Exhibit 10.8
**Certain information omitted and filed separately with the Commission pursuant
to a confidential treatment request under Rule 24b-2 of the Commission.
LUCENT TECHNOLOGIES OEM SUPPLY AGREEMENT
LUCENT TECHNOLOGIES INC. BROADBAND TECHNOLOGIES, INC.
000 Xxxxxxxx Xxxxxx 0000 Xxxxxxx Xxxxx
Xxxxxx, Xxxx, Xxx Xxxxxx 00000 Xxxxxx, XX 00000-0000
This Agreement, which is effective on February 4, 1998 (the "Effective Date") is
by and between BroadBand Technologies, Inc. ("Company") and Lucent Technologies
Inc. ("Supplier") (collectively the "Parties").
WHEREAS, Company wishes to purchase certain Materials of Supplier's manufacture
for resale to Company's customers;
WHEREAS, Company may provide Company proprietary information and technology to
Supplier to enable the manufacture of the Materials; and
WHEREAS, Supplier desires to design, produce and sell such Materials to Company
for Company's use, including resale to customers.
NOW THEREFORE, the Parties agree as follows:
1. INTRODUCTION
1.1 ATTACHMENTS - The following Attachments are hereby made part of this
Agreement:
Attachment 1 Definitions
Attachment 2 Engineering Change Control Procedures
1.2 DEFINITIONS - The terms set out in Attachment 1 which are used in
capitalized form in this Agreement, whether in the singular and/or plural form,
shall have the meanings set forth in Attachment 1. Additionally, any term
defined in the body of this Agreement, which appears in capitalized form, and
whether in the singular and/or plural form, shall have the meaning so set out in
this Agreement.
1.3 EFFECTIVE PERIOD OF AGREEMENT - The term of this Agreement shall
commence on the Effective Date and shall, except as otherwise provided in this
Agreement, continue in effect for five (5) years.
1.4 MATERIAL - Material is hereby offered for sale by Supplier and may
be purchased by Company in accordance with the terms and conditions stated in
this Agreement. This Agreement is a non-commitment agreement and Material shall
be furnished by Supplier on an as-ordered basis. The Parties will from time to
time identify Material to be sold under this Agreement in Product Letters, which
shall identify the Materials, specifications, prices and discounts, packing and
labeling requirements,
forecast commitment periods and other specific terms regarding the Product or
component involved. A Product Letter shall not be effective until it is agreed
to in writing by both Parties. In the event of a conflict between the terms of a
Product Letter and the terms of this Agreement, the terms of the Product Letter
shall govern.
1.5 SPECIFICATIONS OR DRAWINGS - The technical specifications set out
in Product Letters (referred to herein as "Technical Specification" or
"Specification") shall govern the Material to be purchased pursuant to this
Agreement.
(a) In accordance with the notification requirements outlined in
Section 11.12, Supplier shall provide Company with at least thirty (30)
days prior written notice of any change affecting conformance with the
Technical Specifications proposed to be made by Supplier in the
Material furnished pursuant to said Technical Specification under this
Agreement. Company shall have a reasonable period of time to determine
if the Material that will incorporate the changed specifications will
comply with the original specifications for the ordered Material
(b) If Company, in its sole discretion, does not agree to the change
proposed by Supplier, then in addition to all other rights and remedies
at law or equity or otherwise, and without any cost to or liability or
obligation of Company, Company shall have the right to terminate any or
all purchase orders for Material affected by such change.
1.6 DISCONTINUANCE
(a) Supplier shall continue to supply Material to Company pursuant to
the Technical Specification for the term of the Agreement and for one
year after the expiration of this Agreement. If Supplier is unable to
continue to thus supply or discontinues manufacture of Material,
Company shall be entitled to one year's advance notice and Company
shall have the following options: (i) Company may enter into good faith
discussions with Supplier concerning continued supply of Material,
which discussions may include identification of any possible purchaser
of the product line from Supplier so that Company can pursue continued
supply from any such purchaser; (ii) the opportunity for Company to
offer to purchase the product line in the event Supplier seeks to sell;
and/or (iii) the opportunity for Company to place an end of life
purchase order for the discontinued Material, which Supplier will
accept during the notice period. "Discontinuance" includes, but is not
limited to, changes in the Form, Fit or Function of the Material.
Supplier will accept delivery schedules for such Material extending up
to six months after such end of life purchase order has been submitted.
(b) Supplier shall offer for sale to Company during the term of this
Agreement and until 5 years after the earlier of discontinuance of the
relevant Material or of expiration or termination of this Agreement,
maintenance, replacement and repair parts ("Parts") which are
functionally equivalent and
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identical in Form, Fit and Function to the Material covered by this Agreement.
The price for the Material and Parts shall be the price set forth in Supplier's
then current agreement with Company for said Material or Parts or, if no such
agreement exists, a price agreed upon by Company and Supplier. If the Parties
fail to agree on a price, the price shall be a reasonably competitive price for
said Material or Parts at the time for delivery. The Material and Parts shall be
warranted as set forth in Section 4.1.
2. ORDERS AND PAYMENT
2.1 INVOICING FOR GOODS - Supplier shall: (1) render an original
invoice, or as otherwise specified in this Agreement, which shows the order
number, through routing and weight; (2) render separate invoices for each
shipment within twenty-four (24) hours after shipment; and (3) mail invoices
with copies of bills of lading and shipping notices to the address shown on this
Agreement or the order. If prepayment of transportation charges is authorized,
Supplier shall include the transportation charges from the FOB point to the
destination as a separate item on the invoice stating the name of the carrier
used.
2.2 MARKING - All material furnished under this Agreement shall be
marked for identification purposes in accordance with the Specifications set
forth in this Agreement and as follows:
(a) with Supplier model/serial number; and (b) with month and year of
manufacture.
In addition, Supplier shall add any other identification which might be
requested by Company such as but not limited to indicia conforming to Company's
serialization plan. Charges, if any, for such additional identification marking
shall be as agreed upon by Supplier and Company. This Section does not reduce or
modify Supplier's obligations under Section 11.6.
2.3 PACKING, LABELING AND SERIALIZATION - Material purchased, repaired,
replaced or refurbished under this Agreement shall be packed, labeled and
serialized by Supplier at no additional charge in accordance with Product
Letters.
2.4 PAYMENT TERMS - Payment shall be net 30 days from the later of the
date of delivery or invoicing for the Material by Company.
2.5 PRICE AND DISCOUNTS - Prices and discounts for Material will be set
forth in Product Letters and they shall remain in effect during the term of this
Agreement or for the period specified in the applicable Product Letters.
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2.6 FORECASTS - Company shall provide Supplier with six (6) month
rolling forecasts of Material it believes it will purchase from Supplier.
However, said forecasts are only provided to assist Supplier in planning its
manufacturing activities and they do not commit or bind Company to purchase or
the Supplier to supply any Materials, or any quantity of Materials. A forecast
only becomes binding upon the Parties when a Purchase Order, as set forth below,
is forwarded by Company to Supplier and Supplier duly accepts it and the agreed
upon delivery schedule for each Purchase Order is within ninety (90) days,
except that such 90-day forecast commitment period may be altered by mutual
agreement of the Parties for particular Material described in the Product
Letters. At such time, any changes to the volume of Materials committed to by
the Parties shall be governed by Sections 2.7, 2.8 and 2.9 below.
2.7 PURCHASE ORDERS - Purchase Orders issued under this Agreement shall
be sent to the Lucent address specified on firm price quotes from Lucent to BBT
This Agreement shall incorporate the typed or written provisions on Company's
orders issued pursuant to this Agreement. Printed provisions on Company's orders
(except as specified otherwise in this Agreement), boilerplate provisions in
electronic orders and all provisions on Supplier's forms shall be deemed
deleted. Estimates or forecasts furnished by Company shall not constitute
commitments, except as otherwise set forth in this Agreement.
Purchase Orders shall specify: (a) description of Material, inclusive
of any numerical/alphabetical identification referenced in the price list in
this Agreement, (b) delivery date, (c) applicable price, (d) location to which
the Material is to be shipped and (e) location to which invoices shall be sent
for payment.
Orders consistent with the Company forecast and requesting delivery
more than ninety (90) days (or the alternate forecast commitment period
specified for particular Material in the applicable Product Letter) from the
date the order is received by Supplier will be accepted or rejected by Supplier
in writing within five (5) business days of receipt of the order. Orders
requesting delivery in less than ninety days or which exceed the forecast shall
be deemed accepted unless Supplier provides written notice to the contrary
within ten (10) business days from receipt of the order.
Company may at any time subsequent to the issuance of a Purchase Order
under this Agreement change the Purchase Order quantity at no charge in
accordance with the schedule below:
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Number of Days Prior to Allowable Increase/Decrease
Scheduled Shipment Date (% of P.O. Quantity)
0-90 (or 0-alternate forecast 0% 0%
commitment period)
91-greater (or alternate
forecast commitment
period-greater) 100% 100%
Company will make reasonable efforts to provide forecasts and purchase orders
for Material that avoid sharp increases or decreases in production.
