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EXHIBIT 10.10
CONFIDENTIAL
Contract No. 9710739
COMPAQ COMPUTER CORPORATION
PURCHASE AGREEMENT
JIT PROGRAM
This Purchase Agreement (this "Agreement") is made and entered into as
of the thirteen day of June, 1997 by Compaq Computer Corporation, a Delaware
corporation ("Buyer"), and the party designated as the Seller on Exhibit A
hereto ("Seller").
For good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Buyer and Seller hereby agree as follows:
1. DEFINITIONS
1.1. In addition to terms defined elsewhere in this
Agreement, capitalized terms used in this Agreement shall have the
meanings given thereto in Annex 1 hereto.
2. PRODUCT PURCHASES
2.1. The terms and conditions contained in this Agreement
shall govern the purchase and sale of product (the "Product") listed in
a product schedule (the "Product and Pricing Schedule") entered into
from time to time by Buyer and Seller, which schedule shall be
substantially in the form of Exhibit B.
2.2. Notwithstanding anything to the contrary in this
Agreement, 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, as and when
Buyer submits orders in accordance with this Agreement.
2.3. Buyer may purchase Products by issuing from time to time
a purchase order or a blanket purchase order to Seller (the purchase
order and the blanket order may be referred to herein as the "Order" or
the "Blanket Order"). The Order or Blanket Order shall set forth the
quantity of Product, price of Product, and part number, shall specify a
term [*] during which such Order or Blanket
Order shall be. Seller shall accept through the EDI verification
procedures set forth in Section 2.4, any Order or Blanket Order that
materially conforms with the terms of this Agreement. No additional or
different provisions proposed by Seller in any acceptance, confirmation
or acknowledgment shall apply unless expressly agreed to in writing by
Buyer. Buyer hereby gives notice of its objection to any additional or
different terms. Subject to any change orders that may be entered into
in accordance with this Agreement, the Order or Blanket Order represents
the obligation of Buyer to buy and Seller to sell the aggregate quantity
of Products specified in the Order or Blanket Order in accordance with
and subject to the terms of this Agreement and at the price or prices
specified in such Order or Blanket Order (which prices will be
established in accordance with the other provisions of this Agreement
including those set forth in Section 4) during the term specified in the
Order or Blanket Order. However, the specific delivery date for any lot
of Product delivered pursuant to a particular Order or Blanket Order and
the quantity of Product to be delivered on such date shall be
established in accordance with Section 5.
2.4. All Orders or Blanket Orders shall be issued, submitted
or communicated, as applicable by electronic data exchange ("EDI"). All
EDI orders, verifications, forecasts, responses, acknowledgments and
other communications shall (l) reference and be subject to the terms and
conditions of this Agreement and (ii) be in such format as Buyer's
policies, specifications and procedures regarding electronic data
interchange may require from time to time.
[*]CONFIDENTIAL INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT
HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
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2.5. EDI capability at Seller will be phased in over a 90 day
period commencing from the execution of this Agreement. Until the time
that EDI is fully implemented, Buyer shall issue Written Orders to
Seller. Seller shall use commercially reasonable efforts to send written
confirmation of such acceptance within two (2) days after receipt of a
Written Order from Buyer.
2.6. Seller agrees that all of Buyer's Affiliates, wherever
located, shall be entitled to make purchases under this Agreement.
2.7. Buyer agrees that all of Seller's Affiliates, wherever
located, shall be allowed to perform any or all obligations under this
Agreement upon qualification by Buyer.
3. TERM OF AGREEMENT
3.1. The term of this Agreement shall be 3 years, commencing
on the date of this Agreement (the "Effective Date"). This Agreement
will be automatically renewed at the conclusion of the initial 3 year
period for a 12 month period unless one of the parties notifies the
other party not less than 30 days prior to the end of such 3 year period
that it does not intend to renew this Agreement. Such automatic renewal
provision shall apply at the end of each successive 12 month period
unless either party indicates, in accordance with the 30-day notice
provision described in the preceding sentence, that renewal is not
intended. This Agreement may terminate prior to the aforementioned
stated term under the circumstances set forth in Section 13.
Notwithstanding the foregoing, this Agreement shall remain in full force
and effect and shall be applicable to any Order issued by Buyer to
Seller during the term of this Agreement until all obligations under
such Order have been fulfilled.
4. PRICING
4.1. The prices for the Products shall be established from
time to time by the parties executing and delivering a pricing schedule
in the form set forth as Exhibit B (the "Product and Pricing Schedule").
The Product prices (the "Prices") set forth in any Pricing Schedule
shall be fixed for the period set forth therein.
4.2. The Prices shall include [*] of the Product to the
Buyer including, without limitation, [*]
4.3. To the extent permitted by applicable law, Seller shall
[*] Seller's execution and delivery of any Pricing Schedule shall be its
representation that the Prices and other terms reflected therein (the
"Subject Terms") comply with the preceding sentence. In the event Seller
fails to sell Product to Buyer on the foregoing terms, Buyer shall be
entitled to [*]
4.4. Seller shall use its best efforts to maintain [*] and to
ensure that [*]. If Buyer does not consider the Subject Terms [*], Buyer
shall have the right, at any time and from time to time, to request an
[*], and Seller shall use its best efforts to amend the [*] by entering
into a [*].
[*]CONFIDENTIAL INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT
HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
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5. CONSUMPTION REPORTS, COMMITS AND OTHER COMMUNICATIONS
5.1. [*], Buyer shall furnish via EDI to Seller [*] under
this Agreement from the period (such period shall be referred to herein
as the [*]) commencing on a date in the current week as specified by
Buyer [*] (defined below), [*] may at times be referred to as an "830
Report". The [*] is the time period for which [*]. [*] shall include
Buyer's part number, quantity and required delivery date and shall be
submitted via EDI. Within [*] of Seller's receipt of Buyer's 830 Report,
Seller shall send to Buyer [*], such report may at times be referred to
herein as an "870 Report", indicating [*] in Buyer's 830 Report. Seller
shall use its best efforts to ensure that the quantity and delivery
dates specified in its 870 Report are equal to those specified in
Buyer's 830 Report. The quantity set forth in Seller's 870 Report for
any particular [*] is referred to herein as the [*]. Although Seller has
[*] beyond the levels indicated in Exhibit C, Flexibility Agreement,
Seller agrees to [*] schedules in accordance with Buyer's 830 Report.
5.2. Provided Seller is providing a JIT Delivery, the
following terms of this Section 5.2 shall apply. From time to time,
Buyer may furnish Seller with a report via EDI, (referred to herein as
an "862 Report"), summarizing [*] or any other particular time period
([*]) specified in such report. During any particular Consumption
Period, Seller shall at all times [*] as indicated in Buyer's 862
Report. Once Buyer's 862 Reports indicate that the [*] (as defined in
Exhibit H) of the Product, Seller shall [*] to Buyer at Buyer's
facilities identified for such Product in accordance with the [*] (as
defined in Exhibit H) the [*] of such Product; provided, in no event
shall Seller be obligated [*] specified for any particular [*]. On the
same day that any shipment is made by Seller, Seller shall furnish Buyer
with an advanced ship report via EDI. The delivery date for each
shipment shall be the last day of the [*] described in Exhibit H and is
referred to as the "On Dock Date".
