EXHIBIT 10.18
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TABLE OF CONTENTS
ARTICLE 1 OBJECT OF THE AGREEMENT..............................................1
ARTICLE 2 PRODUCT..............................................................1
ARTICLE 3 PURCHASE COMMITMENT AND SUBSEQUENT PURCHASE ESTIMATES................2
ARTICLE 4 ORDERS...............................................................3
ARTICLE 5 PRICES...............................................................3
ARTICLE 6 TERMS OF PAYMENT.....................................................4
ARTICLE 7 TERMS OF DELIVERY....................................................5
ARTICLE 8 PACKING..............................................................5
ARTICLE 9 DELIVERY TIMES.......................................................5
ARTICLE 10 RESCHEDULING AND CANCELLATION.......................................6
ARTICLE 11 INSPECTIONS.........................................................7
ARTICLE 12 QUALITY REQUIREMENTS................................................8
ARTICLE 13 FACILITY SURVEYS....................................................8
ARTICLE 14 WARRANTY............................................................8
ARTICLE 15 PRODUCT LIABILITY...................................................9
ARTICLE 16 DISCONTINUATION OF PRODUCTION......................................10
ARTICLE 17 ENVIRONMENTAL MANAGEMENT...........................................10
ARTICLE 18 INDUSTRIAL PROPERTY RIGHTS AND PATENT INDEMNIFICATION..............10
ARTICLE 19 CONFIDENTIALITY....................................................11
ARTICLE 20 FORCE MAJEURE......................................................12
ARTICLE 21 EFFECTIVE DATE AND TERM............................................12
ARTICLE 22 PREMATURE TERMINATION..............................................13
ARTICLE 23 APPLICABLE LAW AND SETITLEMENT OF DISPUTES.........................14
ARTICLE 24 FINAL PROVISIONS...................................................14
APPENDIX 1 PARTS/PRODUCTS PURCHASE VOLUMES AND PRICES
APPENDIX 2 SPECIFICATIONS
APPENDIX 3 QUALITY REQUIREMENTS
APPENDIX 4 ROLLING FORCAST
[*] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
PRODUCTION AGREEMENT
TRW Inc., a corporation incorporated in Ohio (hereinafter referred to as
the "Buyer") of the first part and Endwave Corporation, a Delaware corporation
(hereinafter referred to as the "Seller") of the second part have as parties
(hereinafter referred to as the "Parties") of this agreement made and entered
into this Production Agreement (hereinafter referred to as the "Agreement") as
of the 31st day of March, 2000.
WITNESSETH THAT
WHEREAS Buyer and Nokia Telecommunications OY ("Nokia") previously entered
into a Production Agreement, dated as of July 23, 1996 (the "Nokia Agreement")
whereby Buyer agreed to provide to Nokia the transceiver modules referred to
herein.
WHEREAS Buyer and Buyer's previously wholly owned subsidiary, TRW Milliwave
Inc. ("MW"), entered into purchase orders, whereby MW would perform the work
under the Nokia Agreement for Buyer (the "MW Purchase Orders").
WHEREAS MW was acquired by Seller on the date hereof pursuant to the terms
of that certain Agreement and Plan of Merger, dated February 28, 2000, by and
among Buyer, Seller and MW.
WHEREAS Buyer and Seller wish to terminate the MW Purchase Orders and enter
into this Agreement, whereby Seller will perform the work under the Nokia
Agreement for Buyer.
NOW THEREFORE THE PARTIES HERETO HEREBY AGREE AS FOLLOWS:
ARTICLE I
OBJECT OF THE AGREEMENT
The Seller wishes to sell to the Buyer and the Buyer wishes to purchase
from the Seller, in accordance with the terms and conditions hereof, certain
parts (hereinafter referred to as "Product" or "Products") which are to be
ordered by the Buyer from time to time and which are specified in Appendix 1
hereto and which are manufactured and/or marketed by the Seller in accordance
with the specifications (HEREINAFTER REFERRED TO AS "Specifications") provided
in Appendix 2 hereto.
ARTICLE 2
PRODUCT
2.1 The Products to be supplied hereunder are specified in Appendix 1 hereto.
2.2 The Parties may, upon mutual agreement, amend Appendix 1 to include any new
item to, or to delete any item from the definition of Product.
2.3 Notwithstanding Clause 2.2 above, the Buyer may, upon notice to the Seller,
delete any item from the definition of Product for the following reasons:
(1) Standardization of the Buyer's components and/or products;
(2) The particular item may no longer be used by the Buyer due to
changes in production, production methods and/or products; and
(3) The particular item does not meet the Specifications and/or causes
serious quality problems in the Buyer's products.
2.4 Appendix 1 hereto includes a list of the Products and Buyer-specific
components thereof which the parties mutually agree shall be kept in buffer
stock by the Seller. The Parties may mutually agree to amend the buffer stock
levels and to add new Products and Buyer-specific components to be kept in
buffer stock by he Seller.
2.5 The Seller agrees to inform the Buyer of any export or re-export
restrictions relating to the Products
2.6. The Seller agrees that it will not make, have made, use or sell under the
patents or using the technical data generated under the Development Agreement,
dated as January 8, 1996, between TRW and Nokia (the "Development Agreement"),
as specifically set forth in Article 17 of the Development Agreement, Buyer or
Nokia-specific 18 GHz or 38 GHz package designs, ____ Buyer or Nokia-specific
transceiver modules or Buyer or Nokia-specific DC/ALC/IF board designs developed
as a result of performance under the Development Agreement to parties other than
the Buyer or Nokia, without the express written consent of the Buyer.
ARTICLE 3
PURCHASE COMMITMENT AND SUBSEQUENT PURCHASE ESTIMATES
3.1 The Seller hereby agrees to sell to the Buyer and the Buyer hereby agrees
to buy from the Seller, on and subject to the terms and conditions contained in
this Agreement, the Products listed in Appendix 1.
3.2 The Buyer shall buy from the Seller and Seller agrees to sell the Buyer no
less than the minimum quantities of Products set forth in Appendix 1.
3.3 Other than with respect to the minimum quantities of Products as referenced
in Clause 3.2 above, the Parties hereto acknowledge that the purchase volumes
determined in Appendix 1 are regarded as estimates only based on the best
assumptions of the Buyer, it being agreed however, that under no circumstances,
except as set forth in Clause 3.2 above, shall such estimates be regarded as
binding purchase orders on behalf of the Buyer hereunder.
3.4 Notwithstanding the before said under Clause 3.3, the Buyer may provide the
Seller with a specific purchase forecast for a fixed period of time as shall be
agreed from time to time between the Parties. Such purchase forecast shall not,
however, be regarded as a binding order.
ARTICLE 4
ORDERS
4.1 The Buyer shall place written orders for the Products by telefax. The
Seller shall forthwith and not later than one (1) week thereafter send the Buyer
and Buyer's designee, Nokia, a confirmation of the order. The Seller shall not
have the right to refuse to supply the Parts ordered by the Buyer in accordance
with the purchase quantities referred to in Clause 3.2 above.
4.2 In case either the Buyer's order or the Seller's confirmation of order
contains terms and conditions not mutually agreed upon between the Parties as
set forth herein, such terms and conditions shall be regarded null and void in
respect of such order.
ARTICLE 5
PRICES
5.1 RESERVED
5.2 The prices are specifically determined in Appendix 1 hereto.
5.3 The prices as set forth in Appendix 1 shall remain unchanged during the
period identified therein.
Notwithstanding the beforesaid, it is agreed however, that in case the
Buyer exceeds the estimated purchase quantities referred to in Clause 3.2 above,
then the fixed prices shall be renegotiated to take into accord the revised
purchase quantities; in the case where the Buyer does not meet the estimated
purchase quantities referred to in Clause 3.2 above, then the fixed prices also
shall be renegotiated.
