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Exhibit 10.15
MANUFACTURING AGREEMENT
BETWEEN
MCDATA CORPORATION
AND
SCI SYSTEMS INC.
01-92-03-0A
McDATA Agreement
Number
*Certain information in this agreement has been omitted and filed separately
with the Commission. Confidential treatment has been requested with respect to
the omitted portions. Asterisks within brackets denote omissions.
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MANUFACTURING AGREEMENT
TABLE OF CONTENTS
Page
RECITALS............................................................ 1
1. SCOPE OF AGREEMENT............................................ 1
1.1 Definitions ............................................ 1
1.2 Products and Services .................................. 1
2. TERM OF AGREEMENT............................................. 1
3. PURCHASE ORDERS AND FORECASTS................................. 2
3.1 Exclusion............................................... 2
3.2 Forecasts............................................... 2
3.3 Purchase orders......................................... 2
3.4 Adds, Reschedules, Cancellations........................ 2
3.5 Liabilities............................................. 2
4. PRICES AND TAXES.............................................. 2
4.1 Prices ................................................. 2
4.2 Price Adjustments ...................................... 3
4.3 Taxes................................................... 3
5. TERMS OF PAYMENT AND CREDIT................................... 3
5.1 Credit.................................................. 3
5.2 Invoicing............................................... 3
5.3 Payment................................................. 3
6. SHIPMENT/DELIVERY AND EXPORT/IMPORT........................... 3
6.1 Definition.............................................. 3
6.2 Shipment................................................ 3
6.3 Export/Import........................................... 3
6.4 Compliance with Law..................................... 4
6.5 Country of Origin Certificate........................... 4
7. TITLE AND RISK OF LOSS........................................ 4
8.
ACCEPTANCE.................................................... 4
8.1 Conformance to Specifications........................... 4
8.2 Acceptance Definition................................... 4
8.3 McDATA Test Procedures.................................. 4
9.
WARRANTY...................................................... 4
9.1 Product Warranty ....................................... 4
9.2 Title Warranty ......................................... 5
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9.3 Disclaimer.............................................. 5
10. PRODUCT
CHANGES....................................................... 5
10.1 Control ................................................ 5
10.2 Implementation.......................................... 5
11. INDEMNIFICATION............................................... 5
11.1 Patents and Copyrights.................................. 5
11.2 Personal Liability...................................... 6
11.3 Responsibilities of the Parties......................... 6
12. REGULATORY APPROVAL........................................... 6
12.1 McDATA ................................................. 6
12.2 SCI..................................................... 6
13. CONFIDENTIALITY AND NON-DISCLOSURE............................ 7
14. TOOLING....................................................... 7
14.1 Ownership and Use ...................................... 7
14.2 Maintenance............................................. 7
15. TERMINATION AND CANCELLATION.................................. 7
15.1 McDATA's Default ....................................... 8
15.2 SCI's Default .......................................... 8
15.3 Insolvency ............................................. 8
15.4 Cancellation............................................ 8
16. GENERAL
16.1 Entire Agreement; Amendment............................. 8
16.2 Termination ............................................ 8
16.3 Force Majeure........................................... 8
16.4 Governing Law .......................................... 9
16.5 Notices ................................................ 9
16.6 Assignment ............................................. 9
16.7 Exercise of Remedies ................................... 9
16.8 Limitation of Liability ................................ 9
16.9 Attorneys' Fees ........................................ 9
16.10 Headings ............................................... 10
16.11 Most Favored Nations.................................... 10
EXHIBITS............................................................ 10
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MCDATA CORPORATION
MANUFACTURING AGREEMENT
THIS MANUFACTURING AGREEMENT ("Agreement") is entered into by McDATA Corporation
("McDATA"), having its principal place of business located at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, and SCI Systems Inc. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇., ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("SCI").
RECITALS
WHEREAS, McDATA is engaged in the business of designing, developing and
marketing certain high technology network communications computer products;
WHEREAS, SCI is an established corporate entity, engaged in the business of
manufacturing various products and subassemblies, which services McDATA wishes
to employ in manufacturing its family of products;
WHEREAS, SCI wishes to sell its services to McDATA for manufacturing
McDATA-designed products.
WHEREAS, McDATA desires to contract for SCI's services in manufacturing the
products as listed in Exhibit A;
NOW, THEREFORE, in consideration of the premises and promises contained herein,
the receipt and sufficiency of which is hereby acknowledged, the prices covenant
and agree as follows:
1. SCOPE OF AGREEMENT
1.1 Definitions. Capitalized terms (except Headings) used in this Agreement
shall have the meanings set forth herein or as more fully defined in Exhibit B
hereto.
1.2 Products. This Agreement covers the procurement of all components used in,
and the manufacture and test of, certain of McDATA's Products ("Products")
listed in Exhibit A. Additional Products may be added to Exhibit A by mutual
agreement, and the manufacture and sale of such additional Products shall be
made in accordance with the provisions of this Agreement.
2. TERM OF AGREEMENT
The term of this Agreement shall commence as of the effective date below and,
unless sooner terminated pursuant to the termination provisions hereof, shall
continue in effect for a period of five (5) years. Upon written consent of both
parties, this Agreement may be extended for additional one (1) year periods.
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3. PURCHASE ORDERS AND FORECASTS
3.1 Exclusion. This Agreement is not a purchase order, and nothing in this
Agreement shall obligate McDATA to purchase any Products or incur any liability
to SCI unless and until this Agreement is implemented by McDATA's issuance of
specific purchase orders pursuant to the terms and conditions hereof.
3.2 Forecasts. McDATA expects to purchase the estimated quantities outlined in
Exhibit A to the Agreement. Concurrent with the signing of this Agreement,
McDATA shall provide SCI with a forecast of Products, specified by McDATA
assembly number, for the [*]. Such forecast will be updated monthly. Except for
those quantities for which McDATA has issued a purchase order, such forecast
shall be considered non-binding.
3.3 Purchase Orders. McDATA shall provide purchase orders for the initial [*]
of its forecast, and add requirements from time to time in order to maintain a
[*] of Products on order at all times. All purchase orders shall state the item
number, quantity ordered, unit of measure, McDATA assembly number, revision
level, description of item, unit and extended price, delivery dates, method of
shipment, and tax status of each shipment to a location. SCI shall acknowledge
receipt and acceptance/rejection of all purchase orders within [*]. No term or
condition on SCI's standard quotation or McDATA's standard purchase order will
modify this Agreement.
3.4 Adds, Reschedules, Cancellations. SCI agrees to provide for resources
sufficient to permit increases up to [*] of purchase order quantity of Products
which fall within [*] to [*] from delivery date, beginning eighteen 18 weeks
after execution of this Agreement. McDATA may place purchase orders for delivery
at [*] from order date. McDATA must approve, in writing, any expedite charges or
any other cost variances to current quote. McDATA may defer scheduled deliveries
up to [*] from original scheduled delivery date, providing the request is
received by SCI [*] or more from the original delivery date. Purchase orders
released for delivery within [*] of the order date are non-cancellable.
Liability beyond [*] is limited to material cost as described in section 3.5.
3.5 Liabilities. McDATA agrees to assume liability for materials ordered to
forecast which have manufacturer's leadtimes beyond open purchase orders,
providing SCI makes reasonable efforts to cancel, return, or restock obsolete
materials. McDATA assumes liability for any Minimum Purchase quantity specified
by McDATA beyond ordinary standard manufacturer minimum purchase requirements
(e.g. 'tape & reel'), in an effort to reduce part cost. McDATA's total liability
shall be five (5) percent above (for handling) the cost of materials remaining
in SCI's inventory, unique to McDATA's Products, which SCI is committed to
purchase and are non-returnable and non-cancellable. SCI shall provide a
material exposure report monthly to allow McDATA to monitor material liability.
