COMPAQ COMPUTER CORPORATION
PURCHASE AGREEMENT
This Purchase Agreement ("Agreement") is made by Compaq Computer
Corporation ("Buyer") and Apex PC Solutions, Inc. a Washington Corporation
("Seller"). The terms and conditions contained in this Agreement shall
govern the purchase and sale of Product listed in Exhibit A ("Products and
Pricing").
1. INTENT
A. Buyer intends to enter into a long-term relationship with Seller. As such,
Seller is willing to cooperate with Buyer to further mutual long term goals
by sharing Product road map and technology directions. Seller agrees to
cooperate to achieve Buyer's long term program goals such as shortening
Product lead-times, increasing volume flexibility, achieving Just-in-Time
delivery, achieving ongoing cost reductions and specific quality goals, and
continuous quality improvement.
B. This Agreement is not a requirements contract and does not obligate Buyer
to purchase any minimum quantity of Product but only establishes the terms
and conditions for such purchases if and when they occur.
2. PURCHASE ORDERS
A. Buyer will purchase Products only by issuing purchase orders ("Order or
Orders") to Seller. Orders shall contain such things as quantity, price,
delivery date, part number, and revision level. Buyer shall make
commercially reasonable efforts to send written confirmation (except by
mutual agreement) of Orders within one (1) week after Issuance. If Seller
fails to return the acknowledgment, Seller will be deemed to have accepted
any Order which conforms with the terms of this Agreement. No additional
or different provisions proposed by Seller shall apply unless expressly
agreed to in writing by Buyer. Buyer hereby gives notice of its objection
to any additional or different terms.
B. Seller agrees that all Buyer sites, subsidiaries, affiliated companies and
subcontractors, wherever located, shall be entitled to make purchases under
this Agreement.
3. TERM OF AGREEMENT
A. The term of this Agreement shall be twelve (12) months, commencing on the
date Buyer executes this Agreement ("Effective Date"). This Agreement will
be automatically renewed at the conclusion of the initial twelve (12) month
period
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for successive twelve (12) month periods unless one of the parties
indicates by written notice to the other party not less than thirty (30)
days prior to the end of any such twelve (12) month period that it does not
intend to renew the Agreement. Notwithstanding the foregoing, the
Agreement shall remain in full force and effect and shall be applicable to
any Order(s) issued by Buyer to Seller during the term of this Agreement
until any and all obligations of the parties under such Order(s) have been
fulfilled.
4. PRICING
A. The prices for the Products shall be set forth in Exhibit A and shall be
fixed for the period set forth therein (the "Pricing Period").
B. Prices shall include all charges such as packaging, packing, crating,
storage, forwarding agent or brokerage fees, freight shipping charges,
document fees, duties, and any and all sales, use, excise and similar
taxes. F.O.B. point specified in Exhibit A.
C. Seller represents that the prices charged for Products are * .In the
event Seller provides prices and/or terms for Products * , Buyer shall
be entitled to * .
D. Seller shall maintain a vigorous cost reduction program to ensure that
pricing is competitive at times. In the event that Buyer does not consider
Seller's pricing aggressive relative to the market during any Pricing
Period, Buyer shall have the right to request an immediate meeting with
Seller to renegotiate pricing.
5. DELIVERY
A. Time shall be of the essence in meeting Buyer's requirements. Delivery
performance shall be measured by on-dock date at Buyer's specified ship-to
location.
B. Unless otherwise set forth in the Order, title and risk of loss shall pass
to Buyer at Buyer's specified ship-to location.
C. If Seller delivers Product in advance of the specified delivery date, Buyer
may either return such Product at Seller's risk and expense for subsequent
delivery on the specified delivery date or retain such material and make
payment when it would have been due based on the specified delivery date.
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* Subject to confidential treatment request; filed separately with the
Securities and Exchange Commission
D. Changes to delivery dates may only be made by Buyer's authorized purchasing
representatives. Buyer may, without cost or liability, issue change
requests for Product quantities and schedule dates in accordance with the
Flexibility Agreement attached as Exhibit D ("Flexibility Agreement").
Written confirmation will be sent by Seller to Buyer within two (2) work
days of receiving a change request, and Buyer shall provide a confirming
Order change within ten (10) working days of receiving Seller's
confirmation.
E. Seller shall notify Buyer in writing immediately if Seller has knowledge of
any event which could result in any change to the agreed delivery plan.
F. In the event that Product scheduled for delivery is more than one (1)
business day late, Buyer may request such Product to be shipped and
delivered via a different mode of transportation at sellers expense.
Alternatively, Buyer may purchase substitute Product elsewhere without
affecting other remedies Buyer may have and charge Seller any additional
cost incurred as a result.
6. PACKING, MARKING, AND SHIPPING INSTRUCTIONS
A. All Product shall be prepared and packed in a commercially reasonably
manner so as to secure the lowest transportation rates and meet carrier's
requirements or those set forth in the Product specification attached as
Exhibit B ("Specification").
B. Each shipping container shall be marked to show Buyer's Order number, part
number, revision level, lot number, and quantity contained therein. A
packing list showing the Order number shall be included in each container.
C. Seller agrees to standardize the count multiples used in shipments.
7. QUALITY
A. Seller shall establish and/or maintain a quality improvement plan
acceptable to Buyer. Seller's Quality improvement Plan is attached to this
Agreement as Exhibit C ("Quality Plan").
B. At Buyer's request, Seller will facilitate on-site visits and inspections
by Buyer during normal business hours. Buyer's inspections shall In no way
relieve Seller of its obligation to deliver conforming Product or waive
Buyer's right of inspection and acceptance at the time the Products are
delivered.
C. Seller agrees to provide relevant outgoing inspection, quality, and
reliability data upon Buyer's request.
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D. Seller agrees to conform to the revision level stated on Buyer's Order.
