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Exhibit 10.30
***Text Omitted and Filed Separately
Confidential Treatment Requested
Under 17 C.F.R. Sections
200.80(b)(4), 200.83 and 230.406
SUPPLY AGREEMENT
THIS SUPPLY AGREEMENT (this "Agreement") is entered into as of
July 31, 1996 by and among LUCENT TECHNOLOGIES INC., a Delaware corporation,
having a principal office at 000 Xx. Xxxx Xxxx, Xxxxxxx Xxxxx, Xxx Xxxxxx 00000
and its affiliates ("Company"), AT&T Paradyne Corporation, a Delaware
corporation, having a principal office at 0000 000xx Xxxxxx Xxxxx, Xxxxx,
Xxxxxxx 00000 and CAP Acquisition Corp., a Delaware corporation, having a
principal office at 0000 000xx Xxxxxx Xxxxx, Xxxxx, Xxxxxxx 00000 ("CAPCO"),
collectively referred to herein as "Supplier".
1. TERM
This Agreement shall become effective as of the date here of
and shall continue in effect for a period of four (4) years. The amendment or
termination of this Agreement shall not affect the obligations of either party
to the other under then existing Orders issued pursuant to this Agreement, but
such Orders shall continue in effect as though this Agreement had not expired or
been terminated and was still in effect with respect to said Orders.
2. ORDER
For the purpose of this Agreement, an "Order" shall mean
Company's form of purchase order or contract used for the purpose of ordering
Material. Each Order shall reference this Agreement, thereby incorporating in
such Order the terms and conditions stated in this Agreement. In addition,
orders from affiliates (excluding AT&T Corp. and NCR Corp. when purchasing as
affiliates but not when purchasing as subcontractors) and subcontractors shall
be considered Orders for purposes of the Volume/Price Letter as outlined in a
letter agreement between Texas Pacific Group and Company dated the date of this
Agreement ("Volume/Price Letter").
3. MATERIAL
For the purpose of this Agreement, "Material" shall be defined
as those services performed by Supplier for Company and those communications
products that are identified by comcode numbers and described on Exhibit A to
this Agreement ("Existing Products"); which attachment shall be continuously
updated, to include Enhanced and New Products if such products satisfy the
requirements of the clause ENHANCED AND NEW PRODUCTS.
4. ENHANCED AND NEW PRODUCTS
For the purpose of this Agreement, "Enhanced Product" or
"Enhanced Products" shall mean any product which results out of Company's desire
to have Supplier redesign, modify, or enhance an Existing Product or family of
Existing Products. For the purpose of this Agreement, "New Product" or "New
Products" shall mean any product which is not an Enhanced Product or Existing
Product but which is substantially similar to an of this Agreement, "New
Product" or "New Products" shall mean any product which is not an Enhanced
Product or
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Existing Product but which is substantially similar to an Existing Product with
respect to design and function and possesses reasonable performance
improvements. If Company desires to purchase an Enhanced or New Product(s) from
Supplier, Company shall so notify Supplier and provide Supplier the opportunity
to manufacture such Enhanced or New Product(s), subject to the following
conditions and procedures.
Supplier shall, within thirty (30) days from the date of
Supplier's receipt of Company's notice, inform Company whether Supplier desires
to manufacture and supply such Enhanced or New Product(s) to Company. If
Supplier desires to manufacture and supply such Enhanced or New Product(s),
Supplier shall provide Company (a) a written production plan demonstrating
Supplier's ability to satisfy the Performance Requirement, as described in the
next sentence, for such Enhanced or New Product(s) (such plan shall include
production locations and proposed dates for prototypes, sample production and
full production) and (b) Supplier's proposed Price for such Enhanced or New
Product(s). "Performance Requirement" shall mean the Company's reasonably
prescribed performance standards for Material, including, but not limited to,
quality, compliance with Specifications, delivery and service support, each
determined in the case of an Enhanced Product with reference to standards for an
Existing Product or family of Existing Products.
The parties shall then negotiate in good faith to reach an
agreement on such production plan's ability to satisfy the Performance
Requirements and the Price to be charged for the Enhanced or New Product(s). In
the event the parties agree on the production plan's satisfaction of the
Performance Requirement and the Price for such Enhanced or New Product(s), and
Supplier fulfills its obligations under the production plan (including the
commencement of full production runs), then such Enhanced or New Product(s) will
be added to Exhibit A for the purposes of this Agreement. All work performed by
Supplier under this clause will be at Supplier's sole risk and expense, unless
otherwise agreed to by the parties.
If despite good faith negotiations the parties fail to agree
(i) that the Enhanced or New Product(s) production plan satisfies the
Performance Requirement or (ii) on a Price for the Enhanced or New Product(s),
the parties agree to resolve the dispute through mediation as set forth in the
Clause MEDIATION. In the event that as a result of such mediation, if necessary,
the production plan is deemed to not satisfy the Performance Requirement, or the
product plan slips the Company may purchase the Enhanced or New Product(s) from
another source or sources and, the Volume/Price levels as outlined in the
("Volume/Price Letter") shall be adjusted to reflect the dollar amount purchased
by Company from the other source or sources.
If the Supplier desires not to make available for order by
Company any Enhanced or New Product, the Company may purchase the Enhanced or
New Product(s) from another source or sources and, the Volume/Price levels as
outlined in the Volume Price Letter shall be adjusted to reflect the dollar
amount purchased by Company from the other source or sources.
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5. MATERIAL PURCHASE
During the term of this Agreement, Company shall purchase and
Supplier shall sell Material to Company in accordance with the terms and
conditions set forth in this Agreement and the Exhibits shown which are hereby
made a part of this Agreement.
In the event the terms and conditions of the Exhibits shown
above conflict with the terms and conditions of the Agreement, the terms and
conditions of this Agreement shall prevail.
6. PRICE
For the purposes of this Agreement, the "Price" for Material
shall mean [***] and shall be as set forth on Exhibit A which attachment shall
be revised from time to time as provided in this Agreement. Supplier agrees to
accept Orders directly from any of Company's subcontractors as designated by
Company and extend to Company's subcontractors the Prices set forth for
Material.
7. BEST PRICE
Supplier's Prices to Company for Material contained herein
with applicable discounts and with any increases permitted hereunder, shall be
[***]. If Supplier at any time [***], Supplier shall [***]. For purposes of
determining if Supplier's prices are Best Prices, within the meaning of this
paragraph only. Supplier's Prices shall [***].
8. MARKET RIGHTS
Company has selected Supplier as a preferred supplier for the
Material described in Exhibit A during the four (4) year term of this Agreement.
"Preferred Supplier" means that Company will use commercially reasonable efforts
to purchase Material from Supplier over equivalent (i.e., price, functionality
or performance) material offered by another supplier pursuant to the terms and
conditions of this Agreement. Except for the Preferred Supplier status described
in the foregoing sentence, it is expressly understood and agreed that this
Agreement neither grants to Supplier an exclusive right or privilege to
manufacture, repair, or source all Material of the type described in this
Agreement, nor requires the purchase of any manufactured, repaired, or sourced
Material from Supplier by Company. It is, therefore, understood that Company may
contract with other manufacturers and suppliers for the manufacture or repair of
Material and other products.
9. BENCHMARKING
On a semi-annual basis, or "as needed" by either party,
Supplier and Company shall undertake to benchmark price, quality, product
functionality, and service performance of the Material
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offered by Supplier here under. The Material benchmarked shall be the comcodes
that comprise [***] purchased by Company. Supplier and Company shall review such
benchmark information and Supplier shall develop a plan of action for improving
Material Price, quality, product functionality, and service performance if such
benchmark information indicates improvements are needed when compared to the
then existing standards of the industry of comparable Price, quality, product
functionality and service. Should Supplier fail to introduce improvements that
assure Company that Material is meeting or exceeding competitive benchmarks with
respect to: (1) Material Price within ten (10) days of such review, and (2) for
Material quality, product functionality, or service performance within ninety
(90) days of such review (with Supplier to provide a plan for introducing such
improvements within the first thirty (30) days of such review) then Company
shall have the right to competitively quote such Material in the marketplace.
Company will give Supplier a thirty (30) day prior written notice of an intent
to place business with any other supplier and provide Supplier that thirty (30)
day period to match or beat such other offer received by Company. If Supplier
matches or beats such other offer, Company agrees to continue to place Orders
with Supplier at the new Price, quality, product functionality, and service
levels subject to the terms and conditions of this Agreement. If Supplier does
not match or beat Company's offer, Company may elect to purchase Material from
another source and the Volume/Price levels set forth in the Volume Price Letter
shall be adjusted to reflect the dollar amount purchased by Company from the
other source or sources.
In the event of a dispute with respect to the approach,
procedures or results of the benchmarking, the parties agree to promptly retain
an independent, nonaffiliated consultant experienced in the industry to provide
an objective assessment of the issue(s) in dispute. The determination of the
consultant shall be final and binding.
10. PAYMENT TERMS
Except as otherwise provided in an individual Order issued
hereunder, net thirty (30) days from the later of the date of shipment of
Material to Company or receipt of the invoice therefor by Company.
11. TRANSPORTATION TERMS
FOB Origin, unless both parties mutually agree otherwise.
12. FLEXIBLE DELIVERY ARRANGEMENTS
During the term of this Agreement, Company may give written
notice to Supplier requesting that Supplier implement "Demand Pull", "Pull
Replenishment", "Consignment", and/or some other form of flexible delivery
arrangement for one or more types of Material. Upon mutual agreement between
Company and Supplier, Company shall have the right to implement such flexible
delivery arrangements by providing written notice to Supplier at least thirty
(30) days prior to the agreed upon implementation date. Such notice shall
specify the particular Company facility which will be covered by such flexible
delivery arrangement, the Material covered by such flexible delivery arrangement
and the agreed upon implementation date. The proposed terms and
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conditions of Company's Demand Pull, Pull Replenishment, and Consignment
arrangements are set forth on Exhibits B, C and D of this Agreement.