2.8 SHIPPING - Supplier shall: (1) ship the Material covered by this
Agreement or order complete unless instructed otherwise; (2) ship to the
destination designated in the Agreement or order; (3) ship according to routing
instructions given by Company; (4) refer to this Agreement and the order number
on all subordinate documents; (5) enclose a packing memorandum with each
shipment and, when more than one package is shipped, identify the package
containing the memorandum; and (6) xxxx the Agreement and order number on all
packages and shipping papers. Adequate protective packing shall be furnished at
no additional charge. Shipping and routing instructions may be furnished or
altered by Company without a writing. All deliveries will be FOB Supplier's
factory. If Supplier does not comply with Company's written shipping or routing
instructions, Supplier authorizes Company to deduct from any invoice of Supplier
(or to charge back to Supplier), any increased costs incurred by Company as a
result of Supplier's noncompliance.
2.9 SHIPPING INTERVAL - The delivery schedule applicable to each
Purchase Order will be set forth in the Purchase Order.
If Supplier does not deliver by the delivery date specified in the
applicable Purchase Order, then in addition to all other rights and remedies at
law or equity or otherwise, and without any liability or obligation of Company,
Company shall have the right to: (a) cancel such Purchase Order following the
expiration of a five (5) business day grace period, or (b) extend such delivery
date to a later date, subject, however, to the right to cancel as in (a)
preceding if delivery is not made or performance is not completed on or before
such extended delivery date. If Company elects to extend such delivery date,
Supplier shall absorb the difference between the charges to ship normal
transportation and the charges to ship premium overnight.
If a Purchase Order is canceled by Company pursuant to the above,
Company shall have the right to retain or return any or all material received by
or paid for by Company under such purchase order. Within fifteen (15) days of
Supplier's receipt of returned material, Supplier shall reimburse Company for
the reasonable costs of shipping
5
the material returned to Supplier and for any amounts, including shipping costs,
previously paid by Company for the Material. Company shall pay for any Material
it retains at the prices set forth in the applicable Product Letters, less
applicable discounts which shall be applied on the basis of the quantity
specified in the Purchase Order.
If, during the course of this Agreement, Supplier determines that
Supplier will no longer be able to ship within the above interval, Supplier
shall immediately notify Company's buyer to that effect. Supplier shall also
notify Company's buyer, as soon as it becomes apparent, if Supplier is unable to
meet the delivery date for an order. However, nothing contained in this
paragraph shall waive Company's rights as set forth above in this Section.
2.10 TITLE AND RISK OF LOSS - Title and risk of loss and damage to
Material purchased by Company under this Agreement shall vest in Company when
the Material has been delivered at the FOB point. If this Agreement or an order
issued pursuant to this Agreement calls for additional services to be performed
after delivery, Supplier shall retain title and risk of loss and damage to the
Material until the additional services have been performed. If Supplier is
authorized to invoice Company for Material upon shipment or prior to the
performance of additional services, title to Material shall vest in Company upon
payment of the invoice, but risk of loss and damage shall pass to Company when
the additional services have been performed.
2.11 TITLE TO MATERIAL FURNISHED BY COMPANY - In the event that Company
provides components to Supplier for use in Material ("Components"), or provides
Supplier with capital equipment, such as a test facility ("Capital Goods"),
Supplier acknowledges and agrees that Company has and shall have at all times
all right, title and interest in Components or Capital Goods furnished directly
or indirectly to Supplier by Company under this Agreement. Supplier shall,
within ten (10) days of receipt of the Components or Capital Goods, notify
Company in writing of any claims for quantity variation or quality problems in
the Components or Capital Goods furnished to Supplier. Supplier assumes
responsibility for any loss or damage to such Components or Capital Goods and
shall be liable for the full and actual value of the Components or Capital
Goods. Supplier shall store the Components or Capital Goods safely, indoors in
protected areas approved by Company at Supplier's facility. If Supplier removes
all or any part of the Components or Capital Goods from one building to another,
Supplier shall continue to be responsible for loss and damage and Supplier shall
give Company at least ten (10) business days advance notice, in writing, of the
removal except when the removal is required during Supplier's manufacturing
process or to protect the Components or Capital Goods from damage or loss.
Company may inspect, inventory and authenticate the account of the
Components or Capital Goods during Supplier's normal business hours. Supplier
shall provide Company access to the premises wherein all such Components or
Capital Goods are located. The Components or Capital Goods shall be kept
segregated in an area marked "PROPERTY OF BROADBAND TECHNOLOGIES." For purposes
of this Section, the
6
term " BroadBand Technologies " shall be deemed to mean BroadBand Technologies
Inc. or the BroadBand Technologies Inc. affiliated or associated company which
owns the Components or Capital Goods, as applicable.
Supplier shall use the Components or Capital Goods only in the
manufacture of Material furnished to Company or otherwise in performing under
this Agreement.
Supplier shall not allow any security interest, lien, tax lien or other
encumbrance (collectively referred to as "Encumbrance") to be placed on any
Components or Capital Goods. Supplier shall give Company immediate written
notice should any third party attempt to place or place an Encumbrance on such
Components or Capital Goods. Supplier shall indemnify and hold Company harmless
from any such Encumbrance. Supplier shall, at Company's request, promptly
execute a "protective notice" UCC-1 form and all other documents reasonably
necessary to enable Company to protect its interest in such Components or
Capital Goods. The Parties agree that this Agreement shall constitute the
security agreement required by the UCC of the appropriate state.
The obligations assumed by Supplier with respect to the Components or
Capital Goods are for the protection of Company's property. If Supplier defaults
in carrying out Supplier's obligations under this Agreement, then, at no cost to
Company and upon five (5) working days notice to Supplier, Company may cancel
this Agreement with regard to affected Materials or withdraw all or any part of
the Components or Capital Goods, or both. Supplier shall, at Company's option,
return to Company or hold for Company's disposition any and all of such
Components or Capital Goods (including any scrap produced as a by-product) in
Supplier's possession at (a) the completion of the order, (b) expiration,
cancellation or termination of this Agreement, or (c ) the withdrawal of
Components or Capital Goods, as provided above.
3. SERVICES
3.1 SERVICES - Visits by Supplier's representatives or its suppliers'
representatives for inspection, adjustment or other similar purposes in
connection with Material purchased under this Agreement shall for all purposes
be deemed "Work under this Agreement" and shall be at no charge to Company
unless otherwise agreed in writing between the Parties.
3.2 TECHNICAL SUPPORT AND TRAINING - At the time a purchase order is
entered into by the Parties, they shall determine, negotiating in good faith,
the level and extent of technical support appropriate for the Material ordered.
However, the Parties hereby agree that the Company shall be entitled to a
mutually agreed upon level of ongoing technical support, which shall include
field service and assistance, and they further agree that the availability or
performance of this technical support service shall not be construed as altering
or affecting Supplier's obligations as set forth in Section 4.1 or elsewhere
provided for in this Agreement. Further, Supplier shall provide instructors and
the necessary instructional material to provide a mutually agreed upon level of
7
training sufficient to train Company's instructors in the installation, planning
and practices, operation, maintenance and repair of the Material.
4. WARRANTY AND LIMITATION OF LIABILITY
4.1 WARRANTY - Supplier warrants to Company and Company's customers, as
defined in this Section, that hardware, including firmware, furnished will be
new, free from defects in design, material and workmanship and will conform to
and perform in accordance with the Specifications for a period of ***********
after delivery, and that software furnished will conform to and perform in all
material respects with the Specifications for a period of ************** after
delivery; provided however, that if significant software defects are discovered,
equating to Severity Levels 1 or 2, Company may require a software fix from
Supplier for up to ***************** from delivery.
If Material furnished contains one or more manufacturer's warranties
that are assignable, Supplier hereby assigns such warranties to Company and
Customers. Supplier warrants that at the time of delivery to Company such
Material shall be free of any security interest or any other lien or any other
encumbrance whatsoever. All warranties shall survive inspection, acceptance and
payment. Different warranty periods may be specified in the applicable Product
Letters.
Defective or non-conforming Material will, at Supplier's option, either
be returned to Supplier for repair or replacement, at no cost to Company, with
risk of in-transit loss and damage borne by Supplier and freight paid by
Supplier, or be repaired or replaced by Supplier on Company's or Company's
customers' site or another site designated by Company at no cost to Company.
Unless otherwise agreed upon by Supplier and Company, Supplier shall complete
repairs and ship the repaired Material within ten (10) working days of receipt
of defective or non- conforming Material, or at Company's option, ship
replacement Material within ten (10) working days after verbal notification is
given Supplier by Company.
If Material returned to Supplier or made available to Supplier on site
for repair as provided for in this Section is determined to be beyond repair,
Supplier shall promptly so notify Company and, unless otherwise agreed to in
writing by Supplier and Company, ship replacement Material without charge within
ten (10) days of such notification.
Replacement Material shall be warranted as set forth above in Section
4.1. Any Material which is repaired, modified, or otherwise serviced by Supplier
shall be warranted as provided in this Section 4.1 for the remainder of the
warranty period (based upon the date repair, modification or other service is
completed and accepted by Company) or ninety (90) days after the Material is
returned to a customer of Company, whichever is later.