4. PRICES AND TAXES
*Certain information on this page has been omitted and filed separately with the
Commission. Confidential treatment has been requested with respect to the
omitted portions. Asterisks within brackets denote omissions.
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4.1 Prices. Prices for Turnkey Manufacturing of contracted assemblies are
individually set forth in Exhibit A hereto, in United States dollars, and are
firm for one quarter (thirteen calendar weeks). New Products shall be quoted
within three (3) weeks of receipt of complete documentation.
4.2 Price Adjustments. The prices for Products listed in Exhibit A shall be
reviewed [*] and updated for current material costs and labor content. SCI shall
make every effort to provide McDATA with continuous reductions in Total Cost.
4.3 Taxes. All prices for Products provided hereunder are exclusive of any
taxes, duties or government levies (including, but not limited to, value added,
property, sales, use, privilege, excise, or similar taxes) imposed by the United
States, or any other governmental entity. Any such taxes or amounts in lieu
thereof which are charged to or payable by SCI (exclusive of taxes based on
SCI's net income) will be invoiced to and paid by McDATA in the manner set forth
in Section 5 below.
5. TERMS OF PAYMENT AND CREDIT.
5.1 Credit. SCI shall, from time to time, establish credit limits for McDATA.
SCI's obligation to deliver Products ordered and to perform Services hereunder
shall be subject to McDATA's adherence to all payment and credit terms
stipulated herein.
5.2 Invoicing. SCI shall invoice McDATA upon shipment of the Products
purchased hereunder. Non-recurring engineering charges will be invoiced on or
after the date such services are performed, with [*] payable upon invoicing and
[*] after First Article approval.
5.3 Payment. All payments for Products and Services shall be made in United
States dollars. Terms are [*] after the later of the receipt of invoice or
acceptance of Products. This discount will be initially taken by discounting the
purchase prices [*], for ease of operation in SCI's system. SCI will monitor
McDATA's adherence to terms, and may at SCI's sole discretion eliminate this
'price method' of taking the discount.
6. SHIPMENT/DELIVERY AND EXPORT/IMPORT
6.1 Definitions. Upon tender of Products to a common carrier, "Shipment" shall
have occurred. Upon McDATA's receipt of Products, 'Delivery' shall have
occurred.
6.2 Shipment. Products sold hereunder will be shipped to McDATA FOB
destination, freight prepaid. McDATA will accept delivery of Product up to [*]
prior to the specified delivery date. If Product is received before this
accepted delivery window, McDATA may either return the Product at SCI's expense
for proper delivery, or withhold payment until the specified delivery date. If
SCI is unable to meet the agreed delivery schedule, McDATA will be notified
immediately. SCI is instructed to ship only quantity specified by purchase
orders issued hereunder. In the event that SCI ships quantities in excess of the
quantities ordered, McDATA reserves the right to return any overshipment at
SCI's expense. McDATA may approve partial shipments on a case-by-case basis
only.
*Certain information on this page has been omitted and filed separately with the
Commission. Confidential treatment has been requested with respect to the
omitted portions. Asterisks within brackets denote omissions.
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6.3 Export/Import. The Parties shall render such assistance as may be
reasonably requested to obtain any documents (e.g., export license, import
certificate, pro forma invoice) which are required to enable export of Products
(and, where necessary, for in-transit passage of goods through another country).
McDATA is the exporter of record. SCI shall not be held responsible for delays
due to export.
6.4 Compliance with Law. McDATA shall comply with all applicable law,
including, without limitation, the export control laws of the United States of
America and prevailing regulations which may be issued from time to time by the
United States Department of Commerce and any export control regulations of the
United States and those countries involved in transactions concerning the
exporting, importing and re-exporting of Products purchased under application of
these terms and conditions. McDATA shall also comply with the United States
Foreign Corrupt Practices Act and shall indemnify SCI from violations of such
act by McDATA.
6.5 Country of Origin Certificate. SCI shall provide appropriate certification
that its manufacturing activities under this Agreement occur in the United
States, and will notify McDATA in the event SCI changes the location of its
manufacturing activities.
7. TITLE AND RISK OF LOSS
Title to Products purchased by McDATA shall pass to McDATA when payment in full
has been received by SCI. Payment shall be deemed to be made with respect to
Products upon compliance with the terms of Section 5.3. The risk of loss or
damage in the goods shall pass to McDATA upon Delivery.
8. ACCEPTANCE
8.1 Conformance to Specifications. All Products sold hereunder shall conform
to McDATA's Specifications as reflected on the respective purchase order, as
acknowledged by SCI, and to IPC Class 2 standards.
8.2 Acceptance Definition. McDATA's acceptance of each Product shall occur
upon Delivery unless SCI is otherwise notified in writing by McDATA within
twenty (20) days from Delivery that such Product does not conform to
Specifications. Payment for any Product by McDATA shall not reduce the twenty
(20) day period available for inspection and reporting of any nonconformance.
8.3 McDATA Test Procedures. McDATA may inspect and test Products received from
SCI to determine conformance with Specifications. SCI shall have the right to
observe McDATA's inspection and test procedures.
In the event that any Product delivered to McDATA does not function in
accordance with the Specifications and such malfunction is not due to freight
damage or other exclusions in Section 9.1, McDATA shall immediately notify SCI,
and SCI agrees to either repair, replace, or issue credit for the malfunctioning
Product within ten (10) days of its return to SCI (or within a reasonable period
based
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on the nature of the defect). More specific details respecting return material
authorizations (RMA), credits and related may be found in Section 9 below.
9. WARRANTY
9.1 Product Warranty. SCI warrants that, under normal use and service, the
Products will be free from defects in material (excepting material obtained
directly from McDATA) and workmanship for a period of [*] from the date of
delivery. SCI will promptly issue a Return Material Authorization number and,
without charge to McDATA, promptly repair, replace, or credit, at its option,
within ten (10) days of its receipt (or within a reasonable period based on the
nature of the defect), any Product which is determined to be defective and which
is returned to SCI within this warranty period, provided the Product has not
been damaged, subjected to misuse, or altered. SCI's liability hereunder is
limited to the repair or replacement of the defective Products and does not
include any labor related to the removal and/or subsequent reinstallation
thereof. For Product covered under warranty, McDATA shall return Product freight
collect to SCI, and SCI shall ship repaired/replaced Product freight prepaid to
McDATA. Repair or replacement of component parts shall not extend or decrease
the Product warranty.
9.2 Title Warranty. Except for SCI's security interest in Products pending
payment therefore pursuant to Section 6, SCI warrants that title to all Products
delivered to McDATA under this Agreement shall be free and clear of all liens,
encumbrances or other claims.
9.3 Disclaimer. THE WARRANTIES AND CONDITIONS SET FORTH HEREIN AND THE
OBLIGATIONS AND LIABILITIES OF SCI HEREUNDER ARE IN LIEU OF, AND McDATA HEREBY
WAIVES, ALL EXPRESS AND IMPLIED WARRANTIES AND CONDITIONS, INCLUDING THOSE OF
MERCHANTABILITY AND/OR FITNESS FOR A PARTICULAR PURPOSE. IN NO EVENT SHALL SCI'S
LIABILITY TO McDATA EXCEED THE AMOUNT PAID BY McDATA TO SCI FOR THE AFFECTED
PRODUCTS.
10. PRODUCT CHANGES
10.1 Control. McDATA may, by written Engineering Change Order notice, make
changes in the drawings, designs, specifications, or method of packing and
shipping the Products. SCI is encouraged to recommend to McDATA at any time
proposed changes that are expected to result in improved reliability or cost
reduction. Implementation of these recommendations shall only be made upon
receipt of authorization by McDATA in the form of written Engineering Change
Order notice. No obligation or liability shall arise or grow out of SCIs
recommendations since all recommendations must be approved by McDATA. Temporary
authorization for changes may be given through a McDATA Material Deviation
Request form.
