Company of a change of address in which case, any such notice or communication shall be delivered or given to such new address.  Until this Warrant is transferred on the Warrant Register of the Company (but in no event later than twenty (20) days following the valid assignment or transfer of such Warrant), the Company may treat the Holder as shown on the Warrant Register as the absolute owner of this Warrant for all purposes, notwithstanding any notice to the contrary.

Transferability and Nonnegotiability of Warrant.  This Warrant may not be transferred or assigned in whole or in part without compliance with all applicable federal and state securities laws by the transferor and the transferee (including the delivery of investment representation letters and legal opinions reasonably satisfactory to the Company, if such are requested by the Company).  Subject to the provisions of this Warrant with respect to compliance with the Securities Act of 1933, as amended (the "Act"), title to this Warrant may be transferred by endorsement (by the Holder executing the Assignment Form annexed hereto) and delivery in the same manner as a negotiable instrument transferable by endorsement and delivery; provided, however, that this Warrant may not be transferred in part unless such transfer is to a transferee who pursuant to such transfer receives the right to purchase at least 1,000 Shares hereunder (as adjusted pursuant to Section 12 hereof).

Assignment of Warrant Upon a Transfer.  On surrender of this Warrant for exchange, properly endorsed on the Assignment Form appended hereto as Exhibit B and subject to the provisions of this Warrant with respect to compliance with the Act and with the limitations on assignments and transfers and contained in this Section 7, the Company at its expense shall issue to or on the order of the Holder a new warrant or warrants of like tenor, in the name of the Holder or as the Holder may direct, for the number of Shares issuable upon exercise thereof.

Compliance with Securities Laws.

The Holder of this Warrant, by acceptance hereof, acknowledges that this Warrant and the Shares are being acquired solely for the Holder's own account and not as a nominee for any other party, and for investment, and that the Holder will not offer, sell, or otherwise dispose of this Warrant or any Shares except under circumstances that will not result in a violation of the Act or any state securities laws.  Upon exercise of this Warrant, the Holder shall, if requested by the Company, confirm in writing, in a form satisfactory to the Company, that the shares of Common Stock so purchased are being acquired solely for the Holder's own account and not as a nominee for any other party, for investment, and not with a view toward distribution or resale except under circumstances that will not result in a violation of the Act or any applicable state securities laws.

This Warrant and all Shares issued upon exercise of this Warrant shall be stamped or imprinted with a legend in substantially the following form (in addition to any legend required by state securities laws):
THE SECURITIES REPRESENTED HEREBY HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.  SUCH SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT.  COPIES OF THE AGREEMENT COVERING THE PURCHASE OF THESE SECURITIES AND RESTRICTING THEIR TRANSFER OR SALE MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD HEREOF TO THE SECRETARY OF THE COMPANY AT THE PRINCIPAL EXECUTIVE OFFICES OF THE COMPANY.

Notwithstanding the foregoing, this Warrant and the Shares issued upon exercise of this Warrant (in each case, a "Security") shall not be required to bear such legend upon (A) the transfer or exchange of such Security in the event that, at the time of such transfer or exchange, (i) a registration statement which covers such Security shall have been declared effective and such Security shall have been disposed of pursuant to the Registration Statement or (ii) such Security shall have been sold in compliance with Rule 144 (or any similar provision then in force) under the Act in such a manner that resale of such Security will not require registration under the Act; or (B) the transfer or exchange of such Security not bearing, nor otherwise required under the terms hereof to bear, such legend.  Whenever the requirements regarding the inclusion of legends with respect to any Security have terminated in accordance with the preceding sentence, the Holder thereof shall be entitled to receive from the Company, at the Company's expense, a new certificate representing such Security not bearing the restrictive legend set forth in this 7(d)(ii).

Reservation of Stock.  The Company covenants that until the Expiration Date, the Company shall: (a) reserve from its authorized and unissued capital stock a sufficient number of shares to provide for the issuance of the Shares upon the exercise of this Warrant, and (b) from time to time, will take all steps necessary to amend its Certificate of Incorporation (the "Certificate") to provide sufficient reserves of Shares issuable upon exercise of the Warrant.  The Company further covenants that all Shares that may be issued upon exercise of the rights represented by this Warrant and payment of the Exercise Price, all as set forth herein, will be validly issued, fully paid, non-assessable and free from all taxes, liens, and other charges in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously or otherwise specified herein).  The Company agrees that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for Shares and to distribute such other securities or property as may be issuable upon the exercise of this Warrant.