13. FLEXIBLE ORDERING AND PAYMENT ARRANGEMENTS
During the term of this Agreement, Company may give written
notice to Supplier requesting that Supplier implement Electronic Data
Interchange ("EDI") ordering and payment arrangements for one or more types of
Material. Upon mutual agreement between Company and Supplier, Company shall have
the right to implement such ordering and payment arrangements by providing
written notice to Supplier at least thirty (30) days prior to the implementation
date. Such notice shall specify the particular Company facility which will be
covered by such ordering and payment arrangement, the Material covered by such
ordering and payment arrangement and the requested implementation date. The
parties acknowledge and agree that the implementation of an EDI program will
entail the cooperation of both parties and that such parties will work in good
faith to implement such program as soon as practicable. The proposed terms and
conditions of the applicable ordering and payment arrangement are set forth on
Exhibit E of this Agreement.
14. SPECIFICATIONS OR DRAWINGS
All technical, functional, and safety specifications, designs,
drawings, schematics, test procedures, and packaging, packing, and container
marking specifications (collectively "Specifications"), as mutually agreed upon
by the parties are hereby made a part of this Agreement. Specifications may be
modified from time to time with agreement of the parties and the parties shall
promptly endeavor to mutually agree to equitable adjustments to the Price and/or
delivery schedules resulting from any such modifications. Supplier shall
manufacture Material in accordance with Specifications, so that Material
conforms to such Specifications.
Company's ownership, design, inspection, and/or approval of
Material shall in no way limit Supplier's responsibility for its obligations
under this or any other part of this Agreement.
15. MANUFACTURE DISCONTINUED
Supplier shall provide Company at least one (1) year prior
written notice that any Material covered by this Agreement is recommended as a
candidate to be manufacture discontinued by Supplier. Company shall, within
sixty (60) days after receipt of Supplier's written notice, provide Supplier a
written response indicating Company's approval or disapproval of the manufacture
discontinued status of such Material based upon such Material's impact on the
Company's business, including but not limited to the Company's obligations to
its customers.
If Company does not approve of the Material being manufacture
discontinued, the parties shall negotiate in good faith to determine the final
disposition of such Material.
If the parties agree that Material shall become manufacture
discontinued, Supplier shall accept Company's Orders for such manufacture
discontinued Material under the terms and conditions of this Agreement for one
(1) year from the Supplier's notification date of manufacture discontinued
status. Once the manufacture discontinued Material is no longer available to
order
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by Company, Supplier agrees that the Volume/Price levels set forth in the
Volume/Price Letter shall be adjusted to reflect the dollar amount that can no
longer be purchased by Company.
16. PROCESS CERTIFICATION
In regard to Supplier's manufacturing processes, Company
reserves the right to perform periodic quality surveys and evaluations
including, but not limited to, analysis of manufacturing or assembly position
procedures, equipment calibration, and operator performance, as well as
evaluation of quality control/quality assurance and data collection and analysis
procedures.
Supplier shall conduct appropriate incoming inspection of
components in accordance with its standard practices. Such practices may be
modified from time to time to address specific conditions as requested by
Company after any increases or decreases to Price resulting from such
modifications have been mutually agreed upon.
17. COMPANY ACCEPTANCE AND QUALIFICATION TESTS
Prior to Supplier initiating volume manufacture of Material at
any new facility, Company shall have the right to conduct acceptance or
qualification tests of manufactured Material and associated piece parts and
processes, including but not limited to technical acceptance tests to ensure
conformance to Company's specifications.
18. RIGHT OF ENTRY AND PLANT RULES
Each party shall have the right upon reasonable notice to
enter the premises of the other party during normal business hours with respect
to the performance of this Agreement, subject to all plant rules and
regulations, security regulations and procedures and U.S. Government clearance
requirements if applicable.
19. ATTENDANCE AT SUPPLIER'S PLANT
Company reserves the right to place, at any time, with
reasonable prior notice one or more personnel in Supplier's facility to carry
out the inspection and acceptance tests, process certification, and other
functions Company may deem reasonably necessary ("Inspection Representatives").
The salaries of said personnel, as well as their travel and
living expenses, shall be [***]. Supplier agrees to furnish said personnel with
reasonable working facilities, as necessary, to perform their work and, if
needed, provide office space and support services as required. Supplier will
make suitable arrangements so that said personnel will have access to the areas
where Material is manufactured, tested, stored and shipped. Personnel authorized
in writing by Company shall be empowered to reject the Material to be delivered
to Company in the event that such Material fails to meet required Specifications
and/or acceptance tests.
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20. SHIPPING AND BILLING
For shipments against an Order placed pursuant to this
Agreement Supplier shall: (1) ship such Order complete unless instructed
otherwise; (2) ship to the destination designated in the Order; (3) ship
according to routing instructions given by Company; (4) place 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; (6) xxxx the Order number on all packages and
shipping papers; (7) render invoices in duplicate or as otherwise specified,
showing the Order number, (8) render invoices for shipments, (9) render invoice
containing carrier name, waybill number and date of shipment; and (10) mail
invoices, bills, and notices to the address shown in 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. Adequate protective packaging shall be
furnished at no additional charge. Shipping and routing instructions may be
altered as mutually agreed without a writing. [***] permitted [***].
21. MARKING
All Material furnished under this Agreement shall be marked
for identification purposes in accordance with the Specifications set forth in
this Agreement and at a minimum as follows:
(a) Supplier model/serial number; and
(b) Month and year of manufacture.
In addition, Supplier agrees to add any other identification
which might be reasonably requested by Company such as but not limited to
distinctive marks conforming to Company's Serialization Plan or to Company's
Bar-coding Plan after charges, if any, for such additional identification
marking have been agreed upon by Supplier and Company.
22. SUPPLIER INTERVAL
For the purpose of this Agreement, "Lead Time" or "Supplier
Interval" shall mean the period of time expressed in days commencing on the date
an Order for Material is placed with Supplier by Company and ending upon
delivery of such Material to Company's point of destination.
If, during the course of this Agreement, Supplier determines
that it will no longer be able to deliver Material within the then existing Lead
Times, Supplier shall immediately notify Company's Buyer to that effect.
Supplier is encouraged to quote reduced Lead Times when responding to Orders
placed under this Agreement if required to meet Company's requested delivery
date.
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23. TAXES AND INSURANCE PAYMENTS
All [***], and [***] will be paid by [***]. The parties agree
that the charges stated herein include [***] and will not be changed hereafter
as a result of [***], [***] shall indemnify and hold [***] harmless from any
loss which [***] may incur as a result of [***] failure to make tax or insurance
payments.
24. 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 to the FOB point.
25. VARIATION IN QUANTITY
Company assumes no liability for Material produced, processed
or shipped in excess of the amount specified in this Agreement or any Order.
26. UTILIZATION OF MINORITY AND WOMEN OWNED BUSINESS ENTERPRISES
It is Company's policy that Minority and Women-Owned Business
Enterprise ("MWBEs") shall have the maximum practicable opportunity to
participate in the performance of contracts. Supplier agrees to use its good
faith efforts to award subcontracts to carry out this policy to the fullest
extent consistent with the efficient performance of this Agreement. Supplier
agrees to conduct a program which will enable MWBEs to be considered fairly as
subcontractors and suppliers under this Agreement. Supplier shall submit to
Company periodic reports of subcontracting with known MWBEs in such manner and
at such time (not more than quarterly) as Company's representative may
prescribe. Such periodic report shall state separately for Minority and Women
Owned Businesses the subcontracted work which is attributable to Company. In
instances where direct correlation cannot be determined, such MWBE payments may
be established by Supplier comparing Company's payments to Supplier, in that
period, to total payments to Supplier from all of its customers, in that period,
and then arriving at Company's apportionment of such MWBE payments. Nothing in
this clause shall affect or diminish the Supplier's obligations as set forth in
the assignment and subcontracting provisions or any other provision of this
Agreement. Supplier's record of compliance with the provisions of this clause
will be a factor Company will consider favorably in making procurement decisions
about future business with Supplier.
27. RECORDS
Supplier shall identify all records associated with this
Agreement and maintain accurate and complete records including charges payable
by Company under this Agreement. These records shall be maintained in accordance
with recognized commercial accounting practices and shall be readily available
to review and audit by Company.
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28. REPORTS
Supplier agrees to maintain the following auditable Order and
shipment reports and provide copies to Company on or before the fifth working
day of each month:
(1) Order and shipment reports for each shipment, including
Xxxx of Lading information, if applicable.
(2) At the request of Company, monthly summaries of actual
shipping intervals achieved on Material ordered and manufactured hereunder,
identifying the number of units and such other information as Company may
reasonably request, consistent with Supplier's current practices.
Supplier further agrees to maintain and render quality and
yield data of the type and frequency reasonably specified by Company to assure
proper control of Material quality and reliability. This data may include such
items as in-process daily yields, quality control, and quality assurance daily
records. Supplier shall furnish and render additional reports as may be
reasonably requested by Company.
29. FORECASTS BY COMPANY
The parties acknowledge and agree that the implementation of
an improved forecasting process is important to both parties. The parties agree
to cooperate and will work in good faith to implement such program as soon as
reasonably practicable.
30. SERVICE
Company shall have the right to monitor the delivery
performance of Supplier via special performance reports. Delivery for such
purposes shall mean arrival at the final destination specified in the Order.
Company's goal is that Supplier will strive to achieve or exceed an Average
Percent Received By Lead Time and an Average Percent Received To Required Date
(Past And Current) of [***] of the Orders. "Average Percent Received by Lead
Time" shall mean the required percentage of Material (based in units) delivered
within the applicable lead time for such Material, which percentage will be
calculated monthly. "Average Percent Received to Required Date (Past and
Current)" shall mean the required percentage of Material (based in units)
delivered on the date such Material was requested to be delivered by the
Company, which percentage shall be calculated monthly.