5.4 [Reserved]
5.5 All changes in prices shall become effective for all orders placed after
such change in price.
5.6 All prices are exclusive of all taxes and expressed in USD. All duties,
levies and income taxes imposed by any governmental authorities of the United
States in respect of payments due herein shall be to the account of Seller. All
duties, levies and taxes imposed by the authorities of Finland in respect of
payments due herein shall be to the account of Buyer.
ARTICLE 6
TERMS OF PAYMENT
The Buyer shall pay for the Products within sixty (60) days from the date
of the Seller's invoice, provided always, that the Buyer or Buyer's designee,
Nokia, has, prior to payment, received the Products in agreed amounts and in
acceptable condition; provided, however, that the Buyer or Buyer's designee,
Nokia, shall advise the Seller, within two (2) weeks of its receipt of the
Products, if the Products are not in acceptable condition. Payment shall be made
within sixty (60) days of Buyer's receipt of Seller's invoice for the relevant
Products by electronic transfer of immediately available funds to Seller's
account as follows:
[ADD ENDWAVE ACCT INFO]
In the event that payment is not made within such sixty (60) days, Buyer
shall pay a penalty of twelve (12) per cent per annum, not to exceed the rate of
one (1) per cent per month, of the amount owed to Seller.
ARTICLE 7
TERMS OF DELIVERY
7.1 The terms of delivery are:
FCA loaded Diamond Springs, CA. Incoterm ECA is modified pursuant to
paragraph 7.3.
7.2 The forwarding agent in Finland is Oy Huolintakeskus Ab.
The forwarding agent in USA is Xxxxx Worldwide.
7.3 Notwithstanding Clause 7.1 hereof, risk of loss, title to, beneficial
ownership of, right of possession to, and all property rights in the Products to
be delivered hereunder shall remain with the Seller and pass to Buyer's
designee, Nokia, at the point of entry into Finland (but prior to unloading or
customs inspection at such point).
ARTICLE 8
PACKING
Products are to be packed properly to withstand transportation and when
applicable, as required and instructed by the Buyer. Prices for the Products
shall include the cost of packing and/or protection required to prevent damage
to the Products during transportation. The Seller agrees to indemnify the Buyer
against any damage that the Products may suffer due to improper packing.
ARTICLE 9
DELIVERY TIMES
9.1 The agreed delivery times are of the essence in this Agreement.
9.2 The schedule terms are as described in Appendix 4. Shipment shall be made
strictly as per the orders (requested quantity and delivery time).
9.3 In case the Seller cannot deliver the Products in accordance with the
agreed delivery time, the Seller shall, not less than ten working days prior to
the agreed delivery time, inform the Buyer thereof in writing stating the reason
for the delay and propose a new date for delivery.
9.4 In case the Parties have not agreed on a new date of delivery in accordance
with
Clause 9.3 above, and in case the respective delivery of the Products is delayed
ten (10) working days or more from the agreed delivery time due to reasons
solely attributable to the Seller, the Buyer shall have the right to cancel the
respective order without any liability to the Seller. Should the Buyer in any
such case purchase the respective Products from a third party supplier, then the
Seller shall be liable to compensate the Buyer up to the value of the respective
order.
9.5 In case the Buyer does not wish to exercise the right of cancellation
provided under Clause 9.4 above, then in case of delays in delivery attributable
to the Seller, the Buyer shall be entitled to [*].
9.6 Notwithstanding Clause 9.5 above, in case the Seller fails to notify the
Buyer of the delay in accordance with Clause 9.3 above and the Buyer does not
wish to exercise the right of cancellation provided under Clause 9.4 above, then
the Seller shall be obliged to pay to the Buyer liquidated damages equivalent to
the liquidated damages that Buyer shall owe to Nokia under the Nokia Agreement..
9.7 The liquidated damages determined above in Clauses 9.5 and 9.6 and in
Clause 11.2 below, or Buyer's right to cancel an order pursuant to Clause 9.4,
shall constitute Buyer's exclusive remedy in respect of delays in delivery under
this Agreement. The Buyer shall not be obligated to show evidence to the Seller
in respect of having suffered actual damage as a result of the delay in delivery
in order to claim the liquidated damages. The Buyer shall be entitled to deduct
the liquidated damages from any payments to be made to the Seller under this
Agreement, and the Seller shall be obliged, upon request by the Buyer, to
provide the Buyer with a credit advice therefor.
ARTICLE 10
RESCHEDULING AND CANCELLATION
10.1 The Buyer may, without additional costs, upon notice to (the Seller not
less than three (3) weeks prior to the intended date of delivery, re-schedule
the respective delivery to take place within a four (4) month period following
the intended date of delivery.
10.2 The Buyer may, without additional costs, upon notice to the Seller not
less than seven (7) weeks (according to the normal lead time of each Product)
prior to the intended date of delivery, cancel the respective delivery.
10.3 In the event of delivery cancellation, the Seller shall submit to the
Buyer, and the Buyer shall pay to the Seller, the costs incurred by the Seller
in support of Buyer-specific components and the price, as defined in Appendix 1,
of Products in buffer stock of any completed Products incurred by the Seller in
connection with such cancellation, as supported by a detailed written statement
and supporting documentation (such as a Seller-incurred cost report and vendor
invoices), and, if requested by the Buyer, verified to the Buyer by the Seller's
independent auditors at the Buyer's expense. Upon payment of such amount, the
Buyer shall have no further liability towards the Seller in connection with such
delivery cancellation.
[*] 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.
ARTICLE 11
INSPECTIONS
11.1 The Buyer, or the Buyer's designee, Nokia, shall inspect the Products upon
delivery to ascertain correct quantities and whether there exists any visible
damage in the Products delivered. The Seller agrees to replace all faulty
Products, at Seller's expense, and deliver additional Products in order to meet
the correct quantities without delay. In any such cases, the relevant incoming
inspection report will be given to the Seller without delay. The Buyer, or the
Buyer's designee, Nokia, shall return immediately the rejected Products to the
Seller unless otherwise agreed upon between the Parties. Return of the Parts
shall be made at the Seller's expense.
11.2 Without affecting the generality of the beforesaid in Clause 11.1, the
Buyer, or the Buyer's designee, Nokia, may use statistical sampling methods in
the incoming inspection as is specifically determined under Appendix 3 hereto.
In case the delivered Products do not pass this inspection, then the Buyer, or
the Buyer's designee, Nokia, has the right to reject the whole particular
delivery. In any such case, the Buyer shall have the option to either (i) demand
the Seller to forthwith replace the rejected delivery or (ii) cancel the
respective delivery without any liability thereof to the Seller. In case of
replacement by the Seller of the rejected delivery, then the Seller shall be
obliged to pay the Buyer liquidated damages in accordance with Clause 9.5 above
calculated from the date of original delivery to the date of replacement
delivery as Buyer's sole remedy for Seller's breach of its obligations under
this Clause 11.2.
11.3 Notwithstanding Clause 11.2, in case the Buyer or Nokia wishes to sort a
delivery that has failed the inspection referred to above in Clause 11.2 in
order to ascertain whether certain Products may nevertheless be suitable (or use
by the Buyer), then the Buyer or Nokia may do so upon agreement with the Seller
of the compensation of the additional costs accrued thereof to the Buyer.
11.4 In certain cases, the Buyer and the Seller may agree, that the Seller shall
undertake the incoming inspection of the Parts on behalf of the Buyer. In any
such case, the procedures determined in Appendix 3 shall be strictly followed.
