Exhibit 10.20
DEVELOPMENT AND PURCHASING AGREEMENT
BY AND BETWEEN
COMDIAL CORPORATION
AND
▇▇▇▇▇▇ CORPORATION
DIGITAL TELEPHONE SYSTEMS DIVISION
This Development and Purchasing Agreement is made and entered into as
of February 21, 1997, by and between ▇▇▇▇▇▇ CORPORATION, DIGITAL TELEPHONE
SYSTEMS DIVISION (hereinafter referred to as "Buyer"), a corporation organized
under the laws of the State of Delaware and having its principal place of
business at ▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and COMDIAL
CORPORATION (hereinafter referred to as "Seller"), a corporation organized under
the laws of the State of Delaware and having its principal place of business at
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
RECITALS
A. Each of Seller and Buyer is engaged in the business of developing,
manufacturing and selling telecommunications equipment and products.
B. Seller is presently developing the Boston Product Line.
C. Buyer desires to engage Seller to modify certain components of the
Boston Product Line in accordance with technical specifications provided by
Buyer in order to develop, engineer, manufacture and support a line of
proprietary digital telephones for sale by Seller exclusively to Buyer, and
Seller desires to accept such engagement, all on the terms and conditions set
forth in this Agreement (which, together with the Attachments attached hereto,
is referred to as the "Agreement").
AGREEMENT
NOW, THEREFORE, in consideration of the premises, mutual covenants,
representations, warranties and agreements set forth in this Agreement, Buyer
and Seller agree as follows:
1.0 DEFINITIONS
The capitalized terms used in this Agreement shall have the meanings
set forth on Attachment A, unless otherwise expressly defined herein or unless
the context clearly requires an alternate meaning.
2.0 DOCUMENTS INCLUDED
2.1. This Agreement consists of this document, all written amendments,
modifications and supplements hereto, all change orders, all Purchase Orders and
all Attachments listed below, each of which is integrated and made a part of the
Agreement and all of which together constitute the Agreement.
Attachment A Definitions
Attachment B Statement
of Work, dated as of February 21,
1997, approved by both Seller and
Buyer
Attachment C Estimated Product Requirements and
Product Pricing
Attachment D Form of Purchase Order
Attachment E Form of Seller's New Products
Release for Shipment Form
Attachment F Repair Prices for Out of Warranty
Repairs
Attachment G Engineering Schedule
Attachment H New Products Release Schedule
2.2. If a conflict or inconsistency exists among the terms and
conditions of this Agreement (excluding the Statement of Work and any Purchase
Orders), the Statement of Work, or any Purchase Order, the following order of
precedence shall govern and control interpretation of the documents: (i) the
terms of the Agreement shall prevail over the terms of both the Statement of
Work and any Purchase Order, (ii) the terms of the Statement of Work shall
prevail over the terms of any Purchase Order. Notwithstanding the foregoing, the
parties may mutually agree in writing to a different order of precedence for any
Purchase Order.
3.0 PRODUCT DEVELOPMENT AND DESIGN
3.1. Seller has previously provided to Buyer copies of the hardware
specifications for the Boston Product Line entitled "Electrical Product
Specification for Boston," dated October 28, 1996, and software specifications
for Buyer's Impact telephones entitled "Impact Telephone Communications (8012S,
8112S, 8024S, 8124S)," dated May 29, 1996.
3.2. Buyer has provided or shall provide Seller on an ongoing basis
with complete, accurate and updated technical and functional descriptions of the
Products to be developed and manufactured by Seller, including all necessary
deviations from or changes to the hardware and software specifications set forth
in Section , all in sufficient detail to permit Seller to design and develop
Products for Buyer's 20-20 product line. The statement of work attached hereto
as Attachment B (the "Statement of Work") is incorporated into this Agreement.
3.2.1. Seller shall have at least ten (10) Business Days to
review and accept any technical and/or functional descriptions of the
Products which Buyer provides to Seller after the date of this
Agreement. Buyer shall reimburse Seller for any additional NRE Expenses
which Seller reasonably expects to incur as a result of incorporating
such additional technical and functional requirements into the
Products.
3.3. Based on the Statement of Work, Seller will be responsible for the
design, development and engineering of the Products so that they meet the
following requirements:
3.3.1. The Products will meet the specifications set forth in
the Statement of Work, including, but not limited to, the description
of functions and features, and will perform satisfactorily in
accordance with the performance criteria and testing requirements set
forth in the Statement of Work; and
3.3.2. The Products will be designed and developed in
accordance with industry standards set forth in Statement of Work.
3.4. Buyer and Seller shall assist and cooperate with each other as
reasonably necessary to develop the Products and meet their respective
obligations under this Agreement and the Statement of Work.
3.5. Seller shall be responsible for design, development and
engineering of all hardware associated with the modification of certain
components of the Boston Product Line to comply with and conform to the
Statement of Work, including the following specific tasks:
3.5.1. Manufacture plastic cases for the Products with Buyer's
logo. Buyer and Seller shall mutually agree on the colors of the
plastic cases that will be standard colors for purposes of this
Agreement.
3.5.2. Redesign certain aspects of the hardware of the Boston
Product Line as required for the Products, including redesigning the
line interface and transmission characteristics required for the
Products to be compatible with Buyer's PBX, redesigning the power
supply to support the 44 volt to 56 volt operational range of Buyer's
PBX, redesigning the microprocessor to support the download feature of
Buyer's PBX, designing a liquid crystal display to support 2 X 20 LCD
messages from Buyer's PBX, and, if required, redesigning the
headset/handset ▇▇▇▇ interface.
3.5.3. Design new printed circuit board ("PCB") layouts for
all models of the Products, but only if the PCB layouts used in the
Boston Product Line will not function with Buyer's 20-20 product line.
3.5.4. Build and test prototypes of all models of the
Products.
3.5.5. Provide Buyer with test data and technical information
to assist Buyer in obtaining necessary governmental and other
certifications and permits for the Products.
3.5.6. Provide Buyer with three (3) documentation packages
containing a stock list, drawings and circuit description of the PCB
assembly for each model of the Products.
3.5.7. Permit Buyer to use the Boston Firmware source code and
provide Buyer with engineering support related to the Boston Product
Line's speakerphone and associated software drivers for the sole
purpose of allowing Buyer to develop firmware for the Novato Product
Line.
3.5.8. Provide all technical changes or modifications to the
Products and all required engineering support which are necessary for
Buyer to obtain the approvals, licenses, certifications or permits set
forth in subparagraphs and .
3.5.9. Provide limited review and comments on all firmware
functional and detailed design specifications, if any, submitted by
Buyer to Seller.
3.6. Upon Seller's completion of designs for all models of the
Products, including drawings, schematics, circuit descriptions, mechanical
product specifications, mechanical design verification/assurance test data and
stock lists in accordance with the Statement of Work (collectively, the
"Designs"), but prior to Seller's beginning to develop and build prototypes of
the Products, Seller shall submit the Designs to Buyer for review and approval.
3.6.1. Within ten (10) Business Days of Buyer's
receipt of the Designs, Buyer shall notify Seller in
writing of Buyer's approval of the Designs or Buyer's
requested modifications to the Designs.
3.6.2. Seller shall use reasonable efforts to amend the
Designs in order to comply with Buyer's requested modifications. Buyer
shall reimburse Seller for any additional NRE Expenses incurred by
Seller as a result of any modifications to the Designs which are
outside the scope of or exceed the requirements set forth in the
Statement of Work. Prior to making any modifications to the Designs,
Seller shall provide a good faith estimate to Buyer in writing of the
additional NRE Expenses which Seller expects to incur in connection
with the design modifications requested by Buyer. Buyer and Seller
shall agree in writing which of Buyer's requested modifications will be
incorporated into the Designs.
3.6.3. When Buyer approves the Designs, Seller shall commence
developing and building an initial prototype of each of the Products,
including designing PCB layouts for the Products, creating artwork for
the PCBs, producing the PCBs, ordering parts for the Products, and
building and testing actual prototypes of each of the Products.
3.7. For each of models 8501A, 8501M, 8612S, 8624S, IH24X, IHIST-A and
IHIST-M, Seller shall deliver an Alpha Prototype to Buyer in accordance with the
requirements and specifications set forth in this Agreement, including the
Statement of Work, and according to the schedule set forth in Attachment G. Upon
Seller's completion of an Alpha Prototype for each model, Seller shall submit
five (5) units of such Alpha Prototype to Buyer for review and approval.
3.7.1. Within ten (10) Business Days of Buyer's receipt of an
Alpha Prototype, Buyer shall notify Seller in writing of Buyer's
requested modifications to such Alpha Prototype.