Supplier is expected to make every effort to deliver Material
in accordance with Company's required delivery schedule as contained in
Company's Orders, and as the delivery schedule may be subsequently modified by
Company. Supplier will promptly notify Company of its "Acknowledged Delivery
Schedule", the schedule by which Supplier can deliver Material requested by
Company. Supplier is also expected to communicate to Company any foreseeable
change to Supplier's Acknowledged Delivery Schedule. Supplier's compliance with
the foregoing
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expectations will not relieve Supplier of the minimum service requirements
established in the preceding paragraph.
If Supplier advises Company that it will be unable to meet its
Acknowledged Delivery Schedule, and Company elects to call for expedited
shipment, Supplier will be required to pay the difference in cost between the
method of shipping specified in the Order and the actual cost incurred for
expedited shipment.
31. 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
chlorofluorocarbons, halons, and certain chlorinated solvents. Supplier hereby
warrants that manufactured and/or repaired Material will conform to applicable
requirements established pursuant to such agreements, legislation, or
regulations, and that manufactured and repaired Material will be able to be
imported into and used lawfully in (and without additional taxes associated with
ODCs not reported to Company by Supplier as set forth in this clause) the United
States and other countries designated by Company, under all such agreements,
legislation, and regulations. Supplier also warrants that it is currently
reducing, and is currently using good faith efforts to cause all of its parts
and component manufacturing vendors to reduce, in an expeditious manner,
eliminate and cause its parts and component manufacturing vendors to eliminate,
the use of ODCs in the manufacture and repair of Material and all of its parts
and components.
Supplier shall, upon execution of this Agreement, and at any
time that New Products or Enhanced Products are ordered under this Agreement or
changes are made to Material manufactured and/or repaired under this Agreement,
complete, sign, and return to Company an ODC Content Certification, in the form
requested by Company. The ODC Content Certification must be signed by Supplier's
facility manager, corporate officer, or delegate.
The term "ODC content" on the ODC Content Certification means
the total pounds of ODC used directly in the manufacture and/or repair of each
unit of Material. This includes all ODCs Supplier uses in its manufacturing,
assembly, and repair operations. Supplier will use good faith efforts to include
all ODC information, used by Supplier's vendors and any other vendors in
producing parts, components, or other products incorporated into Material.
Supplier warrants to Company that all information furnished by
Supplier on each ODC Content Certification will be 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 agrees to defend, indemnify, and hold Company harmless
of and from any claims, demands, suits, judgments, liabilities, costs, and
expenses (including additional ODC taxes 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 or reliance on inaccurate or incomplete information furnished
to Company by Supplier on any ODC Content Certification or by reason of
Supplier's breach of this clause.
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Supplier agrees to cooperate with Company in responding to any
inquiry concerning the use of ODCs to manufacture and/or repair 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 and/or repair Material or components thereof.
32. COMPLIANCE WITH ENVIRONMENTAL/HEALTH AND SAFETY/TRANSPORTATION LAWS
Supplier agrees to comply with applicable country or state
environmental, health and safety, and transportation laws and regulations
including but not limited to applicable United States environmental, health and
safety, and transportation laws and regulations. Supplier agrees to indemnify
and hold Company harmless from any loss or damage that may be sustained by
Company by reason of Supplier's failure to comply with this clause.
33. OZONE DEPLETING SUBSTANCES LABELING
Supplier warrants and certifies that all products, including
packaging and packaging components, provided to Company under this Agreement
will be 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."
Supplier agrees to indemnify, defend, and save harmless
Company, its officers, directors, and employees from and against any losses,
damages, claims, demands, suits, liabilities, fines, penalties, and expenses
(including reasonable attorney's fees) that may be sustained by Company by
reason of Supplier's noncompliance with such applicable law or the terms of this
warranty and certification.
34. CFC PACKAGING
Supplier warrants that all packaging materials furnished under
this Agreement and all packaging associated with Material furnished under this
Agreement will not have been manufactured using and will not contain
chlorofluorocarbons. "Packaging" means all bags, wrappings, boxes, cartons, and
any other packing materials used for packaging. Supplier shall indemnify and
hold Company harmless for any liability, fine, or penalty incurred by Company to
any third party or governmental agency arising out of Company's good faith
reliance upon said warranty.
35. HEAVY METALS 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. Supplier further warrants to Company that the sum of the
concentration levels of lead, cadmium, mercury, and hexavalent chromium in the
packaging or packaging component provided to Company under this Agreement will
not exceed one hundred (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
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above in this clause. Supplier shall indemnify and hold Company harmless for any
liability, fine, or penalty incurred by Company to any third party or
governmental agency arising out of Company's good faith reliance upon said
warranties or any Certificates Compliance.
36. INDEMNITY AND INFRINGEMENT
All Work performed by Supplier under this Agreement shall be
performed by Supplier as an independent contractor and not as an agent of
Company. All persons furnished by Supplier shall be considered solely Supplier's
Employees or agents, and Supplier shall be responsible for compliance with all
applicable laws, rules, and regulations relating to labor, working conditions,
wages, and payment of all unemployment, social security, and other payroll
taxes, including contributions when required by law.
Supplier agrees to indemnify and save harmless Company, its
affiliates and its customers and their officers, directors, employees,
successors and assigns (all hereinafter referred to in this clause as "Company")
from and against any losses, damages, claims, demands, suits, liabilities, and
expenses (including reasonable attorneys' 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 occasioned by, caused or alleged to have been
caused by or on account of the Material, or the performance of Work or Services
performed by Supplier or persons furnished by Supplier; (2) assertions under
Workers' Compensation or similar acts made by persons furnished by Supplier or
by any subcontractor or by reason of any injuries to such persons for which
Company would be responsible under Workers' Compensation or similar acts if the
persons were employed by Company; (3) any failure by Supplier to perform
Supplier's obligations under this Indemnity and Infringement Section; and/or (4)
any infringement or claim of infringement of any patent, trademark, copyright,
trade secret, or other intellectual property right of third parties based on the
manufacture, repair, sale, use, importation, reproduction and/or distribution of
Material furnished to Company hereunder, and/or any part, component, feature or
design of such Material, except that this infringement indemnity shall not apply
to the extent that such claims or infringements arise solely and directly from
Company supplied parts or components, or from Supplier's required adherence to
Company's written instructions or Specifications which are so specified that
such adherence directly causes such claims or infringement and which
instructions or Specifications require the use of Material other than (i)
commercial material which is available on the open market or the same as such
Material or (ii) Material of Supplier's origin, design or selection.
In the case of the infringement indemnity, if Company's or its
customers' manufacture, repair, use, sale, importation, reproduction and/or
distribution of Material is restricted or prevented by injunction, court order
or negotiated settlement on account of such infringement, Supplier shall, at its
expense: (i) procure for Company and Company's customers the right to continue
manufacturing, using, selling, importing, reproducing and/or distributing such
Material; or (ii) replace such Material with a noninfringing product
substantially complying with such Material's Specifications and satisfactory to
Company; or (iii) modify such Material so it becomes noninfringing and performs
in a substantially similar manner to the original Material and satisfactory to
Company; or (iv) in the event of inability to reasonably perform any of the
foregoing, refund to Company the purchase price for affected Material. All
payments refunded
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pursuant to the foregoing provision would continue to be counted toward the
Company's revenue commitment as set forth in the Volume/Price Letter.
Supplier agrees to defend Company, at Company's request,
against any of the referenced claims, demands, or suits at Supplier's expense.
Company agrees to notify Supplier within a reasonable time of any written claims
or demands against Company for which Supplier is responsible under this Clause.
37. TECHNICAL SUPPORT
Ongoing technical support via telephone to Company or
Company's customers will be [***] and shall include but not be limited to the
following: (a) answering technical questions, (b) explaining proper operation
procedures for Material, (c) providing up-to-date information on the status of
Material returned to Supplier for repair, and (d) quoting and explaining any
repair or replacement charges for Material.
38. LATE DELIVERY / LIQUIDATED DAMAGES AND CANCELLATIONS
Supplier agrees that in the event that Company is able to
provide to Supplier demonstrable evidence that any delay by Supplier in
delivering any Material committed to by Supplier under any Order caused the loss
of a contract of Company or caused Company to obtain substitute material from a
third party in order to fulfill the contract, then Company shall [***] set forth
in the Volume/Price Letter for the applicable period.
These provisions concerning late delivery of conforming
Material are intended to be and shall be cumulative and in addition to every
other remedy now or hereafter possessed by Company, including but not limited to
its right to recover damages under the clause entitled WARRANTY.
39. AUDIT
Supplier shall maintain accurate and complete records
including termination charges payable by Company under this Agreement. These
records shall be maintained in accordance with recognized commercial accounting
practices so they may be readily audited and shall be held until costs have been
finally determined under this Agreement and payment or final adjustment of
payment, as the case may be, has been made. Supplier shall permit Company or
Company's Representative to examine and audit these records and all supporting
records at all reasonable times. Audits shall be made not later than one (1)
calendar year after the final delivery date of Material ordered or completion of
services rendered or one (1) calendar year after the expiration date of this
Agreement, whichever comes later. In addition, Supplier shall permit a third
party audit of its sales records to determine compliance with the Volume/Price
Letter.
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40. CLAUSE HEADINGS
The headings of the clauses in this Agreement are inserted for
convenience only and are not intended to affect the meaning or interpretation of
this Agreement.
