NOTE: Information has been redacted from the following agreement. The
location of such redacted information is identified by asterisks (*). Such
information is confidential and has been omitted pursuant to 17 C.F.R. Reg.
Section 240.24b-2 and filed separately with the Securities and Exchange
Commission.
______________________________________________________________________________
OEM PURCHASE AGREEMENT
THIS OEM PURCHASE AGREEMENT is entered into between *********
("*********"), and EIP MICROWAVE, INC., a Delaware corporation doing business
at 0000 XxXxxxxxxx Xxxxx, Xxxxxxxx, XX 00000-0000 ("Supplier"), effective as
of the date of execution by the last signing party (the "Effective Date").
1 SCOPE OF AGREEMENT
1.1 GENERAL. This Agreement sets forth the terms and conditions under
which Supplier agrees to sell, license and support the OEM Products
listed in EXHIBIT A to this Agreement. The OEM Products shall be
regarded as "Original Equipment Manufacturer" products that shall
either be sold separately or incorporated into ********* Products
for resale worldwide. The OEM Products and the ********* Products
will be marketed, serviced, and supported by *********'s field
organization, subject to the marketing, service, and support
obligations of Supplier pursuant to this Agreement. All OEM
Products shall be new (I.E., not previously sold to a customer),
except as provided in Sections 3.3 or 4.7, as provided in
Section 1.2 of EXHIBIT B of this Agreement or as otherwise provided
by the parties.
1.2 TERM OF AGREEMENT. Unless earlier terminated under the provisions
of this Agreement, this Agreement shall commence as of the Effective
Date and continue for a five (5) year period thereafter (referred to
herein as the "Initial Term"). After the Initial Term, this
Agreement shall continue automatically for two (2) additional one
year terms (each referred to herein as an "Additional Term"), unless
terminated by either party upon one hundred and twenty (120) days
written notice prior to expiration of the Initial Term or any such
Additional Term. The Initial Term and any applicable Additional
Terms are collectively referred to as the "Term".
2 DEFINITIONS
The following capitalized terms shall have these meanings throughout this
Agreement.
2.1 "Delivery Date" shall mean the date specified in an Order for the
delivery of OEM Products by Supplier to the destination required
under the Order.
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2.2 "Documentation" shall mean the user and technical manuals and other
documentation that Supplier will make available with the OEM
Products.
2.3 "********* Products" shall mean ********* data-sheeted and *********
model-numbered products and/or systems that will incorporate the OEM
Products and that will be marketed and sold to end-user customers by
********* and its distributors.
2.4 "********* Property" shall mean all property, including without
limitation, designs, documentation, models, tools, equipment and
materials furnished to Supplier by ********* or paid for by
********* for use by Supplier in connection with this Agreement.
2.5 "Intellectual Property Rights" shall mean all rights in patents,
copyrights, trade secrets, trademarks, trade names and other similar
proprietary rights.
2.6 "Marks" shall mean the trademarks, trade names, logos, insignia,
symbols, designs or other marks of a party.
2.7 "OEM Products" shall mean the products developed by Supplier listed
in EXHIBIT A and all related Documentation and Parts.
2.8 "Orders" shall mean a written or electronic purchase order placed by
********* to Supplier for purchase of the OEM Products.
2.9 "Parts" shall mean the replacement parts, components, assemblies,
consumables or other products that may be purchased from Supplier in
conjunction with or as additions to the OEM Products.
2.10 "Software" shall mean any software or firmware products included or
bundled with the OEM Products, as referred to in the description of
OEM Products in EXHIBIT A attached hereto.
2.11 "Specifications" shall mean the technical and functional
requirements for the OEM Products as set forth or referenced in
EXHIBIT A to this Agreement, as revised with the written consent of
both parties.
2.12 "Subsidiary" shall mean an entity controlled by or under common
control with a party to this Agreement, through ownership or control
directly or indirectly of fifty percent (50%) or more of the voting
power of the shares or other means of ownership or control, provided
that such control continues to exist.
3 TESTING, EVALUATION, DELIVERY AND ACCEPTANCE
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3.1 DELIVERY. Supplier has delivered to ********* units of OEM
Product ********* for testing and evaluation ("Test Units").
3.2 TESTING AND ACCEPTANCE PROCEDURE. (a) ********* shall have six
(6) weeks from the date of receipt of the second Test Unit to
evaluate the Test Units for conformity with the Specifications, and
either accept, return for rework, or reject the Test Units.
********* shall be entitled to test and evaluate the Test Units by
whatever means it deems appropriate, consistent with Supplier's
rights in the Test Units, and Supplier hereby grants to ********* a
license to use the Test Units to perform its evaluation.
(b) Upon *********'s completion of its testing and evaluation
described in Section 3.2(a) above, ********* shall either (i)
notify Supplier in writing that the Test Units meet the
Specifications and are accepted; or (ii) notify Supplier that the
Test Units fail to meet the Specifications and are rejected.
(c) In the event that ********* notifies Supplier that the Test
Units fail to meet the Specifications, ********* shall return the
Test Units to Supplier for rework, together with a reasonably
detailed written explanation of the Specifications which have not
been met. Supplier will attempt to rework and resubmit the Test
Units for re-evaluation by ********* within ten (10) days after
receipt of the Test Units from *********, or such other time period
as mutually agreed to by the parties. If ********* determines,
after re-evaluation, that the re-worked Test Units fail to meet the
Specifications, ********* shall notify Supplier that the Test Units
fail to meet the Specifications and are rejected.
3.3 INITIAL ORDER. If ********* is satisfied that the Test Units meet
the Specifications, then ********* shall issue a noncancellable
Order to Supplier for a total of ********* OEM Products (the
"Initial Order"). If Supplier is satisfied that the Test Units
meet the Specifications, then Supplier shall accept the Initial
Order. ********* shall return the Test Units to Supplier, and
Supplier shall have the right to package and sell all returned Test
Units to ********* as new OEM Products, subject to the provisions
of Section 10 and all other terms of this Agreement.
3.4 TERMINATION. If the Initial Order has not been issued by *********
and accepted by Supplier on or before July 12, 1997, then either
party may in its sole discretion terminate this Agreement without
incurring any liability to the other party. The right to terminate
the Agreement under this Section 3.4 shall commence on July 13,
1997 and shall continue until such time as the Initial Order has
been issued by ********* and accepted by Supplier. Upon
termination under this Section 3.4, ********* shall return all
Tests Units to Supplier, and each party shall return all
Confidential Information to the disclosing party, so that no
Confidential Information is retained by either party.
3
4 ORDER AND SHIPMENT OF OEM PRODUCTS
4.1 ORDERS. Each delivery of OEM Products shall be initiated by an
Order issued to Supplier by *********. Each Order shall include
(i) product quantity; (ii) unit price; (iii) shipping destination;
(iv) Delivery Date; (v) product option configuration; and (vi)
other instructions or requirements pertinent to the Order.
********* may schedule regular intervals for deliveries by an
appropriate Order setting forth the intervals.