3.7.2. Seller shall use reasonable efforts to incorporate
Buyer's requested modifications into a Beta Prototype of such Product.
Buyer shall reimburse Seller for any additional NRE Expenses incurred
by Seller as a result of any modifications to the Alpha Prototype
requested by Buyer which are outside the scope of or exceed the
requirements set forth in the Statement of Work. Prior to making any
modifications to the Alpha Prototype, Seller shall provide a good faith
estimate to Buyer in writing of the additional NRE Expenses which
Seller expects to incur in connection with the modifications requested
by Buyer. Buyer and Seller shall mutually agree on which modifications
will be incorporated into the Beta Prototype of such Product.
3.8. For each of models 8501A, 8501M, 8612S, 8624S, IH24X, IHIST-A and
IHIST-M, Seller shall deliver a Beta Prototype to Buyer in accordance with the
requirements and specifications set forth in this Agreement, including the
Statement of Work, and according to the schedule set forth in Attachment G. Upon
Seller's completion of a Beta Prototype for each model, Seller shall submit five
(5) units of such Beta Prototype to Buyer for review and approval.
3.8.1. Within ten (10) Business Days of Buyer's receipt of a
Beta Prototype of a Product, Buyer shall notify Seller in writing of
Buyer's approval of such Beta Prototype or Buyer's requested
modifications to the Beta Prototype.
3.8.2. Seller shall use reasonable efforts to incorporate
Buyer's requested modifications into such Beta Prototype. Buyer shall
reimburse Seller for any additional NRE Expenses incurred by Seller as
a result of any modifications to such Beta Prototype requested by Buyer
which are outside the scope of or exceed the requirements set forth in
the Statement of Work. Prior to making any modifications to a Beta
Prototype, Seller shall provide a good faith estimate to Buyer in
writing of the additional NRE Expenses which Seller expects to incur in
connection with the modifications requested by Buyer. Buyer and Seller
shall mutually agree on which modifications will be incorporated into
the Beta Prototype.
3.8.3. Buyer may purchase additional units of the Alpha
Prototypes and/or Beta Prototypes of each model of the Products
pursuant to a separate Purchase Order under this Agreement at a price
per unit which is mutually agreed by Seller and Buyer. Seller shall not
submit the costs of such additional Alpha Prototypes and/or Beta
Prototypes to Buyer for reimbursement as NRE Expenses.
3.9. Following Buyer's approval of the Beta Prototype of a Product,
Buyer shall submit a Purchase Order to Seller for pilot models of such Product
("Product Pilot Models") for field testing to be performed by Buyer with
cooperation and support from Seller, including, Seller's timely remedial action
in response to problems encountered during field testing which Buyer and Seller
mutually agree are Seller's responsibility. Buyer's Purchase Order shall contain
a mutually agreed upon price per unit for the Product Pilot Models. Seller shall
not submit the costs of the Product Pilot Models for reimbursement by Buyer as
NRE Expenses.
3.10. When Buyer and Seller mutually agree that a Product Pilot Model
has met all testing requirements, including field testing, and is ready for full
production by Seller, Buyer and Seller shall execute a QC Release for Shipment
document with respect to such Product Pilot Model, in substantially the form set
forth in Attachment E hereto. Upon execution by Buyer and Seller of a QC Release
for Shipment document with respect to a Product Pilot Model, Seller may begin
production manufacturing of such model.
3.11. Seller shall develop validation test procedures and
specifications for the Products based on Seller's demonstrated practices with
respect to product testing. Such test procedures and specifications shall be
submitted by Seller for review and approval by Buyer. Buyer shall have ten (10)
Business Days after receipt of such procedures and specifications to approve
them or recommend modifications to Seller. Seller and Buyer shall mutually agree
on all validation test procedures and specifications for the Products.
3.12. Buyer shall be responsible for:
3.12.1. Designing, developing and engineering the firmware
for the Products, either internally or using third-parties;
3.12.2. Integrating the Products with Buyer's PBX, including
system integration testing and associated performance level testing;
3.12.3. Developing Product logos, user manuals and
advertising material;
3.12.4. Obtaining, at Buyer's expense, all federal or state
governmental, agency or other approvals, licenses, certifications or
permits which are necessary or required in order for Buyer to
distribute the Products for sale to the public in the United States,
including, but not limited to, compliance with (i) registration and
technical standards requirements of Part 68 of the Federal
Communications Commission's Rules and Regulations, (ii) the National
Electrical Code and regulations thereunder, (iii) requirements of
Subpart J of Part 15 of the Federal Communications Commission's Rules
and Regulations relating to suppression of radio frequency and
electromagnetic radiation to specified levels and (iv) technical
standards required to obtain certification from Underwriters'
Laboratories.
3.12.5. Obtaining, at Buyer's expense, all European
governmental, agency or other approvals, licenses, certifications or
permits which are necessary or required in order for Buyer to
distribute the Products for sale to the public in European countries,
including, but not limited to, compliance with (i) Safety -- Low
Voltage Directive 72/23/EEC as amended by Directive 93/68/EEC, EN 60
950, BS 6301, (ii) Emission/Susceptibility -- EMC Directive 89/336/EEC
as amended by Directive 93/68/EEC, EN 55 022, EN 55 024, EN 50-081-1,
EN 50 082-1, CISPR 22, (iii) General -- Telecom Terminal Directive
91/263/EEC as amended by Directive 93/68/EEC, and (iv) "CE" marking.
3.12.6. Coordinating and performing all field trials with
reasonable support and cooperation from Seller;
3.12.7. Preparing all system level engineering documentation
required for Products meeting all requirements for QC Release for
Shipment;
3.12.8. Coordinating Product roll out, including, but not
limited to, preparing marketing and promotional literature and
providing training associated with the Products; and
3.12.9. Providing first tier technical support for the
Products to Buyer's customers.
3.13. Subject to the terms of Section 3.13.5, Buyer agrees to reimburse
Seller for all of Seller's non-recurring engineering and design expenses ("NRE
Expenses") directly attributable to Seller's development of the Products,
including without limitation, engineering time, materials costs, and travel
expenses to and from Buyer's facilities, but excluding expenses incurred by
Seller in connection with general design and engineering of the Boston Product
Line.
3.13.1. Buyer shall make advances against Seller's NRE
Expenses in five (5) installments as follows: (i) $109,800 upon
execution of this Agreement, (ii) $100,000 upon Buyer's approval of the
Designs, (iii) $83,000 upon Buyer's approval of the Alpha Prototypes of
the Products, (iv) $36,600 upon Buyer's approval of Beta Prototypes and
(v) $36,600 upon QC Release for Shipment of all models of the Products.
3.13.2. Within ten (10) Business Days of the end of each
calendar month during this Agreement, Seller shall submit a status
report of all NRE Expenses incurred by Seller during the prior calendar
month to Buyer's Purchasing Department to the attention of the
Purchasing Manager at Buyer's location in Novato, California. Within
ten (10) Business Days after Buyer's receipt of Seller's status report,
Buyer shall notify Seller in writing of Buyer's approval or disapproval
of any NRE Expenses contained in such status report. If Buyer does not
indicate any disapproval of any NRE Expenses within thirty (30) days
after Buyer's receipt of Seller's status report, Buyer shall be deemed
to have approved the NRE Expenses contained therein. Buyer and Seller
agree to negotiate in good faith to resolve any disputes related to NRE
Expenses.
3.13.3. Within thirty (30) Business Days of Seller's receipt
of the first Purchase Order from Buyer following QC Release for
Shipment of the Products, Seller shall submit a final report of all NRE
Expenses incurred by Seller in connection with development of the
Products together with itemized supporting documentation for such NRE
Expenses. If Seller has incurred total actual NRE Expenses which are
less than $366,000, Seller shall repay Buyer an amount equal to the
difference between the actual NRE Expenses incurred by Seller and
$366,000.
3.13.4. Seller agrees to notify Buyer when the NRE Expenses
reach $366,000, and Buyer may approve, in Buyer's sole discretion, NRE
Expenses in excess of that amount. If Buyer approves NRE Expenses in
excess of $366,000 pursuant to this Agreement or if Seller incurs NRE
Expenses due to Buyer's delay as set forth in Section 3.13.5, within
thirty (30) days after Buyer's receipt of Seller's final report, Buyer
shall remit payment to Seller for any such NRE Expenses in excess of
$366,000.