EXCEPT AS SET FORTH ABOVE, SUPPLIER DISCLAIMS ALL WARRANTIES, EXPRESS AND
IMPLIED, INCLUDING BUT NOT LIMITED TO THE IMPLIED
8
WARRANTIES OF MERCHANTABILITY AND/OR FITNESS FOR A PARTICULAR PURPOSE.
4.2 LIMITATION OF LIABILITY - NEITHER PARTY SHALL BE LIABLE FOR ANY
INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES, OR FOR LOSS OF PROFITS, REVENUE
OR DATA, WHETHER IN AN ACTION IN CONTRACT, TORT, STRICT LIABILITY, OR OTHERWISE,
EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
5. QUALITY
5.1 EPIDEMIC CONDITION - If, during the term of this Agreement and for
five years after the last shipment date of Material under this Agreement,
Company notifies Supplier that Material shows evidence of an "Epidemic
Condition," Supplier shall prepare and propose a Corrective Action Plan ("CAP")
with respect to such Material within ten (10) working days of such notification,
addressing implementation and procedure milestones for remedying such Epidemic
Condition(s). An extension of this time-frame is permissible upon mutual written
agreement of the Parties.
Upon notification of the Epidemic Condition to Supplier, Company shall
have the right to postpone all or part of the shipments of unshipped Material
exhibiting the Epidemic Condition, by giving written notice of such postponement
to Supplier, pending correction of the Epidemic Condition. Such postponement
shall temporarily relieve Supplier of its shipment liability and Company of its
shipment acceptance liability. Should Supplier not agree to the existence of an
Epidemic Condition or should Company not agree to the CAP, then Company shall
have the right to suspend all or part of its unshipped orders without liability
to Company until such time as a mutually acceptable solution is reached.
An Epidemic Condition will be considered to exist when one or more of
the following conditions occur:
(1) Failure reports or statistical samplings show that four (4) percent or
more of Material installed or four (4) percent or more of Material
shipped during any two consecutive months, or four (4) percent or more
of the Material tracked by Company's Field Quality Engineering contain
a potential safety hazard (such as personal injury or death, fire,
explosion, toxic emissions, etc.), or exhibit a highly objectionable
symptom (such as emissions of smoke, loud noises, deformation of
housing) or other disconcerting symptoms of this type.
(2) Reliability plots of relevant data indicate that the Material has
actual Mean Time Between Failures (MTBF) of less than 80% of the MTBF
stipulated in the Technical Specification. The MTBF parameter of
Material is defined as the total operating or power-on time of any
population under observation ("T"), in hours, divided by the total
number of critical failures ("n") that have occurred during the
9
observed period. A critical failure is defined as a failure to operate
per the requirements of the Technical Specification. The total
operating time of a population is the summation of operating time of
individual units in that population. MTBF is expressed as MTBF = T/n.
An Epidemic Condition shall exist when data derived from populations
being tracked confirms the condition with 80% confidence.
(3) Material Dead on Arrival (DOA) failures exceed the Epidemic DOA
failure rate which is defined as 1.2 x DOA rate specified in the applicable
Product Letter.
Only major functional and visual/mechanical/appearance defects are
considered for determining Epidemic Condition. Material can be either sampled
or, at Company's option, 100% audited at Company warehouses, factories or
Company's customers' locations. If Material is sampled, the data must have 80%
or better statistical confidence.
For the purpose of this Agreement, functional DOA shall be defined as
any Material that during the test, installation or upon its first use fails to
operate as expected or specified. Visual/mechanical/appearance DOA is defined as
any Material containing one or more major defects that would make the Material
unfit for use or installation.
An Epidemic Condition shall not include failures due to customer
misapplication, utilization of parts not approved by Supplier, or chain failures
induced by internally or externally integrated subassemblies.
In the event that Supplier develops a remedy for the defect(s) that
caused the Epidemic Condition and Company agrees in writing that the remedy is
acceptable, Supplier shall:
(a) Incorporate the remedy in the affected Material in accordance with
Company's Engineering Change Control procedures as set forth in
Attachment 2;
(b) Ship all subsequent Material incorporating the required modification
correcting the defect(s) at no additional charge to Company; and
(c) Repair and/or replace Material that caused the Epidemic Condition. In
the event that Company incurs costs due to such repair and/or
replacement, including but not limited to labor and shipping costs,
Supplier shall reimburse Company for such reasonable costs. Supplier
shall bear risk of in transit loss and damage for such repaired and/or
replaced Material.
Supplier and Company shall mutually agree in writing as to the remedy's
implementation schedule. Supplier shall use its best efforts to implement the
remedy in accordance with the agreed-upon schedule.
10
If Supplier is unable to develop a mutually agreeable remedy, or does
not adequately take into account the business interests of Company, as
reasonably agreed by the Parties, Company may (1) develop and implement such
remedy and, in such case, reasonable implementation costs and risk of in-transit
loss and damage shall be allocated between the Parties as set forth in this
Section, and/or (2) cancel postponed orders without liability and return all
Material affected by such Epidemic Condition for full refund, payable by
Supplier within thirty (30) days after receipt of returned Material (with risk
of loss or in-transit damage borne by Supplier).
5.2 INSPECTION, ACCEPTANCE TESTING, AND QUALITY CONTROL STANDARDS
(a) Ongoing Inspection and Testing. All Material shall be subject, at either
Supplier's manufacturing facility or at Company premises, to further inspection,
acceptance testing, and review for conformance to ongoing quality control
standards as may be established in the Specifications.
(b) Acceptance Inspection and Acceptance Testing. All Material shall be subject
to acceptance inspection and testing by Company, at Company's election, on
Supplier's premises, during normal business hours and following a reasonable
notice to Supplier, on Company's premises, or at a location selected by Company
(including the premises of any customer of Company). When conducted on
Supplier's premises by Supplier, copies of all documents prepared by Supplier
indicating the results of such inspection and testing shall be provided to
Company at Company's request. Inspection and testing at Company's facilities or
locations designated by Company shall be commenced for Material within a period
of not more than thirty (30) days after delivery thereof. Company's failure to
notify Supplier of a defect within such thirty-day period shall be deemed to
constitute acceptance. The inspection and testing shall be in accordance with
the quality control procedures and tests agreed upon by the Parties.
(c ) Facility Surveys. Company reserves the right to review, during regular
business hours and following reasonable notice to Supplier, Supplier's physical
facilities and Supplier's quality control procedures, both prior to first
Material deliveries and periodically thereafter, in order to assure compliance
with the Specifications and other standard industry practices and procedures.
Supplier shall maintain quality control procedures mutually agreed upon by
Company and Supplier as a result of such facility survey. In the event that
Company determines in good faith, during any facilities survey, that Supplier's
procedure is insufficient to insure consistent acceptable quality, Company shall
so advise Supplier, specifying the deficiency Company believes exists and
reasonable proposals for correction. In the event that Supplier shall fail to
effect the suggested correction or reasonably satisfy Company as to the lack of
need for such correction within thirty (30) days, Company may terminate this
Agreement with regard to affected Materials and cancel all then-outstanding
Purchase Orders for Materials without liability or consequence.
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(d) Acceptance Testing Results. Company shall provide notification to Supplier
upon completion of acceptance testing setting forth the specific date of
acceptance or rejection of Material included in the notification. If any
Material is rejected, Supplier shall thereafter proceed forthwith to correct the
defects indicated by Company, either by repairing the defective Material at the
point of delivery or within Supplier's facility, if possible, or by supplying a
new Material. The cost associated with any such repair or replacement, including
transportation charges for return to Supplier and subsequent return to Company,
shall be borne by Supplier. The transportation costs will be borne by Company if
it is determined that the Material was improperly rejected. Material for which
acceptance tests are not completed within thirty (30) days after delivery to the
FOB point shall be deemed to have been accepted by Company as of such time.
(e) Failure to Meet Minimum Standards. If, during either qualification or
acceptance testing, Company determines that the Materials are not defect-free or
cannot comply with minimum quality standards or as otherwise established between
the Parties, this Agreement may be terminated with respect to such Materials at
Company's option and Company may cancel without liability or consequence any
Purchase Order previously issued.
(f) Supplier Personnel. Supplier shall provide, at Company's request and at
locations selected by Company, and at no charge to Company, technically
competent personnel of Supplier, chosen by Supplier, to assist in the
identification and resolution of any performance problems which may jeopardize
the progress of the first installation of Material. Supplier shall also provide,
at Company's request, any performance information available from any source
which could aid Company in evaluation of Material performance.
(g) No Waiver of Warranty. In no event shall the inspection, qualification, and
acceptance of any Material, or the payment for any such Material by Company, in
any way impair or reduce Company's rights under Section 4.1 of this Agreement,
or Company's rights to further inspection or testing.
5.3 QUALITY -
(A) Supplier commits to attaining and maintaining "acceptable " ratings
(or equivalent) on all quality system elements per a Quality System Audit (QSA)
as periodically performed by Company.