5.3. The [*] and at the place required under Section 5.2
shall [*]. Seller shall notify Buyer in writing immediately if Seller
has knowledge of any event which is reasonably likely to delay any
agreed delivery date or delivery plan.
5.4. Title and risk of loss of Product shall pass to Buyer at
[*], and Seller, at its cost and expense shall [*]
5.5. If Seller delivers Product in advance of the On-dock
Date therefor, Buyer may, at its option, either (i) return such Product
to Seller at Seller's risk and expense (in which case Seller, at its
expense, shall redeliver such Product to Buyer on the correct On-dock
Date therefor) or (ii) retain such Product and make [*] on the [*] would
have been due based on the correct On-dock Date therefor.
5.6. Changes to delivery dates may only be made by Buyer's
authorized purchasing representatives designated in writing from time to
time by Buyer delivering to Seller a notice in writing or via EDI. Buyer
may, [*], issue change orders for Product quantities and schedule dates
in accordance with the flexibility agreement attached as Exhibit C (the
"Flexibility Agreement").
[*]CONFIDENTIAL INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT
HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
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5.7. In the event that Product scheduled for delivery is more
than [*], Buyer may (i) at its request, require Seller, at Seller's
expense, to ship and deliver such Product via a different mode of
transportation or (ii) [*], consistent with the terms of this Agreement.
5.8. All reports contemplated by Sections 5.1 and 5.2 and
change orders contemplated in Section 5.6 shall be communicated between
Buyer and Seller via the EDI conventions set forth in Section 2.4.
6. PACKING, MARKING, AND SHIPPING INSTRUCTIONS
6.1. Seller shall prepare and pack all Product in a manner
(i) that Buyer from time to time may reasonably specify or, in the
absence of Buyer's specification, that is consistent with practices
customary in the computer component industry and (ii) necessary to meet
a designated carrier's requirements.
6.2. Seller shall ▇▇▇▇, or cause to be marked, each shipping
container to adequately show Buyer's Order number, part number, revision
level, lot number, and quantity contained therein. Seller shall include
in each container a packing list showing the Order number.
7. QUALITY
7.1. Seller shall ensure that all Products conform to the
specifications, drawings, samples and other descriptions designated in
the Product Schedule for such Product (the "Specifications"). The
Specifications shall include any labeling requirements imposed by
applicable law.
7.2. Seller shall establish and/or maintain a quality
improvement plan acceptable to Buyer. Seller's initial Quality
Improvement Plan is attached to this Agreement as Exhibit D (the
"Quality Plan") and shall not be amended without Buyer's prior written
consent.
7.3. Upon reasonable notice, Buyer shall be entitled to visit
and inspect Seller's facility sites during normal business hours and
Seller shall cooperate to facilitate such visits. 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.
7.4. At Buyer's request, Seller shall provide Buyer with
relevant inspection, quality, and reliability data. Seller shall conform
to the revision level stated on Buyer's Order.
8. CHANGE ORDERS
8.1. Buyer may from time to time change the Specifications
for the Products, and Seller shall use its best efforts to ensure that
all Product complies therewith. [*]. Any request by Seller for any such
adjustment must be made in writing to Buyer [*] of Seller's receipt of
Buyer's notice of change in specifications. No changes shall be made by
Seller in the form, fit, or function of the Product to be purchased
hereunder without [*].
[*]CONFIDENTIAL INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT
HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
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9. INSPECTION AND ACCEPTANCE
9.1 Products purchased or to be purchased pursuant to this
Agreement shall be subject to inspection and test by Buyer at all times
(including during the period of manufacture or development) and places
(including Seller's facilities). 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 or that contains any defect in
material, workmanship or design (the "Defective Product"). Buyer may, at
its option, (i) return Defective Product to Seller, [*] (ii) return
Defective Product to Seller for Seller's correction or replacement or
(iii) exercise any other rights as Buyer may have at law or in equity
that are consistent with the other provisions of this Agreement. Product
required to be corrected or replaced shall be subject to the same
inspection and acceptance provisions of this Agreement as Product
originally delivered under any Order. Seller shall reimburse Buyer for
any costs of any special inspection measures deemed necessary by the
Buyer.
9.2. If Buyer returns Defective Product to Seller for
correction or replacement, Seller shall [*]. Seller shall [*] associated
with [*] including [*]. Seller agrees to provide [*] after receipt
thereof. Seller will also provide Buyer with a written corrective action
report upon request addressing the steps that will be taken to eliminate
the recurrence of the problem, and will use commercially best efforts to
implement the actions addressed in such report.
10. WARRANTY
10.1. Seller hereby warrants to Buyer that Product purchased
hereunder shall (i) vest in Buyer good and valid title to such Product
free and clear of all liens, encumbrances, security interests,
encumbrances, burdens and other claims and (ii) be free from
infringements or violations described in Section 17.1. In addition, [*]
from the date of Buyer's acceptance of Product delivered hereunder,
Seller hereby warrants to Buyer that such Product shall (x) be free from
defects in material, workmanship and design and (y) be in conformity
with the Specifications. The warranty for replaced or repaired Product
will be the same as the original Product. In the case of [*], Seller
shall [*] or, at Buyer's [*] election, [*]. Upon discovery of a defect
in material, workmanship or design in any Product or the discovery of a
Product that is not in compliance with the Specifications during the
[*], Buyer may, at its option, return Product to Seller, [*] (b) for
Seller's prompt correction or replacement and (ii) [*].
10.2. Seller warrants that there are no claims of infringement
or violation of the type described in Section 17.1 with respect to the
Product.
11. OUT OF WARRANTY REPAIRS and SPARE PARTS AVAILABILITY
11.1. Seller agrees to refurbish to a "like new" condition any
Product no longer covered by the express warranties set forth elsewhere
in this Agreement (an "Out of Warranty Product") at the refurbishment
prices and according to the terms set forth in Exhibit E. In addition,
Seller shall make available for purchase by Buyer replacement and repair
parts for Products ("Spares") in accordance with the terms set forth in
Exhibit E.
[*]CONFIDENTIAL INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT
HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
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12. PAYMENT
12.1 Buyer shall make payment in full for the purchase price
of all Product purchased hereunder (other than items disputed by Buyer
in good faith) and received by Buyer on or before the [*] day after the
date of Seller's invoice; provided, Seller's invoice shall not be dated
earlier than the shipment date of Product covered thereby. Payment of
invoices shall not constitute acceptance of the Product.
12.2. Unless otherwise specified in Exhibit B or agreed to in
writing by the parties, payment shall be made in U.S. dollars.
13. TERMINATION
13.1. Either party (the "Non-Defaulting Party") may terminate
this Agreement and/or any Order issued hereunder by written notice to
the other party (the "Defaulting Party") upon the occurrence of a
Default by the Defaulting Party. [*] This Agreement shall terminate on
the date of such notice (the "Termination Date").
13.2. Upon termination by Seller of this Agreement and/or any
Order due to Buyer's default or upon termination [*], Buyer's entire
liability shall be to purchase, without duplication: [*] as defined in
the Exhibit C as Buyer's [*] and (ii) all Product that Buyer has
received and had not previously paid for.
13.3. Upon termination by Buyer of this Agreement and/or any
Order due to Seller's Default, (i) Buyer shall have [*] (ii) Buyer
shall have such additional remedies as may be [*] any balance due for
Products delivered by Seller before termination.