3.13.5. Notwithstanding any provision to the contrary
contained in this Agreement, except as provided in subsections 3.7.2,
3.8.2 and this 3.13.5, as long as Buyer and Seller comply, within a two
(2) week grace period, with all requirements set forth in the
development schedule attached hereto as Attachment G, Seller agrees
that Buyer shall have no obligation to reimburse Seller for aggregate
NRE Expenses in excess of $366,000 incurred by Seller in connection
with Seller's performance of its obligations under this Agreement,
including the Statement of Work. If Seller incurs additional direct and
unavoidable expenses due to Buyer's failure to comply with the
development schedule attached hereto as Attachment G, Buyer shall
reimburse Seller for such expenses as long as Buyer's delay is not a
result of a previous delay by Seller.
3.14. Each party shall retain all right, title and interest in and to
any inventions, discoveries, methods, ideas, hardware and software, know-how and
techniques, and all intellectual property rights therein owned or possessed by
such party and/or its licensors as of the date of this Agreement ("Existing
Intellectual Property"), which relate or have application to the Products and/or
to the manufacture of the Products or other products generally. With respect to
the Existing Intellectual Property, the following licenses are granted during
the term of this Agreement:
3.14.1. With respect to Seller's Existing Intellectual
Property which Seller discloses to Buyer in the performance of this
Agreement, Seller grants Buyer a royalty-free, non-transferable,
nonexclusive, worldwide license, sublicense, or, with Seller's consent,
a license to grant a sublicense, to use Seller's Existing Intellectual
Property for the limited purpose of (i) Buyer's development of firmware
for the Novato Product Line as outlined in Section 3.12 hereof and (ii)
installing and supporting the Novato Product Line. Notwithstanding the
foregoing, Seller expressly retains at all times all right, title and
interest in Seller's Existing Intellectual Property and all other
technology related to the Boston Firmware which Seller provides Buyer
for the limited purpose of developing firmware for the Novato Product
Line.
3.14.2. With respect to Buyer's Existing Intellectual Property
which Buyer discloses to Seller in the performance of this Agreement,
Buyer grants Seller a royalty-free, non-transferable, nonexclusive,
worldwide license or sublicense to use Buyer's Existing Intellectual
Property for the limited purpose of developing the Products,
manufacturing the Products and selling the Products to Buyer. All
development of the Products by Seller shall occur at Seller's facility
in Charlottesville, Virginia. Notwithstanding the foregoing, Buyer
expressly retains at all times all right, title and interest in Buyer's
Existing Intellectual Property and all other technology related to the
Optic Firmware which Buyer provides Seller for the limited purpose of
developing the Products, manufacturing the Products and selling the
Products to Buyer.
3.15. Seller shall own all intellectual property rights in inventions,
discoveries, methods, ideas, hardware, software, know-how and techniques,
including, but not limited to, all technical information, schematics, source
code, object code, data, designs, sketches, drawings, blueprints, patterns,
models, molds, fixtures, tools and any other materials derived from or based
upon the Boston Product Line, which are made, created, developed, written
conceived or first reduced to practice in the course of, arising out of, or as a
result of work done under this Agreement ("Seller's Developed Intellectual
Property"). With respect to Seller's Developed Intellectual Property, as long as
Seller is manufacturing the Products for sale to Buyer, Seller grants Buyer a
nonexclusive, royalty-free, non-transferable, worldwide license to use Seller's
Developed Intellectual Property for the limited purposes of (i) Buyer's
development of certain components of the Novato Product Line and (ii) installing
and supporting the Novato Product Line.
3.16. Buyer shall own all intellectual property rights in inventions,
discoveries, methods, ideas, hardware, software, know-how and techniques,
including, but not limited to, all technical information, schematics, source
code, object code, data and any other materials derived from or based upon the
Optic Firmware, which are made, created, developed, written conceived or first
reduced to practice in the course of, arising out of, or as a result of work
done under this Agreement ("Buyer's Developed Intellectual Property"). With
respect to Buyer's Developed Intellectual Property, as long as Seller is
manufacturing the Products for sale to Buyer, Buyer grants Seller a
nonexclusive, royalty-free, non-transferable, worldwide license to use Buyer's
Developed Intellectual Property for the limited purpose developing the Products,
manufacturing the Products and selling the Products to Buyer. All development of
the Products by Seller shall occur at Seller's facility in Charlottesville,
Virginia.
3.17. Buyer and Seller shall mutually agree upon procedures, including
escalation procedures and required response times, for first-tier technical
support of the Products to be provided by Buyer and second-tier technical
support of the Products to be provided by Seller.
3.18. Attachment G sets forth the engineering schedule for the design
and development of the Products, (other than the IHIST-A and IHIST-M modules) as
of the date of this Agreement. The parties recognize that with their mutual
agreement, this schedule may be altered during the course of Product design and
development, to reflect the occurrences of events that will have an effect on
the schedule. The IHIST modules will follow the schedule for the Boston Product
Line and are expected to be completed prior to the other Products.
3.19. Attachment H sets forth the Product Release Schedule for the
Products, as of the date of this Agreement. The parties recognize that with
their mutual agreement, this schedule may be altered during the course of
Product design and development, to reflect the occurences of events that will
have an effect on the schedule.
3.20. Buyer and Seller agree to conduct regularly scheduled meetings,
in person or via teleconference, to exchange information, discuss development
progress, respond to issues or problems and review schedules.
4.0 MANUFACTURING
4.1 During the term of this Agreement, Seller agrees to maintain its
manufacturing processes in accordance with standard industry practices and ISO
9001 guidelines or equivalent standards.
4.2 All Products shall be manufactured by Seller and furnished to Buyer
in strict conformity with the QC Release for Shipment version of each model of
the Products. Seller's failure to deliver Products which conform to the QC
Release for Shipment version of a Product model shall justify Buyer's rejection
of nonconforming Products. Seller agrees to repair or replace, at Seller's
expense, non-conforming Products within a reasonable period following Seller's
receipt of a written notice from Buyer describing the manner in which the
Products at issue do not conform with the QC Release for Shipment version of
such Product.
4.3 Seller shall manufacture the Products in accordance with Seller's
normal high level of quality and product reliability. Seller has in-house
capability to use surface mount technology ("SMT") assembly at its
Charlottesville, Virginia manufacturing facility.
4.4 Seller shall provide internal yield data and supplier performance
data for the Products as reasonably requested by Buyer and which can be
reasonably generated through Seller's data systems.
5.0 MANUFACTURING RIGHTS
5.1 Seller agrees that the Products and any pricing associated with the
Products are PROPRIETARY to Buyer at its Novato, California location. Except as
expressly permitted by this Agreement, Seller shall not use or disclose any
information related to the Products or pricing of the Products to any
third-party, including any of Buyer's Affiliates subsidiaries or joint
venturers, without Buyer's prior written consent.
5.2 Seller shall provide complete and updated information regarding the
design, manufacture and test results for the Products, including all information
related to the QC Release for Shipment versions of the Products (collectively,
the "Escrowed Information"), to an escrow agent upon terms and conditions which
are mutually agreeable to Buyer, Seller and the escrow agent.
5.2.1 If this Agreement is terminated due to Seller's Material
Breach in accordance with Article 19.0 hereof or Seller otherwise
discontinues manufacture of the Products for reasons including, but not
limited to, Seller's dissolution or bankruptcy, Buyer shall be entitled
to obtain the Escrowed Information from the escrow agent on terms and
conditions as are mutually agreed upon by Buyer and Seller in writing.
If Buyer is entitled to obtain the Escrowed Information pursuant to
this Subsection 5.2.1, Seller shall grant Buyer an exclusive,
non-transferable, worldwide license to use the Escrowed Information for
the sole purpose of enabling Buyer or a third-party designated by Buyer
to manufacture the Products. Buyer and Seller agree that during the
period beginning on the date of this Agreement and terminating on the
fifth anniversary thereof, Buyer shall be entitled to obtain such
license of the Escrowed Information on a royalty-free basis and,
thereafter, shall pay such royalty as Buyer and Seller shall mutually
agree.
5.2.2 The Escrowed Information shall be returned to Seller and
the escrow arrangements shall terminate at such time as both Seller and
Buyer agree to discontinue manufacture of the Products.
5.3 Seller agrees to give Buyer not less than six (6) months advance
written notice of any plans to discontinue manufacture of the Products. Seller
and Buyer shall negotiate in good faith to find an alternative means for meeting
Buyer's future demand for the Products which may include, without limitation,
Seller's manufacturing a sufficient supply of the Products to enable Buyer to
phase the Novato Product Line out of use or Seller's transferring the Escrowed
Information as described in Section .
6.0 PURCHASE OF PRODUCTS AND PRICING
6.1 Buyer shall purchase Products in accordance with the provisions of
this Agreement.