10.2 Implementation. SCI shall provide manufacturing and inventory cost impact
within [*] after receipt of McDATA's Engineering Change Order notice, including
an appropriate statement of any resulting purchase price variance and material
obsolescence. After acceptance by McDATA, the new
*Certain information on this page has been omitted and filed separately with the
Commission. Confidential treatment has been requested with respect to the
omitted portions. Asterisks within brackets denote omissions.
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price shall apply to any purchase order affected by the Engineering Change
Order, and Exhibit A shall be amended accordingly.
11. INDEMNIFICATION
11.1 Patents and Copyrights. Upon demand, McDATA agrees to promptly defend,
indemnify and hold SCI, its successors and assigns, harmless from and against
all actions, claims, liabilities, litigation, causes of action, damages, costs,
losses and expenses of every kind and character (including attorneys' and
accountants' fees and costs) resulting from, arising out of or relating to (a)
any claim or threatened claim that any Product, or any portion thereof,
infringes any patent, trademark, copyright, mask work or other proprietary
right, whether foreign or domestic, of any third party ("infringement claim");
or (b) any claim or threatened claim arising out of or in connection with the
distribution, sale or use of any Product or part thereof, whether by McDATA or
any third party and whether any such claim is based upon contract, tort or any
other legal theory ("non-infringement claim"). SCI shall cooperate with McDATA
in defending or investigation of all claims. The foregoing shall not apply to
any non-infringement claim based upon a defect in Product material or
workmanship caused by SCI.
11.2 Personal Injury. Each party will maintain general comprehensive liability,
property damage, and automobile liability insurance, including contractual
endorsement and products hazard coverage, in reasonable amounts covering the
obligations set forth in this Agreement.
11.3 Responsibilities of the Parties. Each of the parties hereto shall conduct
the work to be performed hereunder as an independent contractor and not as an
agent or employee of the other party hereto. Subject to the terms and conditions
of this Agreement, each party shall at its sole discretion, choose the means to
be employed and the manner of carrying out its obligations hereunder.
12. REGULATORY APPROVAL
12.1 McDATA. McDATA warrants that the Products, when manufactured in accordance
with this Agreement, comply with all applicable industry and governmental
standards and requirements. McDATA shall be responsible for obtaining and
defining, in writing, any required regulatory certification approval standards,
including responsible coordination of manufacturing location inspections. McDATA
agrees to provide appropriate documentation at SCI's request that applicable
industry and/or government standards or regulations have been and continue to be
met.
12.2 SCI. If McDATA desires SCI to be producing regulatory-approved devices
requiring certification agency inspections at SCI's facility, McDATA shall
notify SCI in writing at least thirty (30) days before initiation of factory
inspections. SCI will cooperate in the support and coordination of such
inspections. SCI assumes no responsibility or liability for maintaining McDATA's
designs in compliance with those standards for the Products, which liability is
assumed entirely by McDATA.
13. CONFIDENTIALITY AND NON-DISCLOSURE.
Each of the parties hereto acknowledge that in the course of conducting business
and meeting its obligations under this Agreement, it will obtain information
from the opposite party which is of a confidential and proprietary nature.
Provided such information is marked as such ("SCI [or McDATA]
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Proprietary Information" or equivalent), the following shall apply. Such
Proprietary Information may include, but is not limited to, trade secrets,
know-how, inventions, techniques, processes, programs, schematics, data,
customer lists, financial information, and sales and marketing plans.
The receiving party shall at all times during the term of this Agreement and for
three (3) years after its termination, keep in confidence and trust all such
Proprietary Information and shall not use it without the prior written consent
of opposite party, except (i) as permitted by the terms of this Agreement, (ii)
as may be necessary to fulfill its obligations under this Agreement, and/or
(iii) to operate, maintain, or support the Products. Furthermore, neither party
shall, without the prior written consent of the other, disclose such Proprietary
Information to any person except to those of its employees, Distributors, or
consultants who need to know same to fulfill that party's obligations under this
Agreement or to operate, maintain, or support the Products, provided that such
employees, Distributors, or consultants are parties to written agreements to
keep in confidence such Proprietary Information; such agreements will meet the
minimum requirements set forth herein. Each party will use its best efforts to
prosecute material violations of such agreements with respect to the Proprietary
Information. Upon termination of this Agreement and upon request, each party
shall promptly return all Proprietary Information under its control and all
copies thereof to the owner.
Either party may publicly disclose the existence of this Agreement, however
neither party shall disclose the specific terms and conditions contained herein
to any third parties except by written agreement between SCI and McDATA dated
subsequent hereto or as required by law or the order of a court of competent
jurisdiction.
The non-disclosure provisions of this Section shall not apply to information
which (i) becomes publicly available through no act of the recipient; (ii) is
required to be disclosed by the law of any government which has jurisdiction
over such information; (iii) was previously known at the time of its receipt
without similar restrictions; (iv) is released in writing by the provider; (v)
is provided to third parties without similar restrictions on disclosure; or (vi)
can be documented, by adequate written records, to have been independently
developed by without reference to or use of any of the opposite party's
Proprietary Information.
14. TOOLING
14.1 Ownership and Use. All tooling furnished to SCI by McDATA or developed by
SCI and paid for by McDATA shall be the sole property of McDATA and McDATA will
provide instructions for marking as such. SCI may use such tooling only for the
manufacture of McDATA's Products purchased directly by McDATA and all other uses
must be approved in writing by McDATA.
14.2 Maintenance. SCI shall store, protect, preserve, and maintain such
property in accordance with sound industrial practice. In the event that
McDATA's property becomes lost or damaged while in SCI's possession, for any
reason other than through normal and proper use, SCI agrees to replace or repair
such property at SCI's expense. Within sixty (60) days after termination of this
Agreement, SCI will request McDATA to provide SCI with instructions for the
disposition of all such property and McDATA will pay for packing and shipping of
such property. If McDATA does not provide disposition instructions to SCI within
thirty (30) days of written notice, SCI may dispose of the property at its
convenience without liability or accounting.
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15. TERMINATION AND CANCELLATION
15.1 McDATA's Default. The failure by McDATA to make any payment required
hereunder, or a material breach by McDATA of its obligations hereunder, shall
constitute an event of default by McDATA. Upon the occurrence of an event of
default by McDATA, SCI shall provide McDATA with written notice specifying the
nature of such default. If McDATA has not cured such default within thirty (30)
days after receipt of such notice, SCI may, at its sole option, cancel this
Agreement and/or seek any other remedies available under law or in equity.
15.2 SCI's Default. A material breach by SCI of its obligations hereunder shall
constitute an event of default by SCI. Upon the occurrence of an event of
default by SCI, McDATA shall provide SCI with written notice specifying the
nature of such default. In the event SCI fails to remedy such default within
thirty (30) days after receipt of such notice, McDATA may, at its sole option,
cancel this Agreement and/or seek any other remedies available under law or in
equity.
15.3 Insolvency. In the event of proceedings (voluntary or involuntary) in
bankruptcy or insolvency by or against either party hereto, or in the event of
the appointment (with or without the party's consent) of an assignee for the
benefit of creditors or a receiver, the opposite party may elect to immediately
terminate this Agreement.
15.4 Cancellation. Either party may cancel this Agreement at any time, without
cause or liability, by providing [*] advance written notice to the other party.
In the event that McDATA cancels this Agreement and SCI has procured material,
authorized by McDATA, in excess of the quantity required to manufacture the
Products scheduled during the [*] notification period, McDATA agrees to purchase
such unused material at the then current agreed upon material cost plus [*]
handling charge, at the time of the last delivery of Product.
16. GENERAL.
16.1 Entire Agreement; Amendment. Except as may be otherwise provided in this
Agreement, this Agreement constitutes the entire agreement between SCI and
McDATA and supersedes all previous understandings, negotiations and proposals,
whether written or verbal. This Agreement may not be altered, amended or
modified except by an instrument in writing signed by duly authorized
representatives of each party. In the event that any one or more provisions
contained in this Agreement should for any reason be held to be unenforceable in
any respect, such unenforceability shall not affect any other provisions hereof,
and this Agreement shall be construed as if such unenforceable provision had not
been contained herein.