14. FORCE MAJEURE
14.1. Neither party shall be liable for its failure to perform
any of its obligations hereunder during any period in which performance
is delayed by fire, flood, war, embargo, riot or an unforeseeable
intervention of any government authority that causes complete business
interruption ("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 [*] or more, Buyer, notwithstanding any other
provision of this Agreement to the contrary, [*]. In the event such
termination, [*] hereunder shall be for the [*]. 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.
[*]CONFIDENTIAL INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT
HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
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15. PRODUCT NOTICES
15.1. Any notice given under this Agreement shall be in
writing and will be effective (i) when delivered, if delivered in
person, (ii) during the business hour of receipt (or the next business
hour if not received during a normal business hour), if by telecopy or
(iii) 5 days after depositing same in the U.S. mail, postage prepaid and
addressed to Seller at the address for notice specified on Exhibit A or
such other address as Seller may specify to Buyer in accordance with
this Section 15.1 or to Buyer at the address set forth below or at such
other address as Buyer may specify to Seller in accordance with this
Section 15.1:
If to Buyer:
COMPAQ COMPUTER CORPORATION
▇.▇. ▇▇▇ ▇▇▇▇▇▇
▇.▇. ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
ATTN: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
with a copy to:
COMPAQ COMPUTER CORPORATION
▇.▇. ▇▇▇ ▇▇▇▇▇▇
▇.▇. ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
ATTN: Division Counsel-Operations
16. COMPLIANCE WITH LAWS
16.1. All Product supplied and work performed under this
Agreement shall comply with all applicable laws and regulations
including, without limitation, all laws governing Seller's relationship
with its employees, agents or subcontractors. Upon request, Seller shall
certify compliance with such applicable laws and regulations, and
provide such evidence of compliance as Buyer may reasonably request.
17. INDEMNIFICATION; REMEDIES
17.1. Seller shall indemnify, defend and hold harmless Buyer
and its Affiliates and their respective directors, officers,
shareholders, employees and agents (collectively, the "Buyer Indemnified
Parties") from and against any and all [*] Products furnished under this
Agreement [*] right and shall [*] [*]; provided, the foregoing indemnity
shall not apply to the extent any such claim is attributable solely to
design specifications furnished by Buyer to Seller. Buyer shall notify
Seller of such claim and permit Seller to defend and compromise such
claim; provided, Buyer's failure to so notify Seller shall not diminish
Seller's indemnity obligations hereunder except to the extent any
Buyer's delay in notifying Seller materially prejudices Seller's defense
of such matter. If an injunction or exclusion order preventing the use
of the Products results from such a claim (or, if Buyer reasonably
believes such an injunction is likely) Seller shall, [*], and at Buyer's
request, [*]. In the event that Seller cannot obtain such right for
Buyer, Seller shall [*] and thereupon Seller [*] and Buyer shall be
entitled to such additional remedies as may be available at law or in
equity that are consistent with the terms of this Agreement.
[*]CONFIDENTIAL INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT
HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
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[*]
17.2. Seller shall indemnify, defend and hold harmless the
Buyer Indemnified Parties from and against any Indemnified Loss relating
to or arising out of any personal injury or death resulting from (i) the
use of any Product or (ii) Seller's acts or omissions; provided, the
foregoing indemnity shall not apply to the extent any such claim is
attributable solely to design specifications furnished by Buyer to
Seller.
17.3. THIS SECTION 17 SHALL BE ENFORCEABLE TO THE EXTENT SET
FORTH ABOVE NOTWITHSTANDING THE SOLE, CONCURRENT, ACTIVE OR PASSIVE
NEGLIGENCE OF ANY OF THE BUYER INDEMNIFIED PARTIES.
17.4. Subject to Section 17.5, upon the occurrence of a
Default by a party hereto the other party shall be entitled to exercise
such rights and remedies as are available at law or in equity including
the right to seek specific performance upon Seller's failure to deliver
on a timely basis unique products in conformity with the Specifications.
17.5. NEITHER PARTY SHALL BE LIABLE FOR ANY CONSEQUENTIAL
DAMAGES (INCLUDING, WITHOUT LIMITATION, [*] EVEN IF THE OTHER PARTY HAS
BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES EXCEPT (I) IN CONNECTION
WITH A [*] PROVISIONS SET FORTH IN THIS AGREEMENT AND (II) TO THE EXTENT
ANY SUCH DAMAGES ARE A PART OF AN INDEMNIFIED LOSS AGAINST WHICH BUYER
IS ENTITLED TO BE INDEMNIFIED PURSUANT TO THE OTHER PROVISIONS OF THIS
SECTION 17.
18. TRADEMARKS; LOGOS
18.1. Seller is authorized to use the Compaq logo and
trademark only to the extent necessary to meet the required
specification for the Product. No other rights with respect to Buyer's
trademarks, trade names or brand names are conferred, either expressly
or by implication, upon Seller.
19. GRATUITIES
19.1. 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.
20. INSURANCE.
20.1. Seller shall maintain such minimum insurance coverage as
is described on Exhibit F or as the parties may otherwise mutually
agree. All insurance policies maintained by Seller in accordance with
this Section 20 [*]
[*]CONFIDENTIAL INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT
HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
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21. CONFIDENTIAL INFORMATION
21.1. 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
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.
21.2. Both parties agree that the party receiving Information
will maintain such Information in confidence for a period of three years
from the date of disclosure of such Information.
21.3. 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.
21.4. 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.
21.5. The provisions of this Section 21 shall not apply to
information (i) known to the receiving party at the time of receipt from
the other party, (ii) generally known or available to the public through
no act or failure to act by the receiving party, (iii) furnished to
third parties by the disclosing party without restriction on disclosure,
(iv) furnished to the receiving party by a third party as a matter of
right and without restriction on disclosure, (v) furnished as required
by court order or similar governmental authority or by the imminent
likelihood thereof or by applicable law, or (vi) is in the possession of
the receiving party without a confidential obligation at the time of
disclosure as shown by the receiving party's files and/or records
immediately prior to disclosure.
21.6. 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.
22. COUNTRY OF ORIGIN
22.1. 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. Product shall be
marked with the country of origin as required by applicable law.
22.2. Seller agrees to provide necessary export licenses and
documents to facilitate export of Product. Seller further agrees to
assist Buyer's import of Product as reasonably requested by Buyer.
[*]CONFIDENTIAL INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT
HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
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23. PROPERTY FURNISHED BY BUYER
23.1. 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 Seller only in its
performance hereunder. Such property shall be delivered, upon request,
to a destination specified by Buyer in good condition, except for normal
wear and tear.
24. [*]
24.1 The following remedies as stated will be available to
[*]
25. GENERAL
25.1. 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.
25.2. 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.
25.3. 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.
25.4. Either party shall not export, re-export or otherwise
disclose, directly or indirectly, technical data received from the other
party 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.
25.5. With respect to any payment, reimbursement or other
amount owed by one party (the [*]) to the other (the "[*]") under this
Agreement, [*] by the [*] to the [*] under this Agreement or any other
agreement. Both parties agree that the [*] is a convenience to both
parties and nothing contained in this Section 25.5 or in the entire
Agreement shall be construed as a barter agreement.
[*]CONFIDENTIAL INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT
HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
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25.6 This Agreement is hereby identified as "Compaq
Confidential" and "Gadzoox Confidential," and any additional
confidentiality requirements between the parties (now or in the future)
applicable to material identified as such shall apply to this Agreement.