6.2 Buyer's estimated annual requirements for the Products (the
"Estimated Product Requirements") and Seller's pricing of the Products are set
forth on Attachment C hereto. Buyer shall maintain on hand and in inventory at
any given time a dollar amount of Products which is adequate to provide a
reasonable level of service to Buyer's customers.
6.3 The prices set forth in Attachment C have been mutually agreed upon
by Buyer and Seller but are based upon Buyer's purchase of all of the Estimated
Product Requirements. If Buyer does not purchase all of the Estimated Product
Requirements in any year, Buyer shall not be subject to an upward price revision
and/or billback for such year. Seller may amend Attachment C and adjust the
prices of the Products in any subsequent year following a material reduction in
Products purchased by Buyer, provided, however, that Seller and Buyer shall
mutually agree to such price adjustment taking into account Buyer's reduced
requirements.
6.4 If Seller achieves a reduction in the cost of any component which
is used in the Products, Seller shall make a proportionate reduction in the
price of any Products which utilize such component so that such cost reduction
is shared equally between Buyer and Seller. Any such price reduction shall apply
to any unfilled Purchase Orders and all Purchase Orders received by Seller at
its Charlottesville, Virginia offices after the effective date of the reduction
in price of the component. Seller shall give Buyer a credit equal to the amount
of such price decrease for all such Products held by Buyer in its inventory on
the effective date of the price decrease, to be applied towards the purchase of
additional Products.
6.5 Buyer and Seller shall consult every ninety (90) days after Seller
commences delivery of the Products to determine whether further cost reductions
for the Products can be economically achieved through design, material, process
or other changes.
6.6 The benefit of any cost reductions in the Products which are
achieved as a result of design or materials changes, whether initiated by Seller
or jointly by Seller and Buyer, shall be shared equally between Buyer and
Seller.
6.7 This Agreement does not cover Seller's support to Buyer's
Affiliates, joint venturers, and/or technology transfer partners which may
require subassembly supply and/or component pricing. Buyer and Seller agree to
negotiate in good faith to develop separate written agreements which shall
address such matters in detail.
6.8 Seller's prices do not include any taxes or other charges. All
taxes, sales, use or privilege taxes, value-added taxes, excise or similar taxes
or assessments, shipping, handling, insurance, brokerage, and other related
charges levied by any governmental organization or pertaining to the Products
(including its sale and shipment to Buyer) shall be paid by Buyer.
7.0 PURCHASE ORDERS
7.1 Buyer, or divisions or majority-owned subsidiaries of Buyer listed
on Attachment C hereto, shall submit to Seller orders for Products required by
an Approved Purchaser on Purchase Orders ("Purchase Order") which shall comply
with the provisions set forth in Attachment D hereto, shall be in such form and
contain such information as may be designated by Seller, including the
appropriate Product codes, the quantity of Products ordered, the desired
shipping dates, shipping method and the destinations to which the Products are
to be shipped.
7.2 During any twelve (12) month period, Buyer shall submit Purchase
Orders for Products in standard colors at an average rate of 2400 units per
month, in accordance with Attachment C.
7.3 If Buyer submits a Purchase Order for Products in a non-standard
color as defined in 3.5.1, Seller shall be entitled to purchase plastic pellets
in bulk amounts which would allow Seller to produce approximately 2000 units of
plastic casings for such Products in such color regardless of the number of
Products actually ordered by Buyer. Seller shall store any remaining plastic
pellets for use in other Products in such color which Buyer may order from time
to time thereafter until such inventory is depleted. Seller shall be entitled to
invoice Buyer for any additional materials costs incurred by Seller in
connection with non-standard color requests and for any unused plastic pellets
which Seller has in inventory for more than eighteen (18) months.
7.4 Seller is authorized to purchase raw materials against the first
month of Buyer's forecasted demand beyond booked orders as set forth in the
forecast to be provided by Buyer in accordance with Section hereof. Seller shall
obtain written authorization from Buyer prior to procuring any components or raw
materials required specifically for the Products which require long lead-time
ordering or for which Buyer can obtain a volume discount for purchasing amounts
in excess of the amounts set forth in the foregoing sentence.
7.5 Seller shall acknowledge all Purchase Orders within five (5)
Business Days of Seller's receipt thereof. Purchase Orders containing special
requests or requirements may require a longer period for Seller's response and
acknowledgment.
7.6 All Purchase Orders shall be subject to and governed solely by the
terms of this Agreement, notwithstanding any additional or different terms which
may be contained in any document submitted by either party.
7.7 Seller will make reasonable efforts to furnish a sufficient
quantity of Products to meet the resale requirements of Buyer, and Buyer shall
make reasonable efforts to ensure that it orders from Seller a reasonable, level
and consistent quantity of Products throughout the term of this Agreement.
7.8 At all times, Seller shall maintain a buffer inventory level of the
Products equivalent to the lesser of one-twelfth of the Estimated Product
Requirements or Buyer's forecasted demand for the next month as set forth in the
forecast provided by Buyer pursuant to Section . At the end of the term of this
Agreement, Buyer shall be responsible for any remaining inventory held by Seller
in accordance with this Section 7.8 and shall issue a delivery schedule, not to
exceed ninety (90) days, for such remaining inventory.
7.9 At least five (5) Business Days prior to the beginning of each
calendar month during the term of this Agreement, Buyer shall supply Seller with
a twenty-six (26) week forecast of Buyer's demand for each of the Products.
7.10 If Seller encounters an unforeseen shortage of parts or components
("Shortage Items") used in the manufacture of the Boston Product Line and the
Novato Product Line, Seller shall apportion such Shortage Items for use in
manufacturing the Boston Product Line and the Novato Product Line substantially
in accordance with the ratio of Buyer's firm orders or forecasted demand for
Products requiring such Shortage Items to total demand for all products
requiring such Shortage Items, determined by reference to the forecast provided
by Buyer pursuant to Section and Seller's internal forecast documentation, each
as of the date on which the Shortage Items were originally ordered by Seller.
8.0 CANCELLATION OF PURCHASE ORDERS
8.1 Buyer may cancel any Purchase Order under this Agreement, in whole
or in part, by written notice to Seller. If a Purchase Order is canceled for any
reason other than a Material Breach by Seller under this Agreement, Buyer shall
bear all costs and expenses for any work in process or materials in inventory
(but only to the extent such materials in inventory cannot be used in other
products manufactured by Seller) covered by the canceled Purchase Order.
9.0 TERMS OF PAYMENT
9.1 Seller shall invoice Buyer for each order placed by Buyer, upon
shipment to Buyer of the Products so ordered. Any dispute about an invoice,
including questions relating to proof of shipment, price discrepancy, quantity
discrepancy, and freight charges, must be reported to Seller in writing within
fifteen (15) days after Buyer's receipt of Seller's invoice. Any request to
adjust an invoice that is submitted to Seller more than fifteen (15) days after
Buyer's receipt of Seller's invoice may be rejected by Seller, and if so
rejected, Buyer will not be entitled to the requested adjustment.
9.2 Payment of the purchase price for Products purchased pursuant to
this Agreement, including taxes, costs and fees as set forth in Section hereof
and any shipping costs, shall be made by Buyer within fifteen (15) days after
receipt of Seller's invoice for such Products. Buyer shall be obligated to make
payment to Seller in a timely fashion for Products which it purchases,
regardless of whether such Products are retained in Buyer's inventory or sold to
customers, and if sold, regardless of whether such customers make payments to
Buyer.
9.3 Invoices not paid within the period allowed for payment
thereof shall be subject to interest on the unpaid amount at the rate of twelve
percent (12%) per annum or the maximum contract rate fixed by law, whichever is
less, computed from the date upon which such payment is deemed to be overdue
until paid. If an invoice sent to Buyer contains a discrepancy or error which
Buyer asserts in writing to Seller and in good faith within the time allowed for
payment thereof, the disputed items on such invoice shall not be subject to
interest for late payment provided such items are paid in full within fifteen
(15) Business Days after resolution of the asserted discrepancy or error.
9.4 If Buyer does not pay to or reimburse Seller for any cost or charge
imposed on Buyer pursuant to this Agreement, and in addition to any other
remedies it may have in law or equity, Seller may offset such amounts against
any obligations of Seller to Buyer under this Agreement or otherwise. If Buyer
has a credit due from Seller, Seller will issue a credit memo to Buyer, which
Buyer may thereafter apply towards payment of Buyer's accounts payable to
Seller. Upon request from Buyer for a return authorization, Seller agrees that
it will either issue such return authorization or provide Buyer with written
substantiation for the refusal to issue the return authorization within thirty
(30) days of the request by Buyer. If Seller fails to issue a credit or a return
authorization or provide written substantiation for the refusal, Buyer shall be
entitled to offset the value of the credit or product against Buyer's accounts
payable to Seller.