ARTICLE 12
QUALITY REQUIREMENTS
The Seller has established quality requirements together with the Buyer
(hereinafter referred to as "Quality Requirements"), set forth in Appendix 3,
which describe the various measures Seller shall undertake in order to meet the
quality requirements and specifications for this Agreement. Seller's obligations
under this Agreement shall be performed in accordance with those Quality
Requirements
ARTICLE 13
FACILITY SURVEYS
Each of the Buyer and Nokia reserves the right, by itself or through its
appointed representative, during regular business hours and following reasonable
notice to the Seller, to review the Seller's physical facilities and the
Seller's quality control procedures, both prior to first delivery
of the Products under this Agreement and periodically thereafter, in order to
assure compliance with the requirements of Appendices 2 and 3. The right
determined herein above shall also apply to the Buyer's and Nokia's customers.
The Seller shall maintain quality control procedures mutually agreement upon by
the Parties as a result of such facility survey. In the event that the Buyer or
Nokia determines, in good faith, during any facility survey, that the quality
procedures applied by the Seller are insufficient to insure consistent
acceptable quality as set forth in Appendices 2 and 3, then the Buyer or Nokia
shall specifically inform the Seller thereof and request corrective measures to
be undertaken by the Seller. The Seller hereby agrees to undertake any such
mutually agreed upon corrective measures without delay. Seller agrees to request
its subcontractors to comply with the requirements of this Article 13 as they
relate to the work to be performed by such subcontractors.
ARTICLE 14
WARRANTY
14.1 The Seller shall give a warranty for a period of [*]
from delivery (hereinafter referred to as the "Warranty Period") for the
Products supplied hereunder. The warranty period provided hereunder shall
include that the Products supplied shall be new and unused, (free from defects
in material and workmanship and shall meet the Specifications (Appendix 2) and
Quality Requirements (Appendix 3).
14.2 The Seller shall repair or replace, at its own option and cost and without
delay, all Products that fail to satisfy the foregoing warranty within the
Warranty Period.
14.3 In case more than [*]of the Products in a particular
delivery prove to be defective within the Warranty Period, then the Seller
shall, at its own cost and without delay, replace the respective remaining
Products of that particular delivery with new ones and this warranty shall apply
to such replacement Products for the unexpired portion of the Warranty Period or
[*], whichever is longer.
14.4 With reference to Clause 14.2 above, in case the Parties mutually agree
that the Buyer shall undertake the repair or replacement of such defects on
behalf of the Seller, then the Seller shall compensate the Buyer for the costs
accrued thereof.
14.5 THE FOREGOING WARRANTIES ARE IN LIEU OF ALL OTHER WARRANTIES, WHETHER ORAL,
WRITTEN, EXPRESS, IMPLIED, OR STATUTORY. IMPLIED WARRANTIES OF FITNESS FOR A
PARTICULAR PURPOSE AND MERCHANTABILITY SHALL NOT APPLY. SELLER'S WARRANTY
OBLIGATIONS AND BUYER'S REMEDIES HEREUNDER (EXCEPT AS TO TITLE) ARE SOLELY AND
EXCLUSI\TELY AS STATED HEREIN.
ARTICLE 15
PRODUCT LIABILITY
Notwithstanding the above in Article 14, the Seller shall be liable for
damage to property other than the Products and/or to persons caused by a
manufacturing defect in the Products for which the Seller is solely responsible.
The Seller shall compensate the Buyer for any damage that the Buyer shall be
obliged to pay to its customer or any other by court or arbitration award or by
[*] 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.
settlement out of court; provided, however, that the total liability of the
Seller on any such claim, whether in contract, tort (including sole or
concurrent negligence), or otherwise, arising out of, connected with, or
resulting from such manufacturing defect [*]. The Buyer
shall, and at the cost of the Seller, assist the Seller against any product
liability claim with reasonable efforts.
ARTICLE 16
DISCONTINUATION OF PRODUCTION
If the Seller shall, at any time during the validity of this Agreement or
thereafter, discontinue to manufacture any specific Products, a notice to this
respect must be given to the Buyer and Nokia [*] prior to the intended date of
discontinuation, in order to give the Buyer a chance to place an end-of-life
order before the discontinuation. Such Products shall be delivered in one or
more partial deliveries in accordance with the Buyer's instructions within [*]
from the order date.
ARTICLE 17
ENVIRONMENTAL MANAGEMENT
Nokia endeavors to comply with the principles of the Business Charter for
Sustainable Development (published by the International Chamber of Commerce in
1991) for environmental management. The Buyer encourages the adoption of the
principles therein by (he Seller and its subsuppliers. The Buyer may, where
appropriate, request improvements in the Seller's practices to ensure compliance
with the said principles.
ARTICLE 18
INDUSTRIAL PROPERTY RIGHTS AND PATENT INDEMNIFICATION
18.1 Ownership of the copyright in all drawings, specifications, manuals,
documents, data, and software provided by one Party hereto to the other under
this Agreement shall remain with the Party first referred to above but the
receiving Party shall be deemed to have the right to use such copy right for the
performance of the Agreement hereunder.
18.2 Seller agrees that it shall to the extent its design is concerned, at its
own expense and at its option, defend or settle any claim, suit, or proceeding
brought against Buyer, Nokia or any customer of Buyer or Nokia, based on an
allegation that a Product furnished under this Agreement constitutes a direct or
a contributory infringement of any claim of any patent, mask work, or copyright,
which exists as of the date of this Agreement. This obligation shall be
effective only if Buyer shall have made all payments then due and if Seller is
notified of said allegation promptly in writing and given authority,
information, and assistance for the settlement or defense of such claim, suit,
proceedings. Seller shall pay all damages and costs assessed in such suit or
proceedings. In the event of a final adjudication by a court of competent
jurisdiction that its Product infringes or violates any third party intellectual
property right or if the use or sale thereof is enjoined, or if the provisions
of any negotiated settlement Agreement prohibit the use of the Product, Seller
shall at its sole option and its own expense, use commercially reasonable
efforts to either: (a) procure for Buyer the right to continue using the
Product; (b) replace it with a substantially equivalent non-infringing
[*] 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.
Product; or (c) modify it so it becomes non-infringing but substantially
equivalent.
18.3 The foregoing indemnity does not apply to the following: (1) Infringement
by a combination of Products furnished under this Agreement with other parts not
furnished hereunder unless Seller is a contributory infringer; (2) Infringement
resulting from changes or modifications made to or from the Part by Buyer or
Nokia; and (3) Any settlements of a claim, suit, or proceeding made without
Seller's written consent.
18.4 The foregoing states the entire liability of Seller with respect to
infringement or violation of third party intellectual property rights in
connection with Parts furnished under this Agreement.
18.5 In the event any Product to be furnished under this Agreement is to be made
in accordance with drawings, samples or manufacturing specifications designated
by Buyer or Nokia and is not the design of Seller, Buyer agrees to defend to the
extent Buyer's or Nokia's design is concerned, indemnify and hold Seller
harmless to the same extent and subject to the same requirements as set forth in
Seller's indemnifications of Buyer as set forth in Section 18.2 above.
ARTICLE 19
CONFIDENTIALITY
19.1 Each Party (`Receiving Party') shall not disclose to third parties nor use
for any purpose other than for the proper fulfillment of this Agreement any
technical or commercial information (`Information') received from the other
Party (`Disclosing Party') in whatever form under or in connection with this
Agreement without the prior written permission of the disclosing Party except
information which
(a) was in the possession of the Receiving Party prior to disclosure
hereunder; or
(b) was in the public domain at the time of disclosure or later became part
of the public domain without breach of the confidentiality obligations herein
contained; or
(c) was disclosed by a third party without breach of any obligation of
confidentiality owed to the Disclosing Party; or
(d) was independently developed by personnel of the Receiving Party having
no access to the Information.
19.2 The provisions of this Article 19 shall survive the termination of this
Agreement for whatsoever reason.