25.7. Except to the extent the confidentiality provisions set
forth in Section 22 conflict with confidentiality provisions set forth
in any other confidentiality or non-disclosure agreement between the
parties hereto, this Agreement represents the entire agreement with
respect to the subject matter hereof and 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 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.
25.8. THE CONSTRUCTION, VALIDITY, AND PERFORMANCE OF THIS
AGREEMENT AND ANY ORDER ISSUED UNDER IT SHALL BE GOVERNED BY THE LAWS OF
THE CONSTRUCTION, VALIDITY, AND PERFORMANCE OF THIS AGREEMENT AND ANY
ORDER ISSUED UNDER IT SHALL BE GOVERNED BY THE LAWS OF THE STATE TEXAS
U.S.A. THE PARTIES HEREBY WAIVE APPLICATION OF THE U.N. CONVENTION ON
CONTRACTS FOR THE INTERNATIONAL SALE OF GOODS.
25.9. EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT
WARRANTIES (EXPRESS OR IMPLIED, STATUTORY OR OTHERWISE) OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE ARE HEREBY
DISCLAIMED IN THEIR ENTIRETY.
25.10. Upon the request of either party, the parties shall
cooperate and use commercially reasonable efforts to implement as soon
as practicable an electronic data interchange system to process the
submission and acceptance of Orders, the payment of Product and such
other matters as the parties may mutually agree upon having such terms
and transmissions standards and formats as the parties may agree.
IN WITNESS, THE AUTHORIZED REPRESENTATIVES OF THE PARTIES HAVE EXECUTED THIS
AGREEMENT AS OF THE DATE FIRST WRITTEN ABOVE.
For the Buyer For the Seller
/s/ ▇▇▇▇▇ McLoughlon /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------------- ----------------------------------------
Signature Signature
▇▇▇▇▇ McLoughlon ▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------------- ----------------------------------------
Name Name
Vice President Corporate Materials Vice President Sales
------------------------------------- ----------------------------------------
Title Title
[*]CONFIDENTIAL INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT
HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
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CONFIDENTIAL
Contract No. 9710739
Annex 1 ........... Defined Terms
Exhibit A ......... Seller Information
Exhibit B ......... Product and Pricing Schedule
Exhibit C ......... Flexibility Agreement
Exhibit D ......... Quality Improvement Plan
Exhibit E ......... Service, Repair, and Refurbishment
Exhibit F ......... Insurance Requirements
Exhibit G ......... Compaq Supplier Compliance Policy
Exhibit H ......... JIT Requirements
[*]CONFIDENTIAL INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT
HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
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ANNEX 1
DEFINITIONS
"Affiliate" means, with respect to any Person, any other Person controlling,
controlled by, or under the common control with that First Person. As used in
this definition, the term "control" means the possession, directly or indirectly
or the power to direct, or cause the direction of the management and policy of
the controlled person.
"Business Day" shall mean any day other than a Saturday, a Sunday, or a holiday
on which banks in the State of Texas generally are closed.
"Buyer Indemnified Parties" shall have the meaning given thereto in Section
17.1.
"Default" shall mean:
with respect to Buyer, (a) Buyer's failure 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, [*] of notification of said breach; provided,
delays in delivery shall be deemed [*] herein; or (b) Buyer becomes insolvent,
becomes subject to any bankruptcy proceeding, 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 such party's assets and such condition is not cured
within [*]; and
with respect to Seller, (a) Seller's failure 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, [*] notification of said breach; provided,
the failure of Seller [*] (b) Seller becomes insolvent, becomes subject to any
bankruptcy proceeding 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 [*] (c) [*] any or all of its
rights or obligations under this Agreement or any Orders issued hereunder to a
third party without [*]. Such approval is not required for changes in ownership
arising from Seller's fund raising activities, mergers, or other changes in
corporate structure provided seller provides notice to Buyer of the above [*]
from occurrence.
"Defective Product" shall have the meaning given thereto in Section 9.1.
[*]
"First Party" shall have the meaning given thereto in Section 25.5.
"Force Majeure" shall have the meaning given thereto in Section 14.1.
"Indemnified Loss" shall have the meaning given thereto in Section 17.1.
"Information" shall have the meaning given thereto in Section 21.1.
"Non-Defaulting Party" shall have the meaning given thereto in Section 13.1.
"On-dock Date" shall have the meaning given thereto in Section 5.2.
"Order" shall have the meaning given thereto in Section 2.3.
"Out of Warranty Product" shall have the meaning given thereto in Section 11.1
[*]CONFIDENTIAL INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT
HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
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14
"Prices" shall have the meaning given thereto in Section 4.1.
"Product and Pricing Schedule" shall have the meaning given thereto in Section
4.1.
"Product" has the meaning given in Section 2.1.
"Quality Plan" has the meaning given thereto in Section 7.2.
"Second Party" shall have the meaning given thereto in Section 25.5.
"Spares" shall have the meaning given thereto in Section 11.1.
"Specifications" has the meaning given thereto in Section 7.1.
"Specified Location" has the meaning given thereto in Section 5.1.
"Subject Terms" has the meaning given thereto in Section 4.3.
"Termination Date" shall have the meaning given thereto in Section 13.1.
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EXHIBIT A
SELLER
Gadzoox Microsystems, Inc.
▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
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EXHIBIT B
PRODUCTS, PRICING AND [*]
1. FOB Seller Pricing:
ITEM SELLER REFERENCE COMPAQ REFERENCE LEAD-TIME PRICE TIME
---- ---------------- ---------------- --------- ----- ----
1. [*] TBD [*] [*] [*]
II. DDP Houston Pricing:
ITEM SELLER REFERENCE COMPAQ REFERENCE LEAD-TIME PRICE TIME
---- ---------------- ---------------- --------- ----- ----
1. [*] TBD [*] [*] [*]
Seller agrees that the price [*] and that [*] prior to the end of the
[*] Seller agrees to [*] for the following [*] calendar quarters.
Seller further agrees to provide price in [*].
[*]
[*]
SPECIFICATION
Buyer's specification number TBD is incorporated by reference.
[*]CONFIDENTIAL INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT
HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
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EXHIBIT C
[*]
[*]
The following [*] on existing purchase orders may be made [*] to Buyer.
Number of weeks prior
scheduled delivery dates % increase to
------------------------ -------------
[*] [*]
Seller agrees to [*] at buyer's request. [*] requirement shall be calculated as
the [*] calculated over the next [*] via the EDI 830 [*].
[*]
The following [*] on existing purchase orders may be made by the Buyer.
[*] [*]
--------------------------- -----------------
[*] [*]
[*]
[*]CONFIDENTIAL INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT
HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
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EXHIBIT C
[*]
[*]
1) Finished Goods:
[*]
2) Work in Process (WIP):
[*]
3) Raw
[*]
At no time is Buyer [*] of Orders for conventional Product, or the 830 [*] for
JIT Product.
[*]
"Raw" shall mean all piece parts and/or other dedicated materials including
packaging materials.
Buyer liability is based on contract price of the revision level at the time of
decrease.