(B) Supplier commits to ensure that all Supplier manufacturing and
design operations which contribute to the design, development, production, and
service of material are ISO 9001 and 9002.
(C) Supplier commits to establish an end of the line Quality Assurance
audit on Material by a date set forth in the relevant Product Letters. The focus
of this audit shall be to replicate user application of Material as specified by
Company's customer. Test and examination of material under the quality audit
shall be at a system level, and shall
12
include but is not limited to a system for continuous monitoring of all primary
and ancillary product functions and fault detection of the Material while under
this test.
Supplier shall continuously review customer return data to ensure that
the scope of the product quality audit function includes the
requirement(s)/condition(s) under which the return failed. Supplier shall
perform a detailed failure mode analysis of all Material found defective through
the end of the line product quality audit in line with the requirements and
process outlined in paragraph E below.
(D) Supplier commits to establishing a program of tracking return
rates. Material which has been in operation for any period of time up to, and
including, one full year shall be considered part of this tracking program. For
the purpose of this Article, the term "circuit pack" shall be used to define the
lowest replaceable unit of Material supplied to Company.
For the purpose of calculating the return rate, the population shall be
all circuit packs shipped during a quarter. The returns shall be those circuit
packs shipped during the quarter that are returned/received during the time
period beginning three (3) months after the end of the quarter being measured,
and ending after fifteen (15) months following said quarter.
All returns will be included in the calculation of the return rate
including, but not limited to, failures, no trouble founds and recalls. The
return rate is to be calculated using the following equation:
10,000 x returns (from Qtr. pop.) during months 3-15 post target Qtr.
---------------------------------------------------------------------
Population of target Qtr.
This calculation shall be made for product manufactured during each fiscal
quarter of this Agreement.
Supplier shall measure and report return rates on a quarterly basis to
Company, and comply with the return rate requirement in accordance with the
following schedule:
Manufactured Return Rate Annual
Date Requirement Measurement Due
-----------------------------------------------------------
Jan.-Dec. ********* April
The Annual Measurement will be the summation of the number of returns received
during the defined time period of each quarter of the year divided by the
summation of the populations of each quarter times ten thousand.
(E) Supplier commits to establishing a system for tracking and
analyzing all Material returned by Company to it, as well as any Material
failures which occur through Company's end of the line Quality Assurance audit.
For all Material in the above two
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categories, Supplier shall perform a failure mode analysis, which at a minimum
will be down to the component level. Component level failure modes will be
recorded and failed components found defective will be accumulated for the
purpose of determining repetitive occurrences.
Material shall be considered defective if it fails to meet the warranty
Specifications under this Agreement (including performance and appearance
Specifications) or if during testing, installation or use, the material fails to
operate as expected or specified.
Supplier shall continuously monitor, and analyze, data on material
returned by Company to it, as well as Material found through the end of the line
Quality Assurance Audit, for the purpose of determining: (a) return rates in
excess of expectations as outlined in paragraph (D) of this Article; or (b)
repetitive occurrences of the same component level problem. Supplier shall
provide to Company on a quarterly basis, written summary reports of said
analysis.
If Supplier determines instances where Material return rate is in
excess of the requirements as outlined in paragraph (D) , then Supplier shall
provide a written Corrective Action Report to Company, explaining in detail the
nature of the problem detected, and the step(s) Supplier proposes to correct the
problem. This completed report is to be provided to Company no later than thirty
(30) days following the occurrence or detection of the condition which required
the corrective action.
As part of the plan to correct the problem, it is agreed that Supplier
shall:
a) Incorporate the remedy in affected Material in accordance with the
change control procedures set forth in Supplier's change control
process.
b) Ship all subsequent Material incorporating the required modification
correcting the problem at no additional charge to Company; and
c) Repair and/or replace previously shipped Material that may contain
the same problem trend. In the event that Company incurs costs due to
such repair and/or replacement, including but not limited to labor and
shipping costs, Supplier shall reimburse Company for such reasonable
costs. Supplier shall bear risk of in transit loss and damage for such
repaired and/or replaced material.
Supplier and Company shall mutually agree in writing as to the
implementation schedule of the Corrective Action Plan. Supplier shall use its
best efforts to implement the plan in accordance with the agreed upon schedule.
Company shall be entitled to postpone, at no charge to Company, further
deliveries of orders until such time as the remedy is implemented consistent
with this Article.
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(F) If Supplier 1) fails to meet the customer return rate established
in paragraph (D) during any period of three months or more; or 2) fails to issue
Corrective Action Reports as required in paragraph (E); or 3) fails to implement
a correction action in a manner and time frame agreed to by Company, then
Company may, in addition to any other remedies it may have: 1) develop and
implement such remedy for already purchased Material, the reasonable cost of
which will be borne by Supplier; 2) cancel or postpone other orders without
liability and return all material affected by the problem for full refund,
payable by Supplier within thirty (30) days after receipt of returned Material
(with risk of loss or in transit damage borne by Supplier).
(G) As part of a program of continuous improvement, Supplier shall
establish annually, improvement goals for a series of key quality objectives.
These goals should include, but are not limited to: a) customer return rates as
specified in paragraph (D), b) Quality Assurance product quality audit defect
rates, and c) final system test yields. Supplier shall track these goals on a
monthly basis and to commit the resources necessary for the attainment of these
goals.
5.4 REPAIRS NOT COVERED UNDER WARRANTY - In addition to repairs
provided for in Section 4.1, Supplier shall provide repair service on all
Material ordered under this Agreement for a period of five (5) years after the
discontinuation of manufacture of Material, as set forth in Specifications.
Material to be repaired under this Section will be returned to a location
designated by Supplier, and unless otherwise agreed upon by Supplier and
Company, Supplier shall ship the repaired Material which meets the
Specifications set forth in the applicable Product Letters within fifteen (15)
days of receipt at Supplier's location.
If Material is returned to Supplier for repair as provided for in this
Section and is determined to be beyond repair, Supplier shall so notify Company.
If requested by Company, Supplier will sell to Company a replacement at the
price set forth in Supplier's then current agreement with Company for said
Material or, if no such agreement exists, at a price agreed upon by Supplier and
Company. If the Parties fail to agree on a price, the price shall be a
reasonably competitive price for such Material at the time for delivery.
Further, if requested by Company, Supplier shall take the necessary steps to
dispose of the unrepairable Material and pay to Company the salvage value, if
any.
Replacement and repaired Material shall be warranted as set forth in
Section 4.1.
This Agreement does not grant Supplier an exclusive privilege to repair
any or all of the Material purchased under this Agreement for which Company may
require repair; and Company may perform the repairs or contract with others for
these services. In addition, Supplier authorizes Company and any qualified
repairer with whom Company may contract to perform repairs on all Material
purchased under this Agreement.
All transportation costs and in transit risk of loss and damage to
Material returned to Supplier for repair under this Section will be borne by
Company and all transportation
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costs of and in transit risk of loss and damage to such repaired or replacement
Material returned to Company will be borne by Company.
5.5 REPAIR PROCEDURES - Company shall furnish the following information
with Material returned to Supplier for repair: (a) Company's name and complete
address; (b) name(s) and telephone numbers(s) of Company's employee(s) to
contact in case of questions about the Material to be repaired; (c) ship-to
address for return of repaired Material if different than (a); (d) a complete
list of Material returned; (e) the nature of the defect or failure if known; and
(f) whether or not returned Material is in warranty. Supplier shall, within ten
(10) days of the execution of this Agreement, provide a written notice to
Company specifying (i) the name(s) and telephone number(s) of the individual(s)
to be contacted concerning any questions that may arise concerning repair, and
(ii) if required, any special packing of Material which might be necessary to
provide adequate in-transit protection from transportation damage.
Material repaired by Supplier shall have the repair completion date
stenciled or otherwise identified in a permanent manner at a readily visible
location on the Material and the repaired Material shall be returned with a tag
or other papers describing the repairs which have been made.
All invoices originated by Supplier for repair services must be clearly
identified as such, and must contain: (1) a reference to Company's purchase
order for these repair services, (2) a detailed description of repairs made by
Supplier and the need therefor, and (3) an itemized listing of parts and labor
charges, if any. Replaced parts will, upon request, be available for inspection
by or returned to Company. Further, the provisions of Sections 2.1 (Invoicing)
and 2.8 (Shipping), other than provisions relating to transportation charges
with respect to Material repaired under warranty, shall apply to Supplier's
return to Company of repaired Material.
5.6 RIGHT OF ENTRY - Each Party shall have the right to enter the
premises of the other party during normal business hours with respect to the
performance of this Agreement including an inspection or a Quality Review,
subject to all plant rules and regulations, clearances, security regulations and
procedures as applicable. Each party shall provide safe and proper facilities
for such purpose.
5.7 VARIATION IN QUANTITY - Company assumes no liability for Material
produced, processed or shipped in excess of the amount specified in this
Agreement or in an order issued pursuant to this Agreement.