ARTICLE 20
FORCE MAJEURE
20.1 Neither Party shall be liable to the other for any delay or non-performance
of its obligations hereunder in the event and to the extent that such delay or
non-performance is due to an
event of Force Majeure.
20.2 Events of Force Majeure are events beyond the control of the Party which
occur after the date of signing of this Agreement and which were not reasonably
foreseeable at the time of signing of this Agreement and whose effects are not
capable of being overcome without unreasonable expense and/or loss of time to
the Party concerned. Events of Force Majeure shall include (without being
limited to) war, civil unrest, strikes, lock-outs and other general labor
disputes, acts of government, natural disasters, exceptional weather conditions,
breakdown or general unavailability of transport facilities, accidents, fire,
explosions, and general shortages of energy and materials.
20.3 In the event that the delay or non-performance of either Party hereto
continuous for a period of six (6) months due to reasons of Force Majeure, then
either Party shall have the right to terminate this Agreement with immediate
effect.
ARTICLE 21
EFFECTIVE DATE AND TERM
21.1 This Agreement shall become valid and effective on the date of signature
hereof and shall remain valid until July 23, 2001.
21.2 RESERVED
21.3 The termination of this Agreement in accordance with Clause 22.1 below
shall not affect the delivery of the Products, in accordance with the terms and
conditions hereof, which have been ordered and confirmed prior to the
termination.
21.4 At the conclusion of this Agreement Seller shall promptly submit to Buyer,
and Buyer shall pay to Seller, the total costs incurred by Seller in supporting
the Buyer-specific components in buffer stock and the price of Products held in
buffer stock detailed in Appendix 1 and Clause 2.4, as supported by a detailed
written statement and supporting documentation (such as Seller incurred cost
report and vendor invoices), as determined in accordance with Seller's standard
accounting practices and, if requested by Buyer, verified to Buyer by Seller's
independent auditors at Buyer's expense. Upon payment of such amount, Buyer
shall have no further liability towards Seller in connection with this
Agreement.
ARTICLE 22
PREMATURE TERMINATION
22.1 In the event that a Party hereto is in default of a material obligation
under this Agreement and fails to remedy such default within a reasonable time
fixed by the non-defaulting Party (which period shall not be less than thirty
(30) days) in a written notice drawing the attention of the defaulting Party to
the default and requiring the same to be remedied, then the non-defaulting Party
shall have the right to terminate this Agreement with immediate effect after the
expiry of the
period fixed. In the event of bankruptcy, receivership or comparable procedure
under applicable bankruptcy Ordinance of a Party hereto or in case the default
is not capable of being remedied within a reasonable time (which period shall
not be less than thirty (30) days) then the non-defaulting Party may terminate
this Agreement forthwith.
22.2 The termination of this Agreement in accordance with Clause 22.1 above,
shall also terminate the carrying out of any outstanding orders, whether
confirmed or not.
22.3 In the event of termination by Seller for Buyer's nonpayment as stated in
Clause 22.1, Seller shall promptly submit to Buyer, and Buyer shall pay to
Seller, the total costs incurred by Seller of Buyer-specific components and
work-in-process, and the price, as defined in Appendix 1, of any completed
Products in buffer stock, incurred by Seller in connection with such
cancellation, as supported by detailed written statement and supporting
documentation (such as Seller incurred cost report and VENDOR invoices), and ,if
requested by Buyer, verified to Buyer by Seller's independent auditors at
Buyer's expense. Upon payment of such amount, Buyer shall have no further
liability towards Seller in connection with such nonpayment.
ARTICLE 23
APPLICABLE LAW AND SETTLEMENT OF DISPUTES
23.1 This Agreement shall be governed by the laws of the State of California. In
addition, the United Nations Convention on the International Sale of Goods (the
Vienna Convention) shall apply to all sales contracts pertaining to the Parts
between the Parties.
23.2 Any and all disputes arising out of or in connection with this Agreement
shall be finally settled according to commercial arbitration rules of the
American Arbitration Association by three (3) arbitrators appointed in
accordance with the Rules of that organization. The arbitration proceedings
shall be conducted in Los Angeles, CA in the English language. The arbitration
award shall be final and binding on the Parties.
ARTICLE 24
FINAL PROVISIONS
24.1 Neither Party shall assign or transfer to any third party, without the
prior written consent of the other Party, this Agreement or any of its share or
interest therein. Such consent shall not be unreasonably withheld in case of
assignment to an affiliate of the assigning Party, on condition that the
assigning Party shall remain fully responsible towards the other Party for the
proper fulfillment of this Agreement.
24.2 This Agreement contains the entire understanding between the Parties in
respect of this matter and all previous correspondence, memoranda, minutes of
meetings, offers, enquiries and other documents exchanged between the Parties
prior to the date of this Agreement shall be
cancelled and superseded by this Agreement.
24.3 In addition to this Agreement the following documents are hereby made part
of this Agreement:
XXXXXXXX 0 Xxxxx, Xxxxxxxx volumes and Prices
APPENDIX 2 Specifications
APPENDIX 3 Quality Requirements
APPENDIX 4 Operating Model
In case of any discrepancies between the above documents, the text of this
Agreement document shall always prevail over any of the Appendices (with the
exception of Appendix 4) or the Schedules thereto. The terms and conditions of
Appendix 4 hereto shall alter the contents of this Agreement only to the extent
expressly stated in Appendix 4. All other conditions of this Agreement shall
remain unchanged. The Appendices shall apply in the order set forth above.
24.4 Alterations or amendments to this Agreement shall be made in writing with
the signature or both parties.
24.5 The following persons shall act as the representatives of the Parties
regarding notices, performance, extension, termination and changes in respect of
this Agreement.
REPRESENTING THE SELLER: Endwave Corporation
000 Xxxxxx Xxx
Xxxxxxxxx, XX 00000
REPRESENTING THE BUYER: TRW Inc.
Space & Electronics Group
One Space Park
Xxxxxxx Xxxxx, XX 00000 XXX
24.6 [RESERVED]
24.7 Notwithstanding any other provision of this Agreement, neither Party shall
under any circumstances be liable for any indirect nor consequential damage
howsoever arising under or in connection with this Agreement, except in cases of
intentional misconduct or gross negligence
24.8 No failure or delay of either Party in exercising its rights hereunder
(including but not limited to the right to require performance of any provision
of this Agreement) shall be deemed to be a waiver of such rights unless
expressly made in writing by the Party waiving its rights.
24.9 In the event that any provision of this Agreement shall be held
invalid as contrary to any law, statute or regulation in that regard, the
invalidity of such provision shall in no way affect the validity of any other
provision of this Agreement and each and every provision shall be severable from
each and every other.
24.10 Buyer agrees that it shall not knowingly sell, transfer, or deliver,
directly or indirectly, and part of portion of the Products or related
documentation supplied by Seller pursuant to this Agreement to any person or
organization in any country where such sale, transfer, or delivery by Buyer
would be prohibited by law or regulation nor or hereafter in effect which
imposes any restrictions on United States trade with foreign countries. Seller's
obligations hereunder are conditioned upon Seller's obtaining, from the
appropriate agencies or departments of the United States Government, all export
licenses and other governmental permits that may be required by law to enable
Seller to export the Parts supplied by Seller pursuant to this Agreement. Seller
agrees to take all reasonable steps to obtain such licenses and permits. In the
event that the required approvals are not granted, withdrawn, or not extended,
then either party may terminate this Agreement and such termination for purposes
of determination of costs shall be considered caused by Force Majeure as defined
in Article 20 of this Agreement.
24.10 The headings used in this Agreement are inserted for convenience only and
shall not affect the interpretation of the respective provisions of this
Agreement
IN WITNESS WHEREOF, the Parties have caused this Agreement to be signed by
their duly authorized representatives.