18
[*]CONFIDENTIAL INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT
HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
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CONFIDENTIAL
EXHIBIT C
[*]
[*]
[*] [*] [*]
-------------------------- ------------------------- --------
[*] [*] [*]
For reschedules beyond these limits. [*]
[*]
19
[*]CONFIDENTIAL INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT
HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
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EXHIBIT D
QUALITY IMPROVEMENT PLAN
Compaq Computer Corporation and Gadzoox
Microsystems Quality Plan
All Communications Products
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 Ship-to-Stock Criteria
13.0 Supplier obligations
14.0 Compaq's obligations
Attachment 1 Supplier Reporting Requirements
Attachment 2 List of Deliverables from Compaq's 5-Step
Supplier Development Process.
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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. Reliability is defined as the
demonstrated field performance and MTBF of the Communication Product. This plan
identifies actions necessary to assure conformance of:
A. Documentation
B. Equipment Qualification/Calibration Program
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:
The following documents should be consulted with this Quality Plan:
A. Compaq OEM Specifications.
B. World Class (SDP) Supplier Development Process. 4.0 Quality
Systems Survey:
4.0 Quality Systems Survey:
In accordance with the requirements of SDP (Supplier Development Process, Rev.
E), a full quality system survey will be completed.
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 Gadzoox Microsystems.
5.0 Quality Planning:
Gadzoox Microsystems shall provide Compaq and must 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/Gadzoox
Microsystems team will review the current engineering specification package to
assure:
A. All documentation is present and legible.
B. Specified tolerances are defined and sub-tier suppliers'
manufacturing process capabilities known.
C. Specified dimensions do not conflict with other documentation.
D. Clarity of workmanship standards is defined.
Any discrepancies or issues shall be noted on the SDP Print Acceptance Form,
PAF,. The items will be assigned to the Compaq/Gadzoox Microsystems project
teams for resolution. The project teams will be accountable for completing the
items within a specified time frame.
When changes to any content within the Kit have occurred then, each month,
Compaq Procurement Engineering will be responsible for issuing Gadzoox
Microsystems 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.
[*], Gadzoox Microsystems shall send Compaq Procurement Engineer all Compaq
product drawings, ECNs, and PCNs that affect form, fit, function, P/N changes,
and QA procedures. This information is required for Compaq documentation
control.
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[*]CONFIDENTIAL INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT
HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
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5.2 Work Instruction:
The [*] process document should be a controlled document which includes: [*].
Gadzoox Microsystems shall issue Compaq Procurement Engineer the [*]
documentation before [*].
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 or any
activity affecting quality shall have appropriate experience and training.
Appropriate records of training shall be maintained.
5.4 Process Flow Diagrams:
Gadzoox Microsystems 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 or can be a part of the Process Management Plan
(PMP):
A. Sub-tier suppliers, port numbers and purchased components
B. Receiving inspection requirements at Gadzoox Microsystems
C. Test locations and equipment type at Gadzoox Microsystems
D. Inspection stations, parameters monitored, location, and
equipment type at Gadzoox Microsystems
E. Storage/Queue locations.
F. Transportation.
G. Rework/MRB activity.
H. Cycle time at each main activity
5.5 Product Flow Diagrams:
Gadzoox Microsystems must 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/Product Critical Parameter Review
The Compaq/Gadzoox Microsystems team will develop a control plan for critical
process/product critical parameters and critical operations, as defined in the
SDP Manual, that insures that all requirements and processes meet or exceed
customer expectations. [*]. Critical 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:
A. Process Management Plan.
B. Gadzoox Microsystems Inspection Plans.
C. Sub-tier Suppliers' Management Plans.
The Process Management Plan (PMP) shall be completed for all operations at
Gadzoox Microsystems and its sub-tier suppliers, where critical parameters are
affected in the process. Each PMP will contain the following details:
A. Process flow: listing major steps in the operation.
B. Critical Parameters.
C. Dimension/tolerance: attribute or variable.
D. Frequency: number of times observation measured.
E. Sample Size: number of items evaluated.
F. Control Method: type of chart or method.
G. Equipment: gage description, identification number.
H. Measurement Precision: frequency of Gage R&R studies.
22
[*]CONFIDENTIAL INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT
HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
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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 quality 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 quality data, what the requirements are, and the operation
trend.
6.1 Process Capability Studies, per the SDP Manual:
Gadzoox Microsystems Manufacturing Facilities Attribute features shall be
recorded with p-charts and variable characteristics shall be monitored
in-process with mean and range charts. This method will identify runs, [*], and
other quality items.
Also, these critical parameters must be evaluated to establish a capability
index (Cpk) and GR&R process. Identification of the critical parameters are
defined in the Supplier Process Management Plan.
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
all organizations. Gadzoox Microsystems engineering are responsible for
evaluating this information. [*], Gadzoox Microsystems shall send Process
Parameter Control Plan to Compaq Procurement Engineer along with any and all
required improvement plans.
6.2 Measurement Precision, per the SDP Manual:
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 Reproducibility.
6.3 Measurement Correlation, per the SDP Manual:
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 Gadzoox Microsystems
agree in the accept/reject criteria for generic types of non-conformance.
Techniques for documentation include: detail drawings, photographs of
non-conformance, or actual samples of non-conforming product. Both Compaq and
Gadzoox Microsystems shall be utilizing the same accept/reject criteria.
The method to calculate and evaluate a correlation coefficient is in the SDP. A
correlation action is requested if the correlation coefficient, [*]
6.4 First Article Inspection:
Gadzoox Microsystems must submit [*] of all new designs or modifications before
production release. The samples should be representative of a capable process.
If Compaq deems that Gadzoox Microsystems measuring equipment is capable, Compaq
will use Gadzoox Microsystems FAI reports and test results for qualifying a
design/process change.
Compaq Procurement Engineer shall evaluate all samples for qualification. Compaq
will provide Gadzoox Microsystems with written documentation on all reviews
within [*] of receipt.
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[*]CONFIDENTIAL INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT
HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
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6.5 Supplier Corrective Action Request (SCAR/8D):
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 overnight freighted to
Gadzoox Microsystems Gadzoox Microsystems shall reply within [*], acknowledging
and providing Compaq with a response on their intended containment and
corrective actions. If long term corrective actions are required then the
implementation date for the long term corrective action must be provided within
no more than [*] after receiving the SCAR. Compaq is to be notified if the
specified date for corrective action implementation will not be met prior to the
due date. Notification shall be accompanied with justification for
implementation push-out.
The intent of the SCAR is to eliminate potential problems or recurrence. Gadzoox
Microsystems shall be responsible to answer the following concerns:
A. Non-conformance Description
B. Failure Analysis (FAR)
C. Root Cause
D. Containment
E. Corrective Action
F. Effectivity Dates (containment & corrective action)
G. Verification
6.6 Experimental Design
Design of Experiments will be used throughout the program where applicable.
7.0 Design/Process Change Requirements, per the SDP Manual:
All Engineering changes that effect the [*] must be approved by Compaq prior to
production implementation. Gadzoox Microsystems and Compaq must discuss proposed
changes prior to any [*]. In order for Gadzoox Microsystems to proceed with [*],
Compaq must agree conceptually with the proposed changes. Implementation will be
dependent upon the satisfactory completion of FAI and qualification testing.
7.1 Supplier Change Request and Sample Submittal:
Gadzoox Microsystems should send purpose of change request, the FAI report,
qualification test results, and [*] parts to Compaq Procurement Engineer (for
sustaining product) or the Program Manager (for new product development). The
sample parts must 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 Gadzoox Microsystems measuring and/or test equipment is not compatible to
Compaq, Compaq will initiate test qualification. Otherwise evaluations will be
given from the Gadzoox Microsystems results.