41. DEFAULT
In the event Supplier shall be in breach or default of any of
the material terms, conditions, or covenants of this Agreement and if such
breach or default shall continue for a period of forty-five (45) days after the
giving of written notice to Supplier thereof by Company that Company intends to
cancel because of such default, 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 this Agreement and/or Orders without any charge or
obligation or liability of Company, including the right to make appropriate
adjustments to the Volume/Price Levels set forth in the Volume/Price Letter.
42. TERMINATION OF ORDER FOR CAUSE
In the event Supplier exceeds the shipping interval, plus five
(5) working days as specified in an Order issued hereunder because of reasons
attributable to Supplier (other than those contained in the FORCE MAJEURE
Section of this Agreement), then in addition to all other rights and remedies of
law or equity or otherwise and without liability or obligation to Supplier,
Company shall have the right to: [***].
43. TERMINATION OF ORDER WITHOUT CAUSE
Company may at any time terminate without cause any or all
Orders placed by it hereunder. Unless otherwise specified herein, Company's
liability to Supplier with respect to such terminated Order or Orders shall be
limited to [***]. However, no such termination charges will be invoiced, if
within sixty (60) days of notice of termination, manufactured or repaired
Material equivalent in volume to that being terminated is ordered by Company. If
requested, Supplier agrees to substantiate such costs with proof satisfactory to
Company.
Supplier shall use its best efforts to cancel, stop, return,
or otherwise dispose of all Supplier sourced parts not used in manufacture or
repair of Material. Upon request, Supplier shall identify its parts suppliers
and cancellation terms, and shall permit and assist Company in discussions
concerning cancellation charges with such parts suppliers.
44. EMERGENCY BACKUP PLAN
Supplier will furnish to Company for Company's approval,
within sixty (60) days of execution of this Agreement a written plan of action
(an "Emergency Backup Plan") that covers Supplier's plans on how it will
continue to perform its obligations under this Agreement in case of an
unforeseen catastrophe, including a force majeure condition, or any other
condition in which Supplier will be unable to produce and ship Material for four
(4) consecutive weeks. The
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Emergency Backup Plan will identify Supplier's secondary manufacturing
location(s) and include the estimated time for the implementation of such
Emergency Backup Plan and production of Material.
The Emergency Backup Plan shall provide, among other things,
that in the event of any unforeseen catastrophe, including a force majeure
condition, or any other condition in which Supplier will be unable to produce
and ship acceptable Material for four (4) consecutive weeks, Supplier shall use
its reasonable best efforts to (a) manufacture and ship the Material from one or
more of its other manufacturing facilities to meet Company's requirements for
Material; (b) commence shipments of Material to Company from such secondary
manufacturing facilities no later than thirty (30) days after the commencement
of the unforeseen catastrophe or other condition; and (c) achieve the following
levels of shipments from such secondary manufacturing facilities: (i) a minimum
of forty (40) percent of Company's then current forecast after thirty (30) days
of the commencement of the unforeseen catastrophe or any other condition; (ii) a
minimum of sixty (60) percent of Company's then current forecast after
forty-five (45) days of the commencement of the unforeseen catastrophe or any
other condition; and (iii) one hundred (100) percent of Company's then current
forecast after sixty (60) days from the commencement of the unforeseen
catastrophe or any other condition.
45. EXPORT CONTROL
Supplier acknowledges that any software and technical
information (hereinafter referred to as "technology"), including but not limited
to services and training, provided under this Agreement may in fact be subject
to United States export laws and regulations, and may require the prior written
approval of the U.S. Department of Commerce for export or reexport. Supplier
further acknowledges that it has the responsibility for obtaining such approval,
and will, in fact, do so prior to exportation.
Supplier and Company agree that they will not, without the
prior written approval of the U.S. Department of Commerce, transfer or release
(directly or indirectly) any unpublished technology, written, oral, or
otherwise, acquired from Lucent Technologies Inc. or Supplier (as applicable),
or any direct product of such technology (including processes, materials, and
services) to any country listed below, or to any resident or national of such
country, or to any party listed on the U.S. Table of Denial Orders or any other
blocked or denied parties list published by the U.S. Government:
Albania, Armenia, Azerbaijan, Belarus, Bulgaria, Cambodia,
Cuba, Estonia, Georgia, Iran, Iraq, Xxxxxxxxxx, Xxxxxxxxx, Xxxx, Xxxxxx, Libya,
Lithuania, Moldova, Mongolia, North Korea, People's Republic of China, Romania,
Russia, Syria, Tajikistan, Turkmenistan, Ukraine, Uzbekistan, Vietnam, and the
Bosnian-Serb controlled areas of Bosnia/Herzegovina.
It is understood that this restriction does not apply to
technology (1) that has been made generally available to the public in any form
including technology released orally or visually in public conferences, lectures
and trade shows; (2) in publications that may be obtained without cost or at
minimal cost, or are readily available in public libraries; and, (3) which can
not be used
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or adapted for use in design, manufacture, production, utilization or
reconstruction of articles or materials.
46. 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 addressed to the respective parties as stated in the applicable
Order. Notices shall deemed to have been given or made when sent by telegram,
telex, confirmed facsimile, certified or registered mail. Addresses may be
changed at any time by giving prior written notice.
47. INSURANCE
Supplier shall maintain and cause Supplier's subcontractors
performing work for Company in connection with this Agreement 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 [***] each occurrence, and (3)
comprehensive automobile liability insurance if the use of motor vehicles is
required, with limits of at least [***] for bodily injury and property damage
for each occurrence and (4) Comprehensive General Liability ("CGL") insurance,
including Blanket Contractual Liability, and Broad Form Property damage, with
limits of at least [***] combined single limit for personal injury and property
damage for each occurrence, and (5) if the furnishing to Company (by sale or
otherwise) of products or Material is involved, CGL insurance endorsed to
include products liability and completed operations coverage in the amount of
[***] for each occurrence. All CGL insurance shall designate LUCENT TECHNOLOGIES
INC., its assigns, affiliates, and their officers, directors and employees (all
hereinafter referred to in this clause as "Company") as an additional insured.
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
and Supplier's applicable subcontractors performing work for Company shall
furnish prior to the start of work certificates or adequate proof of the
foregoing insurance including, if specifically requested by Company, copies or
endorsements and insurance policies. Company shall be notified in writing at
least thirty (30) days prior to cancellation of or any change in the policy.
48. SEVERABILITY
If any of the provisions of this Agreement shall be invalid or
unenforceable, such invalidity or unenforceability shall not invalidate or
render unenforceable the entire Agreement, but rather the entire Agreement shall
be construed as if not containing the particular invalid or
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unenforceable provision or provisions, and the rights and obligations of
Supplier and Company shall be construed and enforced accordingly.
49. WAIVER
The failure of either party at any time to enforce any right
or remedy available to it under this Agreement or otherwise with respect to any
breach or failure by the other party shall not be construed to be a waiver of
such right or remedy with respect to any other breach or failure by the other
party.
50. SUPPLIER'S INFORMATION
Except as otherwise provided for in a Nondisclosure Agreement,
no Specifications, drawings, sketches, models, samples, tools, computer or other
apparatus programs, technical or business information, or data, written, oral,
or otherwise, furnished by Supplier to Company under this Agreement or any
Order, or in contemplation of this Agreement shall be considered by Supplier to
be confidential or proprietary.
51. USE OF INFORMATION
Any Developed Information, Specifications, drawings, sketches,
models, samples, tools, computer or other apparatus programs, technical or
business information or data, written, oral, or otherwise, owned or controlled
by Company (information") and furnished to or acquired by Supplier under this
Agreement, or in contemplation of this Agreement, shall remain Company's
property. All copies of such Information in written, graphic, or other tangible
form shall be returned to Company at its request. Unless such Information was
previously known to Supplier free of any obligation to keep it confidential, or
has been or is subsequently made public by Company or a third party, it shall be
kept confidential by Supplier, shall be used only in performing under this
Agreement, and may not be used for any other purposes except upon such terms as
may be agreed upon between Supplier and Company in writing.
52. FUNDED DEVELOPMENT/INTELLECTUAL PROPERTY
Supplier agrees not to engage and nor to perform for Company
specific development or design work ("Development") without an advance written
agreement defining ownership of the Development.
53. SURVIVAL OF OBLIGATIONS
Company's and Supplier's obligations and warranties under this
Agreement, which by their nature would continue beyond the termination or
expiration of this Agreement, including, by way of illustration only and not
limitation, those in the clauses COMPLIANCE WITH LAWS, RELEASES VOID, IMPLEADER,
USE OF INFORMATION, FUNDED DEVELOPMENT/INTELLECTUAL PROPERTY, WARRANTY,
INSURANCE, and INDEMNITY AND INFRINGEMENT, shall survive termination,
cancellation, or expiration of this Agreement.
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54. RELEASES VOID
Neither party shall require (i) waivers or releases of any
personal rights or (ii) execution of documents which conflict with the terms of
this Agreement, from employees. representatives or customers of the other in
connection with visits to its premises and both parties agree that no such
releases, waivers or documents shall be pleaded by them or third persons in any
action or proceeding.
55. ASSIGNMENT
Except as set forth below, neither Company nor Supplier shall
assign any right or interest under this Agreement and the Volume/Price Letter or
(with respect to Supplier) under an Order issued pursuant to this Agreement
(excepting monies due or to become due) or delegate any Work or other obligation
to be performed or owed under this Agreement and the Volume/Price Letter or an
Order either in whole or in part without the prior written consent of the other
party which consent shall not be unreasonably withheld. Any attempted assignment
or delegation in contravention of the above provisions shall be void and
ineffective. Any assignment of monies shall be void and ineffective to the
extent that (1) Supplier shall not have given Company at least thirty (30) days
prior written notice of such assignment or (2) such assignment attempts to
impose upon Company obligations to the assignee additional to the payment of
such monies, or to preclude Company from dealing solely and directly with
Supplier in all matters pertaining to this Agreement including the negotiation
of amendments or settlements of charges due.