16.2 Termination. Neither party may terminate this Agreement except as
specifically provided for herein. Such termination shall not relieve either
party of such obligations as are intended to survive the termination, including
but not limited to this Section and Section 5.3, 6.4, 9, 11, 12, 13, and 14.
*Certain information on this page has been omitted and filed separately with the
Commission. Confidential treatment has been requested with respect to the
omitted portions. Asterisks within brackets denote omissions.
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16.3 Force Majeure. Neither party shall be liable to the other for delays or
failures to perform any obligation hereunder if such delay or failure to perform
is due to any act of God, acts of the other party, acts of civil or military
authority, labor disputes, fire, riots, civil commotions, sabotage, war,
embargo, blockage, floods, epidemics, delays in transportation, or when due to
governmental restrictions. In the event of any such delay or failure, the
parties shall have an additional period of time equal to the time lost by reason
of the foregoing in which to perform hereunder.
16.4 Governing Law. This Agreement shall be governed in all respects by the
laws of the State of Colorado, U.S.A., as such laws are applied to agreements
between Colorado residents entered into and to be performed entirely within
Colorado. The United Nations Convention on the International Sale of Goods
(CISG), as provided for in Article 6 thereof, is specifically excluded and shall
not be applicable to any transaction contemplated herein.
16.5 Notices. Notices required hereunder shall be in writing, or by facsimile
or telex subsequently confirmed in writing, and shall be deemed given when
transmitted or deposited in the mail (or an express delivery service), postage
prepaid, addressed as follows:
To McDATA: With an additional copy to:
McDATA Corporation McDATA Corporation
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: Corporate Purchasing Manager Attn: Vice-President, Operations
ITT Telex #499-8259; ANS BACK McDATA
Facsimile # (▇▇▇) ▇▇▇-▇▇▇▇
To SCI Systems Inc.: With an additional copy to:
SCI Systems, Inc. SCI Systems, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Program Manager Attn: Vice-President, Plant Manager
Facsimile # (▇▇▇) ▇▇▇-▇▇▇▇
All electronically-transmitted notices shall be confirmed, as provided above, by
written notice mailed within five (5) days of the date the telex or facsimile is
sent. Once confirmed, the notice shall be effective as of the date of the telex
or facsimile.
16.6 Assignment. Neither party shall assign this Agreement or any rights
hereunder without the prior written consent of the opposite party, which consent
shall not be unreasonably withheld.
16.7 Exercise of Remedies. Any delay or omission by either party to exercise any
right or remedy under this Agreement shall not be construed to be a waiver of
any such right or remedy or any other right or remedy hereunder.
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16.8 Limitation of Liability. EXCEPT AS OTHERWISE PROVIDED IN SECTION 11 ABOVE,
NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR ANY SPECIAL, INDIRECT, INCIDENTAL
OR CONSEQUENTIAL DAMAGES DUE TO FAILURE TO PERFORM ITS OBLIGATIONS HEREUNDER.
16.9 Attorneys' Fees. If any dispute arises between the parties with respect to
the matters covered by this Agreement which leads to a proceeding to resolve
such dispute, the prevailing party shall be entitled to receive its reasonable
attorneys' fees and out-of-pocket costs incurred in connection with such
proceeding, in addition to any other relief it may be awarded.
16.10 Headings. Headings contained in this Agreement are for convenience only,
are not a part of this Agreement, and do not in any way interpret, limit or
amplify the scope, extent or intent of this Agreement or any of the provisions
hereof.
16.11 Most Favored Nations. SCI represents that all of the prices, terms and
benefits granted by SCI under this Agreement are comparable to or better than
the equivalent terms being offered to any present or proposed customer, for
similar components, quantities, and terms. If SCI shall, during the term hereof,
enter into arrangements with any other customer providing greater benefits or
more favorable terms, SCI shall promptly notify McDATA thereof and this
Agreement shall be deemed amended to provide the same benefits or terms to
McDATA.
17. EXHIBITS
A. Products and Initial Pricing
B. Definitions
IN WITNESS WHEREOF, the parties hereto have executed this Agreement in duplicate
by their duly authorized representatives.
"SCI": SCI Systems Inc. "McDATA": McDATA Corporation
Name: /s/ ▇.▇. ▇▇▇▇▇▇ Name: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------ ------------------------
Title: VP Title: VP Manufacturing
------------------ ------------------------
Date: 6/9/92 Effective Date: 6/16/92
------------------ ----------------
10
14
EXHIBIT A
PRODUCT'S AND INITIAL PRICING
PRODUCT INITIAL PRICE ESTIMATED ANNUAL VOLUME
------- ------------- -----------------------
▇▇▇-▇▇▇▇▇▇-▇▇▇ [*] [*]
▇▇▇-▇▇▇▇▇▇-▇▇▇ [*] [*]
▇▇▇-▇▇▇▇▇▇-▇▇▇ [*] [*]
▇▇▇-▇▇▇▇▇▇-▇▇▇ [*] [*]
▇▇▇-▇▇▇▇▇▇-▇▇▇ [*] [*]
▇▇▇-▇▇▇▇▇▇-▇▇▇ [*] [*]
▇▇▇-▇▇▇▇▇▇-▇▇▇ [*] [*]
▇▇▇-▇▇▇▇▇▇-▇▇▇ [*] [*]
▇▇▇-▇▇▇▇▇▇-▇▇▇ [*] [*]
▇▇▇-▇▇▇▇▇▇-▇▇▇ [*] [*]
▇▇▇-▇▇▇▇▇▇-▇▇▇ [*] [*]
▇▇▇-▇▇▇▇▇▇-▇▇▇ [*] [*]
▇▇▇-▇▇▇▇▇▇-▇▇▇ [*] [*]
▇▇▇-▇▇▇▇▇▇-▇▇▇ [*] [*]
▇▇▇-▇▇▇▇▇▇-▇▇▇ [*] [*]
▇▇▇-▇▇▇▇▇▇-▇▇▇ [*] [*]
▇▇▇-▇▇▇▇▇▇-▇▇▇ [*] [*]
▇▇▇-▇▇▇▇▇▇-▇▇▇ [*] [*]
Listed pricing is already discounted [*] per terms agreement
(reference Section 5.3).
*Certain information on this page has been omitted and filed separately with the
Commission. Confidential treatment has been requested with respect to the
omitted portions. Asterisks within brackets denote omissions.
1
15
EXHIBIT B
DEFINITIONS
"Minimum Purchase" - MCDATA may specify SCI to purchase lot size quantities of
certain components beyond SCI's normal practice, in order to decrease unit
price.
"Unique Materials" - Material which is solely used in the manufacture of
McDATA's products. If the material is or can be used by SCI in the manufacture
of product for other customers' products, and SCI has a current purchasing
requirement for such material, the material shall not be considered unique.
"Turnkey Manufacturing" - SCI assumes responsibility for all facets of
procurement for, and manufacturing and test of, McDATA's Products. McDATA
expects SCI to act at all times in McDATA's best interest, as the manufacturing
arm of McDATA.
"Quarterly Review" - Each quarter, at a mutually agreed schedule, the parties
will meet to review pricing, performance and other issues.
"Total Cost" - 'Lifetime Cost' of a Product, including price, quality,
reliability, warranty, repair costs, leadtime/responsiveness, delivery costs,
etc.
"IPC Class 2 Standards" - Industry standards for workmanship, developed by
the Institute for Interconnecting and Packaging Electronic Circuits. Class
2 refers to General Industrial requirements.
1
16
MCDATA AUTHORIZED MINIMUM BUY LIST
PART NO. QTY. PART NO. QTY.