4.2 ORDER ACKNOWLEDGMENT. Supplier shall acknowledge and either accept
or reject each Order (via telefax as provided in Section 23.1
below) within two (2) business days of receipt. All Orders shall
be deemed accepted by Supplier unless ********* receives notice of
rejection from Supplier within two (2) business days of Supplier's
receipt of the Order. Supplier shall be bound by the terms and
conditions of every Order acknowledged and accepted and every Order
deemed accepted as provided herein. Supplier agrees not to
unreasonably withhold acceptance of any Orders. In the event that
Supplier rejects seven (7) consecutive Orders, ********* shall have
the right to terminate the Agreement pursuant to Section 19 below.
An Order shall be deemed to have been placed as of the date of
receipt of the Order by Supplier. To the extent of any
inconsistency between the terms of an Order and the terms of this
Agreement, the terms set forth herein shall control and take
precedence.
4.3 FORECASTS. On or before the first day of each month, *********
agrees to provide Supplier with a six (6) month rolling forecast of
its projected orders. Any quantities listed in any forecasts or
other correspondence between the parties (other than an Order) are
only estimates made as an accommodation for planning purposes and
should in no way be construed as a commitment on *********'s part
to purchase such quantity. ********* may revise any forecasts in
its sole discretion.
4.4 LEAD TIME. Supplier agrees to use its best efforts to meet the
Delivery Date of each accepted Order. In the event Supplier is
unable to meet the Delivery Date of any accepted Order, *********
shall have the right to cancel such Order without charge.
4.5 INVENTORY REQUIREMENT. Supplier shall maintain (on a first in,
first out basis) a protective inventory equal to the materials and
components required to manufacture ********* units of each model of
OEM Product (including all available options). If this inventory
is depleted, Supplier shall replenish the inventory as soon as
possible after depletion.
4.6 ORDER CHANGES. The parties acknowledge that Orders are subject to
postponement, decrease or cancellation by ********* pursuant to
Section 4.6(a)
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below (in the case of Large Orders) and Section
4.6(b) below (in the case of other Orders). However, the Initial
Order is not subject to any postponement, decrease or cancellation.
(a) If *********'s customer postpones, decreases or cancels an
order to ********* that was the basis for a Large Order by
********* to Supplier, then ********* has the right to
postpone, decrease or cancel such Large Order to the same
extent by notice to Supplier at least one day prior to the
Delivery Date. If Supplier incurs additional costs directly
associated with the OEM Product subject to the cancelled
Large Order, then ********* will reimburse Supplier upon
demand an amount equal to *********.
(b) ********* has the right, without incurring any liability to
Supplier, to postpone, decrease or cancel any Order (other
than a Large Order) by notice to Supplier at least one day
prior to the Delivery Date, PROVIDED, HOWEVER, that
*********'s rights described in this sentence are limited to
the postponement, decrease or cancellation of Orders for
*********..
4.7 CUSTOMER RETURNS. If any OEM Product is returned to ********* by
*********'s customer within ********* months following the date
such OEM Product was first delivered to that ********* customer,
and that OEM Product is in operable condition, then ********* will
be entitled to immediately return such OEM Product to Supplier in
accordance with Section 7 for *********. If any such OEM Product
requires any cosmetic refurbishment or damage repair, the refund
will be further reduced by an amount to be negotiated by the
parties at such time to cover such refurbishment and repair costs.
Notwithstanding the foregoing, *********'s right to return OEM
Products in any calendar month is limited to ********* units in the
aggregate in any month.
4.8 SHIPMENT REQUIREMENTS. All Orders shall be shipped complete. If
only a portion of the OEM Products is available for shipment to
meet the Delivery Date, Supplier shall immediately notify *********
and either ship the available OEM Products or reschedule shipment,
as directed by *********. If Supplier ships any OEM Product by a
method other than as specified in the corresponding Order, Supplier
shall pay any resulting increase in the cost of freight. Supplier
shall immediately advise ********* of any prospective failure to
ship the specified quantity of released OEM Product in time to meet
the Delivery Date. ********* may utilize drop shipment options to
any designation specified by *********.
4.9 ********* OPTION TO ACCEPT OVERSHIPMENTS. If Supplier ships more
OEM Products than ordered, the amount of the overshipment may
either be kept by ********* for credit against future Orders or
returned to Supplier pursuant to Section 7 below, at *********'s
election.
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4.10 MEETING DELIVERY DATES. If due to Supplier's failure to make a
timely shipment, the specified method of transportation would not
permit Supplier to meet the Delivery Date, the OEM Products
affected shall be shipped by air transportation or other expedient
means acceptable to *********. Supplier shall pay for any
resulting increase in the freight cost over that which *********
would have been required to pay by the specified method of
transportation.
4.11 RISK OF LOSS. Shipments shall be F.O.B. Supplier's place of
shipment. Title to OEM Products ordered hereunder and risk of loss
or damage shall pass from Supplier to ********* upon Supplier's
delivery of the OEM Products to the common carrier specified by
*********, subject to the provisions below with respect to packing
and handling.
4.12 NO ADVANCE SHIPMENT. Supplier shall not ship any OEM Product more
than three (3) work days prior to the shipment date required to
meet the Delivery Date by the method of transportation specified in
the Order. If Supplier ships more than three (3) work days in
advance of such shipment date, ********* may at its option either
return the OEM Products pursuant to Section 7 below or delay
processing the corresponding invoice until the Delivery Date.
4.13 PACKAGE CONTENTS. Each delivery of OEM Products to ********* shall
include a packing list which contains at least:
(a) The Order number and the ********* part number;
(b) The quantity of OEM Products or Parts shipped; and
(c) The date of shipment.
4.14 PACKAGING PROTECTION. Supplier shall preserve, package, handle,
and pack all OEM Products so as to protect the OEM Products from
loss or damage, in conformance with good commercial practice.
Special static protection shall be provided for OEM Products
requiring such packaging.
4.15 RESPONSIBILITY FOR DAMAGE. Supplier shall be liable for any loss
or damage due to (a) its failure to properly preserve, package,
handle, or pack OEM Products in accordance with Section 4.14
hereof, and/or (b) a release of chemicals or other hazardous
materials to the environment prior to *********'s actual receipt of
the corresponding OEM Products (collectively "Supplier's Damages").
Following delivery of the OEM Products to the common carrier,
********* shall be liable for any loss or damage excluding
Supplier's Damages. ********* shall be responsible for asserting
any claims for loss or damage for which ********* is liable
hereunder against the common carrier involved and Supplier shall
provide reasonable assistance to ********* in connection therewith.
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5. PRICES AND PAYMENT TERMS
5.1 OEM PRODUCT PRICES. Supplier's prices for the OEM Products and
Parts (including OEM Products and Parts ordered in connection with
"Large Orders" as such term is defined in EXHIBIT E) are set forth
in EXHIBIT B, in U.S. currency unless otherwise stated, and shall
remain in effect during the Term, subject to Section 5.2 hereof.
OEM Products and Parts shall also be subject to any applicable
prompt payment discounts pursuant to Section 5.3.