7.2 Capability Evaluation:
At Compaq's option, a process capability study may be performed on [*] more
parts from pre-production run targeting on the critical dimensions and
parameters.
7.3 Design/Process Change Summary List:
Gadzoox Microsystems will be responsible for recording & reporting all major
design changes to Compaq. Gadzoox Microsystems will be responsible for recording
and reporting all manufacturing process changes at Gadzoox Microsystems to
Compaq. The following information must be recorded: change description,
production effectivity date, and serial number. 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, Gadzoox
Microsystems shall be responsible for performing inspections that are sufficient
to assure that the parts supplied to Compaq meet the requirements specified in
the product assembly documentation.
24
[*]CONFIDENTIAL INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT
HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
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8.1 Lot Acceptance:
All lots shall be capable of passing a sampling inspection [*] . All defects
shall be considered [*]. Failed lots will be subject to rejection and returned
to supplier for corrective action.
8.2 Electrical Criteria:
Electrical assemblies and components shall comply with the Gadzoox Microsystems
"Electrical Workmanship Standards Manual". Each product will be [*]. The
inspector shall ▇▇▇▇ conforming products.
Compaq must approve changes to all critical components before production release
(Mps, oscillators, connectors, cables, and etc.)
8.3 Record Retention:
Gadzoox Microsystems shall record and maintain inspection/test records for a
minimum duration of [*] from the date of shipment or Compaq approved alternate.
Gadzoox Microsystems 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 Non-conforming Product:
Rejected assemblies will be verified by Compaq MRB team. If verified as
defective, the material/lot will be dispositioned as RTV(returned to vendor),
UAI(use as is), Scrap or Rework. Supplier Corrective Action will be initiated
for each unit defect (Section 6.5).
8.5 Out Of Box Audit:
Lot sampling of Finished goods should be conducted on an audit basis
employing a [*] The audit should include the following visual checks:
- Compaq critical specs (labels, dimensions, electrical)
- Bard Code labels, board quantity per box.
- Revision level
- Functional Test
[*]
Any audit failure will trigger the lot to be held for disposition. The
lot disposition will be to check [*] the lot for non-conformity before shipping
the lot to Compaq. All audit failures require 8D analysis by the supplier.
8.6 Gadzoox Microsystems Assembly Criteria:
Assemblies shall be [*] functionally tested and visually inspected. (refer to
sec.8.5).
8.7 Compaq Factory Assembly Criteria:
Compaq Receiving Inspection and factory audit personnel shall evaluate each
assembly to the Compaq's Receiving Inspection Plan (RIP) and functionally
tested. Compaq Procurement Engineering Technicians will periodically pull a
sample from an incoming lot. The unit(s) will be disassembled and evaluated for
workmanship and product integrity. (refer to section 12.0).
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FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT
HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
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9.0 PERFORMANCE REPORTS:
Compaq will issue monthly performance reports due by the [*] of the
following month. Example: February's data due by [*]. This information
will trend defective parts per million (DPPM). The reports are as follows:
A. Incoming Inspection
B. Workmanship Audit
C. Factory Audit (when available)
D. Field Returns (when available)
Each month Gadzoox Microsystems 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, Gadzoox
Microsystems shall compile [*]. These reports shall identify DPPM and
pareto defects. The Gadzoox Microsystems information will be collected by
inspection function:
A. Final Functional Test Results (Total boards tested, Total
Nonfunctional)
B. Out of Box Audit Results (Total Number inspected, Total failed)
C. Reliability Test Results
D. Top [*] Manufacturing Issues for the current Month at each
point in the process.
The Gadzoox Microsystems/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 Power Supply
and assembly are examples of major components. The Assembly, and Power Supply
require the following marking:
1. Compaq P/N (silk screened) and/or Gadzoox Microsystems P/N(on
PCB).
2. Revision Level of Controlling Drawing (record on the data base)
3. Manufacturer's Name/Raw material (Country of origin, Silk
screened)
4. Date of Manufacture (record on the data base)
5. Agency Markings (silk screened)
The [*] should also include a Vendor Final QA marking (make-break). Gadzoox
Microsystems can trace this information through their assign SN.
Additional marking is allowed including manufacture S/N, manufacture order,
flammability rating, etc.
10.2 ASSEMBLY TRACEABILITY:
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: build week, supplier location, part number, serial number and if
necessary, rework status.
11.0 RELIABILITY:
Reliability audits shall be performed at least once a quarter or after any major
design or production change.
An On-Going Reliability Test (ORT) plan shall be approved by Compaq Procurement
Engineering. The purpose is to monitor the production process in an on-going
method. On-Going Reliability Test (ORT) audits shall be performed at-least [*].
11.1 FIELD RETURN VERIFICATION & FAILURE ANALYSIS
Gadzoox Microsystems shall verify field return product and identify reason for
the return. If the defect is verified, Gadzoox Microsystems will identify cause
and initiate corrective action. The field return information should be compiled
in [*]. This information shall be used to improve design, workmanship, quality,
and reliability.
[*]CONFIDENTIAL INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT
HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
26
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12.0 SHIP-TO-STOCK CRITERIA (QUALITY METRICS):
The goal of quality planning is utilization of quality tools that assure
conforming product and elimination of non-value-added inspection. The following
requirements must be fulfilled in order to be considered eligible for
"Ship-to-Stock" status:
o Compaq incoming inspection must have [*] lot acceptance and
[*] as minimum.
o Compaq factory audits must maintain a [*]
o Compaq product integrity audit must meet functional and
workmanship specification. (form/fit, critical dimensions, etc.)
o Process Capability: critical parameters must maintain a process
capability index, [*] or better as proven by objective evidence
with each quarterly review.
o Measurement Precision: Gage operator R/R studies for critical
parameter evaluations must consume [*]
Pending the acceptance of the above criteria, lots will be placed on skip lot
inspections. The number of acceptable lots to reach skip lot status will be
determined by Compaq Procurement Engineer.
If at any time, these requirements are not met, then the commodity shall return
to regular inspection and corrective action initiated.
o Compaq 1997 Quality Goals.
Performance Measures for 1997
QUALITY METRIC 1Q97 2Q97 3Q97 4Q97
-------------- ---- ---- ---- ----
[*] [*] [*] [*] [*]
[*] [*] [*] [*] [*]
[*] [*] [*] [*] [*]
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FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT
HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
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13.0 SUPPLIER OBLIGATIONS:
Communication Products:
Cognizant Required
Personnel Due Date
--------- --------
Process Flow Diagram Gadzoox Microsystems Eng. Pre-Production
- Final Assembly
- Sub Assembly
- Test Inspection
Product Flow Diagram Gadzoox Microsystems Eng. Pre-Production
- Incoming to warehouse
- Final Assembly
- Sub Assembly
Process Critical Parameters Gadzoox Microsystems Pre-Manufacturers.