10.0 SHIPPING
10.1 Title and risk of loss or damage to Products purchased by
Buyer shall pass to the Buyer upon delivery of such Products by Seller to a
common carrier or other agency for shipment to Buyer.
10.2 All Products purchased by Buyer shall be shipped by
Seller to Buyer F.O.B. Charlottesville, Virginia. Seller shall use reasonable
efforts to ship Products to Buyer in accordance with Buyer's written shipping
instructions.
10.3 At Buyer's request and with Seller's approval, Seller
will establish a program for drop shipping Products directly to Buyer's
customers or Affiliates.
10.4 All freight, transportation, rigging, crating, packing,
demurrage, insurance, and handling charges, as well as customs duties, taxes,
export licenses, and fees of the customs broker and shipping agent, shall be
paid by Buyer.
11.0 QUALITY AND RELIABILITY
11.1 Seller acknowledges that Buyer expects that all Products delivered
to Buyer shall be of an acceptable quality as measured at Buyer's incoming
inspection.
11.2 Prior to commencing shipment of the Products to Buyer, Seller
shall submit the Products to mutually agreed testing procedures developed in
accordance with the Statement of Work.
11.3 Seller will be provided regular quality rating reports in
accordance with Buyer's supplier management program and Buyer's procedures
governing such program ("Buyer's Supplier Management Program"). Buyer's Supplier
Management Program provides that if, during any calendar month during the term
of this Agreement, less than ninety-six percent (96%) of the Products delivered
by Seller to Buyer meet Buyer's requirements for quality, Buyer shall issue a
written supplier corrective action report (a "SCAR") to Seller which
specifically describes the quality defects discovered by Buyer. If, during the
month immediately following the month for which the SCAR was issued, less than
ninety-six percent (96%) of the Products delivered by Seller to Buyer meet
Buyer's requirements for quality, Buyer and Seller shall hold an on-site meeting
to discuss corrective action. If, during the three (3) months immediately
following the month for which the on-site meeting was held, less than ninety-six
percent (96%) of the Products delivered by Seller to Buyer meet Buyer's
requirements for quality, a Material Breach of this Agreement shall be deemed to
have occurred and Buyer shall be entitled to all remedies set forth in Articles
.0 and .0 of this Agreement.
12.0 WARRANTY AND SERVICE
12.1 Seller warrants that Products sold to Buyer pursuant to this
Agreement will perform in accordance with the QC Release for Shipment version of
such Product and will be free from defects in material and workmanship for the
longer of two (2) years from the date of manufacture or one (1) year from the
date of delivery from Seller to Buyer (the "Warranty Period"), provided that
such Products are installed in compliance with Seller's written specifications,
to the extent applicable, and given normal service and maintenance by Buyer
during the Warranty Period. Seller's obligation under this warranty shall be
limited to repairing or replacing, at Seller's option, any part(s) that prove
defective under normal and proper use and service for the Warranty Period. For
such repairs and replacements, Buyer shall pay the cost for shipment to Seller's
plant; and Seller shall pay the cost for shipment from its plant. This warranty
shall not apply to lamps, fuses, batteries or other such items normally consumed
in operation which have a normal life shorter than the Warranty Period.
12.2 THE WARRANTIES CONTAINED IN THIS ARTICLE .0 ARE IN LIEU OF ALL
OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING WARRANTIES OF MERCHANTABILITY OR
FITNESS FOR ANY PARTICULAR PURPOSE. THESE WARRANTIES SHALL BE VOID AS TO
PRODUCTS DAMAGED OR RENDERED UNSERVICEABLE OR NON-FUNCTIONAL BY NEGLIGENCE OF
NON-SELLER PERSONNEL, MISUSE, THEFT, VANDALISM, FIRE, LIGHTNING, POWER SURGES,
WATER OR OTHER PERIL OR ACTS OF GOD, OR BY BUYER'S FAILURE TO COMPLY WITH
PUBLISHED TECHNICAL REQUIREMENTS OR BY SERVICES OR PRODUCTS OF OTHER VENDORS,
INCLUDING WITHOUT LIMITATION THE LINES OF ANY LOCAL EXCHANGE TELEPHONE COMPANY.
REPAIR OR ALTERATION OF PRODUCTS BY PERSONS NOT AUTHORIZED BY SELLER VOIDS THE
WARRANTY. LIABILITY OF SELLER HEREUNDER IS EXPRESSLY LIMITED TO THE REPAIR OR
REPLACEMENT DESCRIBED ABOVE, AND IN NO EVENT SHALL SELLER BE LIABLE FOR ANY
INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES, SUCH AS LOST SALES, LOST
PROFITS OR INJURY TO PROPERTY, IN RESPECT OF WARRANTY CLAIMS OR ANY OTHER
ECONOMIC DAMAGES RELATING TO THE PERFORMANCE OR FUNCTIONALITY OF THE PRODUCTS,
WHETHER THEY ARE ALLEGED TO ARISE IN CONTRACT OR TORT OR OTHERWISE. NO EXPRESS
OR IMPLIED WARRANTY IS MADE AGAINST INTRUSIONS INTO SELLER'S VOICE PROCESSING
SYSTEMS BY FRAUDULENT CALLERS OR AGAINST ANY TOLL FRAUD. SELLER MAKES NO
WARRANTIES AS TO THE LAWFULNESS OF USING ANY FEATURE OF THE PRODUCTS TO MONITOR,
RECORD OR FORWARD ANY ORAL, WIRE OR ELECTRONIC COMMUNICATION.
12.3 Seller shall not be liable for any warranty offered by Buyer that
differs from the warranty quoted above. Seller does not warrant any Products
that have been modified without Seller's prior written consent, and Buyer shall
not make or permit to be made, any alterations or modifications of any Products
without the prior written consent of Seller. Buyer agrees to hold harmless and
indemnify Seller against claims of any kind related to any unauthorized
alterations or modifications of Products made or authorized by Buyer, or related
to warranties by Buyer that differ from the warranty quoted above.
13.0 RETURN OF PRODUCTS
13.1 "In warranty" defective Products shall be returned to Seller,
postage or freight prepaid. Seller will, at its option, repair or replace such
defective Products free of charge. Within fifteen (15) days of Seller's receipt
of defective Products, Seller shall ship, at Seller's expense, repaired or
replacement Products to Buyer, F.O.B. Charlottesville. All repaired defective
Products will carry the original warranty period or an additional one-year
warranty, whichever is greater. On a calendar quarterly basis, Seller will
reimburse Buyer for the "average" return freight charges and insurance for all
"in warranty" returns during such quarter. The "average" return freight charge
shall be determined by the parties, by reference to "in warranty" Product
returns during the first full calendar quarter of Product shipment.
13.2 "Out of warranty" defective Products may be returned to Seller,
postage or freight prepaid, without prior authorization. Seller will, at its
option, repair or replace the defective Products. Units are re-dated to allow
for a new warranty, which is one-year. All repair work is billed at prevailing
rates, which, for purposes of this Agreement only, Seller agrees not to increase
more than five percent (5%) in any calendar year. Repair rates for calendar year
1997 are set forth in Attachment F, subject to change in 1998 and subsequent
years in accordance with the provisions of this section.
3.1. Returned Products must be carefully packed to prevent damage. Any
damage incurred during shipment will be the responsibility of the sender. All
returns should be sent to: Comdial Corporation, ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Comdial Product Services. A complete
repair rate schedule is available upon request.
13.3 Seller agrees to provide repair service for all Products sold
under this Agreement for a period of five (5) years after shipment of the
Products unless the Products have been misused or are beyond repair. Thereafter,
Seller shall determine on a year to year basis, in its sole discretion and
subject to the availability of required parts, whether to provide repair service
for any additional period.