Registration Rights.  

(a)The Company shall, as promptly as reasonably practicable: 

	Prepare and file with the Securities and Exchange Commission (the "SEC") a registration statement on Form S-3 (or any successor form then available covering the issuance and resale of securities with respect to this Warrant) covering the issuance and resale of the shares of Com21 Common Stock to be issued upon exercise of this Warrant, and use commercially reasonable efforts to cause such registration statement to become effective, and, upon the request of the Holder, keep such registration statement effective for a period of up to one hundred twenty (120) days or until the distribution contemplated in the registration statement has been completed; provided, however, that (i) such 120-day period shall be extended for a period of time equal to the period the Holder refrains from selling any securities included in such registration at the request of an underwriter of Common Stock (or other securities) of the Company; and (ii) in the case of any registration of the Shares on Form S-3 which are intended to be offered on a continuous or delayed basis, such 120-day period shall be extended, if necessary, to keep the registration statement effective until all such Shares are sold, provided that Rule 415, or any successor rule under the Securities Act of 1933, as amended (the "Act"), permits an offering on a continuous or delayed basis, and provided further that applicable rules under the Act governing the obligation to file a post-effective amendment permit, in lieu of filing a post-effective amendment which (i) includes any prospectus required by Section 10(a)(3) of the Act or (ii) reflects facts or events representing a material or fundamental change in the information set forth in the registration statement, the incorporation by reference of information required to be included in (i) and (ii) above to be contained in periodic reports filed pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (the "1934 Act") in the registration statement.

	Prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection with such registration statement as may be necessary to comply with the provisions of the Act with respect to the disposition of all securities covered by such registration statement.

	Furnish to the Holder such numbers of copies of a prospectus, including a preliminary prospectus, in conformity with the requirements of the Act, and such other documents as they may reasonably request in order to facilitate the disposition of Shares owned by them.

	Provide a transfer agent and registrar for all Shares registered hereunder and a CUSIP number for all such Shares, in each case not later than the effective date of such registration.

(b)Furnish Information.  

It shall be a condition precedent to the obligations of the Company to take any action pursuant to this Section 9 with respect to the Shares of a particular selling Holder that such Holder shall furnish to the Company such information regarding itself, the Shares held by it, and the intended method of disposition of such securities as shall be required to effect the registration of such Holder's Shares.

(c)Delay of Registration.  

No Holder shall have any right to obtain or seek an injunction restraining or otherwise delaying any such registration as the result of any controversy that might arise with respect to the interpretation or implementation of this Section 9.

(d)Reports Under the 1934 Act.  

With a view to making available to the Holder the benefits of Rule 144 promulgated under the Act and any other rule or regulation of the SEC that may at any time permit a Holder to sell securities of the Company to the public without registration or pursuant to a registration on Form S-3, the Company agrees to:

	file with the SEC in a timely manner all reports and other documents required of the Company under the Act and the 1934 Act; and

	furnish to any Holder, so long as the Holder owns any Shares, forthwith upon request (i) a written statement by the Company that it has complied with the reporting requirements of SEC Rule 144, the Act and the 1934 Act (at any time after it has become subject to such reporting requirements), or that it qualifies as a registrant whose securities may be resold pursuant to Form S-3 (at any time after it so qualifies) and (ii) such other information as may be reasonably requested in availing any Holder of any rule or regulation of the SEC which permits the selling of any such securities without registration or pursuant to such form.