6. TERMINATION
6.1 BANKRUPTCY AND TERMINATION FOR FINANCIAL INSECURITY If a proceeding is
commenced under any provision of the United States Bankruptcy Code, voluntary or
involuntary, by or against either Party, and this Agreement has not been
16
terminated, the non-debtor party may file a request with the bankruptcy court to
have the court set a date within sixty (60) days after the commencement of the
case, by which the debtor party will assume or reject this Agreement, and the
debtor party shall cooperate and take whatever steps are necessary to assume or
reject the Agreement by such date. If a bankruptcy proceeding results in a
Change In Control, the provisions in this Agreement pertaining to Change In
Control shall govern.
6.2 TERMINATION FOR CHANGE IN CONTROL - In the event of a Change in
Control of Company or a reasonable expectation of a Change in Control of
Company, Company shall provide notice to Supplier of such actual or expected
Change in Control event within ten (10) business days of the knowledge or
reasonable expectation of the Change in Control event. Upon the effective date
of a Change in Control, Supplier shall have the right to terminate this
Agreement by giving Company written notice of its intention to terminate at
least ninety (90) days prior to the termination date specified in the
termination notice. The Parties understand and agree that if Supplier elects to
exercise its right to terminate, then such termination shall apply on a going
forward basis, but shall not apply to past purchase orders that are completed or
to current purchase orders that are firm and binding commitments of Company.
6.3 MATERIAL DEFAULT - If Supplier shall be in Material Default of any
of the terms, conditions or covenants of this Agreement or of any purchase
order, then, in addition to all other rights and remedies which Company may have
at law or equity or otherwise, Company shall have the right to cancel any
purchase orders placed by Company with regard to affected Material without any
charge to or obligation or liability of Company.
7. INTELLECTUAL PROPERTY
7.1 Any purchase or sale of Materials under this Agreement, does not
transfer ownership rights in the underlying intellectual property of Supplier
which may be embodied in such Materials. Portions of the Materials that are
normally licensed (not sold) by Supplier will be provided to Company's end-users
pursuant to a sub-license consistent with the terms of Supplier's standard
end-user license and which identifies Company's licensors as third party
beneficiaries under such sub-license. Supplier grants to Company a license to
use and distribute firmware included or provided by Supplier in the Material,
solely for the purpose of marketing, distribution and support by Company of the
Materials purchased by Company under this Agreement.
7.2 CONFIDENTIALITY - All Information ("Information" means proprietary
specifications, designs, plans, drawings, software, data, prototypes or other
business and /or technical information) provided by either Party to the other
under this Agreement shall be held in confidence by the receiving Party; shall
be used only for the purpose of performing acts and obligations required by this
Agreement; shall be reproduced only to
17
the extent necessary for that purpose; and shall not be disclosed by the
receiving Party without the prior written approval of the disclosing Party. The
receiving Party may, however, disclose the Information to its employees,
consultants and contractors with a need to know; provided, that the receiving
Party binds those employees, consultants and contractors to terms at least as
restrictive as those stated herein, advises those employees, consultants and
contractors of their confidentiality obligations, and indemnifies the disclosing
Party for any breach of those obligations. Information shall be subject to the
restrictions in this section if it is in writing or other tangible form, only if
clearly marked as proprietary when disclosed to the receiving Party; or, if not
in tangible form, is of a nature that a reasonable person would conclude is
confidential Information, and the Information is reduced to writing clearly
marked as proprietary, with a copy of the writing being furnished to the
receiving Party within thirty (30) days of the disclosure of the intangible
information, and with the writing containing a notice that the information was
previously provided in intangible form. These restrictions on the use or
disclosure of Information shall not apply to any Information: (i) which is
independently developed by or for the receiving Party; (ii) which is lawfully
received free of restriction from another source; (iii) after it has become
generally available to the public without breach of this Agreement by the
receiving party; (iv) which at the time of disclosure to the receiving Party was
known to that Party free of restriction as evidenced by documentation in that
Party's possession; (v) which the disclosing Party agrees in writing is free of
such restrictions; or (vi) which the receiving Party is required to disclose
under applicable laws, rules and regulations, provided that the receiving Party
shall first notify the disclosing Party of such required disclosure and afford
the disclosing party the opportunity to seek a protective order relating to such
disclosure. All Information shall remain the property of the disclosing Party
and shall be returned upon written request or upon the receiving Party's
determination that it no longer has a need for such Information. The receiving
Party may retain one copy of all written materials returned to provide an
archive record of the disclosure.
7.3 INFRINGEMENT - Supplier shall indemnify and save harmless Company,
its affiliates and their customers, officers, directors, and employees (all
referred to in this Section as "Company") from and against any losses, damages,
liabilities, fines, penalties, and expenses (including reasonable attorneys'
fees) that arise out of or result from any and all claims (1) of infringement of
any patent, copyright, trademark or trade secret right, or other intellectual
property right, private right, or any other proprietary or personal interest,
and (2) related by circumstances to the existence of this Agreement or
performance under or in contemplation of it (an "Infringement Claim"). If the
Infringement Claim arises solely from Supplier's adherence to Company's written
instructions regarding services or tangible or intangible goods provided by
Supplier ("Items") and if the Items are not (1) commercial items available on
the open market or the same as such items, or (2) items of Supplier's designated
origin, design or selection, Company shall indemnify Supplier. Company shall
notify Supplier promptly upon learning of such claim and Supplier shall have the
right to defend the claim. Supplier shall not be liable for any settlement made
without Supplier's written approval. Supplier (at Company's request) shall
defend or settle, at its own expense any demand, action or
18
suit on any Infringement Claim for which it is indemnitor under the preceding
provisions and each shall timely notify the other of any assertion against it of
any Infringement Claim and shall cooperate in good faith with the other to
facilitate the defense of any such Infringement Claim.
8. ENVIRONMENTAL
8.1 HEAVY METALS AND/OR CFC IN PACKAGING - Supplier warrants to Company
that no lead, cadmium, mercury or hexavalent chromium have been intentionally
added to any packaging or packaging component (as defined under applicable laws)
to be provided to Company under this Agreement and that packaging materials were
not manufactured using and do not contain chlorofluorocarbons. Supplier further
warrants to Company that the sum of the concentration levels of lead, cadmium,
mercury and hexavalent chromium in the package or packaging component provided
to Company under this Agreement does not exceed 100 parts per million. Upon
request, Supplier shall provide to Company Certificates of Compliance certifying
that the packaging and/or packaging components provided under this Agreement are
in compliance with the requirements set forth above in this Section.
8.2 OZONE DEPLETING CHEMICALS - Supplier hereby warrants that it is
aware of international agreements and pending legislation in several nations,
including the United States, which would limit, ban and/or tax importation of
any product containing, or produced using ozone depleting chemicals ("ODCs"),
including chloroflurocarbons, halons and certain chlorinated solvents. Supplier
hereby warrants that the material furnished to Company will conform to all
applicable requirements established pursuant to such agreements, legislation and
regulations, and the material furnished to Company will be able to be imported
and used lawfully (and without additional taxes associated with ODCs not
reported to Company by Supplier as set forth in this Section) under all such
agreements, legislation and requirements. Supplier also warrants that it is
currently reducing, or if Supplier is not the manufacturer of the material, is
currently causing the manufacturing vendor to reduce and will, in an expeditious
manner, eliminate, or, as applicable, have its manufacturing vendor eliminate
the use of ODCs in the manufacture of the material.
8.3 OZONE DEPLETING SUBSTANCES LABELING - Supplier warrants and
certifies that all products, including packaging and packaging components,
provided to Company under this Agreement have been accurately labeled, in
accordance with the requirements of 40 CFR Part 82 entitled "Protection of
Stratospheric Ozone, Subpart E - The Labeling of Products Using Ozone Depleting
Substances."
If the material furnished by Supplier under this Agreement is manufactured
outside the United States, Supplier shall, upon execution of this Agreement, and
at any time that new products are added to this Agreement or changes are made to
the material furnished under this Agreement, complete, sign and return to
Company an ODC Content Certification.
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The ODC Content Certification must be signed by Supplier's facility manager,
corporate officer or his delegate.
The term "ODC content" on the ODC Content Certification means the total pounds
of ODC used directly in the manufacture of each unit of material. This includes
all ODCs used in the manufacturing and assembly operations for the material plus
all ODCs used by Supplier's vendors and any other vendors in producing
components or other products incorporated into the material sold to Company.
Supplier is responsible to obtain information on the ODC content of all
components and other products acquired to manufacture the material and to
incorporate such information into the total ODC content reported to Company;
provided however, that Supplier should not include in the ODC content those
components or other products which are manufactured in the United States.
Supplier hereby warrants to Company that all information furnished by Supplier
on the ODC Content Certification is complete and accurate and that Company may
rely on such information for any purpose, including but not limited to providing
reports to government agencies or otherwise complying with applicable laws.