14.0 REPRESENTATIONS AND WARRANTIES BY BUYER
14.1 Buyer represents and warrants to Seller that:
14.1.1 Buyer has the full power and authority to execute,
deliver and perform this Agreement and to carry out the transactions
contemplated hereby;
14.1.2 the execution and delivery of this Agreement by Buyer
and the carrying out by Buyer of the transactions contemplated hereby
have been duly authorized by all requisite corporate action, and this
Agreement has been duly executed and delivered by Buyer and constitutes
the legal, valid and binding obligation of Buyer, enforceable against
it in accordance with the terms hereof, subject to limitations imposed
by bankruptcy, insolvency, reorganization, moratorium or other similar
laws relating to or affecting the enforcement of creditors' rights
generally and general principles of equity;
14.1.3 to the best of Buyer's knowledge, no authorization,
consent, approval or order, or notice to or registration,
qualification, declaration or filing with, any governmental authority,
is required for the execution, delivery and performance by such party
of this Agreement or the carrying out by such party of the transactions
contemplated hereby;
14.1.4 to the best of Buyer's knowledge, none of the
execution, delivery and performance by Buyer of this Agreement, the
compliance with the terms and provisions hereof, and the carrying out
of the transactions contemplated hereby, materially conflicts or will
conflict with or result in a material breach or violation of any of the
terms, conditions, or provisions of any law, governmental rule or
regulation or organizational document, as amended, or bylaws, as
amended, of Buyer or any applicable order, writ, injunction, judgment
or decree of any court or governmental authority against Buyer or by
which it or any of its properties is bound, or any loan agreement,
indenture, mortgage, bond, note, resolution, contract or other
agreement or instrument to which such Buyer is a party or by which it
or any of its properties is bound, or constitutes or will constitute a
default thereunder or will result in the imposition of any third party
lien upon any of its properties; and
14.1.5 there are no legal proceedings, arbitrations,
administrative actions or other proceedings by or before any
governmental or regulatory authority or agency, now pending or, to the
knowledge of Buyer, threatened against Buyer party or any of its
subsidiaries that if adversely determined, could reasonably be expected
to have a material adverse effect on Buyer's ability to perform its
obligations under this Agreement.
15.0 REPRESENTATIONS AND WARRANTIES BY SELLER
15.1 Seller represents and warrants to Buyer that:
15.1.1 Seller has the full power and authority to execute,
deliver and perform this Agreement and to carry out the transactions
contemplated hereby;
15.1.2 the execution and delivery of this Agreement by Seller
and the carrying out by Seller of the transactions contemplated hereby
have been duly authorized by all requisite corporate action, and this
Agreement has been duly executed and delivered by Seller and
constitutes the legal, valid and binding obligation of Seller,
enforceable against it in accordance with the terms hereof, subject to
limitations imposed by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting the
enforcement of creditors' rights generally and general principles of
equity;
15.1.3 to the best of Seller's knowledge, no authorization,
consent, approval or order, or notice to or registration,
qualification, declaration or filing with, any governmental authority,
is required for the execution, delivery and performance by such party
of this Agreement or the carrying out by such party of the transactions
contemplated hereby;
15.1.4 to the best of Seller's knowledge, none of the
execution, delivery and performance by Seller of this Agreement, the
compliance with the terms and provisions hereof, and the carrying out
of the transactions contemplated hereby, materially conflicts or will
conflict with or result in a material breach or violation of any of the
terms, conditions, or provisions of any law, governmental rule or
regulation or organizational document, as amended, or bylaws, as
amended, of Seller or any applicable order, writ, injunction, judgment
or decree of any court or governmental authority against Seller or by
which it or any of its properties is bound, or any loan agreement,
indenture, mortgage, bond, note, resolution, contract or other
agreement or instrument to which such Seller is a party or by which it
or any of its properties is bound, or constitutes or will constitute a
default thereunder or will result in the imposition of any third party
lien upon any of its properties; and
15.1.5 there are no legal proceedings, arbitrations,
administrative actions or other proceedings by or before any
governmental or regulatory authority or agency, now pending or, to the
knowledge of Seller, threatened against Seller party or any of its
subsidiaries that if adversely determined, could reasonably be expected
to have a material adverse effect on Seller's ability to perform its
obligations under this Agreement.
16.0 INTELLECTUAL PROPERTY INFRINGEMENT CLAIMS.
16.1 Buyer agrees to notify Seller promptly (but in no case later than
ten (10) Business Days following Buyer's actual or constructive notice thereof)
of any actual or threatened activity by any third party which might constitute
an infringement or unauthorized or deceptive use by any person of any of
Seller's copyrights, patents or other proprietary rights related to the
Products. Seller reserves the sole and exclusive right to institute, maintain,
and settle any proceedings for the infringement or deceptive use of the
Intellectual Property. At Seller's expense, Buyer agrees to cooperate with
Seller and to provide all reasonable assistance which may be requested by Seller
in connection with any action which Seller may take regarding any such potential
infringement or deceptive use.
16.2 Buyer agrees to notify Seller promptly in writing (but in no case
later than ten (10) Business Days following Buyer's actual or constructive
notice thereof) of any claim asserted by a third party that any Product
infringes upon the patent, copyright, or trademark rights of others (an
"Infringement Claim"). For purposes of the indemnity provisions set forth in
this subparagraph , the term "Product" shall be deemed to include each component
and item of equipment comprising the Product. Conditioned upon such notice and
at Seller's expense, Seller shall (i) at its sole option, defend or settle such
Infringement Claim, procure for Buyer the right to sell the Product, or modify
the Product to avoid infringement, and (ii) indemnify and hold Buyer harmless
from any resulting costs or damages, including reasonable attorneys' fees. In no
event, however, shall Seller have any liability for any claim based upon the
combination, operation, or use of any Product applied with equipment not
approved in writing by Seller, or based upon alterations of the Products by any
person other than Seller.
17.0 INDEMNIFICATION PROVISIONS
17.1 If Buyer receives a claim that a Product or any part thereof has
caused damage or injury to others, Buyer shall immediately notify Seller in
writing of any such claim. Seller shall defend or settle such claims and shall
indemnify and hold Buyer harmless from any judgment which may be entered against
Buyer as a result of a defective Product or the negligence of Seller, its
agents, or its employees and all costs or expenses incurred by Buyer in
connection therewith. Seller shall further indemnify and hold Buyer harmless
from and against, any and all suits or claims for personal injury or property
damage arising, or allegedly arising from, Seller's performance or
non-performance of this Agreement. These obligations apply only if the injury or
damages are due to the act, omission, fault, failure or negligence of Seller,
its agents or employees. Seller agrees that Buyer may employ attorneys of its
own selection to appeal and defend the claim or action on behalf ofBuyer at the
expense of Seller, or, Buyer may elect to allow Seller, at Seller's expense, to
employ an attorney to defend Buyer provided, however, Buyer reserves the right
to approve any such attorney, and in the event of non-approval or the failure of
Seller to employ an attorney, Buyer at its option, shall have the sole authority
for the direction of the defense and shall be the sole judge of the
acceptability of any compromise or settlement of any claims for actions against
Buyer. Seller further agrees to pay the amount of any compromise or settlement.
This provision for indemnification shall survive termination of the Agreement.
17.2 Buyer shall indemnify and hold harmless Seller, its employees,
agents, and affiliates from and against any and all claims, actions,
liabilities, losses, and damages arising out of or in connection with Buyer's
sale, lease, use, and related activities pursuant to this Agreement with respect
to the Products, and resulting from the failure of Buyer to comply with all
applicable laws, rules and/or regulations regarding advertising, selling,
licensing, or exporting the Products, as well as any warranties granted by Buyer
in excess of those warranties contained in Article .0 hereof. The foregoing
obligation to indemnify Seller shall include, but not be limited to
indemnification against all expenses, including reasonable attorney's fees and
such fees on appeal, incurred by Seller in investigating and/or defending
against any claims, action, or liabilities for which indemnification is provided
for herein. Buyer agrees to defend Seller against any and all claims, actions,
or liabilities for which indemnification is provided for herein, whether such
claims or actions are rightfully or wrongfully brought or filed with respect to
the subject of indemnification herein. Buyer agrees that Seller may employ
attorneys of its own selection to appeal and defend the claim or action on
behalf of Seller at the expense of Buyer, or, Seller may elect to allow Buyer,
at Buyer's expense, to employ an attorney to defend Seller provided, however,
Seller reserves the right to approve any such attorney, and in the event of
non-approval or the failure of Buyer to employ an attorney, Seller at its
option, shall have the sole authority for the direction of the defense and shall
be the sole judge of the acceptability of any compromise or settlement of any
claims for actions against Seller. Buyer further agrees to pay the amount of any
compromise or settlement. This provision for indemnification shall survive
termination of the Agreement.
18.0 CONFIDENTIAL INFORMATION
18.1 Obligation: Buyer and Seller agree to maintain all Confidential
Information in the strictest confidence. Without the prior written consent of
the other party, Buyer and Seller agree not to disclose any Confidential
Information to any third person, including, but not limited to, either party's
affiliates, joint venturers, technology transfer partners, and not to make use
of any Confidential Information for any purpose other than design, engineering
and manufacturing the Products for sale to Buyer.