(e)Indemnification.  With respect to the Shares included in a registration statement under this Section 9:

	To the extent permitted by law, the Company will indemnify and hold harmless each Holder and each person who controls such Holder within the meaning of the Act or the 1934 Act, against any losses, claims, damages or liabilities (joint or several) to which they may become subject under the Act, the 1934 Act or other federal or state law, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any of the following statements, omissions or violations (collectively a "Violation"): (i) any untrue statement or alleged untrue statement of a material fact contained in such registration statement, including any preliminary prospectus or final prospectus contained therein or any amendments or supplements thereto, (ii) the omission or alleged omission to state therein a material fact required to be stated therein, or necessary to make the statements therein not misleading, or (iii) any violation or alleged violation by the Company of the Act, the 1934 Act, any state securities law or any rule or regulation promulgated under the Act, the 1934 Act or any state securities law; and the Company will pay to each such Holder or controlling person, as incurred, any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the indemnity agreement contained in this subsection 9(e)(i) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Company (which consent shall not be unreasonably withheld), nor shall the Company be liable in any such case for any such loss, claim, damage, liability or action to the extent that it arises out of or is based upon a Violation that occurs in reliance upon and in conformity with written information furnished expressly for use in connection with such registration by any such Holder or controlling person.
	To the extent permitted by law, each selling Holder will indemnify and hold harmless the Company, each of its directors, each of its officers who has signed the registration statement, each person, if any, who controls the Company within the meaning of the Act, any other Holder selling securities in such registration statement and any controlling person of any other Holder, against any losses, claims, damages or liabilities (joint or several) to which any of the foregoing persons may become subject, under the Act, the 1934 Act or other federal or state law, insofar as such losses, claims, damages or liabilities (or actions in respect thereto) arise out of or are based upon any Violation, in each case to the extent (and only to the extent) that such Violation occurs in reliance upon and in conformity with written information furnished by such Holder expressly for use in connection with such registration; and each such Holder will pay any legal or other expenses reasonably incurred by any person intended to be indemnified pursuant to this subsection 9(e)(ii), in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the indemnity agreement contained in this subsection 9(e)(ii) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Holder, which consent shall not be unreasonably withheld; provided, further, that in no event shall any indemnity under this subsection 9(e)(ii) exceed the gross proceeds from the offering received by such Holder.
	Promptly after receipt by an indemnified party under this Section 9 of notice of the commencement of any action (including any governmental action), such indemnified party will, if a claim in respect thereof is to be made against any indemnifying party under this Section 9, deliver to the indemnifying party a written notice of the commencement thereof and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume the defense thereof with counsel mutually satisfactory to the parties; provided, however, that an indemnified party (together with all other indemnified parties that may be represented without conflict by one counsel) shall have the right to retain one separate counsel, with the fees and expenses to be paid by the indemnifying party, if representation of such indemnified party by the counsel retained by the indemnifying party would be inappropriate due to actual or potential differing interests between such indemnified party and any other party represented by such counsel in such proceeding.  The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action, if prejudicial to its ability to defend such action, shall relieve such indemnifying party of any liability to the indemnified party under this Section 9, but the omission so to deliver written notice to the indemnifying party will not relieve it of any liability that it may have to any indemnified party otherwise than under this Section 9.
	If the indemnification provided for in this Section 9 is held by a court of competent jurisdiction to be unavailable to an indemnified party with respect to any loss, liability, claim, damage or expense referred to therein, then the indemnifying party, in lieu of indemnifying such indemnified party hereunder, shall contribute to the amount paid or payable by such indemnified party as a result of such loss, liability, claim, damage or expense in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and of the indemnified party on the other in connection with the statements or omissions that resulted in such loss, liability, claim, damage or expense as well as any other relevant equitable considerations.  The relative fault of the indemnifying party and of the indemnified party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission to state a material fact relates to information supplied by the indemnifying party or by the indemnified party and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.
	The obligations of the Company and Holder under this Section 9(v) shall survive the completion of any offering of Shares in a registration statement under this Section 9, and otherwise.

Notices.

Certificates of Adjustment.  Whenever the Exercise Price or number of shares purchasable hereunder shall be adjusted pursuant to Section 12 hereof, the Company shall issue a certificate signed by its Chief Financial Officer setting forth, in reasonable detail, the event requiring the adjustment, the amount of the adjustment, the method by which such adjustment was calculated and the Exercise Price and number of Shares purchasable hereunder after giving effect to such adjustment, and shall cause a copy of such certificate to be mailed (by first class mail, postage prepaid) to the Holder of this Warrant.