▇▇▇-▇▇▇▇▇▇-▇▇▇ [*] ▇▇▇-▇▇▇▇▇▇-▇▇▇ [*]
▇▇▇-▇▇▇▇▇▇-▇▇▇ [*] ▇▇▇-▇▇▇▇▇▇-▇▇▇ [*]
▇▇▇-▇▇▇▇▇▇-▇▇▇ [*] ▇▇▇-▇▇▇▇▇▇-▇▇▇ [*]
▇▇▇-▇▇▇▇▇▇-▇▇▇ [*] ▇▇▇-▇▇▇▇▇▇-▇▇▇ [*]
▇▇▇-▇▇▇▇▇▇-▇▇▇ [*] ▇▇▇-▇▇▇▇▇▇-▇▇▇ [*]
▇▇▇-▇▇▇▇▇▇-▇▇▇ [*] ▇▇▇-▇▇▇▇▇▇-▇▇▇ [*]
▇▇▇-▇▇▇▇▇▇-▇▇▇ [*] ▇▇▇-▇▇▇▇▇▇-▇▇▇ [*]
▇▇▇-▇▇▇▇▇▇-▇▇▇ [*] ▇▇▇-▇▇▇▇▇▇-▇▇▇ [*]
▇▇▇-▇▇▇▇▇▇-▇▇▇ [*] ▇▇▇-▇▇▇▇▇▇-▇▇▇ [*]
▇▇▇-▇▇▇▇▇▇-▇▇▇ [*] ▇▇▇-▇▇▇▇▇▇-▇▇▇ [*]
▇▇▇-▇▇▇▇▇▇-▇▇▇ [*] ▇▇▇-▇▇▇▇▇▇-▇▇▇ [*]
▇▇▇-▇▇▇▇▇▇-▇▇▇ [*] ▇▇▇-▇▇▇▇▇▇-▇▇▇ [*]
▇▇▇-▇▇▇▇▇▇-▇▇▇ [*] ▇▇▇-▇▇▇▇▇▇-▇▇▇ [*]
▇▇▇-▇▇▇▇▇▇-▇▇▇ [*] ▇▇▇-▇▇▇▇▇▇-▇▇▇ [*]
▇▇▇-▇▇▇▇▇▇-▇▇▇ [*] ▇▇▇-▇▇▇▇▇▇-▇▇▇ [*]
▇▇▇-▇▇▇▇▇▇-▇▇▇ [*] ▇▇▇-▇▇▇▇▇▇-▇▇▇ [*]
▇▇▇-▇▇▇▇▇▇-▇▇▇ [*] ▇▇▇-▇▇▇▇▇▇-▇▇▇ [*]
▇▇▇-▇▇▇▇▇▇-▇▇▇ [*] ▇▇▇-▇▇▇▇▇▇-▇▇▇ [*]
▇▇▇-▇▇▇▇▇▇-▇▇▇ [*] ▇▇▇-▇▇▇▇▇▇-▇▇▇ [*]
▇▇▇-▇▇▇▇▇▇-▇▇▇ [*] ▇▇▇-▇▇▇▇▇▇-▇▇▇ [*]
▇▇▇-▇▇▇▇▇▇-▇▇▇ [*] ▇▇▇-▇▇▇▇▇▇-▇▇▇ [*]
▇▇▇-▇▇▇▇▇▇-▇▇▇ [*]
[*] Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. Asterisks within brackets denote omissions.
2
17
SCI SYS.
PWA FORECAST
5/25/92 values based on 0392 pricing
DOES NOT SHOW T1 ORDERS
ON ON TOTAL
PART NUMBER ORDER HAND JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY QTY.
--------------------------------------------------------------------------------------------------------------- --------
[*] [*] [*] [*] [*] [*] [*] [*] [*]
[*] [*] [*] [*] [*] [*] [*] [*] [*] [*] [*] [*] [*]
[*] [*] [*] [*] [*] [*] [*] [*]
[*] [*] [*] [*] [*] [*] [*] [*]
[*] [*] [*] [*] [*] [*] [*] [*]
[*] [*] [*] [*] [*] [*] [*] [*] [*] [*] [*] [*] [*]
[*] [*] [*] [*] [*] [*] [*]
[*] [*] [*] [*] [*] [*] [*] [*] [*] [*]
[*] [*] [*] [*] [*] [*] [*] [*] [*] [*] [*]
--------------------------------------------------------------------------------------------------------------- --------
SUBTOTAL [*] [*] [*] [*] [*] [*] [*] [*] [*] [*] [*] [*] [*] [*] [*]
[*] [*] [*] [*] [*] [*] [*] [*] [*] [*] [*] [*] [*]
ON ON TOTAL
PART NUMBER ORDER HAND JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY QTY.
--------------------------------------------------------------------------------------------------------------- --------
[*] [*] [*] [*]
[*] [*] [*] [*] [*] [*] [*] [*] [*] [*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*] [*] [*] [*] [*] [*] [*] [*] [*]
[*] [*] [*] [*] [*] [*] [*] [*] [*] [*] [*] [*] [*] [*]
[*] [*] [*] [*] [*] [*] [*] [*] [*] [*] [*] [*] [*]
[*] [*] [*] [*] [*] [*] [*] [*] [*] [*] [*] [*]
[*] [*] [*] [*] [*] [*] [*] [*] [*] [*] [*] [*] [*]
[*] [*] [*] [*] [*] [*] [*] [*] [*] [*] [*] [*] [*] [*]
[*] [*] [*] [*] [*] [*] [*] [*] [*] [*]
--------------------------------------------------------------------------------------------------------------- --------
[*] [*] [*] [*] [*] [*] [*] [*] [*] [*] [*] [*] [*] [*] [*] [*]
[*] [*] [*] [*] [*] [*] [*] [*] [*] [*] [*] [*] [*]
--------------------------------------------------------------------------------------------------------------- --------
GRAND TOTAL [*] [*] [*] [*] [*] [*] [*] [*] [*] [*] [*] [*] [*] [*] [*]
[*] [*] [*] [*] [*] [*] [*] [*] [*] [*] [*] [*] [*]
[*] Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. Asterisks within brackets denote omissions.
3
18
ADDENDUM #1 TO
MANUFACTURING AGREEMENT # 01-92-03-0A
BETWEEN
McDATA CORPORATION
AND
SCI SYSTEMS, INC
23 MAY 1996
19
This Addendum is entered into by McDATA Corporation ("McDATA"), having its
principal place of business located at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇▇-▇▇▇▇, and SCI Systems, Inc. ("SCI"), ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇.,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇.
WHEREAS, McDATA and SCI have entered into Manufacturing Agreement 01-92-03-0A
executed in full and effective 16 June 1992;
WHEREAS, McDATA and SCI have mutually agreed to enter into additional agreements
and alterations to this agreement as part of an enlargement to the business
relationship;
WHEREAS, McDATA and SCI have agreed to restate certain portions of said
agreement for clarity;
WHEREAS, McDATA desires to contract for SCI's services in manufacturing the
products as listed in the revised Exhibit A hereto;
WHEREAS, McDATA and SCI agree that the provisions of this Addendum will take
precedence over the original agreement in the event of a conflict;
NOW THEREFORE, the aforementioned agreement is amended and the parties hereto
agree as follows:
First: Delete Paragraph 3.2, Forecasts, through 3.5, Liabilities, and insert
in lieu thereof, the following:
3.2 Forecasts. McDATA expects to purchase the estimated quantities outlined in
Exhibit A to this Agreement. Concurrent with the signing of this Agreement, as
modified herein, McDATA shall provide SCI with a forecast of Products, specified
by McDATA assembly number, for the [*] period. Such forecast will be updated
[*], and ensure that the forecast period for each assembly is commensurate with
the maximum lead time for each respective assembly, which will change from time
to time. In no event will the forecast period be less than [*]. Except for those
quantities for the next [*], which normally would coincide with quantities for
which McDATA has issued Purchase Order(s), such forecast shall be considered
non-binding unless non-cancelable, non-returnable items are procured as directed
by McDATA.
