1
An asterick (*) indicates that Confidential portions of this exhibit have been
omitted pursuant to Rule 406 under the Securities Act of 1933, as amended. The
confidential portions so omitted have been filed separately with the Securities
and Exchange Commission pursuant to Rule 406.
First Addendum to Procurement Agreement
Between
Sprint/United Management Company
and
CIENA Corporation
This First Addendum to Procurement Agreement (the "Addendum") is effective as of
the 19th day of December, 1996 (the "Effective Date"), by and between
Sprint/United Management Company, a Kansas corporation, having its principal
place of business at 0000 Xxxxxxx Xxxxxxx Xxxxxxx, Xxxxxxxx, Xxxxxx 00000
(hereinafter referred to as "Sprint") and CIENA Corporation, a Delaware
corporation, having its principal place of business at 0000 Xxxxxxxx Xxxx,
Xxxxxx, Xxxxxxxx 00000 (hereinafter referred to as "CIENA"), as an addendum to
that certain Procurement Agreement KC103251ML dated December 14, 1996, between
Sprint and CIENA (the "Agreement"). Except as otherwise indicated, defined terms
in this Addendum have the same meaning as in the Agreement.
A. BACKGROUND
1. Pursuant to the Agreement, Sprint has been purchasing and CIENA has
been supplying Deliverables.
2. Sprint contemplates purchasing Deliverables from CIENA at a higher quantity
level during 1997 than 1996, and desires certain pricing and other concessions
from CIENA in consideration therefor. CIENA agrees to offer such pricing and
other concessions in exchange for Sprint's commitment to (1) purchase at a
higher quantity level over such period, and (2) order Deliverables on a
written schedule as mutually agreed upon by the parties.
Now, therefore, in consideration of the foregoing premises, the parties agree as
follows:
B. ADDENDUM
1. DEFINITIONS.
1.1 "Addendum Deliverables" means Deliverables ordered commencing ******
and shipped not later than **********. Addendum Deliverables shall not include
orders for installation services, emergency technical support services or
training services.
1.2 "Addendum Term" means the period from the Effective Date through
***********.
1.3 "CIENA(`s) Shortfall" means that occurrence when CIENA is not able to
fulfill its obligations as set forth in the Deliverables Schedule.
1.4 "Deliverables Schedule" means that written document representing the
mutually agreed upon quantities and delivery dates of Deliverables throughout
the Addendum Term. The Deliverables Schedule is incorporated by reference into
this Addendum as Exhibit A.
1.5 ***********************
1.6 "Sprint(`s) Shortfall" means that occurrence when Sprint is unable to
fulfill its obligations as set forth in the Deliverables Schedule.
2
2. PREFERRED PROVIDER.
2.1 Sprint designates CIENA as its Preferred Provider during the Addendum
Term, provided all of the following conditions are met:
(a) The Deliverables conform to the Technical Requirements; and (b) CIENA
can provide the Deliverables according to the Deliverables Schedule.
3. PRICES, QUANTITIES AND DELIVERY SCHEDULES.
3.1 Sections 2.1, 2.2, and 2.6 of Article 2 of the Agreement are deleted
for the duration of the Addendum Term, and the following is substituted therefor
during the Addendum Term:
(a) Prices for the Addendum Deliverables are set forth in Exhibit B, which
is incorporated herein by reference.
(b) CIENA agrees to ********* for the Addendum Term.
(c) The Deliverables Schedule, as incorporated in this Addendum, is
Sprint's firm commitment to order for shipment during the Addendum Term the
quantities of Deliverables stated therein. Sprint acknowledges and agrees that
the aggregate price of such Deliverables, at Exhibit B prices, shall be not less
than **********.
(d) During the Addendum Term, Sprint and CIENA shall meet on a monthly
basis to review Sprint's issuance of Purchase Orders for the Addendum
Deliverables, and CIENA's deliveries of same, each in relation to the
Deliverables Schedule. No increase in the quantity of Deliverables, and no
acceleration of the timing of deliveries of such Deliverables may be changed
from the quantities and times set forth in the Deliverables Schedule without the
written consent of both parties. If CIENA issues a notice to Sprint of a CIENA
Shortfall ("CIENA Shortfall Notice"), with respect to the Deliverables Schedule
or any amendment thereto agreed to in writing by both parties, then Sprint has
the right to reduce the corresponding amount of Addendum Deliverables affected
by CIENA's Shortfall and seek alternative sources for like Deliverables with no
penalty. The CIENA Shortfall Notice must be submitted to Sprint within *********
after CIENA identifies such shortfall but in no event later than ******** after
the most recent prior monthly meeting; otherwise, it will be assumed that CIENA
can meet the delivery obligations set forth on the most current Deliverables
Schedule.
(e) Sprint shall issue Purchase Orders for the Addendum Deliverables at
least ******* in advance of the delivery date set forth on the Deliverables
Schedule. Unless mutually agreed in advance in writing, CIENA shall make
shipment in response to a Purchase Order only if the shipment completely
satisfies the Purchase Order. Time is of the essence to Sprint, and CIENA
understands and acknowledges that the Deliverables Schedule must and will be
strictly observed. Sprint may defer delivery of all or part of the Deliverables
ordered under any Purchase Order for as long as ****** days beyond the scheduled
delivery date set forth on Exhibit A, provided that Sprint issues a Purchase
Order supplement to CIENA at least ********* days prior to the scheduled
delivery date.
(f) In the event Sprint issues Purchase Orders in excess of ********
during the Addendum Term, then as to such excess only, CIENA immediately will
issue Sprint an additional discount of ******* on the prices for the
Deliverables constituting such excess.