- Final Assembly Verification Build
- Sub Assembly (MVB)
- Critical Components
Work Instructions Gadzoox Microsystems Pre-Production
- Final Test
- Mechanical Inspection Equipment
-Gaging
Final Inspection Plan Gadzoox Microsystems Pre-Production
- Procedure
- AQL Specifications
- Out-Of-Box Disposition
- Final Disposition
On-Going Reliability Test (ORT) Plan Gadzoox Microsystems Pre-Production
Performance Reports (DPPM) Gadzoox Microsystems [*]
- Final Inspection
- Out-Going Inspection
- Field Return Pareto [*]
- ORT Reports [*]
- ECN/PCN Summary Report Gadzoox Microsystems [*]
14.0 COMPAQ OBLIGATIONS: DATE REQUIRED
- Site Survey Rating: SCORE: depends on final site
- Specification Release to A. Pre-Pilot
- Business Reviews [*]
- Quality Performance Reviews [*]
[*]CONFIDENTIAL INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT
HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
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CONFIDENTIAL
ATTACHMENT I
SUPPLIER REPORTING REQUIREMENTS
Objective: To establish a consistent and standardized reporting format for all
OEM-Communication Products Suppliers.
[*]:
[*] factory data will be submitted to Compaq Procurement Engineer on the Compaq
"[*] Quality Status" form. For each different [*] part number produced for
Compaq, [*] these sheets must be completed for [*] Final Inspection and the Out
of Box Audits. The [*] must be sent no later than the [*] following the end of
the [*]. The [*] shall be sent attention to: OEM Communication Products
Procurement Engineer at FAX number (▇▇▇) ▇▇▇-▇▇▇▇.
[*] factory data reports will include the following:
o A completed Compaq "[*] Supplier Quality Status" form for each Compaq
[*] part number produced. This form will be completed for both the final
inspection and out of box audit data by part number. Also included will
be the [*] for the [*]. (Refer to the note in section 8.5 in this
document).
o An 8D summary report against the defects that represent [*] of the
rejects on the [*].
o A summary sheet reporting all line, process, or design changes to
include initiation date, description of change, reason for change, cut
in date, serial number of product at cut in date, cost savings or
increase.
o A status report for all open, Compaq initiated Supplier Corrective
Action Requests.
o [*] summary on the results of On- Going Reliability Testing (ORT).
(Refer to the note in section 11.0 in this document).
[*]:
[*] factory data will be submitted to Compaq Procurement Engineer on the Compaq
"[*] Supplier Quality Status" form. For each different [*] digit part number
produced for Compaq, one of these sheets must be completed for both Final
Inspection and the Out of Box Audits. The quarterly reports shall be sent
attention to: OEM Communication Products Procurement Engineer at FAX number
(▇▇▇) ▇▇▇-▇▇▇▇.
[*] factory data reports will include the following:
o A completed Compaq "[*] Supplier Quality Status" form for each Compaq
[*] digit part number produced. This form will be completed for both the
final inspection and out of box audit data by part number. Also included
will be the quarterly data for the [*].
o A [*] summary report of the results of the Reliability Testing.
[*]CONFIDENTIAL INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT
HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
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LIST OF DELIVERABLES
1. Critical Parameters
2. Critical Components List
3. Capacity Analysis
4. On-Going Reliability Test Plan (ORT)
5. GR&R
6. [*] Quality Report
7. Preliminary Capability Assessment (Cpk)
8. Final Specification Review(PAF)
9. Out-of-Box Audit (OOBA)
10. Process Management Plan (PMP)
11. Preliminary Capability Study (Cpk)
12. Process Flow Diagram
13. Product Flow Diagram
14. Test Data and Bug List
15. Corrective Action Procedures
16. 8D Form
17. Supplier Corrective Action Report Form
18. Failure Analysis Procedures
Note: forms/guidelines for items 1,4,5,6,7,8,9,10,16,17
will be provided by Compaq Procurement Engineering.
[*]CONFIDENTIAL INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT
HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
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CONFIDENTIAL
EXHIBIT E
SERVICE, REPAIR, AND REFURBISHMENT
A. REFURBISHMENT
1. Seller agrees to provide a source for refurbishment to "like new"
condition any Product at the prices & terms outlined below. This obligation
shall be satisfied by either refurbishing Product submitted by Buyer or replace
such Product with either new or refurbished Product. Refurbished 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, as outlined in Exhibit B.
2. Product submitted by Buyer for refurbishment will be in reasonably good
condition and repairable, and [*]. 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 refurbish such Product.
3. Seller agrees to provide [*] 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's request, to provide repair training, on site
support within [*], documentation, and spare parts to third party service
providers in support of Buyer's service requirements as outlined in this
Exhibit. Training will be charged at [*] plus travel expenses for each trainer
provided by Seller. Such third party service providers will be selected by
mutual agreement.
5. Supplier agrees all repairs will be free of defects in workmanship and
materials for [*] from the date of repair; as noted in affixed human readable
repair date code.
6. Prices for Refurbishment are as follows:
In Warranty: [*] included in Product Price [*]
Out of Warranty: To be negotiated on a case by case basis.
CND (Can Not Duplicate) Failure: [*]
Out of Warranty prices may be renegotiated quarterly. The failure information
provided by the Seller's repair process, will be used as the base line for
setting repair costs.
B. SPARE PARTS AVAILABILITY
1. At Buyer's option, Seller shall make available for purchase by Buyer
replacement parts and/or refurbishment for Products ("Spares"), and Seller
agrees to drop ship such Spares to the location designated by Buyer for a
minimum [*] after delivery of the last shipment of such Product.
Spares shall be [*].
Price for replacement parts, as set forth in Exhibit B will be set based upon
negotiated Product cost. The price for replacement parts after last shipment of
Product will [*] for the [*] Support.
Lead-time for Spares shall be as follows:
In Warranty Refurbishment cycle time - maximum [*] from RMA issuance to
stock
Out of Warranty Refurbishment cycle time - maximum [*] from RMA issuance to
stock
Replacements - [*]
Rush - [*]
[*]CONFIDENTIAL INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT
HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
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CONFIDENTIAL
RMA issuance [*]
2. Buyer reserves the right to allocate supplier capacity to be used for
manufacture of Spares in those situations where the supplier is unable to meet
agreed upon replacement/refurbishment lead times.
3. Seller agrees to provide [*] status reports indicating quantities of
units returned, units which aren't repairable, and CND units for which no
trouble was found. In addition supplier will provide [*] reports which
pareto the types of failure found in repair. Such reports shall include, but
shall not be limited to, the following information:
- Buyer's part number
- Compaq Order number
- RMA issuance date
- Quantity
- Receipt date at Seller's repair site
- Ship date to Buyer
- Cycle time for each step of the process outlined in this Exhibit
E
C. DOCUMENTATION
Seller agrees to provide Theory of Operations, schematics, sourced ▇▇▇▇ of
Material, etc. sufficient to enable repair of product.
D. TECHNICAL SUPPORT REQUIREMENTS
1. Seller will issue & control [*] requests and all relevant factory
issued field instructions in support of their or Compaq's designated service
provider(s)/repair center(s).
2. Seller shall designate a Seller representative(s) as Buyer's
contact(s) having the overall responsibility for management of the service of
Product and Spares throughout Seller's repair center(s).
[*]CONFIDENTIAL INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT
HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
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CONFIDENTIAL
EXHIBIT F
I. INSURANCE REQUIREMENTS
Without limiting any of the obligations or liabilities of
Seller, Seller shall maintain, as long as this Agreement is in effect, at
Seller's expense, insurance policies of the kind and limits listed below and
shall provide Buyer (Corporate Risk Management Department), at the address
indicated in Section 16 of this Agreement, subsequent to execution of this
Agreement, a Certificate of Insurance evidencing such coverage for the term of
this Agreement. Valid certificates of insurance shall be provided to Buyer per
the above requirement as soon as practicable following the issuance of each
renewal policy.