Notwithstanding the provisions set forth above, Company shall
have the right to assign this Agreement and the Volume/Price Letter and to
assign its rights and delegate its duties under this Agreement and the Volume
Price Letter either in whole or in part, at any time and without Supplier's
consent; provided however that such assignment shall only be permitted to an
affiliate or subsidiary of Company having assets greater than [***]. Company
shall give Supplier thirty (30) days prior written notice of any such
assignment. The assignment shall neither affect nor diminish any rights or
duties that Supplier or Company may then or thereafter have as to services or
Material ordered by Company prior to the effective date of the assignment.
Upon the acceptance of the assignment and assumption of the
duties under this Agreement and the Volume/Price Letter by the assignee, Company
shall be released and discharged, to the extent of the assignment, from all
further duties under this Agreement and the Volume/Price Letter as to services
or Material not ordered by Company by the effective date of the assignment.
56. CHOICE OF LAW
The construction, interpretation and performance of this
Agreement and all transactions under it shall be governed by the laws of the
State of New York excluding its choice of laws rules and excluding the
Convention for the International Sale of Goods. The parties agree
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that the provisions of Article 2 "Sales" of the New York Uniform Commercial Code
apply to this Agreement and all transactions under it, including agreements and
transactions relating to the furnishing of services, the lease or rental of
equipment or Material, and the license of software. Supplier agrees to appear in
any court wherein an action is commenced against Company based on a claim for
which Supplier has agreed to indemnify Company under this Agreement.
57. COMPLIANCE WITH LAWS
Supplier and all persons furnished by Supplier shall at their
own expense comply with all applicable laws, ordinances, regulations, and codes
in their performance of this Agreement. Supplier and all persons furnished by
Supplier shall at their own expense be responsible for identifying and obtaining
any and all approvals (except for foreign country homologation and foreign
country approvals or certifications as set forth under the clause COMPLIANCE
WITH FEDERAL COMMUNICATIONS COMMISSION'S RULES AND REGULATIONS PARTS 15 AND 68),
permits, licenses, certificates, insurance, inspections, or the like which may
be required to perform their obligations under the Agreement including, but not
limited to, any licenses required for export of Material Supplier agrees to
indemnify and hold Company harmless from any loss or damage that may be
sustained by Company by reason of Supplier's or Supplier's suppliers failure to
do so.
58. LICENSES
No licenses, express or implied, under any patents,
copyrights, trademarks, or other intellectual property rights are granted by
Company to Supplier under this Agreement or any contract or Order issued
pursuant to this Agreement.
59. IMPLEADER
Supplier shall not implead or bring an action against Company
or its customers or the employees of either based on any claim by any person for
personal injury or death to an employee of Company or its affiliates or their
respective customers occurring in the course or scope of employment and that
arises out of Material or services furnished under this Agreement.
60. FORCE MAJEURE
Neither party shall be held responsible for any delay or
failure in performance of any part of this Agreement or Order to the extent such
delay or failure is caused by fire, flood, explosion, war, strike, embargo,
government requirement, civil or military authority, act of God, act or omission
of carriers or other similar causes beyond its control and without the fault or
negligence of the delayed or nonperforming party or its subcontractors ("force
majeure conditions"). Notwithstanding the foregoing, Supplier's liability for
loss or damage to Company's Material in Supplier's possession or control shall
not be modified by this clause. If any force majeure condition occurs, the party
delayed or unable to perform shall give immediate notice to the other party and
the party affected by the other's delay or inability to perform may elect to:
(1) suspend this Agreement or Order for the duration of the force majeure
condition and (i) at its option obtain elsewhere manufacturing or repair
services to have been furnished under this
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Agreement or Order and deduct from any commitment the quantity obtained or for
which commitments have been made elsewhere and the Volume/Price levels set forth
in the Volume Price Letter shall be adjusted to reflect the dollar amount
purchased by Company from the other source or sources, and (ii) once the force
majeure condition ceases, resume performance under this Agreement or Order with
an option in the affected party to extend the period of this Agreement or Order
up to the length of time the force majeure condition endured and/or (2) when the
delay or nonperformance continues for a period of at least thirty (30) days,
terminate, at no charge, the applicable Order or the part of it relating to
Material not already shipped or Services not already performed. Unless written
notice is given within forty-five (45) days after the affected party is notified
of the force majeure condition, (1) shall be deemed selected.
61. IDENTIFICATION
Supplier shall make no use of any identification of Company or
its affiliated companies in its advertising or promotional efforts in reference
to activities undertaken by Supplier under this Agreement without Company's
prior written consent. The term "identification" includes any trade name,
trademark, service xxxx, insignia, symbol, or any simulation thereof, and any
code, drawing, specification, or evidence of Company's inspection. Supplier
agrees to remove any such identification prior to any sale, use or disposition
of Material or equipment rejected or not purchased by Company, and shall
indemnify. Company, Lucent Technologies Inc. and its affiliated companies
against any claim arising out of Supplier's failure to do so. This clause does
not modify the USE OF INFORMATION clause.
62. COMPLIANCE WITH FEDERAL COMMUNICATIONS COMMISSION'S RULES AND
REGULATIONS PARTS 15 AND 68
Material sold to, manufactured and/or repaired for Company
hereunder for sale or use within the United States shall comply with the
requirements of Parts 15 and 68 of the FCC Rules and Regulations. Material sold
to, manufactured and/or repaired for Company hereunder for sale or use outside
the United States shall comply with the requirements of those targeted
countries. All countries not previously identified as acceptable by Supplier
must be approved in advance by Supplier.
In the event that Supplier does not obtain such Agency
approvals and/or certifications as required by law, Supplier agrees to indemnify
and save Company harmless from any damages, liabilities, claims, or demands,
costs, expenses (including but not limited to rework expressly necessary to
bring Material into compliance) and reasonable attorney's fees which Company may
incur on account thereof.
Nothing herein shall be deemed to diminish or otherwise limit
Supplier's obligations under the clause WARRANTY clause of this Agreement.
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63. FIELD RETURNS (REPAIR SERVICE)
Supplier agrees to provide repair services on all Material
ordered hereunder both during the term of, and for a period of five (5) years
after the expiration of this Agreement. Company agrees to obtain a Return
Material Authorization prior to returning the Material.
Field Returns are Material returned to Supplier that has been
purchased by a customer and either used or not used. This Material may represent
both defective and non-defective units. Supplier agrees to repair all Material,
returning it to a state of repair whereby it will satisfy all terms and
conditions of this Agreement, and applicable Orders. All Material furnished for
repair will remain the property of Company. The interval for this repair shall
not exceed seven (7) working days from receipt of product at Supplier's
facility. The price and any new terms for Repairs not covered by this Agreement
shall be mutually agreed upon by the parties. The price for these repairs shall
be set forth in the applicable Orders.
Supplier agrees to identity all costs associated with this
repair activity. Complete and accurate records will be maintained by Supplier so
as to enable Company and Supplier to effectively evaluate this Field Return
procedure.
Material repaired by Supplier shall have the repair completion
date stenciled on the bottom of the base of Material or otherwise identified in
a permanent manner at a readily visible location on Material as mutually agreed
upon.
All invoices originated by Supplier for repair services must
be clearly identified as such, and must contain a reference to Company's Order
for these repair services. Further, the provisions of the clause SHIPPING AND
BILLING, 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. Company shall give Supplier six (6) months notice if
Company decides to terminate repair services performed by Supplier.
64. INITIALLY DEFECTIVE MATERIAL
"Initially Defective" as used in this clause shall mean any
defective Material returned by Company within thirty (30) days from the date of
sale to end-user. Such Initially Defective Material may be returned to Supplier
by Company for replacement with risk of in transit loss or damage borne by and
freight paid by Company.
Accompanying the Initially Defective Material will be a repair
order, which will include the following:
(1) Identify Material as Initially Defective and contain a
brief description of the defect, if possible.
(2) Identify whether Material is used.
(3) Ship-to address of Company.
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In the event Supplier decides that Initially Defective
Material should be replaced, and Supplier has a "Refurbishment Replacement
Program" in place for Material, then Supplier shall ship a new replacement unit
within seven (7) days of receipt of the defective Material. Supplier shall bear
the transportation cost and risk of loss for the return of such Material. If
Supplier does not have a "Refurbishment Replacement Program" currently in place,
and then implements a program, Supplier shall notify Company within thirty (30)
days and extend to Company the seven (7) day replacement provision for Initially
Defective Material. Until Supplier implements the "Refurbishment Replacement
Program", Supplier shall repair Initially Defective Material as set forth above.
After the initial thirty (30) day period for Company's return
of defective Material to Supplier, defective Material shall be returned to
Supplier by Company accompanied by the Repair Order, with risk of loss borne and
freight paid by Company. At the option of Supplier, such Material will be
repaired or replaced by Supplier at no cost to Company for in warranty returns.
Unless otherwise agreed upon, Supplier shall complete repairs
and ship returned Material to Company within twenty (20) days of receipt of the
defective Material. Supplier shall bear the cost of freight and assume the risk
of loss for shipment to Company of repaired or replaced Material.
If Material returned to Supplier for repair as provided for in
this clause is determined to be beyond repair, Supplier shall promptly so notify
Company and, unless otherwise agreed to by Supplier and Company, ship
replacement Material without charge within seven (7) days of receipt of in
warranty Material if Supplier has a "Refurbishment Replacement Program" in place
for Material. If Supplier does not have a "Refurbishment Replacement Program"
currently in place, and then implements a program Supplier shall notify Company
within thirty (30) days and extend to Company the seven (7) day replacement
provision for in warranty Material. Until Supplier implements the "Refurbishment
Replacement Programs, Supplier shall repair Initially Defective Material as set
forth above.