/s/ XXXXXX X. XXXXXX, XX. /s/ XXXXXX X. XXXX
---------------------------- --------------------------
SIGNED FOR
AND ON BEHALF TRW Inc.
OF Space & Electronics Group
Endwave Division
Corporation
SIGNED FOR
AND ON BEHALF
OF
APPENDIX 1 PARTS, PURCHASE VOLUMES AND PRICES
APPENDIX 2 SPECIFICATIONS
APPENDIX 3 QUALITY REQUIREMENTS
APPENDIX 4 ROLLING FORECAST
18
APPENDIX 1
PARTS/PRODUCTS, PURCHASE VOLUMES AND PRICES
1. PRICES
1.1 UNIT PRICE FOR 18/38 and 23/26 GHz MODULES
The agreed unit prices for cumulative order volume are as follows
[*]
The per unit pricing above is based on [*]and the
number of units delivered by the Seller hereunder. For example, if on
the date hereof, Nokia has alreeady ordered from the Buyer under the
Nokia Agreement[*].
2. PURCHASE COMMITMENT VOLUME
The Buyer commits to purchase volume of [*] provided however, the
production capability of the Seller to start shipments at below
stated week of each frequency band at following table defined
estimated level. The customer demand levels will be given in the
bi-weekly sent Rolling Forecast and the agreed committed maximum
capacity may be reviewed in the monthly management meetings and
will be in alignment relative to the Rolling Forecast and the
general business outlook. The minimum order commitment takes into
account the number of units previously ordered by Nokia under the
Nokia Agreement. For example, if on the date hereof, Nokia has
already ordered from the Buyer under the Nokia Agreement [*] the
minimum number of additional units (18/38 GHZ and 23/26 GHZ units
combined) that the Buyer must order hereunder will be an
[*]. To the extent that the Buyer fails to order such minimum
amount, the Seller agrees that the only liability that the Buyer
shall have to the Seller is assignment of the contractual claim
that the Buyer has against Nokia under the Nokia Agreement for
failure to procure the requisite minimum orders thereunder.
The units manufactured for the rate demonstration will be
shippable products according to the product specification.
The same procedure will take place always when taking a new
frequency product to the volume production.
The committed volume is divided to different frequency bands as
follows
[*] 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.
I) 18/38 Ghz [*]
II) 23/26 Ghz [*]
Minimum order quantity / frequency band is [*] and
if the total order volume of I) or II) exceeds the above
mentioned amount then the other will diminish accordingly and
the total commitment will stay as agreed [*]. As
indicated 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.
APPENDIX 2
SPECIFICATIONS
[*]
[*] 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.
APPENDIX 3
QUALITY REQUIREMENTS 1(1)
Cellular Transmission APPENDIX 3
3/5/98
CONFIDENTIAL
QUALITY REQUIREMENTS FOR PRODUCTION AGREEMENT OF MMIC-MODULES
1. PURPOSE
The purpose of this document is to incorporate the manufacturing and the
quality control process of the Seller into one entity, in a way that makes
it possible to dispense with the Buyer and Nokia's receipt control as a
routine procedure and normally forward the Products directly to production.
The aim is to develop quality systems in a joint effort to the point where
the Seller can assume full responsibility for his activities and for the
quality of his products. In this way, the Buyer and Nokia's quality policy
with regard to their Sellers is fulfilled (i.e. responsibility for quality
is on the party carrying out the task). Both the Buyer and Nokia and the
Seller regard the fulfillment of the final consumer's expectations and
needs as the basis of their business operation. Their mutual business
relations are considered enduring and the aim is to be successful together.
2. APPLICATION
This quality document is complementary to General conditions of Purchase. This
document applies to all components, units and devices supplied by the Seller to
the Buyer and Nokia (hereinafter referred to as "the Products").
3. DUTIES
In order to build up a fruitful co-operation, the parties assume the following
duties:
A. The Buyer and Nokia
- Inform the Seller of any development projects that will have notable
influence on the formers Seller relations.
- Create the conditions, as far as is in his power, for mutually beneficial
business relations
- Disclose the quantities for and the nature of deliveries in good time
- Supply, with every order of a new product, written documentation giving the
expected quality requirements. In co-operation with the Seller the Buyer
and Nokia make sure that the requirements are unambiguous.
- Inform the Seller of reasons that are attributable to the latter and may
result in the termination of business relations, early enough to allow the
Seller to take the necessary measures in order to eliminate the said
reasons.
NOKIA
QUALITY REQUIREMENTS 2(2)
Cellular Transmission APPENDIX 3
3/5/98
CONFIDENTIAL
B. The Seller
- Engages himself to produce and to deliver Products that comply with the
quality requirements agreed upon and to respect the agreed delivery times.
- Keeps an up-to-date list of his approved Sellers.
- Provides evidence of ISO 9000 certification and permits control visits at
his premises with reference to deliveries to the Buyer and Nokia.
- Assumes responsibility for the quality of all his deliveries up to ex
carrier including responsibility for products purchased as raw materials
from his own Seller. Concerning the quality of the product up to the final
consumer, this is not valid if previous integration of the products into
the system or mishandling had caused a failure.
- Informs the Buyer and Nokia without delay of any circumstances that may
affect his deliveries or business relations.
- Provides the Buyer and Nokia with the quality records when requested.
- Continuously develops his quality systems and the quality of his products,
in an effort to satisfy the needs of the final consumer.
- Responsibility cannot be assured if the Quality of the Product is
compromised by any kind of failure propagation (electrical, mechanical,
functional, mishandling) from the System to the Product.
4. QUALITY ASSURANCE
The Seller shall run an effective quality system capable of assuring that
the requirements will be fulfilled. The quality system shall be in
accordance with international quality standards ISO 9000 (EN 29000).
Seller shall to the extent and within the time frames requested by the
Buyer and Nokia send to the Buyer and Nokia a report of the results of the
quality assurance measures described in the Seller's quality system
documentation. Seller shall present agreed reports monthly. The reports
shall cover the observations set out in the quality inspection program
described in the Sellers Quality Plan.
When a reported result deviates from the quality level according the
incoming inspection plan, Seller shall, when requested, inform the Buyer
and Nokia of the measures that Seller
NOKIA
QUALITY REQUIREMENTS 3(3)
Cellular Transmission APPENDIX 3
3/5/98
CONFIDENTIAL
has taken or will take in order to achieve the said quality level.
Representatives of the Buyer and Nokia or the end user shall have the right
to visit now and then the factories of the Seller or his subcontractors in
order to observe the quality assurance or to make sure that the procedures
and rules described in Seller's quality system documentation or Quality
Plan are followed. Seller shall, when requested, demonstrate the working
places and the instructions that are used during the production of the
product.
5. QUALITY PLAN
The Seller shall produce a total Quality Plan for the Product (according to
ISO 9000) and deliver it to the Buyer and Nokia's quality assurance
personnel at least two months prior to the commencement of production. The
documentation shall clearly state the criteria that will be employed when
releasing items to the Buyer and Nokia or when releasing items from any
stage of production to next.
6. INSPECTION AND CONTROL
The Buyer and Nokia donot accept any faulty [defective] Products. They have
the right to return all faulty Products, regardless of at which stage of
production the fault has been detected.
Representatives of the Buyer and Nokia and the end user shall have the
opportunity of visiting the factory of the Seller or his subcontractor
before and during the production phase to inspect the production of the
equipment to be supplied and to carry out any measurements considered
necessary.
The incoming inspection will be based on standard IEC410 (MIL-STD 105 E)
and Nokia Telecommunications Quality Requirements. The sampling plan will
be General inspection level II, single sample, AQL 2,5 for visual
inspection. If the amount of defective products[*] in electrical
incoming inspection or in the production test process, the delivery lot
will be rejected. Defective product returned to the Seller will be at the
cost of the Seller.