E. Seller agrees to advise Buyer of any changes to process, materials, or
sources of supply and ensure that such changes do not compromise
specifications, quality, or reliability of Products ordered by Buyer.
8. INSPECTION AND ACCEPTANCE
A. Products purchased pursuant to this Agreement shall be subject to
inspection and test by Buyer at all times and places, including the period
of manufacture or development. Unless otherwise specified in the Order,
final inspection and acceptance of Product by Buyer shall be at Buyer's
facilities. Buyer reserves the right to reject Product which does not
conform to the specifications, drawings, samples or other descriptions
specified by Buyer. Buyer may, at its option, either return defective or
nonconforming Product for full credit of the purchase price plus any
transportation charges paid by Buyer, or require prompt correction or
replacement of defective or nonconforming Product, which rights shall be in
addition to such other rights as Buyer may have in law or in equity.
Product required to be corrected or replaced shall be subject to the same
inspection and warranty provisions of this Agreement as Product originally
delivered under any Order. Buyer may charge Seller for costs of any above
normal level of inspection.
B. In the event Buyer returns Product back to Seller for correction or
replacement, Seller shall repair or replace all defective Product within
* of receipt of such Product. Seller will issue a "Return Material
Authorization" within twenty-four (24) hours of receipt. Seller shall bear
all risk and costs such as labor, material, inspection, and shipping to and
from Buyer's facilities. If Buyer incurs any such costs, it may either
recover them directly from Seller or set off via a credit note any amounts
due to Seller. Seller agrees to provide failure analysis of rejected
material within * after receipt of reject materials. Seller will also
provide a written corrective action report addressing the steps that will
be taken to eliminate the cause of the problem. Buyer and Seller will
negotiate in good faith any cost incurred by Seller on product returned
where failure cannot be found.
9. WARRANTY
A. Seller warrants that title to all Products delivered to Buyer under this
Agreement shall be free and clear of all liens, encumbrances, security
interests or other claims and that for a period of * from date of
acceptance of material by Buyer, that all Product shall be free from
defects in material, workmanship, and design. Seller further warrants that
all Product shall conform to applicable specifications, drawings, samples,
and descriptions referred to in this
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* Subject to confidential treatment request; filed separately with the
Securities and Exchange Commission
Agreement. The warranty for replaced or repaired Product will be the same
as the original Product.
B. Defective material discovered during Buyer's manufacturing or assembly
processes are not considered to be a warranty repair and shall be corrected
in accordance with paragraph 8.B.
C. Seller agrees that in case of epidemic failure (greater than * failure
for the same cause in any * period), Seller shall provide correction or
replacement in accordance with Paragraph 8.B.
D. EXCEPT AS EXPRESSLY PROVIDED IN THIS SECTION 9, NO WARRANTIES, EXPRESS OR
IMPLIED, STATUTORY OR OTHERWISE, ARE MADE WITH RESPECT TO THE PRODUCT
DELIVERED BY SELLER TO BUYER UNDER THIS AGREEMENT.
10. OUT OF WARRANTY REPAIRS and SPARE PARTS AVAILABILITY
A. Seller agrees to refurbish to a "like new" condition any out of warranty
Product at the refurbishment prices listed in Exhibit E ("Service, Repair,
and Refurbishment"). In addition, Seller agrees to make available for
purchase by Buyer replacement and repair parts for Products ("Spares") in
accordance with Exhibit E.
11. PAYMENT AND SETOFF
A. Terms of payment shall be net 45 from the date of Seller's invoice provided
that Product has been received by Buyer. Payment of invoices shall not
constitute final acceptance of the Product.
B. Buyer retains the right to setoff rejections of Product or discrepancies on
paid invoices against future invoices.
C. Unless otherwise specified in Exhibit A or agreed to in writing by the
parties, payment shall be in U.S. dollars.
12. CHANGES
A. Buyer may from time to time change the specifications for the Products and
Seller agrees to make best efforts to comply. If changes result in a
change in Seller's costs or in the time for performance, an adjustment will
be made. Any adjustment must be in writing and must be requested within
ten (10) days of receipt by Seller of the notice of change.
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* Subject to confidential treatment request; filed separately with the
Securities and Exchange Commission
B. No changes shall be made by Seller in the form, fit, or function of
Products purchased hereunder without Buyer's prior written approval.
13. TERMINATION FOR CAUSE
A. Seller may terminate this Agreement and/or any Order issued hereunder at
any time by written notice in the event Buyer:
1. Fails to comply with any material provision of this Agreement or any
Order issued hereunder, and, in the case of a breach which is capable
of remedy, falls to remedy same within thirty (30) days of
notification of said breach, or
2. Becomes insolvent or makes an assignment for the benefit of creditors,
or a receiver or similar officer is appointed to take charge of all or
a part of the Buyer's assets and such condition is not cured within
thirty (30) days.
B. Buyer may terminate this Agreement and/or any Order issued hereunder at any
time by written notice in the event Seller:
1. Fails to comply with any material provision of this Agreement or any
Order issued hereunder, and in the case of a breach which is capable
of remedy, fails to remedy same within thirty (30) days of
notification of said breach, or
2. Becomes insolvent or makes an assignment for the benefit of creditors,
or a receiver or similar officer is appointed to take charge of all or
a part of Seller's assets and such condition is not cured within
thirty (30) days, or
3. Assigns or attempts to assign, or subcontracts or attempts to
subcontract, any or all of its rights or obligations under this
Agreement or any Orders issued hereunder to a third party without
Buyer's prior written approval, or
4. Failure to agree on pricing for any Pricing Period.
C. Upon termination by Seller of the Agreement and/or any Order issued under
13A above, Buyer's entire liability shall be to purchase all finished
goods, work in progress, and Buyer unique materials that have been
purchased within lead time by Seller to fulfill Buyer's Order(s).