Any Material which is repaired, modified, replaced, or
otherwise serviced by Supplier shall be warranted as provided in the clause
WARRANTY for the remainder of the warranty period or ninety (90) days after
Material is shipped to Company, whichever is later (based upon the date repair,
modification, or other service is completed and accepted by Company).
A repair and/or replacement report detailing the repairs or
modification to all units returned by Company will be provided on a monthly
basis.
65. EPIDEMIC CONDITION
In the event that during the term of this Agreement and for
one year after the last shipment date of Material hereunder, Company notifies
Supplier (in accordance with the NOTICES clause) 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)
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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 agreement of the parties.
Upon notification of the Epidemic Condition to Supplier,
Company shall have the right to postpone shipments of unshipped Material 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 Corrective Action Plan, 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, excluding potential safety hazards,
will be considered to exist when one or more of the following conditions occur:
1. Failure reports or statistical sampling showing that three
percent (3%) or more of any consecutive one hundred (100) units of Material
delivered to Company or Company's customers are rejected for defective materials
or workmanship; or repair reports indicate nonconformance for the same defect of
five percent (5%) of the installed Material base.
2. Reliability plots of relevant data indicate that Material
has actual Mean Time Between Failures (MTBF) of less than eighty (80%) percent
of the MTBF stipulated in Specification for Material. The MTBF parameter of
Material is defined as the total operation 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 observed period. A critical failure
is defined as a failure to operate per the requirements of Specification. The
total operating time for 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 eighty (80%) percent statistical confidence.
3. Material Dead on Arrival ("DOA") failures exceed the
Epidemic DOA failure rate which is defined as two percent (2%) of Material
delivered to Company or Company's customer within a one (1) month period.
Only major functional visual/mechanical/appearance defects are
considered for determining Epidemic Condition. Material could be either sampled,
or at Company option, one hundred (100%) percent audited at Company warehouses,
factories, or Company's customers' locations. If Material is sampled, the data
must have eighty (80%) percent or better statistical confidence.
For the purpose of this Agreement, functional DOA shall not
include Material for which no defect is found and 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 Material unfit
for use or installation.
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An Epidemic Condition shall not include failure due to
customer misapplication, misuse, abuse, lightning, 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 Engineering Change Control procedures or manufacturing
procedures, as applicable, agreed to by the parties.
(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 at Supplier's option 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 costs, as mutually determined
and agreed upon by both parties. Supplier shall bear such risk of in transit
loss and damage for such repaired and/or replaced Material shipped to Company.
Supplier and Company shall mutually agree in writing as to the
remedy's implementation schedule. Supplier agrees to utilize its best efforts to
implement in accordance with agreed-upon schedule.
In the event that 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 such remedy and implementation cost and risk of in transit loss and
damage shall be allocated between the parties as set forth in this clause,
and/or (2) cancel postponed Orders without liability and return all confirmed
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 of in transit damage borne by Supplier) and Company shall have the right
to adjust the Volume/Price levels set forth in the Volume/Price Letter to
reflect the dollar amount being canceled, and/or (3) terminate this Agreement
without further liability.
66. TITLE TO PARTS FURNISHED BY COMPANY
All parts furnished by Company shall remain Company's property
and be kept segregated and marked PROPERTY OF LUCENT TECHNOLOGIES INC. Supplier
agrees to be responsible for any loss or damage to such parts while in
Supplier's possession or under Supplier's control. Company may inspect,
inventory, and authenticate the amount of parts that are furnished under this
Agreement during Supplier's normal business hours. Supplier shall provide
Company access to the premises wherein all such parts are located. Supplier
shall at Company's option, return to Company or hold for Company's disposition
any and all of such parts and any scrap produced remaining in Supplier's
possession upon termination of this Agreement.
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Supplier will not assert or file common law or statutory lien
against parts furnished by Company, and hereby waives any such common law and
statutory liens. Supplier shall, within ten (10) days of receipt of Company's
parts, notify Company in writing of any claims for quantity variation in the
parts furnished to Supplier.
Supplier shall store Company parts in protected areas approved
by Company. In case of removal from one building to another, Supplier's
responsibility for loss or damage shall continue and Supplier shall give Company
advance notice in writing of the removal, except when the removal is required
during Supplier's manufacturing process.
Supplier shall list parts furnished by Company on all
documents covering manufactured and/or repaired Material shipped from Supplier
to Company.
67. TITLE TO SPECIAL TOOLING AND TEST EQUIPMENT
Special tooling and test equipment ("Tooling") furnished by
Company for use by Supplier under this Agreement shall remain Company's property
at all times, and Supplier shall:
(1) Be responsible for the safekeeping of Tooling and assume
all risks of loss or damage to same, except for reasonable wear and tear.
(2) Maintain and use Tooling in accordance with all applicable
local and country occupational safety and health requirements and other safety
requirements, codes, or standards. Supplier agrees to indemnify and hold
harmless Company from and against any and all losses, damages, claims, demands,
suits, and liabilities (including reasonable attorney's fees) of any kind and
nature whatsoever (including but not limited to claims resulting from injuries
or death to persons or damage to property) in any way arising out of or
resulting from the maintenance, ownership, possession, operation, use,
condition, storage, or movement of Tooling or any accident in connection
therewith.
(3) Permanently xxxx or if impracticable to do so then affix
labeling stating that Tooling is the PROPERTY OF LUCENT TECHNOLOGIES INC.
(4) Store Tooling, when not in use, on racks or in sections of
Supplier's plant marked PROPERTY OF LUCENT TECHNOLOGIES INC., and, in case of
removal of all or any part of it from one building to another, Supplier's
responsibility for loss or damage shall continue and Supplier shall give Company
advance notice in writing of the removal, except when the removal is required
during Supplier's manufacturing process.
(5) Use Tooling only in the manufacture and/or repair of
Material furnished to Company, unless otherwise agreed in writing by Company,
and deliver it to Company upon demand FOB Supplier's plant without additional
charge for removal, packing, or crating.
(6) Repair or replace parts of Tooling as needed from time to
time without charge to Company. This includes, among other things, adjusting,
replaces punches or die sections, and sharpening and keeping tools in good
working condition. At any time when Supplier proposes replacing the entire tool
because (a) tool life has been expended or worn
25
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beyond economical repair, or (b) design changes by Company necessitate
modification or complete replacement, Supplier shall first obtain Company's
written approval, and the replacement Tooling shall be subject to the terms of
this Agreement. Company shall bear the cost of components needed to repair its
test equipment.
(7) Permit Company to inspect, inventory, and authenticate the
account of Tooling furnished under this Agreement during Supplier's normal
business hours. Supplier shall provide Company access to the premises where all
such Tooling is located. The obligations assumed by Supplier with respect to
Tooling as furnished under this Agreement are for the protection of Company's
property. Supplier shall, at Company's option, return to Company or hold for
Company's disposition any or all of such Tooling and associated drawings in
Supplier's possession free of restrictions at (a) the completion of the
applicable Order, if such tooling relates to such Order, or (b) termination of
this Agreement.
68. WARRANTY
Supplier warrants to Company that the Material furnished will
be new product free from defects in design, material, and workmanship, and will
conform to the Specifications, drawings, and samples referred to in this
Agreement or any Order under this Agreement and will perform satisfactorily for
a period of twenty-four (24) months or such longer period as may be agreed to
from time to time from the date of delivery to Company. Supplier warrants that
at time of delivery of the Material, such Material shall be free of any security
interest or any other lien or any other encumbrance whatsoever. Supplier also
warrants to Company that Services will be performed in a first class workmanlike
manner. In addition, if Material furnished contains components subject to one or
more manufacturer's warranties, Supplier hereby assigns such warranties to
Company to the extent permissible. All warranties shall survive inspection,
acceptance, and payment. Material not meeting the warranties will be repaired or
replaced at no cost to Company.
At Company's option, defective or nonconforming Material will
be returned to Supplier for repair or replacement at no cost to Company, with
risk of in-transit loss and damage borne by Company and freight paid by Company.
Unless otherwise agreed upon by Supplier and Company, Supplier shall complete
repairs and ship the repaired Material within seven (7) working days of receipt
of defective or nonconforming Material.
Supplier shall bear the risk of in-transit loss and damage and
shall prepay and bear the cost of freight for shipments to Company of repaired
or replaced Material.
Supplier should be contacted for a Return Material
Authorization Number prior to the return of any Material.
69. QUALITY
Supplier commits to ensure that all manufacturing and design
operations which contribute to the design, development, production and services
of Material remain ISO 9001 or 9002 certified and with respect to certain of
Supplier's subcontractors, are on a plan to achieve
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such certification. Furthermore, Supplier will use its reasonable best efforts
to attain and maintain acceptable ratings in any future quality programs as
agreed to by the parties hereto.
70. MEDIATION
If a dispute arises out of or relates to this Agreement or its
breach and the parties have not been successful in resolving such dispute
through negotiation, the parties agree to attempt to resolve the dispute through
non-binding mediation by submitting the dispute to a sole mediator selected by
the parties or, at any time at the option of a party, to mediation by the
American Arbitration Association ("AAA"). Each party shall bear its own expenses
and an equal share of the expenses of the mediator and the fees of the AAA. The
parties, their representatives, other participants and the mediator shall hold
the existence, content and result of the mediation in confidence. If such
dispute is not resolved by such mediation or either party elects to terminate
such mediation, the parties shall have the right to resort to any remedies
permitted by law. All defenses based on passage of time shall be tolled pending
the termination of the mediation. Nothing in this clause shall be construed to
preclude any party from seeking injunctive relief in order to protect its rights
pending mediation. A request by a party to a court for such injunctive relief
shall not be deemed a waiver of the obligation to mediate. During the pendency
of the mediation, pricing for Material shall be held at the then existing
levels.