5.2 CHANGED PRICES.
(a) Either ********* or Supplier may request a change in the
then current prices of the OEM Products or Parts on or
before *********of any year during the term of this
Agreement. Any subsequent increase or decrease in the
prices of the OEM Products or Parts set forth in Exhibit B
must be approved in writing by both parties, and upon
mutual written consent Exhibit B shall be deemed amended.
Any such price increases or decreases will become effective
as of the first day of *********, and shall apply to all
Orders issued by ********* after the effective date of such
prices, except as provided in Section 5.2(d) below.
(b) Supplier shall have the right, without the consent of
*********, to change the prices of the OEM Products or Parts
set forth in Exhibit B effective *********, provided that
Supplier gives ********* written notice of such changed
prices on or before *********. In no event shall such
change in prices exceed a ********* increase in the then
current prices for the OEM Products or Parts. In the event
of such price change Exhibit B shall be deemed to be amended
accordingly. Any such price change shall apply to all
orders issued by ********* after the effective date of such
prices, except as provided in Section 5.2(d) below.
(c) In addition, Supplier shall have the right, without the
consent of *********, to change the prices of the OEM
Products or Parts set forth in Exhibit B effective
*********, provided that Supplier gives ********* written
notice of such changed prices on or before *********. In no
event shall such change in prices exceed a *********
increase in then current prices for the OEM Products or
Parts. In the event of such price change Exhibit B shall be
deemed to be amended accordingly. Any such price change
shall apply to all orders issued by ********* after the
effective date of such prices, except as provided in Section
5.2(d) below.
(d) Price changes pursuant to this Section 5.2 shall not apply
to OEM Products ordered in connection with "Large Orders" as
defined in Exhibit E, provided that the contracts for such
Large Orders were executed prior to the effective date of
the price change.
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5.3 PAYMENT PROCEDURE. Payments required to be made by ********* under
this Agreement shall be net ********* days after receipt by
********* of an appropriate invoice from Supplier. Invoices for
OEM Products shall not be issued prior to the shipment date for
such products. Invoices for training, support and other Supplier
services shall be issued as mutually agreed to in writing by
Supplier and *********. Except as otherwise provided in this
Agreement, associated freight expenses and duties shall be paid
directly by *********. ********* shall not be liable for any costs
related to or payments for unordered, defective or noncomplying
products returned to Supplier prior to the due date of the
corresponding invoice. In the event that ********* has issued
payment for any unordered products, ********* shall be entitled to
a credit upon return of such products to Supplier. If *********
fails to pay any amounts owed to Supplier under the terms of this
Agreement when due, ********* shall pay Supplier a *********
processing fee, plus interest on such unpaid sum at the rate of
********* per annum or the legal limit, whichever is less,
commencing on the applicable due date until such amount is paid in
full. If payment is made in full within ten (10) days of the
invoice date, a prompt payment discount of *********shall apply to
the invoiced amount.
5.4 PRICE WARRANTY. If, during the Term, Supplier offers a better
pricing formula to other purchasers for similar volumes of OEM
Products, then Supplier shall offer such pricing formula to
********* retroactively as of the date first offered the third
party.
5.5 INDEPENDENT PRICING. Notwithstanding any other provision of this
Agreement, ********* shall have the right to determine the prices
of ********* Products.
6. INSURANCE REQUIREMENTS
6.1 INSURANCE COVERAGE. Supplier will maintain Commercial General
Liability Insurance (including but not limited to premises and
operations, products and completed operations, broad form
contractual liability, broad form property damage and personal
injury liability) with a minimum limit of $1,000,000 combined
single limit per occurrence and $5,000,000 in the aggregate,
protecting ********* from claims of bodily injury, including death,
and property damage that may arise from use of any defective OEM
Products. Each policy obtained by Supplier will name *********,
its officers, directors and employees as additional insureds on the
certificates of insurance and will stipulate that the insurance
coverage afforded the additional insureds will apply as primary
insurance and that no other insurance will be called upon to
contribute to a loss covered thereunder. Supplier will request
that each certificate of insurance provide that coverages will not
be canceled without 30 days' prior written notice to *********. In
the event that coverages are canceled, allowed to expire, modified
or reduced in coverage, Supplier will provide ********* with
immediate written notice thereof. Policies
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triggered by the occurrence of a covered event will be maintained
with ********* named as an additional insured throughout the term
of this Agreement and for at least one year thereafter.
6.2 CLAIMS MADE COVERAGE. If any policies have "claims made" coverage,
Supplier will maintain such coverages with ********* named as an
additional insured for a minimum of three years after termination
of this Agreement. Supplier will promptly notify ********* upon
any decision not to maintain such coverage. Supplier will deliver
copies of policies or certificates evidencing such policies to the
********* contact listed in EXHIBIT D.
6.3 ADDITIONAL REQUIREMENTS. All deductibles on policies providing
coverage will be paid by Supplier. In no event will the coverages
or limits of any insurance required under this Article, or the lack
or unavailability of any other insurance, be deemed to limit or
diminish Supplier's obligations or liability to ********* under
this Agreement.
7 RETURN OF PRODUCTS
7.1 RETURN MATERIALS AUTHORIZATION. All OEM Products returned by
********* to Supplier shall be accompanied by a Return Materials
Authorization ("RMA"). Unless further verification is reasonably
required by Supplier, Supplier shall supply an RMA within two work
days of *********'s request. ********* may return the OEM Products
without any RMA if Supplier fails to provide one.
7.2 RETURN CHARGES. All OEM Products not complying with the product
warranty in Section 10.1 that are returned by ********* to
Supplier, and all replacement or repaired OEM Products shipped by
Supplier to ********* to replace such OEM Products, shall be at
Supplier's risk and expense, including transportation charges
(round trip charges for replacement or repaired OEM Products).
7.3 DUTY TO REMOVE MARKS. Supplier shall remove from all OEM Products
rejected, returned, or not purchased by *********, any of
*********'s Marks or part numbers, prior to Supplier's sale, use,
or disposition of such OEM Products unless resold to *********
pursuant to this Agreement.
8 ENGINEERING PROCESS OR DESIGN CHANGES
8.1 SUPPLIER PROPOSED CHANGES. Supplier shall not, without the prior
written consent of *********, make or incorporate in OEM Products
any of the following changes (collectively, "Engineering Changes").
(a) Process or design changes other than insignificant changes
(insignificant changes are those that do not affect
Specifications, mechanical form, fit, function or
supportability);
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(b) Geographical relocation of manufacturing processes beyond a
fifty (50) mile radius of the location of such processes on
the Effective Date (unless Supplier agrees in advance of any
such relocation pursuant to an amendment to this Agreement
to pay any resulting increase in the freight cost for all
shipments of OEM Products following such relocation); or
(c) Process step discontinuances affecting the electrical
performance (whether specified or not), the mechanical form,
fit, or function, the supportability, the environmental
compatibility or chemical characteristics, or the life,
reliability, or quality of OEM Products.