D. Upon termination by Buyer of the Agreement and/or any Order issued under
13B above:
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1. Buyer shall have the option to purchase any materials or work in
progress which Seller may have purchased or processed for the
fulfillment of any Order at Seller's cost plus a reasonable amount for
any value already added by Seller,
2. Buyer shall have no liability beyond payment for any balance due for
Products delivered by Seller before notice of termination.
14. TERMINATION FOR CONVENIENCE
A. Buyer may terminate this Agreement and/or any Order issued hereunder at any
time for any reason upon giving written notice of termination to the
Seller. Upon receipt of such notice, Seller shall immediately cease to
incur expenses pursuant to this Agreement and/or the Order that has been
terminated unless otherwise directed in the termination notice. Seller
shall also take all reasonable steps to mitigate the cost to Buyer for
terminating this Agreement and/or any Order. Within sixty (60) days from
the date of notice, Seller shall notify Buyer of costs incurred up to the
date of termination. In no event shall such cost exceed the unpaid
balance:
1. Due for conforming material delivered prior to receipt of Buyer's
termination notice; and
2. Due on purchase orders previously issued in conformance with this
Agreement.
B. In addition to the foregoing, in the event that this Agreement is
terminated pursuant to this Paragraph, Buyer's entire liability shall be to
purchase all finished goods, work in progress, and Buyer unique materials
that have been purchased within lead time by Seller to fulfill Buyer's
Order(s).
15. LIMITATION OF LIABILITY
A. EXCEPT FOR A BREACH OF SECTION 19, 23 OR 24 OF THIS AGREEMENT, NEITHER
PARTY SHALL BE LIABLE FOR ANY CONSEQUENTIAL (INCLUDING, WITHOUT LIMITATION,
LOST PROFITS, UNLIQUIDATED INVENTORY, ETC.), INCIDENTAL, INDIRECT, SPECIAL,
ECONOMIC, OR PUNITIVE DAMAGES ARISING OUT OF OR RESULTING FROM THIS
AGREEMENT EVEN IF THE OTHER PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF
SUCH DAMAGES. SELLER'S LIABILITY TO BUYER FOR DIRECT DAMAGES UNDER THIS
AGREEMENT SHALL BE LIMITED TO THE AMOUNTS
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PAID BY BUYER UNDER THIS AGREEMENT, INCLUDING ANY OTHER AMOUNTS PAID BY
BUYER SUCH AS FREIGHT AND STORAGE.
16. FORCE MAJEURE
A. Neither party shall be liable for its failure to perform any of its
obligations hereunder during any period in which performance is delayed by
earthquake, fire, flood, war, embargo, riot or the intervention of any
government authority ("Force Majeure"), provided that the party suffering
such delay immediately notifies the other party of the delay. If, however,
Seller's performance is delayed for reasons set forth above for a
cumulative period of thirty (30) calendar days or more, the Buyer,
notwithstanding any other provision of this Agreement to the contrary. may
terminate this Agreement and/or any Order issued hereunder by notice to
Seller. In the event of such termination, Buyer's sole liability hereunder
will be for the payment to Seller of any balance due and owing for
conforming Product delivered by Seller prior to Seller's notification of
delay to Buyer. In the event the parties do not terminate this Agreement
and/or Order due to a Force Majeure, the time for performance or cure will
be extended for a period equal to the duration of the Force Majeure.
17. PRODUCT NOTICES
A. Any notice given under this Agreement shall be in writing and will be
effective when delivered personally or deposited in the mail, postage
prepaid and addressed to the parties at their respective addresses set
forth below, or at any new address subsequently designated in writing by
either party to the other:
If to Seller: If to Buyer:
APEX PC SOLUTIONS, INC. COMPAQ COMPUTER CORPORATION
0000 000XX XXXXXX, XX P.O. BOX 692000
XXXXXXX, XX 00000 20555 S.H. 249
XXXXXXX, XXXXX 00000-0000
ATTN.: XXXXX SlRIANNI ATTN.: XXXX XXXXXXXX
with a copy to:
COMPAQ COMPUTER CORPORATION
P.O. BOX 692000
20555 S.H. 249
XXXXXXX, XX 00000-0000
ATTN.: Division Counsel-Operations
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18. COMPLIANCE WITH LAWS
A. All Product supplied and work performed under this Agreement shall comply
with all applicable laws and regulations in effect. In particular, Seller
agrees that its performance under this Agreement shall comply with all laws
governing its relationship with its employees, agents or subcontractors and
with the chlorofluorocarbon labeling requirements of the U.S. Clean Air Act
of 1990. Upon request, Seller agrees to certify compliance with such
applicable laws and regulations.
19. PATENT, COPYRIGHT AND TRADEMARK INDEMNITY
A. Seller shall defend, at its expense, any claim against Buyer alleging that
Products furnished under this Agreement (other than claims related to the
Buyer's logo and/or trademark) infringe any patent, copyright or trademark
and shall pay all costs and damages awarded, provided Seller is notified in
writing of such claim and permitted to defend and compromise such claim.
If a final injunction against Buyer's use of the Products results from such
a claim (or, if Buyer reasonably believes such a claim is likely) Seller
shall, at its expense, and at Buyer's request, either use commercially
reasonable efforts to obtain for Buyer the right to continue using the
Product or replace or modify the Product so that it becomes noninfringing.
In the event that Seller cannot obtain such right for Buyer, Seller shall
repurchase all finished Products which Buyer has unsold in its warehouse at
that time. The foregoing states the sole and exclusive liability of Seller
for infringement of proprietary rights.
B. Seller warrants that there are no claims of infringement with respect to
the Product.
C. Seller is authorized to use Compaq logo and trademark only to the extent
necessary to meet the required specification for the Product(s). No other
rights with respect to Buyer's trademarks, trade names or brand names are
conferred, other expressly or by implication, upon Seller.
20. CAPACITY PLANNING
A. Seller agrees to review forecasts provided by Buyer and advise Buyer if
Seller anticipates that he will be unable to achieve the requested volumes.