Supplier shall defend, indemnify and hold Company harmless of and from any
claims, demands, suits, judgments, liabilities, fines, penalties, costs and
expenses (including additional ODC taxes as provided for in paragraph one of
this Section and reasonable attorney's fees) which Company may incur under any
applicable federal, state, or local laws or international agreements, and any
and all amendments thereto by reason of Company's use of reliance on the
information furnished to Company by Supplier on the ODC Content Certification or
by reason of Supplier's breach of this Section. Supplier shall cooperate with
Company in responding to any inquiry concerning the use of ODCs to manufacture
the material or components thereof and to execute without additional charge any
documents reasonably required to certify the absence or quantity of ODCs used to
manufacture the material or components thereof.
8.4 TOXIC SUBSTANCES AND PRODUCT HAZARDS - Supplier hereby warrants to
Company that, except as expressly stated elsewhere in this Agreement, all
material furnished by Supplier as described in this Agreement is safe for its
foreseeable use, is not defined as a hazardous or toxic substance or material
under applicable federal, state or local law, ordinance, rule, regulation or
order (hereinafter collectively referred to as "law" or "laws"), and presents no
abnormal hazards to persons or the environment. Supplier also warrants that it
has no knowledge of any federal, state or local law, that prohibits the disposal
of the material as normal refuse without special precautions except as expressly
stated elsewhere in this Agreement. Supplier also warrants that where required
by law, all material furnished by Supplier is either on the EPA Chemical
Inventory compiled under Section 8 (a) of the Toxic Substance Control Act, or is
the subject of an EPA-approved pre manufacture notice under 40 CFR Part 720.
Supplier further warrants that all material furnished by Supplier complies with
all use restrictions, labeling requirements and all other health and safety
requirements imposed under federal, state, or local laws. Supplier further
warrants that, where required by law, it shall provide to Company, prior to
delivery of the material, a Material Safety Data Sheet which
20
complies with the requirements of the Occupational Safety and Health Act of 1970
and all rules and regulations promulgated thereunder.
Supplier shall defend, indemnify and hold Company harmless for any
expenses (including, but not limited to, the cost of substitute material, less
accumulated depreciation) that Company may incur by reason of the recall or
prohibition against continued use or disposal of material furnished by Supplier
as described in its Agreement whether such recall or prohibition is directed by
Supplier or occurs under compulsion of law. Company shall cooperate with
Supplier to facilitate and minimize the expense of any recall or prohibition
against use or disposal of material directed by Supplier or under compulsion of
law.
Supplier further shall defend, indemnify and hold Company harmless of
and from any claims, demands, suits, judgments, liabilities, costs and expenses
(including reasonable attorney's fees) which Company may incur under any
applicable federal, state or local laws, and any and all amendments thereto,
including but not limited to the Comprehensive Environmental Response,
Compensation and Liability Act of 1980; the Consumer Product Safety Act of 1972;
the Toxic Substance Control Act; Fungicide, Rodenticide Act; the Occupational
Safety and Health Act; and the Atomic Energy Act; and any and all amendments to
all applicable federal, state, or local laws, by reason of Company's
acquisition, use, distribution or disposal of material furnished by Supplier
under this Agreement.
9. IMPORT/EXPORT
9.1 COMPLIANCE WITH UNITED STATES CUSTOMS LAWS AND REGULATIONS -
Supplier shall ensure that its activities in performance of this Agreement shall
not put Company in violation of any United States Customs laws, statutes, or
regulations. Supplier agrees to assist Company in every way necessary to ensure
that Company can import the material into the United States in accordance with
all applicable customs laws, statutes, and regulations, and in support of this
assistance, Supplier agrees to follow Company's directives, if any, which may be
attached to and made part of this Agreement.
9.2 EXPORT CONTROL - Company will not use, distribute, transfer or
transmit any products, software or technical information (even if incorporated
into other products) provided under this Agreement except in compliance with
U.S. export laws and regulations (the "Export Laws"). Company will not, directly
or indirectly, export or re-export the following items to any country which is
in the then current list of prohibited countries specified in the applicable
Export Laws: (a) software or technical data disclosed or provided to Company by
Company or Company's subsidiaries or affiliates; or (b) the direct product of
such software or technical data. Company agrees to promptly inform Company in
writing of any written authorization issued by the U.S. Department of Commerce
office of export licensing to export or re-export any such items referenced in
21
(a) or (b). The obligations stated above in this Section will survive the
expiration, cancellation or termination of this Agreement or any other related
agreement.
10. DISPUTES
10.1 DISPUTE RESOLUTION -
(a) The following procedures shall apply to any dispute or disagreement between
the Parties or any of their Related Parties arising out of this Agreement.
(b) First:
(i) either Party may give written notification of such dispute
or disagreement to the other Party and
(ii) the Parties shall communicate with each other promptly
with a view to resolving such dispute or disagreement within 21 days
(or such extended period as the Parties agree is appropriate in any
case) after such written notification is given.
(c) The giving of any notice regarding any dispute or disagreement
under this Section 10.1 shall toll the running of all applicable statutes of
limitation until the later of (i) 90 days following the giving of such notice or
(ii) 30 days following the termination of discussions between the Parties
concerning such dispute or disagreement.
(d) Second, if at the end of the 21 day period referenced in Section
10.1(b) (as it may be extended) such dispute or disagreement has not been
resolved to the satisfaction of both parties, either Party may request in
writing that such dispute or disagreement be the subject of non-binding
mediation. Following such request, the Parties shall endeavor in good faith
promptly to identify a single person (who shall be a person with experience and
good reputation) who shall assist the Parties in discussing such dispute or
disagreement and in attempting to reach a mutually acceptable business
resolution. Such mediation process shall terminate not later than 30 days
following the request therefor (or such extended or shorter period as the
Parties agree is appropriate). All applicable statutes of limitation shall be
tolled during the period of mediation.
(e) Third, if at the end of the 30 day period referenced in Section
10.1(d) (as it may be extended or shortened) such dispute or disagreement has
not been resolved to the satisfaction of both parties, either Party (the
"complainant") may commence binding arbitration by giving the other Party (the
"respondent") notice in writing (the "initiating notice") setting forth in
reasonable detail the nature of its claim and the relief requested stating that
the complainant is invoking the procedures set forth in this Section 10.1(e) and
(f) and naming the complainant's representative on the Arbitration Panel (as
defined below). Within 21 days of receipt of an initiating notice, the
respondent shall give the complainant notice in writing (the "response") setting
forth in reasonable detail: (1) the basis of its response to the claim; (2) the
nature of any counterclaim it has against the complainant arising from the same
set of facts and circumstances that gave rise to the original claim; (3) any
other counterclaim that Party wishes to bring at that time (although the Party
has no obligation to bring such counterclaims at that time); (4) the relief
requested; and (5) naming the respondent's representative on the Arbitration
Panel. The two representatives shall select a third person who is mutually
acceptable to them. If the representatives fail to make such selection within 21
days, the complainant and the respondent shall each replace its representative
with a new representative and the
22
new representatives shall be subject to the preceding sentence and this
sentence. Once a third person is selected, such person together with the
representatives of the complainant and the respondent shall form the Arbitration
Panel. The date upon which the Arbitration Panel is formed shall be the
"Commencement Date".
(f) The Arbitration Panel shall conduct proceedings to determine the
merits under applicable law of the claims set forth in the initiating notice and
the response. The proceedings shall be administered by JAMS/Endispute in
accordance with its Comprehensive Arbitration Rules and Procedures in effect as
of the Effective Date, subject to the following additional rules:
(i) the proceedings shall take place in New York City;
(ii) the Arbitration Panel (including, if necessary, any
replacement(s) to the Arbitration Panel) shall be selected as set forth
in Section 10.1(e);
(iii) the available relief shall include damages, injunctive
relief and equitable relief to the extent allowed under the applicable
law, this Agreement and any other agreement between the parties;
(iv) the parties shall attempt in good faith promptly to
agree on the nature and extent of any discovery in connection with the
arbitration, provided that, in the absence of such agreement, discovery
shall be governed by JAMS/Endispute's Comprehensive Arbitration Rules
and Procedures. In addition, the applicable law with respect to
privilege and other protections from disclosure, including the work
product doctrine, shall apply;
(v) the final decision of the Arbitration Panel (the "Award")
shall be issued within six months of the Commencement Date (the date of
issuance of the Award being the "Award Date") and must be joined by at
least two members of the Arbitration Panel;
(vi) each party to the proceedings shall pay its own costs in
connection with the proceedings, including the costs and expenses of
its representative on the Arbitration Panel, and the parties shall
share equally the other costs of the proceedings, including the fees of
the third member of the Arbitration Panel, except that the prevailing
party shall be entitled to recover its attorneys' fees incurred in
prosecution thereof.
(g) In accordance with the Federal Arbitration Act, 9 U.S.C.
ss.1 ET SEQ., the Award shall be final and binding and judgment thereon
may be entered by any state or federal court having jurisdiction
thereof.
(h) Nothing in this Section 10.1 shall be construed to
preclude either party from seeking injunctive relief in a court of
competent jurisdiction to prevent imminent irreparable harm. The
dispute resolution procedures set forth herein shall be stayed pending
disposition of any application for such relief. The Parties agree that
a court of competent jurisdiction may consider the merits of any claim
that is subject to the dispute resolution procedures set forth herein
to the extent necessary to resolve any permissible application for
injunctive relief.