8.2 NOTICE OF CHANGE. Supplier shall give ********* notice of any
proposed Engineering Change, and shall provide evaluation samples
and other appropriate information as specified by ********* at
least ninety (90) days prior to the first proposed shipment of any
OEM Products involving an Engineering Change. Regardless of
whether ********* approves a proposed Engineering Change, lead time
shall not be changed.
8.3 ********* PROPOSED CHANGES. ********* may change *********
supplied drawings, designs, or specifications at any time prior to
shipment of corresponding released OEM Products subject to
Supplier's approval. Any such change shall be effective upon
Supplier's approval, which approval shall not be unreasonably
withheld or delayed, subject to Section 8.4.
8.4 SUPPLIER PROPOSED PRICE OR DELIVERY CHANGES. If any change
proposed by ********* pursuant to Section 8.3 reasonably and
directly affects the prices or delivery schedules of OEM Products,
an equitable adjustment shall be made provided that Supplier makes
a written claim for an adjustment within thirty (30) days from the
date ********* gives written notice to Supplier of the change and
********* agrees in writing to the adjustment. If the parties,
acting reasonably and in good faith, are unable to agree within
thirty (30) days after written claim by Supplier upon any *********
change or the amount of any adjustment pursuant to this
Section 8.4, then Supplier shall have no obligation to implement
the change and ********* may terminate this Agreement as to the OEM
Products affected.
8.5 SAFETY STANDARD CHANGES.
(a) Supplier shall immediately give notice to ********* if any
upgrade, substitution or other change to an OEM Product is
required by law to make that product meet applicable safety
standards or other governmental statutes, orders or
regulations, even those which do not affect form, fit, or
function.
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(b) If affected OEM Products already purchased by ********* are
required by any applicable law to be upgraded, substituted
or changed (I.E., a government mandated recall), then
Supplier shall be responsible for all costs associated with
such upgrade, substitution or change including, without
limitation, *********'s reasonable costs in implementing the
recall; and at *********'s option the affected OEM Products
shall either be returned to Supplier for factory upgrade,
substitution or change, or upgraded, substituted or changed
by ********* in the field, PROVIDED, that if the option
(I.E., factory or field) selected by ********* results in
increased costs to Supplier as compared to the other option,
then the parties will negotiate the allocation of such
increased costs between the parties. In the event of any
such ********* field upgrade, substitution or change,
Supplier shall provide the appropriate Parts and OEM
Products free of charge to *********. Such Parts or OEM
Products shall have the same priority as current shipments
incorporating the upgrades, substitutions or changes.
(c) If affected OEM Products already purchased by ********* are
NOT required by any applicable law to be upgraded,
substituted or changed (I.E., there is no government
mandated recall), then neither party shall have any
obligation to make any upgrade, substitution or change.
However, upon request of either party, ********* and
Supplier will meet and discuss whether, and in what manner
and at whose expense, such upgrades, substitutions or
changes should be offered or made.
9 QUALITY
9.1 QUALITY PROGRAM. Supplier shall maintain an objective quality
program for all OEM Products supplied pursuant to this Agreement.
Supplier's program shall be in accordance with *********'s Quality
System Requirements, attached as EXHIBIT F hereto, or if
applicable, any additional or substitute quality requirements
agreed to in writing by the parties. Supplier shall, upon
*********'s request, provide to ********* copies of Supplier's
quality program and supporting test documentation.
9.2 *********'S RIGHT TO INSPECT. ********* shall have the right to
inspect, at Supplier's plant, the OEM Products and associated
nonproprietary manufacturing processes. Any inspection of OEM
Products shall be prior to shipment. Manufacturing processes may
be inspected at any time during the Term. *********'s inspection
may be for any reason reasonably related to this Agreement,
including to assure Supplier's compliance with this Agreement.
*********'s right of inspection shall apply as well to any vendor
or supplier of Supplier, and Supplier agrees to inform such
suppliers of *********'s right to inspect and make such facilities
reasonably available. ********* acknowledges
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that Supplier cannot provide assurances as to whether any supplier
or vendor will permit any inspection.
10 WARRANTIES
10.1 PRODUCT WARRANTY.
(a) Supplier warrants that all OEM Products shall be manufactured,
processed and assembled by Supplier or by companies under
Supplier's direction; conform to the Specification; conform
strictly to the requirements of all Orders; and be free from
defects in design, material and workmanship. The foregoing
warranty does not apply to defects resulting from: (i) maintenance
or calibration by ********* or its customers not in accordance with
applicable industry standards; (ii) *********, customer or third
party supplied software, interfacing or supplies to the extent that
such defect would not have arisen but for such software,
interfacing or supplies; (iii) unauthorized modification of the OEM
Product to the extent that such defect would not have arisen but
for such modification; (iv) use or operation outside of the
Specification for the OEM Product; or (v) abuse, negligence,
accident, loss or damage in transit. Supplier does not warrant
that the operation of OEM Products will be uninterrupted or error
free. Calibration is not included as part of warranty repair
service.
(b) (1) PRODUCTS FOUND DEFECTIVE BY *********. ********* may elect, in
its sole discretion, to return for replacement or repair at
Supplier's expense, any OEM Product which fails to satisfy the
product warranty set forth in Section 10.1(a). ********* shall
return such OEM Product to Supplier within fifteen (15) business
days after *********'s discovery of the defect. Supplier shall
return the replacement or repaired OEM Product as soon as possible,
but in no event later than ten (10) business days after receipt of
the product from ********* (in the case of any return during the
first six (6) months after the first shipment of OEM Products) or
five (5) business days after receipt of the product from *********
(in case of any return thereafter).
(2) PRODUCTS FOUND DEFECTIVE BY *********'S CUSTOMERS. Any OEM
Product which fails to satisfy the product warranty set forth in
Section 10.1(a) after shipment to *********'s customer shall be
repaired by ********* at the local service office as provided in
Exhibit C hereto. Supplier will reimburse ********* for the cost
of Parts and labor in connection with such repairs, at rates no
higher than the internal rates paid by ********* to its service
centers. If ********* is unable to repair the OEM Product locally
after its reasonable efforts to do so, the product shall be
returned to Supplier for replacement or repair at Supplier's
expense. Supplier shall return the replacement or repaired OEM
Product as soon as
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possible, but in no event later than thirty (30)
days after receipt of the product by Supplier.
(3) ********* REMEDY. If Supplier fails to return the replacement
or repaired OEM Product to ********* in a timely manner pursuant to
Sections 10.1(b)(1) and 10.1(b)(2) above, ********* may reject the
product and obtain a full refund of all costs paid by ********* for
the OEM Product, without any deductions. In addition, if
*********'s customer requires that ********* deliver a similar
product in substitution for the noncomplying OEM Product and
********* procures a similar product for such customer, then
Supplier shall reimburse ********* upon demand an amount equal to
(a) *********'s actual documented direct costs incurred in
purchasing such similar product up to a maximum of two times the
price of the applicable OEM Product set forth on the Order, minus
(b) the amount refunded by Supplier for such noncomplying OEM
Product, up to a maximum of *********units per customer.