18.2 Restricted Access: Buyer and Seller agree to restrict access to
all Confidential Information to only such authorized employees and other agents
who have a need for access to the Confidential Information in connection with
their activities as contemplated by this Agreement and take all steps necessary
to ensure that such employees and agents comply with the terms of this
Agreement. Buyer and Seller agree to inform all employees and agents to whom
Confidential Information is disclosed or made available of the terms of this
Agreement and to ensure that all such employees and agents comply with the terms
of this Agreement.
18.3 Return: All Confidential Information and all materials and
documents (including copies) containing Confidential Information provided by
either party to the other shall remain the property of the party providing the
Confidential Information and shall be returned to such party immediately upon
request.
19.0 TERM AND TERMINATION
19.1 This Agreement will expire sixty (60) months from the date first
written above unless earlier terminated for a Material Breach as defined in
Section . Upon expiration of the term, this Agreement may be renewed by mutual
consent and agreement of the parties.
19.2 Upon the occurrence and continuation of a Material Breach by
either party, the non-defaulting party may terminate this Agreement by mailing a
written termination notice to the defaulting party specifying a date not less
than five (5) days after the date of such notice on which the Agreement shall
terminate. For purposes of this Agreement, the term "Material Breach" shall
mean:
19.2.1 default by Buyer in the performance or observation of
any of its material obligations or responsibilities under this
Agreement and the continuance of such default for ninety (90) days
after Buyer's receipt of written notice from Seller specifying such
default, provided, however, that in the case of any such default which
is of a nature that it is not capable of being cured within such ninety
(90) day period, if Buyer shall diligently commence to cure such
default within such ninety (90) day period and diligently and in good
faith thereafter prosecute such cure to completion, the time within
which such default must be cured shall be extended for such period as
is reasonably necessary to complete the curing thereof with diligence,
but in no event for more than 120 days; or
19.2.2 default by Seller in the performance or observation of
any of its material obligations or responsibilities under this
Agreement and the continuance of such default for ninety (90) days
after Seller's receipt of written notice from Buyer specifying such
default, provided, however, that in the case of any such default which
is of a nature that it is not capable of being cured within such ninety
(90) day period, if Seller shall diligently commence to cure such
default within such ninety (90) day period and diligently and in good
faith thereafter prosecute such cure to completion, the time within
which such default must be cured shall be extended for such period as
is reasonably necessary to complete the curing thereof with diligence,
but in no event for more than 120 days.
19.3 Within thirty (30) days after the termination of this Agreement by
Buyer without a Material Breach by Seller, Buyer will purchase from Seller all
work-in-process and inventory relating to the Products.
19.4 Notwithstanding that a date for termination of this Agreement
shall have been established by notice or agreement, Seller shall be obligated to
deliver and Buyer shall be obligated to accept and pay for all such Products as
Buyer shall have ordered from Seller prior to such termination date. In no event
shall Seller be obligated to deliver any Products ordered on or after the date
of termination, provided, however, that Buyer shall not be relieved of any
obligation to accept and pay for Products delivered by Seller and ordered by
Buyer on or after the date of termination of this Agreement.
19.5 The acceptance of any Purchase Order from, or the sale of any
Products to, Buyer after the termination of this Agreement shall not be
construed as a renewal or extension thereof nor as a waiver of termination, but
in the absence of a new written agreement, all such transactions shall be
governed by provisions identical with the provisions of this Agreement.
19.6 Neither party hereto shall, by reason of the termination or
non-renewal of this Agreement be liable to the other party for compensation,
reimbursement or damages on account of the loss of prospective profits on
anticipated sales, or on account of expenditures, investments, leases or
commitments in connection with the business or goodwill of such other party.
19.7 Prior to Seller's commencing manufacture of the Products, if this
Agreement is terminated in accordance with this Article 19.0 by Buyer due to
Seller's Material Breach, Seller shall refund all NRE Expenses previously paid
by Buyer to Seller. If this Agreement is terminated within such period by Seller
due to Buyer's Material Breach, Buyer shall reimburse Seller for all NRE
Expenses incurred by Seller up to and including the effective date of
termination.
19.8 The termination of this Agreement shall not relieve Buyer or
Seller of any obligations and duties which accrued prior to the termination, nor
of any duties or obligations under this Agreement which are stated or
necessarily implied to survive its termination.
20.0 DESIGN, PROCESS AND ENGINEERING CHANGES
20.1 If reasonably possible, Seller agrees to provide six (6) months
advance notification and shall obtain written approval of Buyer of any changes
in form, fit or function of the Products. Implementation of such change will
depend on the nature of the change, lead time required to obtain necessary
parts, tooling lead time and/or inventory on hand. Seller and Buyer agree to
cooperate to expedite implementation of such changes in a timely manner.
20.2 All cost impacts and material availability issues shall be
mutually reviewed and agreed upon in writing by Buyer and Seller prior to
implementation.
20.3 Seller and Buyer agree that the phrase "changes in form, fit or
function" shall include any change which:
(a) affects Buyer software;
(b) affects Buyer hardware electrical or mechanical design;
(c) affects the Products' external appearance; (d) affects
Buyer's user documentation; (e) affects the interchangeability
of old and new versions of the Products; or (f) removes or
degrades a capability described in a Product's data sheet or
manual.
The phrase "changes in form, fit or function" shall not include changes to
remedy "bugs" or other minor deviations from the Statement of Work or the QC
Release for Shipment version of the Products, changes to improve
manufacturability and reliability, or changes of raw-material suppliers.
20.4 If Buyer requests a change in form, fit or function of the
Products which results in Seller's having obsolete Products or materials in
inventory which cannot be used by Seller in Seller's other products, Buyer shall
purchase all such obsolete Products or materials from Seller at Seller's cost.
Seller shall ship any obsolete Products and/or materials to Buyer at Buyer's
request. Buyer shall reimburse Seller for any costs incurred by Seller in
connection with shipping or disposing of obsolete inventory.
20.5 Buyer and Seller shall mutually agree upon a system for
determining numerical and alpha revision changes to the Products.
21.0 DELIVERY DELAYS
21.1 Seller shall use reasonable efforts to ensure prompt delivery of
all Products purchased by Buyer under this Agreement. Buyer's Supplier
Management Program provides that if less than ninety-two percent (92%) of the
Products delivered by Seller to Buyer during any calendar month arrive in
accordance with delivery deadlines set forth in the Purchase Order for such
Products, Buyer shall issue a SCAR to Seller. If, during the calendar month
immediately following the month for which the SCAR was issued, less than
ninety-two percent (92%) of the Products delivered by Seller to Buyer arrive in
accordance with delivery deadlines set forth in the Purchase Order for such
Products, Buyer and Seller shall hold an on-site meeting to discuss corrective
action. If, during the three (3) months immediately following the month for
which the on-site meeting was held, less than ninety-two percent (92%) of the
Products delivered by Seller to Buyer arrive in accordance with delivery
deadlines set forth in the Purchase Order for such Products, a Material Breach
of this Agreement shall be deemed to have occurred and Buyer shall be entitled
to all remedies set forth in Articles .0 and .0 hereof.
22.0 EXCUSABLE DELAYS
22.1 Seller shall be excused from timely performance and shall not be
liable for failure to perform, in whole or in part, as a result of any cause
beyond Seller's reasonable control, including, but not limited to, acts or
inactions of government whether in its sovereign or contractual capacity,
judicial action, war, epidemics, explosions, civil disturbance, insurrection,
sabotage, act of a public enemy, strike, labor dispute, accident, fire, flood,
rain, snow, storm, or other acts of God, provided that Seller gives Buyer prompt
notice of such delay.
22.2 In the event of an excusable delay, Seller shall be entitled to
relief from performance requirements for the duration of the event causing such
delay, provided, however, that if such event exceeds thirty (30) days, Seller
shall work with Buyer to establish an alternative method of supplying the
Products until Seller is able to resume performance of its obligations under
this Agreement.
23.0 COMPLIANCE WITH U.S. EXPORT REGULATIONS.
23.1 Buyer shall comply with the rules and regulations under the U.S.
Export Administration Act, the U.S. Anti-Boycott provisions, and the U.S.
Foreign Corrupt Practices Act, as well as all of the applicable U.S. federal,
state and municipal statutes, rules and regulations. Such compliance with U.S.
Export control laws and regulations shall include, without limitation, an
obligation to obtain any and all applicable or required export licenses or
authorizations (including licenses or permits for the re-export of any Product
or component thereof) and, if so requested by Seller, the obligation to
demonstrate to Seller's reasonable satisfaction that all such licenses have been
obtained.