Buyer volume forecasts will be provided to Seller in accordance with
Exhibit A. Seller may from time to time request Buyer to review Buyer's
forecast and advise of any changes.
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21. GRATUITIES
A. Each party represents that it has not offered nor given and will not offer
nor give any employee, agent, or representative of the other party any
gratuity with a view toward securing any business from the other party or
influencing such person with respect to the business between the parties.
22. INSURANCE AND STATUTORY OBLIGATIONS
A. If Seller's work under this Agreement requires access by Seller to any of
Buyer's premises or the premises of Buyer's customers or locations where
Buyer conducts business, or with material or equipment furnished by Buyer,
Seller shall take all necessary precautions to prevent the occurrence of
any injury to persons or property during the progress of such work and,
except to the extent that such injury is due solely and directly to Buyer's
acts or negligence, Seller shall indemnify Buyer against all loss which may
result in any way from any act or negligence of Seller; its employees,
servants, agents or subcontractors, and Seller shall maintain such
insurance as shall protect Buyer from such risks and from any statutory
liabilities arising therefrom and shall provide evidence of such insurance
to Buyer upon request.
23. INDEMNIFICATION
Seller agrees to protect, defend, indemnify and save Buyer harmless from
all sums, costs and expense which Buyer may incur or be obliged to pay as a
result of any loss, expense, damage, liability, claims, demands in favor of
any person, as a result of personal injury or death resulting from the use
of the Products where the personal injury or death is solely and directly
the result of the gross negligence or willful misconduct of Seller.
24. CONFIDENTIAL INFORMATION
A. Each party recognizes that it may have previously entered or will in the
future enter into various agreements with the other party which obligates
it to maintain as confidential certain information disclosed to it by the
other party. To the extent that such information or any further
confidential information, which might include but is not limited to
business plans, forecasts, capacity, pricing, inventory levels, etc.
(collectively referred to hereinafter as "Information"), is disclosed in
furtherance of this Agreement or any Order issued hereunder, such
information shall be so disclosed pursuant to the minimum terms and
conditions listed below; provided, however, the minimum terms and
conditions listed below shall in no way relieve the parties from any
obligation or modify such obligations previously agreed to in other
agreements. Both parties agree that this Agreement and any
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other agreements regarding confidential information shall hereafter be
considered as coterminous, and shall expire no earlier than the date of
expiration or termination of this Agreement.
B. Both parties agree that the party receiving Information will maintain such
Information in confidence for a period of three (3) years from the date of
disclosure of such information.
C. Each party shall protect the other party's information to the same extent
that it protects it own confidential and proprietary information and shall
take all reasonable precautions to prevent unauthorized disclosure to third
parties.
D. The parties acknowledge that the unauthorized disclosure of such
Information will cause irreparable harm. Accordingly, the parties agree
that the injured party shall have the right to seek immediate injunctive
relief enjoining such unauthorized disclosure.
E. This provision shall not apply to information (1) known to the receiving
party at the time of receipt from the other party, (2) generally known or
available to the public through no act or failure to act by the receiving
party, (3) furnished to third parties by the disclosing party without
restriction on disclosure, or (4) furnished to the receiving party by a
third party as a matter of right and without restriction on disclosure.
F. Immediately upon termination of this Agreement or at the request of the
other party, each of the parties shall promptly return all materials in its
possession containing Information of the other party.
25. COUNTRY OF ORIGIN
A. For each Product purchased under this Agreement, Seller shall furnish Buyer
with country of origin (manufacture), by quantity and part number (Buyer's
and Seller's) if necessary.
B. Seller agrees to provide necessary export documents and to facilitate
export of Product. Seller further agrees to assist Buyer's import of
Product as reasonably requested by Buyer.
26. PROPERTY FURNISHED BY BUYER
A. Any tools, drawings, specifications, or other materials furnished by Buyer
for use by Seller in its performance under this Agreement or any Order
issued hereunder shall be identified and shall remain the property of Buyer
and shall be used by
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Seller only in its performance hereunder. Such property shall be
delivered, upon request, to destination specified by Buyer in good
condition, except for normal wear and tear.
27. GENERAL
A. Any obligations and duties which by their nature extend beyond the
expiration or earlier termination of this Agreement shall survive any such
expiration or termination and remain in effect.
B. If any provision or provisions of this Agreement shall be held to be
invalid, illegal or unenforceable, such provision shall be enforced to the
fullest extent permitted by applicable law and the validity, legality and
enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.
C. No action, except those regarding claims by third parties, or claims with
respect to patents, copyrights, trademarks or trade names or the
unauthorized disclosure of Confidential Information, regardless of form,
arising out of this Agreement may be brought by either party more than two
(2) years after the cause of action has arisen, or, in the case of
nonpayment, more than two (2) years from the date the payment was due.
D. Any waiver of any kind by a party of a breach of this Agreement must be in
writing, shall be effective only to the extent set forth in such writing
and shall not operate or be construed as a waiver of any subsequent breach.
Any delay or omission in exercising any right, power or remedy pursuant to
a breach or default by a party shall not impair any right, power or remedy
which either party may have with respect to a future breach or default.
E. Seller hereby gives assurance to Buyer that it shall not export, re-export
or otherwise disclose, directly or indirectly, technical data received from
Buyer or the direct product of such technical data to any person or
destination when such export, re-export or disclosure is prohibited by the
laws of the United States or regulations of a Department of the United
States.
F. This Agreement is considered to be Compaq Confidential.
G. The entire Agreement between the parties is incorporated in this Agreement
and Appendices attached hereto, and it supersedes all prior discussions and
agreements between the parties relating to the subject matter hereof. This
Agreement can be modified only by a written amendment duly signed by
persons authorized to sign agreements on behalf of both parties, and shall
not be supplemented or modified by any course of dealing or trade usage.
Variance
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from or addition to the terms and conditions of this Agreement in any
Order, or other written notification from Seller will be of no effect.