10.2 WARRANTY OF TITLE AND NONINFRINGEMENT. Supplier warrants that the
OEM Products shall be free and clear of all liens, encumbrances,
restrictions, and other claims against title or ownership.
Supplier further warrants that, to the best of its knowledge, the
OEM Products do not violate or infringe any third party
intellectual property rights and that Supplier is not aware of any
facts upon which such claim could be made.
10.3 SURVIVAL OF WARRANTIES. All warranties specified above shall
survive any inspection, delivery, acceptance, or payment by
********* and be in effect for the shorter of the one (1) year
period following the date of shipment of the OEM Product or the
********* Product containing the OEM Product to *********'s
end-user customers and the 16-month period following the date of
Supplier's shipment of the OEM Product to *********.
10.4 DISCLAIMER. EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT,
SUPPLIER MAKES NO OTHER WARRANTIES, EITHER EXPRESS OR IMPLIED,
REGARDING ANY OEM PRODUCT, OR REGARDING THEIR MERCHANTABILITY OR
THEIR FITNESS FOR ANY PARTICULAR PURPOSE.
11 SUPPORT SERVICES
11.1 GENERAL. Supplier will provide ********* with ongoing maintenance
and technical support for the OEM Products (including making
necessary Parts available) as provided in EXHIBIT C attached
hereto. Supplier agrees to maintain such number of qualified
personnel as is necessary to provide timely and knowledgeable
maintenance and support service.
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11.2 NEW ********* PRODUCTS. The parties intend that, during the Term,
the OEM Products will be compatible with future releases and
revisions of ********* Products; PROVIDED that such new *********
products support the future versions of the OEM Products.
********* will notify Supplier six (6) months, or at the soonest
practicable date, prior to *********'s release of new *********
Products. Upon request by *********, Supplier agrees to use all
reasonable efforts to provide ********* with the OEM Products
adapted for use with such new ********* Products within timeframes
and at such additional costs, if any, to be negotiated by the
parties, PROVIDED that ********* makes available to Supplier such
********* Property reasonably necessary for Supplier to develop any
adaptation.
11.3 ********* PROPERTY. ********* may furnish to Supplier *********
Property under the terms of *********'s standard Equipment Loan
Agreement for use solely in Supplier's manufacturing, testing,
adapting, and supporting the OEM Products. All ********* Property
shall be clearly segregated and identified as the sole property of
*********. ********* Property may not be transferred, assigned,
loaned or in any way encumbered. ********* Property may be
furnished to third parties for fulfillment of Supplier's
obligations hereunder only upon *********'s prior written consent.
11.4 SUBSTITUTE PRODUCTS. If Supplier develops any products that are
less expensive than the comparable OEM Products available under
this Agreement, ********* shall have the right to substitute the
less expensive products at a reduced price (which will be
negotiated in good faith by the parties) as compared to the
comparable OEM Products for all subsequent purchases under this
Agreement.
11.5 FAILURE RATE. Notwithstanding that the warranties given in Section
10.1(a) above apply to 100% of OEM Products, Supplier and *********
acknowledge that the continuous failure rate of all OEM Products
shipped during the first six (6) months following shipment of the
Initial Order is expected to be less than ********* for the first
********* days after shipment by ********* to its customers.
Thereafter, the continuous failure rate of all OEM Products shipped
during the next ********* is expected to be less than ********* for
the first 1 ********* after shipment by ********* to its customers.
After the initial period of *********, a continuous annual failure
rate for all OEM Products is expected to be *********. If the
actual failure rate for OEM Products exceeds this expected rate,
Supplier shall provide reasonable additional engineering and
technical support beyond any continual improvement efforts
specified in this Agreement to bring the actual failure rate within
the expected failure rate specified in this Section 11.5.
11.6 FAILURE REMEDIES. In the event of a failure rate exceeding the
expected failure rate specified above (a "Failure"), *********
shall have the following remedies for a
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one (1) year period commencing upon receipt by *********'s end
user customer of OEM Products or the corresponding *********
Products.
(a) In the event of a Failure, Supplier shall promptly provide
to ********* a root cause analysis and corrective action
plan, which in no event, shall exceed ten (10) business days
after written request from *********. ********* agrees to
make available such information and assistance reasonably
required to allow Supplier to conduct its root cause
analysis and provide its corrective action report.
(b) Except as otherwise provided in Section 8.5 above, neither
party shall have any obligation to make a field stocking
recall or customer based recall or retrofit. However, after
review of the Supplier's root cause analysis and corrective
action plan and upon request of either party, ********* and
Supplier will meet and discuss whether a field stocking
recall or customer based recall or retrofit should be
conducted and how the expenses of any such recall or
retrofit will be allocated.
11.7 SURVIVAL OF SUPPORT OBLIGATIONS. Supplier's maintenance and
support obligations provided in Exhibit C shall run for the Term
and shall continue for a period of five (5) years after *********
ships the last ********* Product or an OEM Product. This
obligation includes making necessary Parts available to *********.
12 OBSOLESCENCE
12.1 DISCONTINUED PRODUCTS. Supplier acknowledges that it intends to
manufacture support and supply the OEM Products for the term of the
Agreement without interruption. If, however, it becomes
impractical to continue the supply or support of any OEM Product (a
"Discontinued Product"), Supplier shall give notice to ********* no
less than ********* months in advance of the last Order date of the
Discontinued Product. After receipt of notice of discontinuance,
********* may, at its option, purchase from Supplier such quantity
of the Discontinued Product as ********* deems necessary for its
future requirements.
13 TRAINING
13.1 TECHNICAL TRAINING. Supplier shall provide technical training, for
a period not to exceed ten (10) business days, to the *********
Program Manager and that manager's team sufficient for that manager
and his or her team to become fully familiar with the OEM Products
and their markets. All such training shall take place on such
dates as are agreed by the parties, and shall be held at Supplier's
facility (or at such other location requested by *********,
provided that ********* reimburses the reasonable travel and living
expenses of Supplier's representatives). Such training shall be at
no charge to ********* except for the
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compensation, travel and living expenses of the ********* team.
********* may further request and Supplier shall provide additional
training as reasonably necessary to inform ********* personnel of
upgraded, enhanced or new versions of the OEM Products. Additional
training shall be provided upon mutually agreeable terms and
conditions.
13.2 *********'S RIGHTS IN TRAINING CLASSES AND MATERIALS. Subject to
the provisions of Section 20, ********* may duplicate and use,
either internally or for *********'s customers, all training
classes, methods, and materials supplied or developed by Supplier
pursuant to this Agreement. *********'s use may be in any manner
********* reasonably deems appropriate, at no charge to *********.
14 MARKETING AND LICENSING
14.1 MARKETING AUTHORITY. ********* shall have the authority to market
the OEM Products and the ********* Products containing the OEM
Products to the extent it deems appropriate, in its sole
discretion. Without limiting the generality of the foregoing
sentence, nothing in this Agreement shall be construed or
interpreted to place a "best efforts" obligation upon *********
with respect to marketing the ********* Products or OEM Products or
preclude ********* from independently developing, purchasing,
licensing, or marketing any product which performs the same or
similar function as the OEM Products. ********* shall have the
right to use its then current standard form business and license
terms for all marketing of the OEM Products and ********* Products.