7. RELIABILITY
The Seller's quality system shall clearly set out the procedures to be
followed during the design and production of the product in order to
prevent any departure from the Seller's internal reliability criteria.
[*] 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.
NOKIA
QUALITY REQUIREMENTS 4(4)
Cellular Transmission APPENDIX 3
3/5/98
CONFIDENTIAL
Seller shall analyze field data of MWUs provided by Buyer and Nokia to
verify that MTBF and Expected Lifetime for MWUs are within the
specification. In the case that any adverse deviation from specification is
identified Seller shall immediately start and implement all the necessary
preventive and corrective actions for future shipments to meet expected
lifetime and MTBF.
If requested by the Buyer and Nokia, the Seller shall provide a list of
materials, which are used in the Product to the Buyer and Nokia's component
quality assurance personnel. If unreliable materials or components are
found, the Seller shall make appropriated modifications to prevent any
possible reliability problems.
8. WARRANTY AND AFTER-SALES SUPPORT
8.1 Seller shall give a warranty for Products for a period specified in the
Production Agreement. The warranty shall cover any defects in design,
engineering, software, materials and workmanship of the Products.
Defective units identified during said period shall be repaired or
replaced free of charge to the Buyer and Nokia by Seller within the
Production Agreement agreed time scales after receiving such Product to
Seller's premises. The replaced or repaired Product shall be delivered to
the Buyer and Nokia at the cost of the Seller.
8.2 Repairs and replacements covered by the above mentioned warranty shall be
warranted to be free from defects in design, engineering, software,
materials and workmanship as defined by Production Agreement.
8.3 Post-warranty repairs during the period of [*] after the last delivery
shall be effected at "reasonable repair charges". A "reasonable repair
charge" means [*]. Any repair, the cost of which to Seller that exceeds
the "reasonable repair charge" shall not be performed by Seller, unless
Seller agrees to perform such repair. Seller may choose whether to
repair the defaulting product or to provide a new product to replace the
defaulting product.
8.4 In the event that a Customer of the Buyer and Nokia requires a warranty
period longer than agreed upon by the Parties hereunder Seller shall
provide such extra warranty as long as the extra cost of such warranty is
mutually agreed by the Parties.
8.5 A sufficient stock of spare Products will be made available to meet Buyer
and Nokia's requirements. The quantities and price of this stock to be
mutually agreed upon by Buyer and Nokia and Seller.
8.6.1 Within the Warranty period, if the percentage of defective Product in a
particular delivery exceeds the maximum allowed by the Production
Agreement, the Seller shall, at its own
[*] 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.
NOKIA
QUALITY REQUIREMENTS 5(5)
Cellular Transmission APPENDIX 3
3/5/98
CONFIDENTIAL
cost and without delay, replace the respective remaining Products of that
particular delivery with new ones and this warranty shall apply to such
replacement Products for the unexpired portion of the Warranty Period or
as defined by Production Agreement.
8.6.2 In the event that Seller would be unable to fulfill any of its
obligations under clause 8.0 of this Document within 90 days, the Buyer
and Nokia may take the corrective measures itself or through any other
Manufacturer at the expense of the Seller.
8.7 In any case, repairs of all the individual units shall be duly documented
in writing.
8.8 Seller shall inform Buyer and Nokia according to Production Agreement if
it intends to stop manufacturing any units or spare parts for the Product
in operation. At the same xxxx Xxxxxx shall offer to supply Products that
Buyer and Nokia will require for future needs. The offer shall be based
on reasonable and agreed prices and commercial conditions.
9. COMPLAINTS
In case of complaint, the Buyer and Nokia inform the Seller of the detected
fault [defect] in writing within 14 days from its detection. On this
occasion, the Buyer and Nokia and the Seller agree on the measures to be
taken, such as:
- The Buyer and Nokia return the rejected lot to the Seller at the
Seller's expense
- The Buyer and Nokia sort out the rejected lot at the Seller's expense
and returns the faulty Products to the Seller, who either replaces
them with faultless [conforming] Products or makes a credit note on
the whole sum, depending on the Buyer and Nokia's choice.
- The Seller sorts out the lot and replaces the faulty Products on the
Buyer and Nokia's or customer's premises in a time schedule mutually
agreed between the parties.
- The Buyer and Nokia have the right to invoice the Seller for mutually
agreeable controlling and handling cost involved.
10. MODIFICATIONS
In accordance with paragraph 3, the Parties must inform in writing each
other of any modifications concerning electrical components and raw
materials as defined in the Seller supplied Project Parts Lists. The
parties are under obligation to verify that the information
NOKIA
QUALITY REQUIREMENTS 6(6)
Cellular Transmission APPENDIX 3
3/5/98
CONFIDENTIAL
provided is unambiguous and, in case ambiguities exist, to contact the
other party without delay in order to straighten them out. If required, a
sample must be submitted for approval.
11 NO PREJUDICE
Neither the presence of Buyer and Nokia's representatives nor any express
or implied acceptance of e.g. work, materials, components, equipment or
method of manufacturing nor the fact that the Buyer and Nokia or their
representatives have not brought any defect or deficiency to the attention
of the Seller or his representatives shall relieve Seller from its
obligations under this Document to perform according to and to meet all
requirements set out in this Document or prejudice any warranty of the
Seller under this Document.
12 SECRECY
To the extent applicable laws so prescribe and collective bargaining
agreements so permit Buyer and Nokia will treat as secret all information
about Seller's or his subcontractor's production.
13 BUSINESS SECRETS
Both parties respect each other's business secrets and will not disclose
the information received to any third party.
14 QUALITY METRICS
The purpose of quality metrics and reports is to evaluate the effectiveness
of key processes during manufacturing, delivery and maintenance phases of
MMIC-modules. The key process targets are regularly checked and the
corrective actions defined in the case of process deviations.
Quality metrics of competition sensitive data shall be available for review
but not delivered in written forms.
NOKIA
QUALITY REQUIREMENTS 7(7)
Cellular Transmission APPENDIX 3
3/5/98
CONFIDENTIAL
-------------------- --------------------- -------------------------------------------- -----------
PROCESS PHASE METRICS DESCRIPTION TARGET
-------------------- --------------------- -------------------------------------------- -----------
MANUFACTURING SPC VALUES TO BE AGREED TBD
PHASE
-------------------- --------------------- -------------------------------------------- -----------
MANUFACTURING [*] [*] TRW
PHASE and
Supplier
Mutually
Agreed
Targets
TBD
[*]
-------------------- --------------------- -------------------------------------------- -----------
MANUFACTURING [*] [*] TBD
PHASE
[*] TBD
[*] [*]
TBD
-------------------- --------------------- -------------------------------------------- -----------
DELIVERY PHASE [*] [*] [*]
[*]
-------------------- --------------------- -------------------------------------------- -----------
[*] [*] [*]
[*]
-------------------- --------------------- -------------------------------------------- -----------
OPERATION AND [*] [*] [*]FITs
MAINTENANCE
-------------------- --------------------- -------------------------------------------- -----------
[*] [*] One
Month
-------------------- --------------------- -------------------------------------------- -----------
[*] [*] TBD
[*]
-------------------- --------------------- -------------------------------------------- -----------
[*] 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.
NOKIA
REPORT 1(23)
Radio Access Systems(RAS) MWU Specifications
System Development (SD) 15.02.1999 Mko
Xxxxxx Xxxxxxxx Confidential
APPENDIX 4
OPERATING MODEL
1
Cellular Transmission Operating model between
CT and SUPPLIER
OPERATING MODEL BETWEEN CT AND SUPPLIER
INTRODUCTION
The Operating Model between the CT plant and the suppliers describes the main
operating principles between CT and suppliers, subcontractors and vendors. It is
a logistics appendix to the purchasing contracts. All logistics principles can
be developed, taught and updated more systematically with the help of this
document between CT and suppliers.