71. ENTIRE AGREEMENT
This Agreement shall incorporate any additional typed or
written provisions on the front side of Company's Orders issued and accepted
pursuant to this Agreement and shall constitute the entire agreement between the
parties with respect to the subject matter of this Agreement, and this Agreement
and the Order(s) and shall not be modified or rescinded, except by a writing
signed by Supplier and Company. In the event of a conflict between this
Agreement and the typed provisions on the Order, this Agreement shall prevail.
All references in these terms and conditions to this Agreement or to work,
services, Material, equipment, products, software or information furnished
under, in performance of, pursuant to, or in contemplation of, this Agreement
shall also apply to any Orders issued pursuant to this Agreement. Printed
provisions on the reverse side of Company's Orders and all provisions on
Supplier's forms shall be deemed deleted, alterations, addenda, or otherwise,
shall be of no force and effect, unless expressly consented to by the parties in
writing. Estimates or forecasts furnished by Company shall not constitute
commitments. The provisions of this Agreement supersede all contemporaneous oral
agreements and all prior oral and written quotations, communications, agreements
and understandings of the parties with respect to the subject matter of this
Agreement. The term "Work" as used in this Agreement may also be referred to as
"services."
AT&T PARADYNE CORPORATION LUCENT TECHNOLOGIES INC.
By: /s/ W. Xxxxxxx Xxxxxxxx By: /s/ Xxxxxxxx X. Xxxxxxx
----------------------------- ------------------------------
Name: W. Xxxxxxx Xxxxxxxx Name: Xxxxxxxx X. Xxxxxxx
----------------------------- ------------------------------
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Title: Authorized Agent Title: Vice President
----------------------------- ------------------------------
Date: 7/31/96 Date:
----------------------------- ------------------------------
CAP ACQUISITION CORP.
By: /s/ Xxxxx X. Xxxxxxx
-----------------------------
Name: Xxxxx X. Xxxxxxx
-----------------------------
Title: President
-----------------------------
Date: 7/31/96
-----------------------------
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EXHIBIT A
MATERIAL PRICE AND LEAD TIME
[***]
-------------------
*Confidential Treatment Requested
A-1
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EXHIBIT B
MATERIAL ON CONSIGNMENT
The terms set forth herein (the "Consignment Arrangement")
will govern any Material on Consignment ("Consigned Material") at a Company
location, each as mutually agreed upon by Company and Supplier and as set forth
in Schedule(s) in the form attached hereto.
1. TERM OF CONSIGNMENT ARRANGEMENT - The term of the
Consignment Arrangement shall be specified in the acknowledged Consignment
Purchase Order.
2. FOB - Consignment site.
3. MATERIAL MANAGEMENT - Supplier shall ship all Consigned
Material via any nationally recognized carrier selected by Company and Supplier.
At the beginning of each 12 month period of this Consignment
Arrangement or otherwise agreed to by Company and Supplier, Company shall issue
to Supplier a "Master Purchase Order" for each Consigned Material. The Master
Purchase Order shall contain Company's twelve (12) month good faith estimated
annual usage for each Consigned Material. The estimated annual usage will be
provided by the Company solely for administrative purpose and shall not
constitute a commitment by the Company to purchase from Supplier the amount set
forth in the estimated annual usage.
Each week the Company shall send to Supplier a Forecast (the
"Weekly Consignment Forecast") for each Consigned Material. The Weekly
Consignment Forecast shall contain an updated twelve (12) month forecast,
including the Company's good faith weekly estimated requirements for a minimum
of the next 26 weeks, for each Consigned Material. Such Forecast shall be issued
by the Company solely for Supplier's Material planning purposes and shall not
constitute a commitment by the Company to purchase from Supplier the amount of
Material set forth in such Weekly Consignment Forecast. The Weekly Consignment
Forecast may differ from the Master Purchase Order estimated annual usage. In
addition, the Weekly Consignment Forecast shall (a) show the quantities
delivered by Supplier that are currently in Consigned Material storage (as
hereinafter defined) and (b) list by part number the amount of Material
withdrawn by Company from Consigned Material storage during such week and the
balance of such Consigned Material Storage. Supplier shall invoice Company each
month for Consigned Material withdrawn by Company in the previous month.
Supplier shall review the Weekly Consignment Forecast and
shall adjust Consigned Material Storage Stock support levels and Supplier's work
in process as set forth herein for the mutually agreed to quantities. Supplier
shall manufacture and ship enough Material into Consigned Material Storage so
that Consigned Material Storage contains the following: one (1) week forecast
plus a level of safety stock not to exceed the next three (3) weeks of Company's
forecast for such part numbers based on the then current Weekly Consignment
Forecast.
B-1
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Supplier shall have the Material Management (which shall be
based upon the Weekly Consignment Forecast) responsibility for Company's
Consignment Site for the Consigned Material. Supplier shall be responsible for
notifying Company of inventory fluctuations considered to be excessive by
Supplier. If upside fluctuations are deemed excessive by Supplier, Supplier and
Company shall work together on a delivery plan mutually agreeable to both
parties.
Company's commitment to purchase Consigned Material shall be
only those quantities withdrawn by Company from Consigned Material Storage and
as set forth below. Returns to Consigned Material Storage must be with the prior
written approval of Supplier.
If at any time during the twelve (12) month period covered by
a Master Purchase Order, this Consignment Arrangement is terminated by either
party as set forth below, or if Company changes its Weekly Consignment Forecast
to eliminate or materially reduce the quantities forecasted under the Master
Purchase Order, or if this Consignment Arrangement expires and is not renewed
during the term of this Agreement, Company's liability to Supplier shall be to
purchase the sum of the first four (4) weeks of gross forecasted amounts for
such terminated, eliminated or materially reduced or expired items (as
forecasted in the previous week's Weekly Consignment Forecast) and Supplier's
work in process and/or raw materials and components. Company's liability for
work in process and/or raw materials and components should not exceed the
Supplier's Lead Time referenced on Exhibit A of gross forecasted amounts for
such terminated, eliminated or materially reduced or expired items (as
forecasted in the previous week's Weekly Consignment Forecast), Such total of
gross forecasted amounts shall be referred to in this clauses as "Forecasted
Material". For that portion of the Forecasted Material at Supplier's location,
Company's obligation under this subsection shall be limited to the sum of (a)
[***] and (b) [***], (i) [***] and (ii) [***] other customers in the ordinary
course of business over a reasonable period of time); less [***] set forth in
(a) and (b) above. If requested by the Company, Supplier agrees to substantiate
such costs and purchase Price with proof reasonable satisfactory to Company.
Upon such termination, elimination, material reduction or
expiration the parties shall meet promptly to determine the finished Materials,
work in process, components and raw materials for which Company is responsible
as set forth above. Supplier shall, at Company's option and expense, ship to
Company or scrap such finished Materials, work in process and raw materials and
components for which Company is liable under this clause.
4. MATERIAL ON CONSIGNMENT - Supplier shall deliver the
Consigned Material as set forth below:
a. Contact Person - The Company's contact person for
each Consignment Arrangement shall be set forth in Company's Weekly Consignment
Forecast.
b. Consigned Material Storage - Upon receipt of each
shipment of Consigned Material, Company shall cause it to be placed in
segregated storage ("Consigned Material Storage") at the Consignment Site
partitioned or marked to evidence Supplier's
-------------------
*Confidential Treatment Requested
B-2
32
ownership and in such a way that the Consigned Material may be readily
distinguished from other inventory by physical inspection. Supplier may
physically inspect Consigned Material in Consigned Material Storage at mutually
agreeable times during normal business hours. After such inspection, Supplier
may invoice Company for any unaccounted for inventory of Consigned Material at
the Price then in effect under this Agreement.
c. Title and Risk of Loss - Upon receipt of
Consignment Material, risk of loss of such lot shall pass to Company. Upon
withdrawal of any item in such lot by Company from Consigned Material Storage,
title to such item shall pass to Company and sale of that lot shall be deemed to
occur.
d. Terms of Payment - Net 30 days.
e. Withdrawal from Consigned Material Storage -
Company may withdraw or cause to be withdrawn Consigned Material from Consigned
Material Storage at any time. Company shall keep or cause to be kept records and
report to Supplier weekly the quantities withdrawn and the balance of Consigned
Material in Consigned Material Storage as set forth in the clause MATERIAL
MANAGEMENT. Supplier's invoices for the Consigned Material shall be based upon
such withdrawal reports. Supplier shall regularly replace quantities withdrawn
to maintain mutually agreed upon stock support levels as set forth in the clause
MATERIAL MANAGEMENT.
f. Shipping Information - Promptly after each
shipment of Consigned Material under this Agreement, Supplier shall furnish to
Company and if Company so requests, to a designated party at the Consignment
Site, a written report setting forth at least the following (i) Company's Order
number; (ii) Consignment Destination; (iii) Origin location; (iv) Name of
Carrier and Truck number (v) lot identification number of each lot; (vi) net
weight of each lot; and (vii) description and quantity of Material in each lot.
g. Personal Property Taxes - Supplier shall be
responsible for the reporting and payment of personal property taxes, if any, on
any Consigned Material in such Consigned Material Storage by Company, except
state and local sale use taxes, as applicable.
h. Transportation Loss - As to loss of or damage to
Consigned Material which is reasonably apparent upon delivery from the carrier,
Company shall cause the following to be done:
(i) At time of delivery, xxxx the delivery
receipt before signing with appropriate exceptions describing the damage;
(ii) At the time of delivery, request the
carrier to either inspect the loss or damage and forward to Supplier a signed
exception report outlining the extent of loss or damage, or issue a written
waiver of inspection and forward it to Supplier; and
(iii) Within ten days after delivery,
inspect the damaged Material and notify Supplier whether Company will (a) accept
it at a mutually agreed lower Price reflecting the transportation damage (if
Supplier had the risk of loss), or (b) reject it. Rejected items shall
B-3
33
be set aside by Company pending disposition by Supplier as soon as reasonably
possible but no later than sixty days following delivery, after which time any
such damaged Consigned Material remaining undisposed of shall be deemed to be
abandoned and Company may dispose of it as it sees fit without any obligation to
Supplier.