Notice of Certain Events.  In case

the Company shall take a record of the holders of its Shares (or other stock or securities at the time receivable upon the exercise of this Warrant) for the purpose of entitling them to receive any dividend or other distribution, or any right to subscribe for or purchase any shares of stock of any class or any other securities, or to receive any other right, or

of any capital reorganization of the Company, any reclassification of the capital stock of the Company, any consolidation or merger of the Company with or into another corporation, or any conveyance of all or substantially all of the assets of the Company to another corporation, or

of any voluntary dissolution, liquidation or winding-up of the Company,

then, and in each such case, the Company will mail or cause to be mailed to the Holder or Holders a notice specifying, as the case may be, (A) the date on which a record is to be taken for the purpose of such dividend, distribution or right, and stating the amount and character of such dividend, distribution or right, or (B) the date on which such reorganization, reclassification, consolidation, merger, conveyance, dissolution, liquidation or winding-up is to take place, and the time, if any is to be fixed, as of which the holders of record of shares of Series B Preferred Stock or Common Stock (or such stock or securities at the time receivable upon the exercise of this Warrant) shall be entitled to exchange their shares of Series B Preferred Stock or Common Stock (or such other stock or securities) for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, conveyance, dissolution, liquidation or winding-up.  Such notice shall be mailed at least 15 days prior to the date therein specified.

Notice Mechanics.  All notices and other communications required or permitted hereunder shall be in writing, shall be deemed to be given upon receipt or, if earlier, (a) five (5) days after deposit with the U.S. Postal Service or other applicable postal service, if delivered by first class mail, postage prepaid, (b) upon delivery, if delivered by hand, (c) one business day after the business day of deposit with Federal Express or similar overnight courier, freight prepaid for priority overnight delivery, or (d) one business day after the business day of facsimile transmission, if delivered by facsimile transmission with copy by first class mail, postage prepaid, and shall be addressed (i) if to the Holder, at the Holder's address as set forth on the Warrant Register, and (ii) if to the Company, at the address of its principal corporate offices (attention: Chief Financial Officer) or at such other address as a party may designate by ten days advance written notice to the other party pursuant to the provisions above.  In the event the notice requirements of this section are not complied with or waived in writing, the Company shall forthwith either cause the closing of the transaction to be postponed until such requirements have been complied with, or cancel such transaction.

Amendments.

Any term of this Warrant may be amended with the written consent of the Company and the Holder, even without the consent of the Holder.  Any amendment effected in accordance with this Section 11 shall be binding upon each holder of any of the Common Stock Warrants, each future holder of all the Warrant, and the Company; provided, however, that such amendment must apply to all such holders equally and ratably in accordance with the number of Shares issuable upon exercise of their Common Stock Warrants.  The Company shall promptly give notice to all holders of Common Stock Warrants of any amendment effected in accordance with this Section 11.

No waivers of or exceptions to any term, condition or provision of this Warrant, in any one or more instances, shall be deemed to be, or construed as, a further or continuing waiver of any such term, condition or provision. 

Adjustments.  The Exercise Price and the number of Shares purchasable hereunder are subject to adjustment from time to time as follows:

12.1Merger, Sale of Assets, Etc.  If at any time, while this Warrant, or any portion thereof, is outstanding and unexpired there shall be (i) a reorganization (other than a combination, reclassification, exchange or subdivision of shares otherwise provided for herein), (ii) a merger or consolidation of the Company with or into another corporation in which the Company is not the surviving entity, or a reverse triangular merger in which the Company is the surviving entity but the shares of the Company's capital stock outstanding immediately prior to the merger are converted by virtue of the merger into other property, whether in the form of securities, cash, or otherwise, or (iii) a sale or transfer of the Company's properties and assets as, or substantially as, an entirety to any other person, then, as a part of such reorganization, merger, consolidation, sale or transfer, lawful provision shall be made so that the holder of this Warrant shall thereafter be entitled to receive upon exercise of this Warrant, during the period specified herein and upon payment of the Exercise Price then in effect, the number of shares of stock or other securities or property of the successor corporation resulting from such reorganization, merger, consolidation, sale or transfer which a holder of the shares deliverable upon exercise of this Warrant would have been entitled to receive in such reorganization, consolidation, merger, sale or transfer had this Warrant been exercised immediately before such reorganization, merger, consolidation, sale or transfer, all subject to further adjustment as provided in this Section 12.  The foregoing provisions of this Section 12.1 shall similarly apply to successive reorganizations, consolidations, mergers, sales and transfers and to the stock or securities of any other corporation which are at the time receivable upon the exercise of this Warrant.  If the per share consideration payable to the holder hereof for shares in connection with any such transaction is in a form other than cash or marketable securities, then the value of such consideration shall be determined in good faith by the Company's Board of Directors.  In all events, appropriate adjustment (as determined in good faith by the Company's Board of Directors) shall be made in the application of the provisions of this Warrant with respect to the rights and interests of the Holder after the transaction, to the end that the provisions of this Warrant shall be applicable after that event, as near as reasonably may be, in relation to any shares or other property deliverable after that event upon exercise of this Warrant.

12.2Reclassification, etc.  If the Company at any time while this Warrant, or any portion thereof, remains outstanding and unexpired shall, by reclassification of securities or otherwise, change any of the securities as to which purchase rights under this Warrant exist into the same or a different number of securities of any other class or classes, this Warrant shall thereafter represent the right to acquire such number and kind of securities as would have been issuable as the result of such change with respect to the securities which were subject to the purchase rights under this Warrant immediately prior to such reclassification or other change and the Exercise Price therefor shall be appropriately adjusted, all subject to further adjustment as provided in Section 12.

12.3Split, Subdivision or Combination of Shares.  If the Company at any time while this Warrant, or any portion thereof, remains outstanding and unexpired shall split, subdivide or combine the securities as to which purchase rights under this Warrant exist, into a different number of securities of the same class, the Exercise Price for such securities shall be proportionately decreased in the case of a split or subdivision or proportionately increased in the case of a combination.

12.4Adjustments for Dividends in Stock or Other Securities or Property.  If while this Warrant, or any portion hereof, remains outstanding and unexpired the holders of the securities as to which purchase rights under this Warrant exist at the time shall have received, or, on or after the record date fixed for the determination of eligible stockholders, shall have become entitled to receive, without payment therefor, other or additional stock or other securities or property of the Company by way of dividend, then and in each case, this Warrant shall represent the right to acquire, in addition to the number of shares of the security receivable upon exercise of this Warrant, and without payment of any additional consideration therefor, the amount of such other or additional stock or other securities or property of the Company which such holder would hold on the date of such exercise had it been the holder of record of the security receivable upon exercise of this Warrant on the date of such distribution or such record date and had thereafter, during the period from the date of such distribution or such record date to and including the date of such exercise, retained such shares and/or all other additional stock available by it as aforesaid during such period, giving effect to all adjustments called for during such period by the provisions of this Section 12.

12.5Certificate as to Adjustments.  Upon the occurrence of each adjustment or readjustment pursuant to this Section 12, the Company at its expense shall promptly compute such adjustment or readjustment in accordance with the terms hereof and furnish to each holder of this Warrant a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based.  The Company shall, upon the written request, at any time, of any such holder, furnish or cause to be furnished to such holder a like certificate setting forth: (i) such adjustments and readjustments; (ii) the Exercise Price at the time in effect; and (iii) the number of Shares and the amount, if any, of other property which at the time would be received upon the exercise of the Warrant.

12.6No Impairment.  The Company will not, by any voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Company, but will at all times in good faith assist in the carrying out of all the provisions of this Section 12 and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the holders of this Warrant against impairment.

Representations of the Company.

	Authorization.  All corporate action on the part of the Company necessary for the authorization, execution and delivery of this Warrant, the performance of all obligations of the Company hereunder, the authorization, issuance and delivery of the Warrants and the authorization and issuance (or reservation for issuance) of the Common Stock issuable upon exercise of the Warrants has been taken or will be taken prior to the Warrant Issue Date.  The Warrant constitutes valid and legally binding obligations of the Company, enforceable in accordance with their respective terms, except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, and other laws of general application affecting enforcement of creditors' rights generally, and (ii) as limited by laws relating to the availability of specific performance, injunctive relief, or other equitable remedies. 