The cursive text in the operating model will be updated in the purchasing
agreement negotiations and the right parts of the operating model will be chosen
by the SUPPLIER and the BUYER. The operating model will be used in purchases
relating to Cellular Transmission. In case of any discrepancies between the
Operating model and the text of Purchasing agreement or its other appendixes,
the terms of the Operating model shall always prevail.
1. FORECASTING
1.1.1 VARIABLE
The SUPPLIER must always have the capacity to deliver based on
previously informed maximum capacity. The following
flexibilities are in use between the BUYER and the SUPPLIER.
The BUYER has also some flexibility with the customers.
The BUYER AND NOKIA will forecast the need for the different
variables also for longer period than 20 weeks, but a
commitment to the demand is given for 2 weeks. After that the
next 2 weeks the BUYER has the right to change the variables
+/-50%.
MIX:
0-2 weeks: Mix is fixed = commitment by the BUYER
3-4 weeks: +/-50% flexibility for
weekly forecast = 50% commitment by the BUYER.
Week 5>: Unfixed mix = no commitment by the BUYER
VOLUME:
0-2 weeks: Volume is fixed = commitment by the BUYER
3-4 weeks: +/-50% flexibility
in weekly volumes = 50% commitment by the BUYER.
NOTE! The BUYER AND NOKIA ARE allowed to increase up
to the maximum capacity from the 3rd week onwards.
i.e. the SUPPLIER needs to always have flexibility
E. Exact delivery dates and quantities are known
only after the weekly order.
2
Cellular Transmission Operating model between
CT and SUPPLIER
The BUYER specific components are listed here:
[*]
[*]
[*]
[*]
[*] 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.
3
Cellular Transmission Operating model between
CT and SUPPLIER
The BUYER will commit to buffer stock of these components up
to 2 weeks 100% according to the forecast plus 6 weeks
according to the agreed maximum capacity.
SENDING THE ROLLING FORECAST
The BUYER AND/OR NOKIA will send the forecast bi-weekly for
following 6 months and monthly update the forecast for
following 12 months.
CONFIRMATION OF THE ROLLING FORECAST
The SUPPLIER will confirm to Buyer and Nokia the forecast sent
by the BUYER AND/OR NOKIA within max. 5 working days.
MAXIMUM CAPACITY
Maximum capacity and buffer stock levels will be agreed in the
yearly contract negotiation and will be reviewed and agreed if
needed in the monthly management meetings to remain in
alignment relative to the Rolling Forecast and the general
business outlook.
2. ORDERING
2.1 EDI (LONG TERM DEVELOPMENT)
Official orders are made automatically. If the serial number
label is used and the information is generated by NOKIA'S MRP
II system and delivered to the SUPPLIER. The SUPPLIER is
responsible for sticking the BUYER's AND/OR NOKIA'S serial
number labels onto the unit. The information on the serial
number label and in the unit's flash memory has to be same.
2.2 PURCHASE ORDER BY FAX
A purchase order is based on NOKIA'S MRP II system and
delivered to the SUPPLIER after the Purchase Order creation.
The BUYER OR BUYER'S DESIGNEE, NOKIA, will send the order
documentation by fax 5 working days before scheduled delivery
week. The BUYER's aim is to send (or have sent by Nokia) the
fax on Monday by 4 p.m. Helsinki time. The SUPPLIER shall
confirm the order within 1 working day. If the BUYER has not
received the confirmation within the agreed time, the BUYER
AND NOKIA shall consider the order confirmed. The SUPPLIER is
responsible for sticking the BUYER's AND/OR NOKIA'S serial
number onto the unit if asked by the BUYER OR BUYER'S
DESIGNEE, NOKIA.
3. DELIVERY
3.1 VARIABLE
The following requirements need to be ensured:
-Minimum lead-time for the weekly order is 5 working days
4
Cellular Transmission Operating model between
CT and SUPPLIER
-Orders are made once a week on Monday by 4 p.m. Helsinki time
-Delivery dates according to the order.
-Delivery from the Emergency Stock within 24 hours
4. INSPECTION
4.1 Inspection
The SUPPLIER is responsible for 100% quality. Both functional
and visual inspection will be made by the SUPPLIER. The BUYER
AND/OR NOKIA may do a functional and visual inspection if
needed. The BUYER AND/OR NOKIA will arrange the quality
training if needed.
The BUYER AND/OR NOKIA is also allowed to audit both the
visual and electrical inspection performed by the SUPPLIER.
The electrical tests and visual inspections are made according
to Appendix 2 Specifications and Appendix 3 Quality
Requirements.
5. INVOICING
An invoice has to be created for each delivery, but it is also
possible to collect invoices and send them to the BUYER
afterwards. The invoice has to include at the very least THE
following information:
- Invoicing address:
-TRW SPACE & ELECTRONICS GROUP, ACCOUNTS PAYABLE,
------------------------------------------------
X.X. XXX 000, XX XXXXXXX, XXXXXXXXXX 00000
-----------------------------------------
-NOKIA TRW purchase order number and purchaser.
-Terms of payment (currency).
-Bankers:
-Name of bank.
-Account number.
-Suppliers contact information.
-Delivery or shipment day.
-Country of origin and dispatch:
5
Cellular Transmission Operating model between
CT and SUPPLIER
-Mention whether the goods are in free circulation within the
EU countries or not.
-Description of goods:
-General product identification
-Suppliers type
-NTC-code
-Invoicing currency and it's international abbreviation
-VAT-code:
-For example Finland FI01011203, Sweden SE516401891201 and
Germany DE812035381.
-The SUPPLIER has their own customer number for every Nokia
site.
-Barcode if available
-Shipment details
-Net and gross weight.
-Dimensions of each package.
-Number of packages.
-Terms of delivery by Incoterms 1990.
-Number of waybill.
-Forwarder and it's representative in country of departure.
-Customs tariff code.
-Delivery note number.
5.1 RESERVED
Netting is recommended for use with foreign suppliers. Below
is a general description about netting.
6
Cellular Transmission Operating model between
CT and SUPPLIER
6. SYSTEM IMPROVEMENT
The target of this chapter is to achieve cost efficiency from
both sides -the BUYER and the SUPPLIER. The targets for the
following issues are clarified in other chapters of this
document. However even tighter targets in the long run will be
set at least for delivery accuracy, delivery time/call off
time and product price. Those targets will be set after the
realization of the present targets has been monitored. Each
target will be set case by case.
6/2000
Delivery accuracy xx
Call off lead-time xx
Quality xx
Price xx
Failure reports and xx
corrective actions
Fixed period xx
THIS TABLE WILL BE UPDATED 6 MONTHS AFTER THE START OF THE
VOLUME PRODUCTION
7. FORWARDING AND TRANSPORTATION METHODS
Transportation and responsibility according to the terms of
delivery. The BUYER AND/OR NOKIA will define the forwarding
agents and transportation method in the weekly orders.
8. COMMON MEASUREMENTS
8.1 Measured by the BUYER AND/OR NOKIA
The BUYER AND/OR NOKIA will do the following measurements ONCE
A MONTH:
1. DELIVERY ACCURACY (DA)
7
Cellular Transmission Operating model between
CT and SUPPLIER
-Time period is +/- 3 days.
Formula:
=(received of promised PO's in a time period/promised PO's in
a time period) *100
2. DELIVERY COMPLETENESS
- Time period is +/- 3 days.