3.3 Purchase Order. McDATA shall provide Purchase Orders for [*] of forecast.
SCI shall utilize and act upon McDATA's forecast for the upcoming [*] in the
same manner and with the same liability between the parties in the event there
are any administrative delays in the issuance of Purchase Orders for this time
period. All Purchase Orders shall state the item number, quantity ordered, unit
of measure, McDATA assembly number, revision level, description of item, unit
and extended price, delivery dates, method of shipment, and tax status of each
shipment to a location. SCI shall acknowledge receipt and acceptance / rejection
of all Purchase
--------
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. Asterisks within brackets denote omissions.
20
Orders within [*]. No term or condition on SCI's standard quotation
(notwithstanding pricing assumptions or clarifications thereto) or McDATA's
standard purchase order will modify this Agreement.
3.4 Adds, Reschedules and Cancellations. SCI agrees to provide for resources
sufficient to permit increases up to [*] of Forecast / Purchase Order quantity
of Products which fall within [*] from delivery date, beginning [*] after first
delivery of a newly introduced assembly using SCI purchased components. McDATA
may place such Purchase Orders for delivery of the additional quantities between
[*] from order date. McDATA must approve, in writing, any expedite charges,
non-AVL parts substitutions, or any other cost variances to current quote.
McDATA may defer scheduled deliveries for a given time period prior to delivery
in accordance with the following schedule:
---------------------------------------------------------
Weeks from Deferral Comments
Delivery Allowed
(One-Time)
---------------------------------------------------------
0 - 4 Wks [*] Exceptions Only as
Mutually Agreed Upon
---------------------------------------------------------
>4 - 8 Wks [*] Multiple Pushes Only
as Mutually Agreed Upon
---------------------------------------------------------
>8 - 12 Wks [*] Multiple Pushes Only
as Mutually Agreed Upon
---------------------------------------------------------
>12 Weeks [*] Multiple Pushes Only
as Mutually Agreed Upon
---------------------------------------------------------
SCI will plan capacity to service McDATA's forecast requirements. SCI requires
adequate notification time to reallocate resources in the event of cancellations
in order to avoid charges that would otherwise result due to idle resources.
McDATA may therefore cancel quantities forecasted, subject to excess liabilities
described in 3.5 below, in accordance with the following schedule:
---------------------------------------------------------
Weeks from Deferral Comments
Delivery Allowed
(One-Time)
---------------------------------------------------------
0 - 8 Wks [*] Exceptions Only as
Mutually Agreed Upon
---------------------------------------------------------
>8 - 12 Wks [*] Exceptions Only as
Mutually Agreed Upon
---------------------------------------------------------
>12 Weeks [*] Exceptions Only as
Mutually Agreed Upon
---------------------------------------------------------
3.5 Liabilities. McDATA agrees to assume liability for materials ordered to
forecast which have manufacturer's lead times beyond open Purchase Orders,
provided SCI makes reasonable
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. Asterisks within brackets denote omissions.
21
efforts to cancel, return, restock or otherwise reallocate obsolete materials.
McDATA assumes liability for any Minimum Order Quantity ("MOQ") specified by
McDATA beyond ordinary standard manufacturer MOQ (e.g., "tape and-reel"), in an
effort to reduce part cost. McDATA's total liability shall normally be five
percent (5%) above the cost of materials remaining in SCI's inventory, unique to
McDATA's Products or the result of MOQs, which SCI is either committed to
purchase or is on-hand and are non-returnable or non-cancelable. As an incentive
to expedite the issuance of a Purchase Order from McDATA to SCI, the five
percent (5%) markup shall be reduced to three percent (3%) in the event McDATA
provides a Purchase Order that authorizes SCI to immediately ship and invoice
the total amount of McDATA's obligation, including (3%) markup, no later than 10
working days from the date the final excess list is provided to McDATA. SCI
shall provide a material exposure report when requested by McDATA, but no more
frequently than weekly, to allow McDATA to monitor material liability.
Second: Delete Paragraph 4.2, Price Adjustments, and insert in lieu thereof,
the following:
4.2 Price Adjustments. The prices for Products listed in Exhibit A shall be
reviewed by SCI and McDATA [*] and updated for [*]. As part of this review, SCI
will roll standards to reflect current market conditions and provide McDATA with
detailed costed BOMs. SCI shall make every effort to provide McDATA with
continuous reductions in Total Cost, and McDATA shall cooperate to the maximum
extent possible to achieve these reductions. Such repricing activities will be
subject to the following terms, effective upon execution of this agreement:
4.2.1 Regarding the DVP Port and Laser Assemblies (P/Ns ▇▇▇-▇▇▇▇▇-▇▇▇ and
470-000337-500). SCI shall pass through the [*] associated with the
transceivers, part numbers ▇▇▇-▇▇▇▇▇▇-▇▇▇ and ▇▇▇-▇▇▇▇▇▇-▇▇▇. The prices
negotiated for the two aforementioned assemblies, less the transceiver baseline
cost of [*] ($[*]/each) and $[*] ($[*]/each), respectively, shall be [*] by
future price decreases (or increases) of ONLY the transceivers. Cypress
(▇▇▇-▇▇▇▇▇▇-▇▇▇ and 715-000373-000) [*], to the extent negotiated by McDATA in
support of the aforementioned assemblies, shall be [*] in [*].
4.2.2 Notwithstanding the unique circumstances identified in 4.2.1 above,
SCI shall retain all SCI caused price reductions for a period of [*] from the
date such reductions are realized by SCI, after which time such reductions will
be passed on to McDATA in their entirety. Such reductions offered will be [*]
(hereafter referred to as "[*]") of [*] (excluding any [*] separately authorized
by McDATA) that are realized during the same time period.
4.2.3 Net cost reductions achieved solely due to McDATA's cost reduction
efforts shall be passed on to McDATA in their entirety and made effective at an
appropriate cut-in time.
4.2.4 Net cost reductions achieved due to SCI and McDATA's combined cost
reduction efforts shall be shared ([*]) with McDATA for a period of [*] from an
appropriate cut-in time, after which time shall be passed on to McDATA in their
entirety.
---------------------
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. Asterisks within brackets denote omissions.
22
4.2.5 Prices quoted, and Purchase Orders issued thereunder, shall include
the discounted purchase prices in support of the [*] payment terms and described
in paragraph 5.3 hereto.
4.2.6 Prices for assemblies are exclusive of No Trouble Found (NTF)
warranty returns. As such, McDATA and SCI have agreed that, to the extent that
SCI's NTFs, exclusive of McDATA's allowable "lot rejects", exceed the number of
McDATA's pre-▇▇▇▇ test failures that are subsequently verified by SCI McDATA
agrees to pay SCI for on a monthly basis. SCI shall keep records by serial
number relative to the NTFs, and McDATA shall keep records by serial number
relative to test failures on SCI assemblies that were verified by SCI. The net
NTFs over-and-above the McDATA documented and SCI verified test failures shall
be invoiced to McDATA at a mutually agreed upon "NTF" rate for each assembly in
question. McDATA's objective is to jointly verify and virtually eliminate the
occurrence of this type of NTF.
4.2.7 Component price increases that are unavoidable by SCI / McDATA shall
be [*] to the extent that they are not offset by any reductions in accordance
with 4.2.2 above. These component price increases must be approved by McDATA
prior to component purchase. Such approvals will be jointly expedited as
necessary to support McDATA schedules.
Third: Add Paragraph 4.4, Time & Material Authorizations, as follows:
4.4 Time and Material Authorizations. McDATA shall have the option, in the event
a nonwarranty repair action is requested, to authorize SCI to proceed with
debug, repair and retest as necessary to repair an assembly being manufactured,
or will be manufactured, at SCI. Such authorization shall be based on (a) labor
incurred for repair and test, at the initial rate of $[*] per hour, including
fractions thereof, and (b) material reimbursement at the current standard cost.