14.2 NO RIGHTS IN MARKS. Except as otherwise specified in the private
labeling section below, nothing in this Agreement shall be
construed to grant either party any rights in the Marks of the
other party. Supplier acknowledges, however, that ********* may
use the name of Supplier and the name of the OEM Products in
advertising and marketing the OEM Products or the *********
Products. The ********* Products shall be affixed with copyright
notices sufficient to give notice as to the rights of the parties
in their respective products.
14.3 PRIVATE LABELING. Supplier shall ensure that the OEM Products
contain the ********* Marks, serial number format and packaging
specified by ********* and conforming to ********* specifications
for external appearance (which shall not require any material
change in form or dimensions of OEM Products or require
commercially unreasonable actions). Except as provided herein,
Supplier shall have no other right or license in any *********
Marks.
14.4 INTELLECTUAL PROPERTY RIGHTS. All intellectual property rights
existing prior to the Effective Date shall belong to the party that
owned such rights immediately prior to the Effective Date. Neither
party shall gain by virtue of this Agreement any rights of
ownership of copyrights, patents, trade secrets, trademarks, or any
other intellectual property rights owned by the other. To the
extent that the OEM
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Products or Software contain any intellectual
property rights owned by *********, ********* hereby grants to
Supplier a worldwide, non-transferable license to manufacture, sell
and distribute the OEM Products and Software without royalty or
other compensation to *********. These rights shall extend to
Supplier's Subsidiaries, vendors and third party channels of
distribution.
14.5 GRANT OF RIGHTS. Supplier hereby grants to *********, under
Supplier's Intellectual Property Rights in the OEM Products, a
worldwide, non-transferable, royalty-free, license to sell and
distribute all OEM Products. Such license shall be exclusive from
the date sellable OEM Products are first shipped to ********* in
accordance with the Initial Order until the termination of the nine
(9) month period following such date. Thereafter, such license
shall become non-exclusive, and Supplier hereby reserves its rights
to sell and distribute the OEM Products after the expiration of
such period. These rights shall extend to ********* Subsidiaries
and third party channels of distribution.
14.6 SOFTWARE LICENSE. If the OEM Products include Software, Supplier
hereby grants to *********, under Supplier's Intellectual
Property Rights in such Software, a non-transferable, worldwide,
fully paid-up license to use and distribute the Software in
object code form as integrated with the OEM Products or the
********* Products. Such license to distribute the Software shall
be exclusive during the period described in Section 14.5 above.
These rights shall extend to ********* Subsidiaries and third
party channels of distribution.
14.7 DOCUMENTATION LICENSE. Supplier hereby grants ********* a
non-transferable, worldwide, fully paid up license to use,
reproduce, translate, publish and distribute in *********'s name
all Documentation or other information, other than confidential
information, furnished by Supplier under this Agreement.
********* may reproduce such Documentation without Supplier's
logo or other identification of source, subject to affixing
copyright notices to all copies of documentation. Such license
to distribute shall be exclusive during the period described in
Section 14.5 above. These rights with respect to the
Documentation shall extend to ********* Subsidiaries and third
party channels of distribution.
14.8 ********* PRODUCT CATALOGS AND CORPORATE PRICE LIST. *********
agrees that the ********* Products will appear in each annual Test
and Measurement Catalog published by ********* during the Term of
the Agreement. ********* further agrees that each *********
Product will be listed on each ********* Corporate Price List
issued by ********* as long as this Agreement is in force for such
********* Product. For purposes of this Section 14.8, the term
"********* Products" shall mean each OEM Product and the
accompanying power cord, rack, mount kit and other supplies and
accessories selected by ********* for use with the OEM Product.
15 INFRINGEMENT INDEMNITY
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15.1 SUPPLIER'S DUTY TO DEFEND. Supplier will defend any claim, suit or
proceeding brought against *********, its Subsidiaries,
subcontractors and customers based on a claim that any OEM Product,
including Software, Documentation or a Supplier Mark, constitutes
an unauthorized use or infringement of any third party's
Intellectual Property Rights. Supplier agrees to pay all damages
and costs, including attorney's fees, awarded against *********,
its Subsidiaries, subcontractors and customers, or agreed to by
Supplier in settlement of such claim.
15.2 *********'S DUTY TO NOTIFY. ********* shall give Supplier prompt
notice of any such claim, suit or proceeding, and shall give
Supplier the authority, information and assistance (at Supplier's
expense) necessary to handle the defense or settlement thereof.
Supplier will not be required to pay or reimburse ********* for
attorneys fees and expenses of any counsel representing *********,
unless Supplier fails to diligently pursue resolution of the claim
or provide ********* with reasonable assurances that it will
diligently pursue resolution. If the use of any OEM Product is
enjoined as a result of such claim (the "Infringing Product"),
Supplier shall, at its sole expense and option:
(a) Procure for ********* and its customers the rights to continue
using the Infringing Product; or
(b) Replace the Infringing Product with a non-infringing product of
equivalent function and performance; or
(c) Modify the Infringing Product to be non-infringing, without
detracting from function or performance.
In the event that Supplier is unable to procure the right for
********* and its customers to continue using the Infringing
Product, replace the Infringing Product with a non-infringing
product of equivalent function and performance; or modify the
Infringing Product as set forth above, Supplier will refund the
purchase price paid by ********* for the Infringing Product upon
*********'s return of the Infringing Product.
15.3 SUPPLIER'S LIMITATIONS. Supplier shall be relieved of its
indemnification obligations under this Section 15 to the extent
that the claim of infringement arises solely and directly from
combination or use of the Infringing Product with products not
contemplated under this Agreement, provided that the inclusion of
OEM Products with ********* Products shall not be considered an
unauthorized combination or use of those products.
15.4 *********'S DUTY TO DEFEND. ********* will defend any claim, suit
or proceeding brought against Supplier or its subcontractors based
on a claim that any ********* Product constitutes an unauthorized
use or infringement of any
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third party's Intellectual Property Rights. ********* agrees to
pay all damages and costs, including attorney's fees, awarded
against Supplier or its subcontractors or agreed to by *********
in settlement of such claim. Supplier shall give ********* prompt
notice of any such claim, suit or proceeding, and shall give
********* the authority, information and assistance
(at *********'s expense) necessary to handle the defense or
settlement thereof. For purposes of this Section 15.4 and Section
15.5 below, the term "********* Product" shall mean the *********
products or systems that will be sold to end-user customers by
********* and *********'s distributors for use with the OEM
Products.