23.2 Notwithstanding the terms of Section 23.1, if Seller agrees to
drop ship any Products to a destination outside of the United States pursuant to
Section 10.3, Seller shall comply with the rules and regulations under the U.S.
Export Administration Act, the U.S. Anti-Boycott provisions, and the U.S.
Foreign Corrupt Practices Act, as well as all of the applicable U.S. federal,
state and municipal statutes, rules and regulations. Such compliance with U.S.
Export control laws and regulations shall include, without limitation, an
obligation to obtain any and all applicable or required export licenses or
authorizations (including licenses or permits for the re-export of any Product
or component thereof) and, if so requested by Buyer, the obligation to
demonstrate to Buyer's reasonable satisfaction that all such licenses have been
obtained.
24.0 FOREIGN CORRUPT PRACTICES ACT.
The parties acknowledge that they are familiar with and understand the
provisions of the United States Foreign Corrupt Practices Act of 1977 (the
"Act"). In connection therewith, the parties agree that neither they, nor any of
their officers, directors, employees or representatives, shall do or be
instructed to do any of the following:
24.1 Pay or give anything of value, either directly or
indirectly, to an official of any government or any political party for
the purpose of influencing an act or decision in such person's official
capacity, or inducing such person to use influence with the government
in order to assist them in obtaining or retaining business for or with,
or directing business to, any person, or for any other purpose
whatsoever; or
24.2 Use any compensation received from the other party for
any purpose, nor take any action, which would constitute a violation of
any law of the United States of America (including the Act) or any
country or governmental authority within the Territory.
25.0 NOTIFICATION
All notices and other communications hereunder shall be in writing and
shall be deemed given if delivered personally, telecopied (which is confirmed)
or mailed by registered or certified mail (return receipt requested) to the
parties at the following addresses (or at such other address for a party as
shall be specified by like notice):
If to Buyer at:
▇▇▇▇▇▇ Corporation
▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Purchasing Manager
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to Seller at:
Comdial Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Senior Vice President
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
McGuire, Woods, Battle & ▇▇▇▇▇▇, LLP
P. O. Box 1288
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
26.0 GOVERNMENT CONTRACTS
26.1 If Products to be furnished by Buyer to Seller under this
Agreement are to be used in the performance of a government contract or
subcontract with the United States of America (a "U.S. Government Contract) and
a U.S. Government Contract number is identified in the Purchase Order for such
Products, those clauses of the applicable United States procurement regulations
whose inclusion in U.S. Government Contracts is mandatory under federal statute
or regulation shall be incorporated by reference in the applicable Purchase
Order.
26.2 Seller agrees to comply with the following Federal Acquisition
Regulation (FAR) clauses which are incorporated by reference herein: 52.220-4,
Labor Surplus Area Subcontracting Program; 52.222-1, Notice to the Government of
Labor Disputes; 52.222-4 Contract Work Hours and Safety Standards Act--Overtime
Compensation; 52.222-26, Equal Opportunity; 52.222-35, Affirmative Action for
Special Disabled and Vietnam Era Veterans; 52.222-35, Affirmative Action for
Handicapped Workers; 52.222-37, Employment Reports on Special Disabled Veterans
and Veterans of the Vietnam Era; ▇▇-▇▇▇-▇▇, Service Contract Act; and 52.223-2,
Clean Air and Water Act. Upon Seller's request, copies of these provisions shall
be supplied by Buyer's purchasing department.
27.0 DISPUTE RESOLUTION; REMEDIES
27.1 During the term of this Agreement, if any issue, dispute or
controversy ("Dispute") should arise between Buyer and Seller, the Dispute shall
be referred to the responsible senior management of each party for resolution.
Neither party shall seek any other means of resolving any Dispute arising in
connection with this Agreement until both parties' responsible senior
managements have had at least five (5) Business Days to resolve the Dispute
following referral of the Dispute to such responsible senior management. If the
senior management of both parties are unable to resolve the Dispute, either
party may then, at any time, deliver notice to the other party of its intent to
submit the Dispute to arbitration, which notice shall outline the specific
issues concerning the Dispute which must be resolved (the "Arbitration Notice").
27.2 Not more than thirty (30) days after delivery of an Arbitration
Notice, either party (for purposes of this Section , the "First Party") may give
notice to the other party (for purposes of this Section , the "Second Party")
that it has designated an arbitrator. Within twenty (20) days of the delivery of
the notice of designation, the Second Party shall be required to designate a
second arbitrator and to notify the First Party of such designation. Within
twenty (20) days of the designation of the second arbitrator, the two designated
arbitrators shall meet and shall jointly designate a third arbitrator who shall
be neutral and impartial. Arbitrators shall be qualified by education and
experience in the subject matter of the Dispute and issues to be arbitrated. The
arbitrator designated by the party-appointed arbitrators shall be the Chairman
of the arbitration panel. A determination by a majority of the panel shall be
binding upon and enforceable against each party.
27.3 If for any reason (i) the Second Party shall fails to designate an
arbitrator after notice of designation is delivered by the First Party or (ii)
the two party-appointed arbitrators fail to designate a third arbitrator, or the
third arbitrator fails for any reason to serve, such arbitrator(s) shall be
designated by the American Arbitration Association upon the demand of either
Party.
27.4 Arbitration proceedings initiated by Buyer against Seller shall be
held in Charlottesville, Virginia and arbitration proceedings initiated by
Seller against Buyer shall be held in San Francisco, California. Buyer and
Seller may mutually agree on an alternative location for any arbitration
proceeding.
27.5 Buyer and Seller agree that any Dispute being resolved by
arbitration shall be determined pursuant to the provisions of this Agreement and
applicable commercial arbitration rules of the American Arbitration Association
then in effect, but only to the extent such rules are not inconsistent with the
provisions of this Agreement.
27.6 The authority of the arbitrators shall be limited to resolution of
the specific Dispute and related issues in controversy as designated by the
parties.
28.0 AMENDMENT OF AGREEMENT
28.1 This Agreement may be amended or altered in any of its provisions
by the parties hereto only by a writing signed by both parties, and any such
amendment shall become effective only when it has been signed by both parties or
at such other time as such amendment may provide.
29.0 SECTION HEADINGS
29.1 The section headings contained herein shall in no way limit,
extend or interpret the scope or language of this Agreement or of any particular
section, and such headings are intended to be utilized only for convenient
reference.
30.0 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES
30.1 This Agreement (including the exhibits hereto and the documents
and instruments referred to herein) (i) constitutes the entire agreement and
supersedes all prior agreements and understandings, both written and oral,
between the parties with respect to the subject matter hereof, and (ii) is not
intended to confer upon any person or entity other than the parties hereto any
rights or remedies hereunder.
31.0 GOVERNING LAW
31.1 This Agreement shall be governed and construed in accordance with
the laws of the Commonwealth of Virginia without regard to any applicable
conflicts of law provisions thereof.
32.0 NO ASSIGNMENT
32.1 Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by either of the parties hereto (whether
by operation of law or otherwise) without the prior written consent of the other
party. Subject to the preceding sentence, this Agreement will be binding upon,
inure to the benefit of, and be enforceable by the parties and their respective
successors and assigns.
33.0 INTERPRETATION
33.1 Unless the context requires otherwise, all words used in this
Agreement in the singular number shall extend to and include the plural, all
words in the plural number shall extend to and include the singular and all
words in any gender shall extend to and include all genders. All references to
contracts, agreements, leases and other understandings or arrangements shall
refer to oral as well as written matters.
34.0 WAIVER
34.1 The waiver by either party of a breach or violation of any term or
provision of this Agreement shall not operate nor be construed as a waiver of
any subsequent breach or violation.
35.0 SEVERABILITY
35.1 The invalidity or unenforceability of any provision in this
Agreement shall not affect or impair the enforcement of any other provision, and
this Agreement shall be construed as if such invalid or enforceable provision
had not been contained in this Agreement.
36.0 COUNTERPART COPIES
36.1 This Agreement may be executed in two counterpart copies, both of
which shall be considered one in the same agreement and shall become binding on
the parties when a counterpart copy has been signed by each of the parties and
delivered to other party, it being understood that all parties need not sign the
same counterpart copy.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written by their respective officers, each duly authorized.
▇▇▇▇▇▇ CORPORATION
By:\s\ ▇▇▇▇▇ ▇. ▇▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Procurement Specialist
Date: March 4, 1997
COMDIAL CORPORATION
By: \s\ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
Date: 3-6-97