Fourth: Add Paragraph 8.4, Lot Rejection Criteria, and 8.5, Parts Reclamation,
as follows:
8.4 Lot Rejection Criteria. McDATA shall inspect lots delivered by SCI and,
using generally accepted criteria and lot sampling plans (such as C=0,
MIL-STD-105), reject lots delivered by SCI based on said sampling plans,
provided that a "lot" (a) shall not exceed [*] of SCI product deliveries on all
but the DVP Port Assembly, and (b) shall not exceed [*] of SCI product
deliveries for the DVP Port Assembly. This provision was part of SCI's price
reduction strategy to (a) provide early identification of potential process
problems to the mutual benefit of both SCI and McDATA, and (b) reduce the SCI
cost associated with processing and sorting assembly returns in extended,
consolidated lots.
8.5 Parts Reclamation. Undamaged "A" parts can be re-used if assemblies are
scrapped, provided: (1) the "A" parts targeted for reclamation are not the
reason for the scrap, (2) the
-----
*Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. Asterisks within brackets denote omissions.
23
removal / reuse can be performed to industry standards, and (3) McDATA provides
written approval, which shall not be unreasonably withheld.
Fifth: Under Paragraph 9.1. Product Warranty, replace the words "[*] from the
date of delivery" with the words "[*] from the date of delivery". Insert after
the first sentence, the sentence "The material warranty provided hereunder shall
in no event exceed the warranty provided by the manufacturer in view of all
environmental stress screening required by McDATA." Add the sentence, "▇▇▇▇
failures, such as temperature, that cannot be duplicated by SCI at ambient
conditions using SCI test equipment shall be McDATA's responsibility."
Sixth: Delete the obsolete SCI address and facsimile number from Paragraph
16.5, Notices, and insert in lieu thereof, the following:
To SCI Systems, Inc.: With an additional copy to:
SCI Systems, Inc. SCI Systems, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇-▇▇▇▇
Attn: Program Manager Attn: Vice President, Plant Manager
Facsimile # (▇▇▇) ▇▇▇-▇▇▇▇
Seventh: Replace Exhibit A, Products and Initial Pricing, with Revision 1 to
Exhibit A, Product Volumes and Pricing, dated 01 May 1996, in its entirety. Note
that the "Director" pricing listed shall be effective concurrent with the first
delivery of Turnkey (i.e., SCI acquired material) DVP Assemblies by SCI, since
the discounted prices assume concurrent material purchase by SCI.
Eighth: Add Section 18, Just-in-Time Scheduling, as follows:
18. JUST-IN-TIME (JIT) SCHEDULING.
McDATA agrees to assist SCI as necessary to achieve JIT delivery of the DVP Port
Assembly and DVP Laser Assembly's LED and Laser Transceivers. This was an
integral part of SCI's price reduction strategy, and will include SCI/McDATA
joint efforts on other "A" parts as mutually agreed upon.
Ninth: SCI agrees, as part of the consideration for transferring the DVP Port
Assembly to SCI, to absorb the Non-Recurring Engineering (NRE) costs associated
with the DVP assembly for the initial transition only. Subsequent changes or
revisions and updates will be handled as normal, and McDATA agrees to pay for
the NRE costs for the DVP Laser Assembly as quoted by SCI.
---------------------
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. Asterisks within brackets denote omissions.
24
Tenth: Add Section 19, DVP Transition Plan, as follows:
19. DVP TRANSITION PLAN
19.1 Overlapping Production. McDATA agrees to pursue overlapping production
from both the current source and SCI for at least thirteen (13) weeks from the
first deliveries made by SCI, to allow adequate time to realize full production
rate and quality efficiencies.
19.2 Material Risk Mitigation. SCI agrees to plan material availability at two
weeks prior to the requisite kit release date as defined in 19.3 below. As part
of this strategy, SCI will advise McDATA of those long lead materials and
quantities thereof that must be obtained from the existing source in order to
meet the prescribed McDATA transition schedule. McDATA will ensure such material
acquisitions (via SCI Purchase from McDATA or PO-for-PO replacement and
assumption of orders) are accomplished at or below the SCI quoted standards,
when reviewed in the aggregate. If this is not feasible, McDATA agrees to
promptly reimburse SCI for such variances at their actual cost, or to amortize
such variances into the Assembly unit prices, inclusive of all ▇▇▇▇-ups, as
mutually agreed between SCI and McDATA. In addition, SCI will utilize all
resources, including searches of other SCI plants, if shortages are identified
by McDATA that may endanger the scheduled transition. Should acquisitions be
required above the standard cost proposed by SCI as a result of inside lead time
requirements, such Purchase Price Variances (PPVs) shall be submitted to, and
promptly approved or rejected by, McDATA. SCI and McDATA will investigate
alternatives to PPVs rejected by McDATA.
19.3 Production Risk Mitigation. Upon issuance of a Purchase Order to SCI for
the Port Assemblies, McDATA shall within 10 working days thereafter meet with
SCI at a mutually acceptable time and place to disclose all relevant
non-proprietary manufacturing process control data, test data or other
reliability or failure related data that may be useful in avoiding start up
problems on known areas of difficulty. SCI agrees to initially use an extended
three (3) week cycle time until such time SCI is satisfied that the production
rate and quality are sufficient to support McDATA's scheduled deliveries,
exclusive of any verified warranty returns thereunder. SCI will make every
effort to ensure that a substantial portion of the required assembly production
is completed within the first ten (10) days of cycle time. Process problems
related to the manufacture and test of the port assemblies shall be identified
to McDATA upon discovery to ensure McDATA involvement and transfer of knowledge
relative to prior manufacturing problems and difficulties historically
encountered by the previous manufacturer. SCI agrees to work with McDATA to ramp
the production volumes up to the desired run rate over a thirteen (13) week
period, barring no unforeseen material availability problems.
19.4 Test Development and Risk Mitigation. McDATA shall participate and
cooperate with SCI to rapidly develop and fabricate test fixtures and programs
suitable for the DVP assemblies. Such cooperation shall prioritize technical
information needs by SCI to prevent negative impacts to the transition schedule
as established with McDATA. SCI will ensure that established test development
schedules are managed and maintained, including any subcontracted assistance and
purchased fixtures.
25
19.5 ESS Thermal Chamber. SCI has identified an 18 week lead time for an ESPEC
oven that would be completely compatible with SCI's existing chamber. Inasmuch
as this lead time does not support McDATA's desired transition schedule, SCI and
McDATA will work together to ensure that a work around plan is established for
an interim solution for ESS testing.
19.6 Non-Warranty Support. SCI agrees to support McDATA's potential need for
repair or upgrade of predecessor assemblies during or after the transition
period on a Non-Warranty, Time and Materials basis as mutually scheduled. Such
support will be provided on a non-interference basis to McDATA's Production
assemblies at SCI, unless otherwise directed by McDATA.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement in duplicate
by their duly authorized representatives.
SCI SYSTEMS, INC. McDATA CORPORATION
By: /s/ ▇.▇. ▇▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
--------------------------- ----------------------------
Name: ▇. ▇. ▇▇▇▇▇▇ Name: ▇▇▇▇ ▇▇▇▇▇▇
--------------------------- ----------------------------
Title: VP/Plant MGR Title: VP/MFR
--------------------------- ----------------------------
Date: 7/9/96 Date: 6/17/96
--------------------------- ----------------------------
26
EXHIBIT A (Revision 1)
23 May 1996
Product Volumes and Pricing
(Note 1)
PRODUCT INITIAL PRICE ESTIMATED ANNUAL VOLUME
002-001203 [*] [*]
470-000324 [*] [*]
470-000325 [*] [*]
▇▇▇-▇▇▇▇▇▇-▇▇▇ [*] [*]
470-000329 [*] [*]
470-000337 [*] [*]
470-000341/D [*] [*]
470-000342 [*] [*]
470-000350 [*] [*]
470-000351 [*] [*]
470-000352 [*] [*]
470-000353 [*] [*]
470-000354 [*] [*]
Note 1: Controller Product that is going end-of-life is not listed above, but is
covered by McDATA Purchase Orders for the full requirements known to date. The
terms of this agreement apply to all product purchased by McDATA, including
Controller Product.