	Valid Issuance.  This Warrant, when issued, sold and delivered in accordance with the terms hereof for the consideration expressed herein, will be duly and validly issued and, based in part upon the representations of the Holder (and any assignee of the Holder ) contained in this Warrant, will be issued in compliance with applicable federal and state securities laws.

Representations of the Holder.

(a)Holder has full capacity, power and authority to enter into and perform its obligations under this Warrant, and all action necessary to authorize the execution, delivery and performance of this Warrant has been taken or will be taken prior to the Warrant Issue Date.  This Warrant when executed and delivered in accordance with its terms will constitute, valid and legally binding obligations of the Holder, enforceable in accordance with their respective terms, except as limited by (a) applicable bankruptcy, insolvency, reorganization, moratorium, and other laws of general application affecting enforcement of creditors' rights generally, (b) laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (c) state and federal securities laws with respect to rights to indemnification or contribution.

Miscellaneous.

Governing Law.  This Warrant shall be governed by and construed under the laws of the State of California, excluding that body of law relating to conflict of laws.

Counterparts.  This Warrant may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

IN WITNESS WHEREOF, Com21, Inc. has caused this Warrant to be executed by its officers thereunto duly authorized.

Dated: March 20, 2002
COM21, INC.

 

By:

George Merrick

President and Chief Executive Officer

CELESTICA INTERNATIONAL, INC.

By:

Name:

Title:

Exhibit A

NOTICE OF EXERCISE

To:  _______________

(a)The undersigned hereby elects to purchase 200,000 shares of Common Stock of Com21, Inc., pursuant to the terms of the attached Warrant, and:

(check one)

_____tenders herewith payment of the purchase price for such shares in full;

OR

_____tenders 200,000 shares of Common Stock purchasable under this Warrant pursuant to Section 3(b) of this Warrant (net-exercise).

(b)In exercising this Warrant, the undersigned hereby confirms and acknowledges that the shares of Common  Stock are being acquired solely for the account of the undersigned and not as a nominee for any other party, and for investment, and that the undersigned will not offer, sell, or otherwise dispose of any such shares of Common Stock except under circumstances that will not result in a violation of the Securities Act of 1933, as amended, or any state securities laws.

(c)Please issue a certificate or certificates representing said shares of Common Stock in the name of the undersigned or in such other name as is specified below:

	
	

	 	
[Print Name]

(d)Please issue a Warrant for the unexercised portion of the attached Warrant in the name of the undersigned or in such other name as is specified below:

	
	

	 	
[Print Name]

 

Date:

[Signature]

[Print Name]

[Title, if applicable]

Exhibit B

ASSIGNMENT FORM

FOR VALUE RECEIVED, the undersigned registered owner of this Warrant hereby sells, assigns and transfers unto the Assignee named below all of the rights of the undersigned under the within Warrant, with respect to the number of shares of Common Stock set forth below:

	
Name of Assignee
	
Address
	
No. of Shares

	 	 	 
	 	 	 
	 	 	 

and does hereby irrevocably constitute and appoint ____________________ Attorney to make such transfer on the books of Com21, Inc. maintained for the purpose, with full power of substitution in the premises.

The undersigned also represents that, by assignment hereof, the Assignee acknowledges that this Warrant and the shares of stock to be issued upon exercise hereof or conversion thereof are being acquired for investment and that the Assignee will not offer, sell or otherwise dispose of this Warrant or any shares of stock to be issued upon exercise hereof or conversion thereof except under circumstances which will not result in a violation of the Securities Act of 1933, as amended, or any state securities laws.  Further, the Assignee has acknowledged that upon exercise of this Warrant, the Assignee shall, if requested by the Company, confirm in writing, in a form satisfactory to the Company, that the shares of stock so purchased are being acquired for investment and not with a view toward distribution or resale.

DATED:  _____________________

	
	

	 	
Signature of Holder

	
	

	 	
(Witness)

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00037-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00037-of-00352.parquet"}]]