11. MISCELLANEOUS
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11.1 ASSIGNMENT - BBT shall not assign any right or interest under this
Agreement (excepting solely for moneys due or to become due) without the prior
written consent of Lucent. Subject to Lucent's right to terminate upon the
occurrence of a Change in Control, a merger or consolidation shall not be deemed
to be an assignment. BBT will provide Lucent with written notice of a merger or
consolidation within ten (10) business days after having knowledge or reasonable
expectation of the merger or consolidation.
11.2 CHOICE OF LAW - This Agreement and all transactions under it shall
be governed by the laws of the State of New Jersey excluding its choice of laws
rules . Each Party agrees to submit to the jurisdiction of any court in the
United States wherein an action is commenced against the other Party based on a
claim for which the first Party has agreed to indemnify the other Party under
this Agreement.
11.3 COMPLIANCE WITH LAWS - Supplier and all persons furnished by
Supplier shall comply at their own expense with all applicable laws, ordinances,
regulations and codes, including the identification and procurement of required
permits, certificates, licenses, insurance, approvals and inspections in
performance under this Agreement.
11.4 ENTIRE AGREEMENT - This Agreement shall constitute the entire
agreement between the Parties with respect to the subject matter of this
Agreement and shall not be modified or rescinded, except by a writing signed by
Supplier and Company. The provisions of this Agreement supersede all prior or
contemporaneous oral and prior written agreements, communications and/or
understandings of the Parties with respect to the subject matter of this
Agreement.
11.5 FORCE MAJEURE - Neither party shall be held responsible for any
delay or failure in performance of any part of this Agreement to the extent such
delay or failure is caused by fire, flood, strike, civil, governmental or
military authority, act of God, or other similar causes beyond its control and
without the fault or negligence of the delayed or nonperforming party or its
subcontractors. Supplier's liability for loss or damage to Company's material in
Supplier's possession or control shall not be modified by this Section. When a
party's delay or nonperformance continues for a period of at least sixty (60)
days, the other party may terminate, at no charge, any purchase order under the
Agreement affected by such delay or nonperformance.
11.6 IDENTIFICATION - Supplier shall not, without Company's prior
written consent, engage in publicity related to this Agreement, or make public
use of any Identification in any circumstances related to this Agreement.
"Identification" means any semblance of any trade name, trademark, service xxxx,
insignia, symbol, logo, or any other designation or drawing of Lucent
Technologies or its affiliates. Supplier shall remove or obliterate any
Identification prior to any use or disposition of any material rejected or not
purchased by Company. Company recognizes that Supplier is a public company and
that it may be required to make disclosures per applicable laws or regulations.
24
11.7 IMPLEADER - Neither Party shall implead or bring an action against
the other Party based on any claim by any person for personal injury or death to
an employee of the other Party for which a Party has previously paid or is
obligated to pay worker's compensation benefits to such employee or claimant and
for which such employee or claimant could not otherwise bring legal action
against the other Party.
11.8 INDEMNITY - At one Party's request, the other Party agrees to
indemnify, defend and hold harmless the other Party, its affiliates, customers,
employees, successors and assigns (all referred to as "Party") from and against
any losses, damages, claims, fines, penalties and expenses (including reasonable
attorney's fees) that arise out of or result from: (1) injuries or death to
persons or damage to property, including theft, in any way arising out of or
caused or alleged to have been caused by the actions or omissions of one Party,
or Material provided by one Party or persons furnished by a Party; (2)
assertions under Workers' Compensation or similar acts made by persons furnished
by a Party.
11.9 INSIGNIA - Upon Company's written request, "Insignia", including
certain trademarks, trade names, insignia, symbols, decorative designs or
packaging designs of Company, or evidences of Company's inspection will be
properly affixed by Supplier to the Material furnished or its packaging. Such
Insignia will not be affixed, used or otherwise displayed on the Material
furnished or in connection therewith without written approval by Company. The
manner in which such Insignia will be affixed must be approved in writing by
Company in accordance with standards established by Company. Company shall
retain all right, title and interest in any and all packaging designs, finished
artwork and separations furnished to Supplier. This Section does not reduce or
modify Supplier's obligations under Section 11.6.
11.10 INSURANCE - Supplier shall maintain and cause Supplier's
subcontractors to maintain during the term of this Agreement: (1) Workers'
Compensation insurance as prescribed by the law of the state or nation in which
the Work is performed; (2) employer's liability insurance with limits of at
least $500,000 for each occurrence; (3) automobile liability insurance if the
use of motor vehicles is required, with limits of at least $1,000,000 combined
single limit for bodily injury and property damage per occurrence; (4)
Commercial General Liability ("CGL") insurance, ISO 1988 or later occurrence
form of insurance, including Blanket Contractual Liability and Broad Form
Property Damage, with limits of at least $1,000,000 combined single limit for
bodily injury and property damage per occurrence; and (5) if the furnishing to
Company (by sale or otherwise) of material or construction services is involved,
CGL insurance endorsed to include products liability and completed operations
coverage in the amount of $5,000,000 per occurrence. All CGL and automobile
liability insurance shall designate Company, its affiliates, and its directors,
officers and employees (all referred to in this provision as "Company") as
additional insured. All such insurance must be primary and non-contributory and
required to respond and pay prior to any other insurance or self-insurance
available. Any other coverage available to Company shall apply on an excess
25
basis. Supplier agrees that Supplier, Supplier's insurer(s) and anyone claiming
by, through, under or in Supplier's behalf shall have no claim, right of action
or right of subrogation against Company and its customers based on any loss or
liability insured against under the foregoing insurance. Supplier will furnish
Company copies of certificates of such insurance, on request. In the event that
Supplier changes insurers, Supplier will notify Company of such change.
Insurance companies providing coverage under this Agreement must be rated by A-M
Best with at least an A- rating.
11.11 NON-EXCLUSIVE MARKET RIGHTS - This Agreement neither grants to
Supplier an exclusive right or privilege to sell to Company any or all products
of the type described in the Section 1.4 which Company may require, nor requires
the purchase of any Material or other products from Supplier by Company.
Therefore, Company may, and intends to, contract with other manufacturers and
suppliers for the procurement of comparable products, and the same products to
the extent such can be done without infringing Supplier's technology rights. In
addition, Company shall, at its sole discretion, decide the extent to which
Company will market, advertise, promote, support or otherwise utilize the
Material. Purchases by Company under this Agreement shall neither restrict the
right of Company to cease purchasing nor require Company to continue any level
of such purchases.
11.12 NOTICES - Any notice or demand which under the terms of this
Agreement or under any statute must or may be given or made by Supplier or
Company shall be in writing and shall be given or made by confirmed facsimile,
or similar communication or by express mail or overnight courier addressed to
the respective Parties as follows:
26
To:Lucent Technologies Inc.
00 Xxxxxxxx Xxxx
Xxxxxxxx, Xxx Xxxxxx 00000
Attention: Access Product Management Vice President
with a copy to:
Lucent Technologies Inc.
000 Xxxx Xxxxxx Xxxx
Xxxxxx, Xxx Xxxxxx 00000
Attention: Corporate Counsel-Switching and Access
To: BroadBand Technologies, Inc.
X.X. Xxx 00000
0000 Xxxxxxx Xxxxx
Xxxxxx, Xxxxx Xxxxxxxx 00000-0000
ATTN: Chief Financial Officer
with a copy to:
Xxxxx X. Xxxxxxxx, Esq.
Xxxxxxxxxx Xxxxxxxx LLP
X.X. Xxx 000000
Xxxxxxx, Xxxxx Xxxxxxxx 00000
The effective dates of such notices shall be upon receipt. The above addresses
may be changed at any time by giving prior written notice as above provided.
11.13 PRODUCT DOCUMENTATION - Supplier shall furnish, at no charge,
product documentation, and any succeeding changes thereto, as described in the
Technical Specification. Company may use, reproduce, reformat, modify and
distribute such product documentation. Company shall reproduce Supplier's
copyright notice contained in any documentation reproduced without change by
Company. For documentation which is reformatted or modified by Company, Company
shall place Company's own copyright notice on the reformatted or modified
documentation, together with the copyright notices of Supplier and of any third
parties which appear on the original documentation. It is the intent of the
Parties that Company's copyright notice shall be interpreted to protect the
underlying copyright rights of Supplier to the documentation to the extent such
underlying rights are owned by Supplier.
11.14 SEVERABILITY - If any of the provisions of this Agreement shall
be invalid or unenforceable, such invalidity or unenforceability shall not
invalidate or render unenforceable this entire Agreement, but rather this entire
Agreement shall be construed
27
as if not containing the particular invalid or unenforceable
provision or provisions, and the rights and obligations of the Parties shall be
construed and enforced accordingly.
11.15 INDEPENDENT AGREEMENT - Breach by a Party of any other agreement
between the Parties shall not constitute a breach of this Agreement, unless the
same conduct independently breaches this Agreement. A breach of this Agreement
shall not constitute a breach of any other agreement between the Parties, unless
the same conduct independently breaches such other agreement.