15.5 CLAIMS BASED UPON COMBINATION OR USE. ********* will defend any
claim, suit or proceeding brought against ********* and Supplier or
its subcontractors based on a claim that the combination or use of
any OEM Product, including Software, with any ********* Product or
third party product sold by ********* to end-user customers
constitutes an unauthorized use or infringement of any third
party's Intellectual Property Rights. Each party shall each pay
all damages and costs, including attorney's fees, awarded against
it, or agreed to by it in settlement of such claim. Supplier shall
give ********* prompt notice of any such claim, suit or proceeding,
and shall give ********* the authority, information and assistance
(at *********'s expense) necessary to handle the defense or
settlement thereof. Each party will retain authority to approve
any settlement thereof that affects it. In the event that
********* is no longer a party to such claim, suit or proceeding by
reason of court order or *********'s reasonable settlement thereof,
then *********'s obligation under this Section 15.5 shall cease
effective as of the date of such court order or settlement.
16 COUNTRY OF MANUFACTURE AND DUTY DRAWBACK RIGHTS
16.1 COUNTRY OF ORIGIN CERTIFICATION. Upon *********'s request,
Supplier shall provide ********* with an appropriate certification
stating the country of origin of OEM Products, sufficient to
satisfy the requirement of the customs authorities of the country
of receipt and any applicable export licensing regulations,
including those of the United States.
16.2 COUNTRY OF ORIGIN MARKING. Supplier shall mark each OEM Product
with the country of origin. Supplier shall, in marking OEM
Products, comply with the requirements of the customs authorities
of the country of receipt, as instructed by *********.
16.3 DUTY DRAWBACK. If OEM Products delivered under this Agreement are
imported, Supplier shall when possible allow ********* to be the
importer of record. If ********* is not the importer of record and
Supplier obtains duty drawback rights to OEM Products, Supplier
shall, upon *********'s request, provide ********* with documents
required by the customs authorities of the country of receipt to
prove importation and to transfer duty drawback rights to
*********.
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17 GOVERNMENTAL COMPLIANCE
17.1 DUTY TO COMPLY. Supplier shall comply with all federal, state,
local and foreign laws or regulations applicable to its performance
of this Agreement or to OEM Products supplied hereunder. *********
will use best efforts to instruct Supplier as to any applicable
foreign laws or regulations; provided, however, that *********'s
failure to so instruct Supplier shall not relieve Supplier of its
obligation to comply with any applicable foreign laws or
regulations. In the event that Supplier has failed to comply with
any foreign law or regulation in a country in which Supplier has
not otherwise conducted business or sold products within twelve
(12) months prior to the violation, Supplier will undertake such
efforts as are necessary to comply with such foreign law or
regulation up to a maximum of $50,000, or such other amount as is
covered under Supplier's insurance policies, whichever is greater.
********* will be liable for amounts in excess of $50,000, or such
other amount as is covered under Supplier's insurance policies,
whichever is greater, necessary for Supplier to comply with any
foreign law or regulation applicable to Supplier's performance
under this Agreement or to OEM Products supplied hereunder,
provided that Supplier has not otherwise conducted business or sold
products in such foreign country within twelve (12) months prior to
the violation. Notwithstanding any other provision of this
Agreement, Supplier shall be fully liable for all costs and damages
resulting from Supplier's knowing and willful or criminal violation
of any foreign laws or regulations.
17.2 REPRESENTATIONS. Without limiting the generality of the foregoing,
Supplier represents that:
(a) Supplier shall comply with all equal employment opportunity
and non-discrimination requirements prescribed by
Presidential Executive Orders, including the requirements of
Executive Order 11246, the Vocational Rehabilitation Act,
and the Vietnam Era Veterans' Readjustment Assistance Act;
(b) Each chemical substance contained in OEM Products is on the
inventory of chemical substances compiled and published by
the Environmental Protection Agency pursuant to the Toxic
Substances Control Act;
(c) All OEM Products shall be shipped in conformance with
government or freight regulations and requirements
applicable to chemicals;
(d) Supplier shall provide complete and accurate material safety
data sheets prior to shipping any OEM Product if required by
any law, rule or regulation; and
(e) Neither the OEM Products nor any components thereof (i)
contains any "class I substance", as that term is defined in
42 U.S.C. Section 7671(3) as
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now in existence or hereafter amended, or (ii) has been
manufactured by Supplier with a process that uses any
"class I substance" within the meaning of 42 U.S.C.
Section 7671j(d)(2) as now in existence or hereafter amended.
17.3 PROCUREMENT REGULATIONS. For OEM Products purchased under this
Agreement for incorporation into products to be sold under a
federal contract or subcontract, those applicable procurement
regulations that are required by federal statute or regulation to
be inserted in contracts or subcontracts shall upon notice to
Supplier be deemed incorporated in this Agreement and made to apply
to all Orders issued hereunder with respect to such contract or
subcontract.
18 FORCE MAJEURE EVENTS
18.1 DELAYING CAUSES. Subject to the provisions of this Section,
Supplier shall not be liable for any delay in performance under
this Agreement caused by any "act of God" or other cause beyond
Supplier's control and without Supplier's fault or negligence, or
caused by the failure of any of Supplier's vendors to deliver
components, materials or services to Supplier on a timely basis and
in compliance with Supplier's specifications (each a "delaying
cause"). Supplier shall immediately give ********* notice of any
delaying cause.
18.2 ********* OPTION. In the event of a delaying cause, ********* may
act in its sole discretion to:
(a) Terminate this Agreement or any part hereof as to OEM
Products not shipped; or
(b) Suspend this Agreement in whole or in part for the duration
of the delaying cause, buy similar products elsewhere, and
deduct from any quantities specified under this Agreement
the quantity so purchased.
18.3 RESUMPTION OF AGREEMENT. If ********* elects to purchase other
similar products in the event of a delaying cause, ********* may
resume performance under this Agreement once the delaying cause
ceases and extend the Term up to the length of time the delaying
cause endured. Unless ********* gives notice of termination as
provided above within thirty (30) days after notice from Supplier
of the delaying cause ********* shall be deemed to have elected to
suspend this Agreement for the duration of the delaying cause.
19 EVENTS OF DEFAULT
19.1 NOTICE OF BREACH. If either party is in breach of any provision of
this Agreement, the nonbreaching party may, by written notice to
the breaching party, except as
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otherwise prohibited by the United States bankruptcy laws, terminate
the whole or any part of this Agreement or any Order, unless the
breaching party cures the breach or removes the condition causing
the breach within thirty (30) days (or in the case of 19.2(e)
below, sixty (60) days) after receipt of notice.
19.2 CAUSES OF BREACH. For purposes of Section 19.1 above, the term
"breach" shall include without limitation any:
(a) Proceeding, whether voluntary or involuntary, in bankruptcy
or insolvency by or against a party;
(b) Appointment, with or without a party's consent, of a
receiver or an assignee for the benefit of creditors;
(c) Failure by Supplier to make a delivery of OEM Products in
accordance with the requirements of this Agreement or any
Order;
(d) Failure by Supplier to replace or repair OEM Products not
complying with the product warranty in Section 10.1 in a
timely manner as required thereby;
(e) Failure by Supplier to perform its support obligations as
required by Section 11 above;
(f) Failure by ********* to pay for the OEM Products when due as
provided herein; or
(g) Other failure by a party to comply with any material
provision of this Agreement (including any exhibit hereto)
with additional failure to provide the nonbreaching party,
upon request, with reasonable assurances of future
performance.