H. THE CONSTRUCTION, VALIDITY, AND PERFORMANCE OF THIS AGREEMENT AND ANY ORDER
ISSUED UNDER IT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF WASHINGTON,
U.S.A.
IN WITNESS, THE AUTHORIZED REPRESENTATIVES OF THE PARTIES HAVE EXECUTED THIS
AGREEMENT.
For the Buyer For the Seller
/s/ Xxxxxx Xxxxxxxx for Xxx Xxxxxx /s/ Xxxxx X. Xxxxx
---------------------------------- ------------------------------
9/19/94 9-8-94
---------------------------------- ------------------------------
Signature (date) Signature (date)
Xxxxxx X. Xxxxxx Xxxxx X. Xxxxx
---------------- ------------------------------
Name Name
Vice-president Corporate Procurement General Manager
------------------------------------ ------------------------------
Title Title
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EXHIBIT A
ITEM SELLER REFERENCE COMPAQ REFERENCE LEAD-TIME PRICE TIME
---- ---------------- ---------------- --------- ----- ----
1 242694-001 242694-001 8 WEEKS * *
(4-PORT-SWITCHBOX) * *
* *
2 242695-001 242695-001 8 WEEKS * *
(8-PORT SWITCHBOX) * *
* *
3 242778-001 242778-001 8 WEEKS * *
(SWITCHBOX * *
INTERCONNECT KIT) * *
4 242691-001 242691-002 8 WEEKS * *
(115 DOMESTIC * *
FRONT CONNECT * *
5 242691-002 242691-002 8 WEEKS * *
(230 DOMESTIC * *
FRONT CONNECT * *
PANEL)
6 242691-B33 242691-B33 8 WEEKS * *
(240 INTERNATIONAL * *
FRONT CONNECT * *
PANEL)
-------------------------------- -----------------------------
XXX XXXXXXX XXXXX XXXXXXXX
COMPAQ COMPUTER CORPORATION APEX PC SOLUTIONS, INC.
* Subject to confidential treatment request; filed separately with the
Securities and Exchange Commission.
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EXHIBIT B
SPECIFICATION
Buyer's specification number 169953-001/-002 and 169954-001/-002 is incorporated
by reference.
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EXHIBIT C
QUALITY AGREEMENT
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COMPAQ COMPUTER CORPORATION
AND
APEX PC SOLUTIONS, INC.
QUALITY PLAN
APPROVALS:
/s/ Xxxx Xxxxxxx Xxxxxxxxx
----------------------------------- ------------------------------------
Xxxx Xxxxxxx Xxxxxxxxx
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REVISION HISTORY
Revision A (9/23/96) Original
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TABLE OF CONTENTS
1.0 Purpose
2.0 Scope
3.0 References
4.0 Quality Systems Survey
5.0 Quality Planning
6.0 Quality Assurance Methodology
7.0 Design/Process Change Requirements
8.0 Inspection Requirements
9.0 Performance Reports
10.0 Traceability Identification
11.0 Reliability
12.0 Supplier obligations
13.0 COMPAQ's obligations
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1.0 Purpose:
This plan documents the specific systems of process and product controls
required to provide defect free product to our customers, on time, and at
a mutually beneficial price.
2.0 Scope:
This plan documents the specific system of process and product controls
required to prevent incidents of non-conforming product. It is
understood that the manufacturing subcontractor *** is
responsible for insuring quality objectives for the product are met, and
APEX PC SOLUTIONS, INC. having control of the design is responsible for
the reliability as well as ultimate responsibility for the final quality
of the product. Reliability is defined as the demonstrated field
performance and MTBF of the *** . This plan identifies
actions necessary to assure conformance of:
A. Documentation
B. Equipment Qualification
C. Correlation (functional/nonfunctional)
D. Workmanship
E. Process Capability
F. Critical Parameters
This document is a supplement to Compaq Computer Corporation's contractual
agreements and engineering specifications. In any case of conflicting
requirements, purchasing and engineering documents shall take precedence.
3.0 References:
A. Compaq *** Specifications (part number
*** )
B. Compaq *** Specification (part number
*** )
C. World Class Supplier Process Handbook (WCSP)
4.0 Quality Systems Survey:
In accordance with the requirements of WCSP handbook FM1 001, a full
quality system survey will be completed.
*** Subject to confidential treatment request; filed separately with the
Securities and Exchange Commission.
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The results of the survey will be used to establish a baseline from which
an improvement plan may be launched and results measured. Based upon the
survey results, a classification will be assigned to APEX PC SOLUTIONS,
INC.
5.0 Quality Planning:
APEX PC SOLUTIONS, INC. shall be responsible for a controlled and capable
process to ensure the product is in total compliance with the product
specifications. ( *** )
5.1 Documentation Review:
As a part of the product evaluation process, members of the
Compaq/APEX PC SOLUTIONS, INC. team will review the current
engineering specification package to assure:
A. All documentation is present and legible
B. Specified tolerances are defined and APEX PC SOLUTIONS, INC.
and/or subtier supplier manufacturing process capabilities
known
C. Specified dimensions must not conflict with other
documentation
D. Clarity of workmanship standards
Any discrepancies or issues shall be noted on the WCSP Print
Acceptance Form, PAF. The items will be assigned to the project team
for resolution. The project team will be accountable for completing
the items within a specified time frame. The project team may consist
of the Compaq/APEX PC SOLUTIONS, INC. team. When changes to any
content within the Kit have occurred then; Each *** , Compaq
Procurement Engineering will be responsible for issuing APEX PC
SOLUTIONS, INC. Quality Assurance Manager all new released and ECN
documentation. This documentation distribution will include the
assembly, reference specifications, Receiving Inspection Procedures,
and Compaq manufacturing diagnostics. Each *** , APEX PC SOLUTIONS,
INC. shall send Compaq Procurement Engineer ***
. This information is
required for Compaq documentation control.