3
5. TRUE-UP OBLIGATION
Sprint currently anticipates issuing Purchase Orders for at least
********* in Addendum Deliverables by or before ********. If Sprint fails to do
so, Sprint agrees to meet with CIENA in ********* to inform CIENA as to the
reasons for such failure and to advise CIENA whether Sprint then anticipates
that Purchase Orders during the Addendum Term will equal or exceed ********. If
Sprint is unable at that time to provide CIENA reasonable assurances that
Purchase Orders will equal or exceed ******** during the Addendum Term, Sprint
agrees to negotiate reasonable compensation to CIENA for any anticipated Sprint
Shortfall, it being understood that CIENA's willingness to reduce its prices
during the Addendum Term was and is in consideration for Sprint's commitment to
purchase ******** in Addendum Deliverables during the Addendum Term.
III. GENERAL
Other than as set forth above, the Agreement remains unchanged and in full force
and effect. In the event of a conflict between the terms of the Agreement and
this Addendum, this Addendum will control.
This Addendum is executed by authorized representatives of Sprint and CIENA and
is made a part of and incorporates the terms and conditions of the Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Addendum to be
executed by their duly authorized representatives as of the day and year below
written.
CIENA CORPORATION SPRINT/UNITED MANAGEMENT
COMPANY
By: By:
---------------------------- -----------------------------
Title: Title:
------------------------- -------------------------
Date: Date:
------------------------- -------------------------
4
Exhibit A
Page 1
SPRINT MONTHLY SUMMARY - 1997 CAP
---------------------------------------------------------------------------------------------------------------------
LINE OPTICAL ADD CHANNEL UNITS COMMON SPARES TERM. SPARES
MONTH TERMINALS AMPLIFIERS DROP
----------------- ---------------- --------------- ---------------- ---------------- --------------- ----------------
**** **** **** **** **** **** ****
**** **** **** **** **** **** ****
**** **** **** **** **** **** ****
**** **** **** **** **** **** ****
**** **** **** **** **** **** ****
**** **** **** **** **** **** ****
**** **** **** **** **** **** ****
**** **** **** **** **** **** ****
**** **** **** **** **** **** ****
**** **** **** **** **** **** ****
**** **** **** **** **** **** ****
**** **** **** **** **** **** ****
**** **** **** **** **** **** ****
----------------- ---------------- --------------- ---------------- ---------------- --------------- ----------------
TOTAL **** **** **** **** **** ****
----------------- ---------------- --------------- ---------------- ---------------- --------------- ----------------
5
Exhibit A
Page 2
***************************************************
6
EXHIBIT B--PRICING DURING THE ADDENDUM TERM
Subject to Section 5 of the Addendum, Sprint's orders for DWDM systems
from September 16, 1996 through the end of the Addendum Term shall be entitled
to pricing based upon the price schedule listed below:
MODULE DESCRIPTION MODEL NUMBER UNIT PRICE($)
------------------ ------------ -------------
channel shelf 16000-01 *****
common shelf 16000-02 *****
dual amp module 16090-01 *****
930 pump module 16080-01 *****
1480 pump module (standard) 16080-12 *****
1480 pump module (high power) 16080-11 *****
service channel module 16070-01 *****
nodal control processor 16060-03 *****
power supply module 16050-01 *****
combiner module (8 way) 16030-08 *****
splitter module (8 way) 16040-08 *****
dual combiner module 16030-16 *****
dual splitter module 16040-16 *****
remodulator module (ch. 1) 16010-01 *****
remodulator module (ch. 2) 16010-02 *****
remodulator module (ch. 3) 16010-03 *****
remodulator module (ch. 4) 16010-04 *****
remodulator module (ch. 5) 16010-05 *****
remodulator module (ch. 6) 16010-06 *****
remodulator module (ch. 7) 16010-07 *****
remodulator module (ch. 8) 16010-08 *****
remodulator module (ch. 9) 16010-09 *****
remodulator module (ch. 10) 16010-010 *****
remodulator module (ch. 11) 16010-011 *****
remodulator module (ch. 12) 16010-012 *****
remodulator module (ch. 13) 16010-013 *****
remodulator module (ch. 14) 16010-014 *****
remodulator module (ch. 15) 16010-015 *****
remodulator module (ch. 16) 16010-016 *****
dual selector module (ch. X/X) 16020-XX *****
faceplate, 4HP, (0.8 wide) 16120-14 *****
faceplate, 7HP, (1.4 wide) 16120-09 *****
orderwire 16140-01 *****
auxiliary management module 16130-01 *****
alarm and power distribution *****
fan try 16600-01 *****
air filter 16600-02 *****
fiber dressing/air plenum 16600-03 *****
heat ramp 16600-04 *****
fan replacement *****
pre-wired rack assemblies *****
7' unequal flange rack (equipped for 8 ch.) 16110-70 *****
7' unequal flange rack (equipped for 16 ch.) 16110-80 *****
7
8' unequal flange rack (equipped for 8 ch.) 16110-88 *****
8' unequal flange rack (equipped for 16 ch.) 16110-70 *****
8'-8' unequal flange rack (equipped for 8 ch.) 16112-70 *****
8'-8' unequal flange rack (equipped for 16 ch.) 16112-80 *****
7' channel rack (equipped for 8 ch.) 16112-88 *****
7' channel rack (equipped for 16 ch.) 16113-70 *****
Add-Drop Capabilities
ADM Amplifier *****
ADM Module (1 channel) *****
ADM Module (2 channel) *****
ADM Module (3 channel) *****
ADM Module (4 channel) *****
ADM Combiner/Splitter 1 *****
ADM Combiner/Splitter 2 *****
980 nm Pump (single output) *****