As to concealed transportation damage, if after withdrawal of
any Consigned Material from Consigned Material Storage, Company discovers
concealed transportation damage, Company shall notify Supplier within five days
of such discovery, take reasonable steps to preserve evidence of how such damage
occurred and take all actions provided in for (b)(iii) above. Where Consigned
Material Storage is located on premises other than Company premises, Company
shall direct the owner of such other premises to comply with the procedure set
forth in this clause.
5. OPTION TO EXTEND - Company shall have the right to extend
the period specified in the clause TERM OF CONSIGNMENT ARRANGEMENT with the
consent of Supplier for up to six(6) months without any increase in Price by
giving Supplier at least thirty (30) days prior written notice.
6. TERMINATION (Consignment Arrangement Only) - Either party
may terminate the Consignment Arrangement with prior written notice of at least
sixty (60) days. Upon receipt or sending such notice, as applicable, Supplier
shall immediately stop work as specified in the notice. Company's liability to
Supplier with respect to such termination shall be limited to the purchase of
the quantities set forth in Clause 3 above, such quantities to be counted as of
the termination date set forth in the notice.
7. CONSIGNMENT SERVICE PERFORMANCE - The Company intends to
monitor the delivery performance of Supplier via special performance reports as
set forth in the Clause SERVICE in the Supply Agreement. In addition, so long as
Company complies with its obligations pursuant to Section 4, Material for
Consignment purposes, Supplier shall strive to achieve or exceed [***]
performance rating for percent of forecasted quantity on hand when measured.
-------------------
*Confidential Treatment Requested
B-4
34
EXHIBIT C
PULL REPLENISHMENT ARRANGEMENT
The terms set forth herein (the "Pull Replenishment
Arrangement") will govern any Material on Pull Replenishment at a Company
location, each as mutually agreed upon by Company and Supplier.
1. TERM OF PULL REPLENISHMENT ARRANGEMENT - The term of the
Pull Replenishment Arrangement shall be specified in the Pull Replenishment
Purchase ("PRP") Order acknowledged by Supplier.
2. PULL REPLENISHMENT PROCESS - For Pull Replenishment
Material, Company shall prepare and deliver to Supplier an annual PRP order(s)
establishing the minimum release quantity for Material. On Monday of each week,
Company shall provide Supplier with an updated twelve (12) month forecast,
including the Company's reasonable and good faith estimated requirements for a
minimum of the next twenty six (26) weeks, for each Pull Replenishment Material
(the "Forecast"). Supplier will receive "Request to Ship" notices as Company
uses Material and requires replenishment of Material. Supplier will deliver
within two to three days of Supplier's receipt of the Request to Ship" 100% of
the quantity designated in the "Request to Ship" notice. Supplier shall
reference the annual PRP order number on its shipping and invoicing documents.
The Forecast received weekly from Company shall be for planning purposes only
and, except to the extent set forth below, shall not be deemed a commitment by
the Company to purchase from Supplier the amount set forth in the Forecast.
Company will acknowledge receipt of Material delivered in the prior week via the
succeeding week's Forecast.
Supplier shall maintain (a) an inventory of inspected finished
Pull Replenishment Material equal to the amount of such Material forecasted to
be used by the Company during weeks one (1) through three (3) of the then
current Forecast and (b) work in process and/or raw materials and components in
the aggregate sufficient to manufacture such Pull Replenishment Material
equivalent to weeks four (4) through eight (8) of then current Forecast. From
time to time, the parties will review the foregoing levels of inventory, work in
process and/or raw material and components and will negotiate on lower inventory
levels, work in process and materials and components based on Supplier's
satisfactory Pull Replenishment service performance.
Supplier shall review the weekly Forecast and make adjustments
to Supplier's inspected inventory of Pull Replenishment Material, work in
process and raw materials and components based upon increases/decreases in the
Forecast. Supplier shall be responsible for notifying Company of inventory
fluctuations considered to be excessive by Supplier. If upside fluctuations are
deemed excessive by Supplier, Supplier and Company shall work together on a
delivery plan mutually agreeable to both parties.
The Company's commitment for the purchase of Pull
Replenishment Material shall be limited to (a) the quantities set forth in the
"Request to Ship" notice of the Forecast and (b) the finished and inspected by
Supplier inventory of Pull Replenishment Materials, work in process, raw
materials and components as set forth above.
C-1
35
The Company's liability for the items above shall be limited
to the sum of (a) [***]; (b) [***]; and (c) for [***].
3. TERMINATION OF PULL REPLENISHMENT ARRANGEMENTS - Company
may at any time terminate any or all annual PRP orders, in whole or in part,
upon thirty (30) days written notification to Supplier. Upon receipt of such
notice, Supplier shall immediately stop work as specified in the notice to
Supplier. Company liability to Supplier with respect to such termination shall
be as set forth in paragraph 2 above. Upon such termination, the parties shall
meet promptly to determine the finished Pull Replenishment Material, work in
process and raw material and components for which Company is responsible as set
forth above. Supplier shall, at Company's option and expense, ship to Company or
scrap such finished Material, work in process and raw materials and components
for which Company is liable under this Agreement.
4. PULL REPLENISHMENT SERVICE PERFORMANCE - The Company
intends to monitor the delivery performance of Supplier via special performance
report set forth in the clause SERVICE of the Supply Agreement. Supplier will
strive to achieve or exceed the service goals established in the clause SERVICE.
-------------------
*Confidential Treatment Requested
C-2
36
EXHIBIT D
DEMAND - PULL
The terms set forth herein (the "Demand Pull Arrangement")
will govern any Material on Demand Pull at a Company location, each as mutually
agreed upon by Company and Supplier.
1. TERM OF DEMAND PULL ARRANGEMENT - The term of the Demand
Pull Arrangement shall be specified in the Demand Pull purchase (DPP) order
acknowledged by Supplier.
2. DEMAND PULL PROCESS - For Demand Pull Material, Company
shall prepare and deliver to Supplier an annual DPP order(s). On Monday of each
week, Company shall provide Supplier with an updated twelve (12) month forecast,
including the Company's reasonable and good faith estimated requirements for a
minimum of the next twenty six (26) weeks, for each Demand Pull Material (the
"Forecast"). The Forecast may also contain authorization by Company to Supplier
to ship within twenty-four hours and Supplier will deliver within the week of
Supplier's receipt of the Forecast provided said Forecast is actually received
on Monday, 100% of the quantity designated in the column entitled "Ship Action"
to be received by Thursday of the current week. Supplier shall reference the
annual DPP order number on its shipping and invoicing documents. The Forecast
shall be for planning purposes only and except to the extent set forth below,
shall not be deemed a commitment by the Company to purchase from Supplier the
amount set forth in the annual DPP order or the Forecast. Company will
acknowledge receipt of Material delivered in the prior week via the succeeding
week's Forecast.
Supplier shall maintain (a) an inventory of inspected finished
Demand Pull Material equal to the amount of such Material forecasted to be used
by the Company during weeks one (1) through three (3) of the then current
Forecast and (b) work in process and/or raw materials and components in the
aggregate sufficient to manufacture such Demand Pull Material equivalent to
weeks four (4) through eight (8) of then current Forecast. From time to time,
the parties will review the foregoing levels of inventory, work in process
and/or raw material and components and will negotiate on lower inventory levels,
work in process and materials and components based on Supplier's satisfactory
demand pull service performance.
Supplier shall review the weekly Forecast and make adjustments
to Supplier's inspected inventory of Demand Pull Material, work in process and
raw materials and components based upon increases/decreases in the Forecast.
Supplier shall be responsible for notifying Company of inventory fluctuations
considered to be excessive by Supplier. If upside fluctuations are deemed
excessive by Supplier, Supplier and Company shall work together on a delivery
plan mutually agreeable to both parties.
The Company's commitment for the purchase of Demand Pull
Material shall be limited to (a) the quantities set forth in the "Ship Action"
column of the Forecast and (b) the finished and inspected by Supplier inventory
of Demand Pull Materials, work in process, raw materials and components as set
forth above.
D-1
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The Company's liability for the items above shall be limited
to the sum of (a) the [***]; (b) [***]; and (c) [***]; less (d) [***] set forth
in (a), (b), and (c) of this paragraph. If requested by the Company, Supplier
will substantiate such costs and purchase prices with proof reasonably
satisfactory to the Company.
3. TERMINATION OF DEMAND PULL ARRANGEMENTS - Company may at
any time terminate any or all annual DPP orders, in whole or in part, upon
thirty (30) days written notification to Supplier. Upon receipt of such notice,
Supplier shall immediately stop work as specified in the notice to Supplier.
Company liability to Suppliers with respect to such termination shall be as set
forth in paragraph 2 above. Upon such termination, the parties shall meet
promptly to determine the finished Demand Pull Material, work in process and raw
material and components for which Company is responsible as set forth above.
Supplier shall, at Company's option and expense, ship to Company or scrap such
finished Material, work in process and raw materials and components for which
Company is liable under this Agreement.
4. DEMAND PULL SERVICE PERFORMANCE - The Company intends to
monitor the delivery performance of Supplier via special performance report set
forth in the clause SERVICE. Supplier will strive to achieve or exceed the
service goals established in the clause SERVICE of the Supply Agreement.
-------------------
*Confidential Treatment Requested
D-2
38
EXHIBIT E
FLEXIBLE ORDERING AND PAYMENT SPECIFICATIONS
"How to Get Started on Electronic Procurement Communications
with AT&T" dated May 1, 1995 is attached hereto and made part of this
Attachment.