5.2 Work Instruction:
*** Confidential treatment request; filed separately with the
Securities and Exchange Commission.
21
The process document should be a controlled procedure which includes:
scope, equipment/materials requirements, detail process methods, and
inspection. APEX PC SOLUTIONS, INC. shall issue Compaq Procurement
Engineer the final assembly process documentation before
pre-production.
Each work station (final assembly and mold shop) should have a
cosmetic inspection work aid. The work aid must meet or exceed Compaq
requirements.
5.3 Training:
Personnel performing assembly, fabrication, inspection, and tests of
any activity affecting quality shall have appropriate experience and
training. Appropriate records of training shall be maintained.
5.4 Process Flow Diagrams:
APEX PC SOLUTIONS, INC. shall submit a process flow diagram from raw
material receipt to product shipment. The process diagram identifies
the main steps, branches, and eventual outcome of the process. The
following information should be included within the diagram:
***
***
***
***
***
***
***
***
5.5 Product Flow Diagrams:
APEX PC SOLUTIONS, INC. shall submit a product flow diagram. The
product flow diagram is a pictorial document of the actual path of the
product throughout the manufacturing facility.
5.6 Process Critical Parameter Review
The Compaq/APEX PC SOLUTIONS, INC. team will develop a control plan
for critical product parameters and critical operations. Critical
parameters are features, properties, attributes, or performance that
render the product unacceptable if found to be beyond the
specification limits. Critical
*** Confidential treatment request; filed separately with the
Securities and Exchange Commission.
22
operations are those control areas within the manufacturing process
that create critical parameters. These systems insure that all
requirements and processes meet or exceed customer expectations.
The critical parameters must be defined in the following plans:
***
***
***
The Process Management Plan (PMP) shall be completed for all
operations at APEX PC SOLUTIONS, INC. and subtier suppliers where
critical parameters are affected in the process. The PMP will contain
the following details:
***
***
***
***
***
***
***
***
6.0 Quality Assurance Methodology:
Compaq's objective is to eliminate the function of performing receiving
inspection to accept incoming material for manufacturing. The intent of
this section is to identify specific actions, improvement plans, goals,
and responsibilities to assure product quality and continuous improvement.
The data collected must be available to the operator in a timely manner
so it can be used for process improvements. Each operator should know why
they are collecting the data, what the requirements are, and the operation
trend.
6.1 Process Capability Studies: *** Manufacturing Facility Attribute
features shall be recorded with *** and variable characteristics shall
be monitored *** . This method will identify
*** .
*** Confidential treatment request; filed separately with the
Securities and Exchange Commission.
23
Also, these critical parameters must be evaluated to establish a
*** . Identification of the critical parameters are defined
in the Supplier Process Management Plan in the WCSP Manual.
Critical parameters are considered capable if the *** .
Any parameter that results in a *** will result in a
corrective action or equivalent containment plan.
The process capability results shall be documented and available for
review by both organizations. Subcontractor ( *** ) and APEX PC
SOLUTIONS, INC. engineering are responsible for evaluating this
information. Each *** the APEX PC SOLUTIONS, INC. Process
Parameter Control Plan (see form in FMI 001) will be sent to Compaq
Procurement Engineer along with the improvement plan.
NOTE: ATTRIBUTES DATA COLLECTED TO INCLUDE***.
6.2 Measurement Precision:
Measurement Precision is the extent to which a repeated measurement
gives the same result. Variations may arise from inherent capabilities
of the instrument, from variations of the operators use of the
equipment, or from changes in operating conditions.
All instruments, gages, test equipment, and inspectors/operators shall
be evaluated for Repeatability and Reproductibility.
6.3 Measurement Correlation:
All major inspection techniques and equipment must be correlated in
order to prevent disagreements about product attributes.
Correlation of visual attributes indicate both Compaq and APEX PC
SOLUTIONS, INC. agree in the accept/reject criteria for generic types of
non-conformance. Techniques for documentation include:
***
. Both Compaq and APEX PC SOLUTIONS, INC.
shall be utilizing the same accept/reject criteria.
*** Confidential treatment request; filed separately with the
Securities and Exchange Commission.
24
The method to calculate and evaluate a correlation coefficient is in the
WCSP manual. A correlation action is requested if the correlation
coefficient, *** .
6.4 First Article Inspection:
APEX PC SOLUTIONS, INC. must submit samples of *** .
The samples should be representative of a capable process.
If Compaq deems that APEX PC SOLUTION, INC.'s measuring equipment is
capable, Compaq will use APEX PC SOLUTIONS, INC. FAI reports and test
results for qualifying a design/process change.
Compaq Procurement Engineer shall evaluate all samples for
qualification. Compaq will provide APEX PC SOLUTIONS, INC. with written
documentation on all reviews within *** of receipt.
6.5 Supplier Corrective Action Request (SCAR):
Compaq Procurement Engineer will initiate Supplier Corrective Action
Request whenever system or material deficiencies are identified. If
Compaq receives non-conforming material, the part and SCAR will be
*** to APEX PC SOLUTIONS, INC. APEX PC SOLUTIONS, INC.
shall reply within *** acknowledging the receipt of
the SCAR. Corrective action shall be submitted within *** from
*** first reported. If the corrective action can not be answered within
*** , APEX PC SOLUTIONS, INC. must notify Compaq prior to the
due date.
The intent of the SCAR is to eliminate potential problems or recurrence.
APEX PC SOLUTIONS, INC. shall be responsible to answer the following
concerns:
***
***
***
***
***
***
*** Confidential treatment request; filed separately with the
Securities and Exchange Commission.
25
***
6.6 Experimental Design:
Design of Experiments will be used throughout the program where
applicable.
7.0 Design/Process Change Requirements:
All Engineering changes to the Assembly that effect the ***
must be approved by Compaq prior to production implementation. The
change request form is located in the WCSP manual.