11.16 RELATIONSHIP OF PARTIES - The relationship of the Parties as
established under this Agreement shall be and remain one of independent
contractors, and neither Party will at any time or in any way represent itself
as being a dealer, agent or other representative of the other Party or as having
authority to assume or create obligations or act in any manner on behalf of the
other Party. Further, it is understood and agreed that the Parties to this
Agreement are not partners or joint venturers.
11.17 SURVIVAL OF OBLIGATIONS - The obligations of the Parties under
this Agreement, which by their nature would continue beyond the termination,
cancellation or expiration of this Agreement, shall survive termination,
cancellation or expiration of this Agreement.
11.18 TAXES - Company shall reimburse Supplier only for the following
tax payments with respect to transactions under this Agreement unless Company
advises Supplier that an exemption applies: state and local sales and use taxes,
as applicable. Taxes payable by Company shall be billed as separate items on
Supplier's invoices and shall not be included in Supplier's prices. Company
shall have the right to have Supplier contest any such taxes that Company deems
improperly levied at Company's expense and subject to Company's direction and
control.
11.19 TIMELY PERFORMANCE - If Supplier has knowledge that anything
prevents or threatens to prevent the timely performance of the work under this
Agreement, Supplier shall immediately notify Company thereof and include all
relevant information concerning the delay or potential delay.
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11.20 COUNTERPARTS - This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
AGREED:
LUCENT TECHNOLOGIES INC. BROADBAND TECHNOLOGIES, INC.
By: _____________________ By:__________________________
Name ___________________ Name ________________________
(Print) (Print)
Title:____________________ Title: ________________________
Date: ____________________ Date:_________________________
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ATTACHMENT 1
LUCENT OEM SUPPLY AGREEMENT
DEFINITIONS
The following terms shall have the meanings set out below:
"Change in Control" - A Change in Control occurs upon any one of the following
circumstances or events:
(i) The stockholders of a Party ("Acquired Party") approve a transaction,
including, without limitation, a merger or consolidation (however
denominated or effectuated), with an Acquiror, including, without
limitation, a merger or consolidation, or series of transactions with the
same Acquiror ("Combination"), and immediately after such transaction(s)
less than 60% of the combined voting power of the then-outstanding
securities of the Acquired Party or the Acquiror, will be held in the
aggregate by the holders of securities entitled, immediately prior to such
Combination, to vote generally in the election of directors of the Acquired
Party ("Voting Securities");
(ii) The stockholders of the Acquired Party approve the sale or transfer of all
or substantially all of its assets to any other Person or entity, and less
than 60% of the combined voting power of the then-outstanding Voting
Securities of such Acquiror immediately after such transaction will be held
in the aggregate by the holders of the Voting Securities of the Acquired
Party immediately prior to such sale;
(iii) An Acquiror acquires in one or a series of transactions beneficial
ownership of more than 40% of the outstanding shares of Voting Securities of a
Party;
(iv) The stockholders of a Party approve a plan of complete liquidation or
dissolution of the Party;
(v) Any Acquiror obtains direct or indirect Control (as herein defined) over a
party and, in Lucent's reasonable judgment, such Control may threaten Lucent's
interests. For the purposes of this subsection, the term "Control" shall mean
the possession directly or indirectly of the power to direct or cause the
direction of the management or policies of a Party, whether through the ability
to exercise voting power, by contract or otherwise;
(vi) At any time, Continuing Directors (as herein defined) shall not constitute
at least 50% of the members of the Board ("Continuing Director" means (i) each
individual, who has been a director of the Party for at least twelve (12)
consecutive months before such time and (ii) each individual who was nominated
or elected to be a director of the Party by at least a majority of the
Continuing Directors at the time of such nomination or election); or
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(vii) Any other transaction which has the effect of causing the substantive
changes in the Acquired Party described in any of the preceding
paragraphs.
For the purposes of this Section, the term "Acquiror" shall mean one person
or entity, or two or more persons and/or entities constituting a "group"
for purposes of the Securities Exchange Act of 1934, as amended.
"Fit" shall mean physical size or mounting arrangement (E.G., electrical or
mechanical connections) as set forth in the Specifications.
"Form" shall mean physical shape as set forth in the Specifications.
"Function" shall mean product features as set forth in the Specifications.
"Material" shall mean the Products, items and projects set forth in Product
Letters to be prepared pursuant to this Agreement.
"Material Default" shall be any failure to comply with the terms and conditions
of this Agreement, any Purchase Order or any Product Letter which is or becomes
a part of this Agreement, which is not cured by the Party that has failed to
perform within 30_days after written notice of such default is given to the
defaulting Party by the non defaulting Party.
"Product" - Shall mean a product as described in the Specifications set forth in
applicable Product Letters prepared by the Parties pursuant to Section 1.4 of
this Agreement, including any and all modifications, changes and improvements
made to such Product pursuant to applicable Product Letters.
"Product Letter" shall have the meaning set forth in Section 1.4 of this
Agreement.
"Part" - Any component, subassembly or other module of a Product.
"Purchase Order" or "Order" - Any purchase order issued by Company for the
purpose of ordering Products or Parts pursuant to this Agreement.
"Related Parties" shall mean, in respect of any Party, such Party's wholly owned
subsidiaries and the respective divisions, heirs, successors and assigns of such
Party and its wholly owned subsidiaries.
"Severity Level 1" - This condition exists when the transmission system is
completely inoperative, and it is not usable by Customer. The inoperative
portion of the licensed software completely restricts the Customer's operation.
"Severity Level 2" - This condition exists when the transmission system is
partially inoperative, but it is still usable by Customer. The inoperative
portion of the licensed
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software severely restricts the Customer's operations, but has a less critical
effect than a Severity Level 1 condition.
"Specifications" - The specifications shall be set forth in the Product Letters
for specific products pursuant to Section 1.5 of this Agreement.
"Technical Information" - All specifications, designs, plans, drawings,
software, data, prototypes, or other business and/or technical information
related to or associated with Products that is provided by Company to Supplier
to enable, assist or facilitate Supplier's performance under this agreement.
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ATTACHMENT 2
LUCENT OEM SUPPLY AGREEMENT
ENGINEERING CHANGE CONTROL PROCEDURES
"Product Changes" shall be administered in accordance with
Xxxx Communications Research document GR 209 CORE, Issue 2, January
1996, titled "Generic Requirements for Product Change Notices," which
is incorporated herein by reference.
Supplier may make changes to MATERIAL, modify drawings, or
make changes to manufacturing specifications, provided the changes,
modifications, or substitutions DO NOT have an impact on the
performance, reliability, Form, Fit, or Function of the MATERIAL
without prior notification to Company. Supplier shall maintain written
records of all such changes, and make these records available for
Company's review upon request.
For such changes or modifications which DO have an impact on
performance, reliability, Form, Fit, or Function, Supplier shall
identify each such change or modification in accordance with the
classifications contained in the above Xxxx Communications Research
document via a Product Change Notification (PCN) form. The Company
shall immediately acknowledge receipt of the PCN to the address/contact
as stated on the PCN form and shall have thirty (30) calendar days to
advise Supplier if the proposed change or modification is unacceptable.
If Company notifies Supplier as required herein, that the proposed
change or modification is unacceptable, Supplier shall not implement
such change or modification. Company may reject any MATERIAL offered by
Supplier which has been changed or modified in a manner unacceptable to
Company.
If Company has not notified Supplier that the change or
modification is unacceptable within thirty (30) calendar days following
issuance of the Change Notification, Supplier shall implement the
change or modification as described in the Change Notification.
If during the review of a proposed PCN, which has a
classification of either A or AC, issued by Supplier during the
Warranty period of the affected MATERIAL, the Company determines that
implementation of the PRODUCT CHANGE will cause the Company to incur
"unreasonable expenses" such as, but not limited to, expenses resulting
from escorting Supplier's personnel to numerous Company locations
containing affected MATERIAL or repeated product changes to the same
item of MATERIAL within a one (1) year time period, the Company shall
so notify Supplier, in writing, prior to the implementation of such
PRODUCT CHANGE.
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Upon such notification, the Company and Supplier shall jointly
determine the implementation procedure which will utilize the
Supplier's and/or Company's personnel in the most cost effective
manner.
If Supplier and the Company conclude the agreed to
implementation procedure will probably cause the Company to incur
"unreasonable expenses", the Company and Supplier shall jointly
determine the likely extent of such expenses and agree, in writing, to
a "not to exceed" estimate for such expenses. In no event shall such
estimate exceed the Company's purchase price for the MATERIAL to be
changed. The Company shall track and record all such expenses
associated with the PRODUCT CHANGE. Upon completion of its efforts, the
Company shall submit to Supplier, for reimbursement by Supplier, an
invoice of the Company's "unreasonable expenses" within forty-five (45)
calendar days after the Company's receipt of such invoice.
Issuing a Class A or AC product Change Notification shall not
constitute an agreement to provide such a change, but shall be
construed as a recommendation by the Supplier that the change is
absolutely necessary.
34