Seller shall also require any sub-contractors retained by Seller
for the purpose of producing or manufacturing Product to insure against the
following risks to the extent stated.
If such levels of coverage proves not to be available for any
reason, the Seller shall substitute equivalent coverage and notify the Buyer
(Corporate Risk Management Department) of the changes.
All policies listed below in II.A.(1) shall be in a [*]
II. DESCRIPTION OF COVERAGE, LIMITS AND SPECIFIC ENDORSEMENT REQUIREMENTS:
II.A.(1) Commercial General Liability
Bodily Injury/Property Damage [*]
[*]
Comprehensive Form Including (if applicable):
(1) Premises/Operations
(2) Products/Completed Operations
(3) Contractual Liability
(4) Independent Contractors
(5) Broad Form Property Damage
(6) Personal/Advertising Injury
(7) Owners' and Contractors' Protective
(8) Endorsed to add Compaq Computer Corporation as an Additional
Insured as required by contract
II.B All insurance coverages shall provide, where applicable, that:
II.B.1 Each Certificate of Insurance shall contain a provision that
coverage afforded under the policies [*] limits as stated in
II.A.(1). Furthermore, Seller will obtain an [*] policies
providing that the Seller's insurance shall be [*]. Any other valid and
collectible insurance or self-insurance maintained by or in the name of
the [*] shall be excess of the [*] insurance and shall not contribute
to it.
[*]CONFIDENTIAL INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT
HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
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CONFIDENTIAL
II.B.2 Notice of occurrences that may give rise to a claim given by the
insured to the insurer shall be sufficient to invoke protection of the
Policy.
II.B.3 The presence on the site of representatives of the Buyer or the
participation of the Buyer's representatives shall not invalidate the
policy.
II.B.4 Violation of the terms of any other policy issued by the insurer
shall not by itself invalidate the policy.
II.C Seller shall cause each insurance policy issued hereunder to provide:
II.C.1 [*] and that the coverage shall contain no limitations on the
scope of protection afforded to the [*]
II.C.2 that each insurance policy required by this section of the
Agreement, and in accordance with Section II.B.1, shall be endorsed to
state that coverage shall [*]
II.D
II.D.1 It is Seller's responsibility to ensure that the insurance
requirements listed above are in effect for the full term of this
Agreement. [*]
II.D.2 Insurance is to be placed with insurers with a [*] and Seller
shall use best efforts to place insurance with carriers [*]. For use of
any insurance carrier which does not meet this requirement, approval
must be received in writing from the Buyer (Corporate Risk Management
Department).
[*]CONFIDENTIAL INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT
HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
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EXHIBIT G
COMPAQ SUPPLIER COMPLIANCE POLICY
Compaq Computer Corporation is proud of its reputation for integrity and honesty
in its business dealings. Our corporate culture of fairness and quality is one
of our most valuable assets. Maintaining this reputation is an ongoing process,
and Compaq considers it be one of its most important jobs.
It is essential that the highest standards of conduct be observed by Compaq, as
well as its suppliers. In fact, Compaq believes that it suppliers must operate
at the same high level of integrity as Compaq. In this regard, Compaq has
adopted a Supplier Compliance Policy. As part of this policy, Compaq expects
each of its suppliers to comply fully with the requirements set forth below.
This policy requires that Compaq suppliers and their employees exercise the
highest degree of honesty and integrity in conducting their business with
Compaq, as well as other third parties.
1. ETHICAL STANDARDS Compaq expects its suppliers to avoid conflicts of
interest that create opportunities for abuses and allegations of
commercial bribery.
A. Business Courtesies - Business should be won or lost on the merits of
the products and services being offered by its suppliers. Therefore,
supplier funds or personal funds of its employees should not be used to
provide a business courtesy unless the gift is commemorative, ceremonial
or customary in nature and has an insubstantial value. Under no
circumstances should a kickback or bribe ever be offered to Compaq or
its employees.
II. ENVIRONMENTAL STANDARDS Compaq expects its suppliers to conduct
their business in a manner that provides a safe, healthy and
environmentally friendly workplace and meets or exceeds all applicable
environment and work place legal requirements.
A. Hazardous Materials, Air Emissions & Waste Water Discharges - Compaq
requires that each of its suppliers comply with all applicable
environmental laws and regulations regarding hazardous materials, air
emissions and waste water discharges, including those regarding the
manufacture, transportation, storage, disposal, and release to the
environment of such materials.
B. Health & Safety - Compaq expects its suppliers to maintain their
facilities in a safe and healthy manner and in compliance with all
applicable laws and regulations.
III. EMPLOYMENT STANDARDS Compaq expects its suppliers to ▇▇▇▇▇▇ human
dignity by treating their employees fairly and with respect. Compaq
requires that its suppliers comply with all applicable national, state
and local employment laws.
A. Child Labor - Compaq expect its suppliers to refrain from using child
labor. Workers can be no less than 14 years of age and not younger than
the compulsory age to be in school. Compaq supports the development of
legitimate workplace apprenticeship programs for the educational benefit
of young people.
B. Prison Labor - Compaq expects its suppliers to refrain from utilizing
prison or forced labor within their workforces.
C. Disciplinary Practices - Compaq expects its suppliers to refrain from
using corporal punishment or other forms of mental or physical coercion
with their employees.
D. Working Hours - Compaq expects its suppliers to comply with all
applicable laws regarding compensation for overtime work performed by
their employees. Additionally, employees should be allowed at least one
day off in seven.
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IV. COMPETITIVE STANDARDS Compaq expects its suppliers to compete fairly
and vigorously within the marketplace. Compaq discourages
anti-competitive practices by its suppliers that inhibit the operation
of a free-market economy. Compaq requires that its suppliers comply with
all applicable competition laws.
A. Price fixing - Compaq expects its suppliers to refrain from
collaborating with competitors to fix prices for its goods.
B. Anticompetitive Practices - Compaq will not tolerate anticompetitive
practices by its suppliers, including efforts to allocate markets or
customers among their competitors or to fix bids.
V. CONFIDENTIALITY Compaq requires that its suppliers enforce a policy that
ensures the confidentiality of all proprietary or confidential
information provided by Compaq.
A. Non-disclosure Agreement - Compaq requires that its suppliers comply
with the terms of the Confidentiality and Non-disclosure Agreements that
have been entered into with Compaq
B. Other Confidentiality Obligations - Compaq requires its suppliers to
refrain from making unauthorized disclosures to Compaq of third party
confidential information.
VI. COMPLIANCE WITH GOVERNMENT LAWS AND REGULATIONS Compaq expects its
suppliers to comply with all applicable laws and regulations governing
their business relationships with Compaq.
Compaq is dedicated to maintaining its reputation for fairness and integrity. In
many ways the future success of both Compaq and its suppliers depends on our
ability to build on these high standards.
The foregoing requirements are not intended to be all-inclusive, and Compaq
expects its suppliers to exercise ethical judgment beyond strict compliance with
the law, and to be responsive to the concerns of the communities in which they
operate. Failure to comply with the above requirements may result in reduction
of business with Compaq, or in some instances, termination of your relationship
with Compaq. Understanding and complying with the above requirements will help
to ensure that our mutual business activities are conducted in the highest
ethical and professional manner.
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Exhibit H
JIT Requirements
[*]
[*]
37