7.1 Sample Submittal:
APEX PC SOLUTIONS, INC. should send purpose of change request (Form G),
the FAI report, qualification test results, and six sample parts to Compaq
Procurement Engineer for sustaining product or the Program Manager for new
product development. The sample parts should be a result of a capable
process, with documentation available to show capability. If the
qualification results are in-process, this should be noted during the
submittal. Compaq will evaluate this information within ***
.
If the APEX PC SOLUTIONS, INC. measuring and/or test equipment is not
compatible to Compaq, Compaq will initiate test qualification. Otherwise
evaluations will be given from the APEX PC SOLUTIONS, INC. results.
7.2 Capability Evaluation:
***
7.3 Design/Process Change Summary List:
APEX PC SOLUTIONS, INC. will be responsible for recording all major
process and design changes. The following information must be
recorded: ***
. This product updated listing should be sent to Compaq
after each production cut-in.
8.0 Inspection Requirements:
Unless otherwise specified in the contract or purchase order, APEX PC
SOLUTIONS, INC. shall be responsible for performing inspections that are
sufficient to assure
*** Confidential treatment request; filed separately with the
Securities and Exchange Commission.
26
that the parts supplied meet the requirements specified in the product
assembly documentation.
8.1 Lot Acceptance:
All lots shall be capable of passing a sampling inspection of ***
AQL (Acceptable Quality Level); C=O (Rejected lots at supplier shall
be re-inspected ***).
***
.
8.2 Electrical Criteria:
Electrical assemblies and components shall comply with the APEX PC
SOLUTIONS, INC. " *** ." Each PCA
will be *** visual inspected and *** tested. The inspector
shall xxxx conforming PCB.
Compaq must approve changes to all critical components before production
release ( ***
)
8.3 Record Retention:
APEX PC SOLUTIONS, INC. inspection/test records should be recorded and
thereby maintained for a minimum duration of *** from the
date of shipment or Compaq approved alternate. Incoming inspection
records shall be capable of tracking receipt history. Quality status
for each process shall be reported to departments concerned on a
regular basis.
8.4 Nonconforming Product:
Rejected assemblies will be verified by Compaq MRB team. If verified
as defective, the material/lot will be disposition as RTV, UAI, Scrap
or Rework. Supplier Corrective Action will be initiated for each
unit defect (Section 6.6).
8.5 Out of Box Audit
Lot sampling of Finished goods should be conducted on an audit basis
employing a C=O sampling plan using a *** *** sampling rate. The
audit should include the following visual checks:
***
***
***
*** Confidential treatment request; filed separately with the
Securities and Exchange Commission.
27
*** . The
lot disposition will be to check *** of the lot for non-conformity
before shipping the lot to Compaq. All audit failures require ***
analysis by the supplier.
9.0 Performance Reports:
Compaq will issue *** performance reports. This information will trend
*** . The reports are as follows:
***
***
Each *** APEX PC SOLUTIONS, INC. will compile final assembly production
yield and functional test yield consisting of the number of units produced
and number of failures by product. If the lots are shipped by air freight,
APEX PC SOLUTIONS, INC. shall compile *** reports. These reports shall
identify *** and *** . The APEX PC SOLUTIONS, INC. information
will be collected by inspection function:
***
***
***
***
The APEX PC SOLUTIONS, INC./Compaq team shall use this information for
identifying trends and developing improvement plans.
10.0 Traceability Identification:
10.1 Major Piece Parts:
The major piece parts shall have traceability identification.
The PCB and assembly are examples of major components. The Assembly,
and PCB require the following marking:
***
*** Confidential treatment request; filed separately with the
Securities and Exchange Commission.
28
The PCB should also include a Vendor Final QA marking
*** .
Additional marking is allowed including manufacture S/N, manufacture
order, flammability rating, etc.
10.2 Assembly.
The final test (Functional Tester) acceptance marking shall be placed
on the underside of assembly. This marking shall be traceable to the
tester and operator. Each assembly will be serialized. The label and
or marking will identify: ***
.
11.0 Reliability:
Reliability audits shall be performed at least *** or after any
major design or production change.
11.1 Field Return Verification & Failure Analysis:
APEX PC SOLUTIONS, INC. shall verify field return product and identify
reason for the return. If the defect is verified, APEX PC SOLUTIONS,
INC. will identify cause and initiate corrective action.
The field return information should be compiled in *** reports.
This information shall be used to improve design, workmanship,
quality, and reliability.
12.0 Supplier Obligations:
*** Cognizant Required
Personnel Due Date
*** APEX PC SOLUTIONS, INC. Eng. ***
- Final Assembly
- Sub Assembly
*** APEX PC SOLUTIONS, INC. Eng. ***
- Final Assembly
- Sub Assembly
*** Confidential treatment request; filed separately with the
Securities and Exchange Commission.
29
*** APEX PC SOLUTIONS, INC. Eng. ***
- Final Assembly
- Sub Assembly
- Critical Components
*** APEX PC SOLUTIONS, INC. Mfg. Eng. ***
- Final Test
- Mechanical Inspection Equipment
- Gaging
*** APEX PC SOLUTIONS, INC. QA Eng. ***
- Procedure
- AQL Specifications
- out-of-Box Disposition
***
*** APEX PC SOLUTIONS, INC. ***
*** QA Eng ***
- Final Inspection
- Out-Going Inspection
- Field Return Pareto QA Eng. ***
- ORT Reports Rel Eng. ***
*** QA Eng. ***
13.0 Compaq Obligations: Date Required
- Site Survey Rating: ***
- Specification Release to A ***
*** Confidential treatment request; filed separately with the
Securities and Exchange Commission.
30
- Business Reviews ***
- Quality Performance Reviews ***
*** Confidential treatment request; filed separately with the
Securities and Exchange Commission.
31
SUPPLIER APPROVAL
Supplier: APEX
Manufacturing Site: REDMOND, WASHINGTON
Commodity: ***
This supplier has been evaluated and approved by the methods and personnel
listed below.