Formula:
=(quantity of delivered items in a time period/total quantity
of ordered or called off items) * 100
3. CUSTOMER SATISFACTION
The customer satisfaction chart gives a rating for the
following areas with a maximum xxxx of 20 for each (max. 100
in total, the target is 95):
-Early warning of technical changes
-Early warning of non-deliveries
-Quick response to changed demands
-Quick response to inquiries
-Quick response to corrective actions
The scoring system for this chart is as follows:
-0 - 5 marks for a poor performance
-6 - 10 marks for a fair performance
-11 - 14 marks for a satisfactory performance
-15 - 18 marks for a good performance
-19 - 20 marks for an excellent performance
4. RECEIVED AND REJECTED MATERIAL
In the received and rejected material chart. There are
reported received material in FIM and rejected material in %
(pcs).
8.2 Measured by the SUPPLIER
8
Cellular Transmission Operating model between
CT and SUPPLIER
To be required from the SUPPLIER in the future:
1. DELIVERY ACCURACY (DA)
-Time period is +/- 1 day.
Formula:
=(shipped items of promised PO's in a time period/promised
PO's in a time period) *100
2. DELIVERY COMPLETENESS
-Time period is +/- 1 day.
Formula:
=(quantity of delivered items in a time period/total quantity
of ordered or called off items *100
3. BUFFER LEVELS
The SUPPLIER delivers information of agreed buffer items to
the BUYER AND NOKIA ONCE A MONTH.
9. PACKING
9.1 MWU shipping package requirements
MWU shipping package have to fulfill following requirements:
The whole package have to be 100% antistatic including packing
tape and extra filling.
The packing material should be recyclable (Material and needed
markings from manufacturer).
The package must have ESD-warning notices.
Single unit packing, double packing as an option (MWU's for
one radio hop in the same package).
Package note including the correct serial numbers of the
units.
Package markings according "LABEL SPECIFICATION FOR PACKAGES"
NESS 099B60.
The boxes should be strong enough to remain undamaged during
the transportation. The boxes should be flat on all sides.
9
Cellular Transmission Operating model between
CT and SUPPLIER
The markings on the top of each shipment unit should include
at least:
-Dispatcher and address
-Receiver and address
IF THE PACKAGING DOES NOT MEET THESE REQUIEMENTS A CLAIM WILL
BE LODGED AGAINST THE SUPPLIER.
THE GOODS should be packed in boxes of maximum dimensions:
Height 22 cm
Width 45 cm
Length 50 cm
Maximum weight 20 kg
9.2 Packing List
Packing list should include the following labeling:
1. SUPPLIER's name and mailing address
2. NOKIA'S name and address
o Delivery address
o Mailing -and invoicing address
o If needed precise location (for example production line or
warehouse)
3. Nokia purchasing order number (in written and barcode form)
4. Nokia's order position (in written and barcode form)
5. Identification information for the goods
o Nokia type
o Nokia code (in written and barcode form)
o Manufacturer type
6. Item quantity (in written and barcode form)
7. Quantity of packages
8. Terms of delivery (Incoterms 1990)
10
9. Date of consignment
10.Production date or other traceability code (in written and
barcode form)
11.Packing list number (in written and barcode form)
NOTE!
-The lowest level of package should contain only one Nokia
code.
9.3 Waybill
Waybill should contain waybill number in written, barcode form
and all other necessary information.
9.4 Identification of MWU
9.4.1 Identification in electrical formal
-Nokia code
-Serial number including manufacturing date
(week/year)
-Manufacturing date (week/year) of chip
-Unit version/stepping
-Frequency band Rx/Tx
-Calibration data
9.4.2 Identification in printed format
-Text format:
-Nokia code
-Serial number including manufacturing date
(week/year) (height 5mm)
-Frequency, for example "38 GHz" (height 10mm)
-Frequency band, for example:
Rx/Tx=37058-37338/38318-38598 MHz (height 5mm)
-Unit version/stepping (height 5mm)
11
Cellular Transmission Operating model between
CT and SUPPLIER
-Barcode format according to NESS 099B60
10. RETURN AND REJECTED MATERIALS
10.1 Return and rejected materials
In the case of defective products, the SUPPLIER is responsible
for taking the necessary action to avoid more damage. This and
the explanation of actions to be taken have to be made within
[*] from the reclamation. Within [*] the SUPPLIER has to ship,
based on the delivery terms DDU NOKIA'S premises, new products
which will replace the defective ones. The BUYER AND/OR NOKIA
will return defective products based on the delivery term Ex
works at BUYER's AND/OR NOKIA'S premises. SUPPLIER shall
inform the BUYER AND NOKIA the SUPPLIER's forwarding agent
(e.g. UPS) and the customer number. The BUYER AND NOKIA shall
inform the SUPPLIER the awb number, the date of the return
shipment and the copy of the proforma invoice by fax. The
SUPPLIER shall send a credit note for defective products or
return the units[*].
The SUPPLIER has to provide a failure analyses report of the
returned products.
[GRAPHIC]
11. CONTACT PERSONS
THE BUYER RESPONSIBLE TEL.
--------- ----------- ----
ALL ISSUES XXXXXXX XXXXXX x000.000.0000
NOKIA
- Production issues Asko Xxxxx x000 0 00000000
- Technical issues Hans Somerma x000 0 00000000
- Quality control Asko Xxxxx x000 0 00000000
- Commercial issues Xxxxx Xxxxxxxx x000 0 00000000
[*] 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.
12
Cellular Transmission Operating model between
CT and SUPPLIER
The SUPPLIER
- Production issues Xxxx Xxxxx x000 0000000
- Technical issues Xxxxxx Xxxxx
- Quality control Xxxx Esqurra x000 0000000
- Commercial issues Xxxxx Xxxxxx x000 0000000
12. VOLUME INCREASE
The SUPPLIER has to clarify what equipment investment and
personnel training is needed in each capacity step and how
long it takes.
Total maximum production capacity will be given by the BUYER
and Nokia.
INVESTMENT STEP 01
EQUIPMENT INVESTMENTS
WHAT EQUIPMENTS ARE NEEDED TO INCREASE VOLUME FROM 0 TO 01?
WHAT IS THE DELIVERY AND IMPLEMENTATION TIME?
PERSONNEL TRAINING
HOW MANY PERSONS MORE ARE NEEDED? HOW LONG RECRUITMENT AND
TRAINING WILL TAKE?
SPACE
IS THERE ENOUGH SPACE TO REACH 01 LEVEL CAPACITY? HOW LONG
SPACE INCREASING WILL TAKE?
INVESTMENT STEP 02
EQUIPMENT INVESTMENTS
WHAT EQUIPMENTS ARE NEEDED TO INCREASE VOLUME FROM 01 TO 02?
WHAT IS THE DELIVERY AND IMPLEMENTATION TIME?
PERSONNEL TRAINING
HOW MANY PERSONS MORE ARE NEEDED? HOW LONG RECRUITMENT AND
TRAINING WILL TAKE?
SPACE
IS THERE ENOUGH SPACE TO REACH 02 LEVEL CAPACITY? HOW LONG
SPACE INCREASING WILL TAKE?
INVESTMENT STEP 03
EQUIMENT INVESTMENTS
13
Cellular Transmission Operating model between
CT and SUPPLIER
WHAT EQUIPMENTS ARE NEEDED TO INCREASE VOLUME FOR 02 TO 03?
WHAT IS THE DELIVERY AND IMPLEMENTATION TIME?
PERSONNEL TRAINING
HOW MANY PERSONS MORE ARE NEEDED? HOW LONG RECRUITMENT AND
TRAINING WILL TAKE?
SPACE
IS THERE ENOUGH SPACE TO REACH 03 LEVEL CAPACITY? HOW LONG
SPACE INCREASING WILL TAKE?
ETC.
THE INVESTMENT STEPS WILL BE UPDATED LATEST 6 MONTHS AFTER THE
PRODUCTION STARTS.