Note 2: These prices will become effective upon delivery of [*] based on SCI
turnkey material purchases, or as otherwise mutually agreed by McDATA and SCI.
Note 3: SCI agrees to absorb the NRE associated with the 470-000341 assembly and
is therefore owned by SCI. Subsequent replacement and update due to normal
useage shall be McDATA's responsibilities. McDATA will pay for NRE as quoted by
SCI on all other assemblies listed.
Note 4: Pricing listed is based on: Assv 470-000341 Assv 470-000337
Transceiver P/N ▇▇▇-▇▇▇▇▇▇-▇▇▇ [*] [*]
Transceiver P/N ▇▇▇-▇▇▇▇▇▇-▇▇▇ [*] [*]
Cypress P/N ▇▇▇-▇▇▇▇▇▇-▇▇▇ [*] [*]
Cypress P/N ▇▇▇-▇▇▇▇▇▇-▇▇▇ [*] [*]
---------------------
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions. Asterisks within brackets denote omissions.
27
ADDENDUM #2
MANUFACTURING AGREEMENT #01-92-03-0A
BETWEEN MCDATA CORPORATION AND SCI TECHNOLOGY, INC., D.B.A. SCI SYSTEMS, INC.
30 APRIL 1998
This Addendum is entered into by McDATA Corporation ("McDATA"), having its
principal place of business located at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇▇-▇▇▇▇, and SCI Technology, Inc. ("SCI"), ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇.,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇.
WHEREAS, McDATA and SCI have entered into Manufacturing Agreement 01-92-03-0A
executed in full and effective 16 June 1992, as amended on 23 May 1996 via
Addendum thereto;
WHEREAS, McDATA and SCI have mutually agreed to enter into additional agreements
and alterations to this agreement as part of further refinement of the business
relationship;
WHEREAS, McDATA and SCI have agreed to restate certain portions of said
agreement for clarity;
WHEREAS, McDATA and SCI agree that the provisions of this Addendum will take
precedence over the original agreement and addendum thereto in the event of a
conflict;
NOW THEREFORE, the aforementioned agreement is amended and the parties hereto
agree as follows:
FIRST: Add Item 20, Creation of Component Inventory Buffers, as follows:
20.0 CREATION OF COMPONENT INVENTORY BUFFERS.
McDATA may identify critical components for which buffer inventory quantities
will need to be established and/or maintained. This will be accomplished using
mutually written agreed upon approaches which may include, but not be limited
to, any or all the following approaches: Independent MRP demand with
corresponding McDATA P.O. coverage, increased shrinkage percentages, and
increased wait days. Consideration for the carrying costs of these components
shall be included in the current product pricing as identified in SCI quotations
and corresponding McDATA purchase orders.
McDATA agrees to be liable for the additional risk associated with the above
inventory buffers, including but not limited to parts obsolescence, cancellation
inventory costs, delays in realization of market price fluctuations (up or
down), and potential carrying costs in the event of schedule pushes.
Such inventory liabilities are further defined in the existing agreement and
addendum thereto.
SECOND: Delete Paragraphs 4.2.2 through 4.2.4, under Price Adjustments, and
insert in lieu thereof, the following:
4.2.2 Notwithstanding the unique circumstances identified in 4.2.1 above,
SCI and McDATA shall equally [*] share all SCI caused price reductions. The
residual SCI retained price reductions shall normally rollover to the next
quarter's price reduction activities, except that all SCI retained price
reductions will be zeroed out and passed on to McDATA with the pricing provided
for the first calendar quarter of each year (Jan., Feb. and Mar.). Quarterly
reductions offered will be net (hereafter referred to as "net cost reductions")
of any increases in standard costs (excluding any expedite costs separately
authorized by McDATA) that are realized during the same time period.
4.2.3 Net cost reductions achieved solely due to McDATA's cost reduction
efforts shall be passed on to McDATA in their entirety and made effective at an
appropriate cut-in time.
4.2.4 Net cost reductions achieved due to SCI and McDATA's combined cost
reduction efforts shall be shared [*] in the same manner as Paragraph 4.2.2
above.
*Certain information on this page has been omitted and filed separately with the
Commission. Confidential treatment has been requested with respect to the
omitted portions. Asterisks within brackets denote omissions.
28
THIRD: Replace Paragraph 4.4, TIME & MATERIAL AUTHORIZATIONS, as follows to
recognize current rates in effect at SCI:
4.4 TIME AND MATERIAL AUTHORIZATIONS.
McDATA shall have the option, in the event a non-warranty repair action is
requested, to authorize SCI to proceed with up-level, rework, debug, repair
and/or retest as necessary to an assembly which may or may not have been built
by SCI. Such authorization shall be based on (a) labor incurred for repair and
test, at the current rate of [*] including fractions thereof, and (b) material
reimbursement at the current standard cost.
FOURTH: Add Section 21, ADMINISTRATION OF ▇▇▇▇ FAILURES, as follows:
21.0 ADMINISTRATION OF ▇▇▇▇ FAILURES.
SCI has agreed to perform additional debug and troubleshoot on ▇▇▇▇ related
failures that were previously serviced by McDATA or returned to SCI. SCI and
McDATA have agreed to the cost associated with such support, based on a planned
level of effort of two (2) full time technicians. Such costs and failure
analysis activity will be reviewed by McDATA and SCI as part of the quarterly
price reviews with the necessary adjustments to assure that the agreed upon
costs are fairly administered and SCI is meeting its RMA turnaround goals. If
SCI does not meet its goals for 2 consecutive months, SCI agrees to negotiate
appropriate forfeiture of up to 100% of the agreed upon costs of these two (2)
technicians until the target is met.
Performance against the initial RMA turnaround goals listed below shall be
separately measured and reported monthly. Data provided monthly shall be
Average Age for all RMA assets that have been at SCI longer than 2 weeks, and
the number of delinquent (age exceeds goal) RMA assemblies outstanding in each
category below.
21.1 Two (2) weeks for receiving inspection rejections,
21.2 Four (4) weeks for all in-process rejections, and
21.3 Six (6) weeks for ▇▇▇▇ related failures.
SCI & McDATA must agree on specific closure plans for ▇▇▇▇ related failures
that are not closed within 30 days. Unusual circumstances (unusual quantities
or technical issues) may result in alternate target schedules as mutually
agreed upon. Should McDATA and SCI find that the volumes being returned due to
▇▇▇▇ related failures exceed the reasonable capacity of the two technicians,
alternate arrangements shall be made and pricing associated therewith
negotiated separately.
FIFTH: This addendum extends the terms and conditions of the original
Manufacturing Agreement, as modified by all subsequent addendums, including
this one, for a period of one year as allowed under section 2 of the agreement,
through 31 December 1998. This agreement will automatically renew in thirty
(30) day increments if obligations continue to be made beyond the existing
term, and if neither party notifies the other of intentions to cancel or
renegotiate such agreement at least sixty (60) days prior to the expiration
date.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement in
duplicate by their duly authorized representatives.
SCI TECHNOLOGY, INC. McDATA CORPORATION
By: /s/ ▇▇▇▇▇ ▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
--------------------- ----------------------
Name: ▇▇▇▇▇ ▇▇▇▇ Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: V.P. & Plant Manager Title: Purchasing Manager
Date: 4/30/98 Date: 5/6/98
*Certain information on this page has been omitted and filed separately with the
Commission. Confidential treatment has been requested with respect to the
omitted portions. Asterisks within brackets denote omissions.