Refer to document 410-05-Q01 for qualification options.
QUALIFICATION METHOD: COMPLETION OF CORPORATE MATERIALS *** SUPPLIER
DEVELOPMENT (5 Step, past performance, other)
RESTRICTIONS: CURRENT AGENCY APPROVALS: *** . ALL REMAINING AGENCY
APPROVALS ARE IN PROCESS.
APPROVED BY:
Purchasing XXXX X. XXXXXXXX 5/26/94 /s/ Xxxx X. Xxxxxxxx
Purchasing Eng. XXXXXXXXX X. XXXXX 5/20/94 /s/ Xxxxxxxxx X. Xxxxx
Other (as required)
*** Confidential treatment request; filed separately with the
Securities and Exchange Commission.
32
EXHIBIT D
FLEXIBILITY AGREEMENT
The following changes to volumes on existing purchase orders may be made without
cost or liability to Buyer.
NUMBER OF WEEKS PRIOR % INCREASE
TO SCHEDULED DELIVERY DATES
8 weeks or more *
6 weeks *
5 weeks *
4 weeks *
3 weeks or less *
Schedule Decrease/Cancellation
Based on our current * lead time, the following table establishes
Compaq's commitment to accept finished inventory and work in process in the
event of an outright order cancellation. In general, orders become *
prior to schedule ship date. In addition, * prior scheduled ship date,
Apex WIP becomes subject to assembly and shipment according to order
schedule.
Vendor WIP * determined to be * complete shall be completed and
delivered to Apex for assembly and subsequent shipment to Compaq. Vendor
WIP determined to be less than * complete * will be scrapped and
invoiced to Compaq at vendor cost. Also, vendor raw materials * that
can not be absorbed by the vendor * .
33
* Subject to confidential treatment request; filed separately with the
Securities and Exchange Commission
*
--------------------------------------------------------------------------------
WEEK/ORDER * * * * * * * * * *
--------------------------------------------------------------------------------
Apex Inventory * * * * * * * * * *
--------------------------------------------------------------------------------
Apex WIP * * * * * * * * * *
--------------------------------------------------------------------------------
Vendor WIP * C * * * * * * * * * *
--------------------------------------------------------------------------------
Vendor WIP * C * * * * * * * * * *
--------------------------------------------------------------------------------
Vendor Raw Material * * * * * * * * * *
--------------------------------------------------------------------------------
*
--------------------------------------------------------------------------------
WEEK/ORDER * * * * * * * * * *
--------------------------------------------------------------------------------
Apex Inventory * * * * * * * * * *
--------------------------------------------------------------------------------
Apex WIP * * * * * * * * * *
--------------------------------------------------------------------------------
Vendor WIP * C * * * * * * * * * *
--------------------------------------------------------------------------------
Vendor WIP * C * * * * * * * * * *
--------------------------------------------------------------------------------
Vendor Raw Material * * * * * * * * * *
--------------------------------------------------------------------------------
*
34
* Subject to confidential treatment request; filed separately with the
Securities and Exchange Commission
Schedule Decrease/Reschedule
Orders and or individual scheduled releases are * prior to
shipment. Any order * may be rescheduled * for a period not
to exceed * .
If schedule delays exceed * , Compaq has the option to purchase * .
--------------------------------------------------------------------------------
Week/Order * * * * * * * * * * * *
--------------------------------------------------------------------------------
Compaq Option * * * * * * * * * * * *
*
--------------------------------------------------------------------------------
* * * * * * * * * * * *
--------------------------------------------------------------------------------
*
In addition, supplier agrees to maintain * and * switch boxes
of buffer stock in finished goods inventory for shipment at buyer's
request.
Seller agrees to reduce product lead times to * by * and *
by * .
35
* Subject to confidential treatment request; filed separately with the
Securities and Exchange Commission
EXHIBIT E
SERVICE, REPAIR, AND REFURBISHMENT
A. OUT OF WARRANTY REPAIRS
1. Seller agrees to refurbish to "like new" condition any out of warranty
Product at the prices listed below. This obligation shall be
satisfied by either refurbishing Product submitted by Buyer or
replacing such Product with refurbished Product of the same part
number. Returned Product shall be at the latest revision level.
"Like new" condition means refurbished to meet the electrical and
mechanical requirements of the Buyer's applicable specifications
including the replacement of non-functioning parts.
2. Product submitted by Buyer for refurbishment will be in reasonably
good condition and repairable. In the event Product submitted for
refurbishment has been tampered with in an attempt to repair it or has
been damaged beyond repair, Seller will not be obligated to make out
of warranty repairs.
3. Seller agrees to provide monthly status reports indicating quantities
of units returned, units which aren't repairable, and units for which
no trouble was found.
4. Seller agrees, upon Buyer request, to provide repair training,
documentation, and spare parts to local service providers. Local
service providers will be selected by mutual agreement.
5. Fair and equitable repair pricing to be negotiated in good faith at a
later date.
B. SPARE PARTS AVAILABILITY
No spare parts. Whole unit replacement.
C. DOCUMENTATION
In addition to warranty service, Apex agrees to provide out of warranty
service for a period of up to * . Apex also agrees that if for any
reason Apex is unable to perform out of warranty service, bills of
material, wiring schematics and other pertinent documentation will be
provided to Compaq, or its designated
36
* Subject to confidential treatment request; filed separately with the
Securities and Exchange Commission
representative. It is understood that this information is and will remain
the property of Apex PC Solutions and will be used under license by Compaq
Computer Corporation and or its designated representative.
D. LOCAL SERVICE SUPPORT
Seller will, at buyer's request, and by mutual consent, provide spare parts
and training for Buyer's local service providers in Buyer's geographic
sales regions.
37
EXHIBIT F
LOCAL SITE REQUIREMENTS
HOUSTON
to be determined
SCOTLAND
to be determined
SINGAPORE
to be determined
38