19.3 *********'S RIGHTS UPON BREACH. In the event ********* terminates
this Agreement in whole or in part as provided above, in addition
to any other remedies provided ********* hereunder, ********* may
procure, upon such terms and in such manner as ********* reasonably
deems appropriate, products similar to the OEM Product provided
hereunder as to which this Agreement is terminated. If *********
procures a similar product, then Supplier shall reimburse *********
upon demand an amount equal to (a) *********'s actual documented
direct costs incurred in purchasing such similar product up to a
maximum of two times the price of the applicable OEM Product set
forth on the Order, minus (b) the price of the applicable OEM
Product set forth on the Order; provided further that such
reimbursement shall be limited to the procurement of products
similar to and not exceeding the quantities of OEM Products subject
to Orders accepted by Supplier prior to the date of termination of
this Agreement.
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Supplier shall not be required to reimburse ********* under this
Section 19.3 in the event such termination occurs as a result of
a breach by Supplier that is related to an infringement claim by
a third party. Supplier shall continue the performance of this
Agreement to the extent not terminated under the provisions of
this Section.
20 CONFIDENTIAL INFORMATION
20.1 CONFIDENTIAL INFORMATION. During the Term, either party may
receive or have access to technical or strategic information,
including, though not limited to, information or data concerning a
party's products or product plans, business operations, strategies,
customers and related business information which the disclosing
party considers to be confidential ("Confidential Information").
All Confidential Information shall be labeled [********* or
Supplier] Confidential and shall be used by only those employees of
the receiving party who have a need to know such information for
the purposes related to this Agreement. Confidential Information
shall only be disclosed to the receiving party's subcontractors
with the prior written approval of the disclosing party. For the
purposes of this Agreement, all technical information, forecasts
and ********* marketing plans, organizational charts and supplier
names, and all information exchanged between the parties under the
Confidentiality Agreements dated May 3, 1996 and May 14, 1996, as
amended, shall be deemed Confidential Information.
20.2 NONDISCLOSURE. The receiving party shall protect Confidential
Information of the disclosing party from the unauthorized
disclosure to third parties with the same degree of care as the
receiving party uses for its own similar information for a period
of five years from the date of termination of this Agreement. The
foregoing restriction shall not apply to any information that is
(a) already known by the receiving party prior to disclosure, (b)
independently developed by the receiving party prior to or
independent of the disclosure, (c) publicly available through no
fault of the receiving party, (d) rightfully received from a third
party with no duty of confidentiality, (e) disclosed by the
receiving party with the disclosing party's prior written approval,
or (f) disclosed under operation of law.
21 LIMITATION OF LIABILITY
EXCLUDING THE PARTIES' OBLIGATIONS UNDER SECTION 15 ABOVE, NEITHER PARTY
SHALL BE LIABLE FOR ANY INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL
DAMAGES (INCLUDING BUT NOT LIMITED TO LOSS OF PROFITS) ARISING OUT OF ANY
PERFORMANCE OF OR FAILURE TO PERFORM THIS AGREEMENT OR THE PROVISIONS OR
OBJECTIVES OF THIS AGREEMENT, REGARDLESS OF WHETHER SUCH DAMAGES ARE
BASED ON TORT, WARRANTY, CONTRACT OR ANY OTHER
23
LEGAL THEORY, EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
22 TERMINATION
22.1 TERMINATION FOR CONVENIENCE. ********* may terminate this
Agreement at any time for any reason by providing Supplier with
nine (9) months advance written notice, and Supplier may terminate
this Agreement at any time for any reason by providing *********
with eighteen (18) months advance written notice.
22.2 OUTSTANDING ORDERS. All Orders issued to and accepted by Supplier
prior to the expiration or termination of this Agreement shall be
fulfilled pursuant to and subject to the terms of this Agreement,
even if the Delivery Dates are after expiration or termination.
22.3 RETURN OF ********* PROPERTY AND CONFIDENTIAL INFORMATION. Upon
expiration or termination of this Agreement, Supplier shall return
all ********* Property to *********, and each party shall return
all Confidential Information of the other party (and all copies
thereof). All such ********* Property shall be in good condition,
normal wear and tear excepted. The party to whom Confidential
Information or ********* Property is to be returned shall determine
the manner and procedure for return.
22.4 SURVIVING PROVISIONS. Notwithstanding the expiration or early
termination of this Agreement, the provisions regarding Payment
procedures in Section 5.3; Insurance in Section 6.1 and 6.2;
Warranties in Section 10, Support Services in Section 11.1, 11,3,
11,6 and 11.7, Intellectual Property Rights in Section 14.4;
Infringement Indemnity in Section 15, Force Majeure in Section
18.1; Confidential Information in Section 20, Limitation of
Liability in Section 21, Assurance of Continued Supply in
Section 22.5, the Miscellaneous provisions in Section 23, and
Exhibit C shall each survive in accordance with their terms. All
licenses granted to *********'s end user customers prior to the
date of expiration or termination shall survive. In addition, the
nontransferable, worldwide, fully paid-up licenses granted to
********* under Section 14.6 and 14.7 shall survive the expiration
or early termination of this Agreement, but only for the sole
purpose of allowing ********* to provide ongoing support to its
customers with respect to OEM Products in the field in accordance
with its rights under Section 11.
22.5 ASSURANCE OF CONTINUED SUPPLY. Immediately upon the termination of
this Agreement by ********* pursuant to Section 19.1, or within
eighteen (18) months after notice of discontinuance from Supplier
pursuant to Section 12.1, Supplier shall grant to an unaffiliated
third party, selected by Supplier and approved by *********, a
nonexclusive license (with a reasonable royalty and upon other
reasonable terms and conditions, including a reasonable price for
the
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products to be paid by *********) to manufacture the affected
OEM Products for the remaining Term of the Agreement, and Supplier
shall release to such third party all technical information and
other material necessary for such manufacture.
23 MISCELLANEOUS
23.1 NOTICES. The addresses for notices shall be the addresses for the
Program Managers as specified in EXHIBIT D. All notices that are
required or permitted to be given under this Agreement shall be in
writing. Notices shall be validly given upon the earlier of
confirmed receipt by the recipient's Program Manager or three (3)
days after dispatch by registered mail, postage prepaid, in any
post office in the United States addressed to the other party's
Program Manager. Notices may be delivered by telefax or by courier
and shall be validly given upon confirmed receipt by the
recipient's Program Manager. Either party may change its address
for purposes of notice by giving written notice to the other party
in accordance with these provisions.
23.2 EXHIBITS. The following Exhibits attached to this Agreement shall
be deemed a part of this Agreement and incorporated herein by
reference:
(a) Exhibit A: OEM Products and Specifications
(b) Exhibit B: Supplier's Prices
(c) Exhibit C: Support Terms
(d) Exhibit D: Program Managers
(e) Exhibit E: Large Orders
(f) Exhibit F: Quality System Requirements
23.3 INDEPENDENT CONTRACTORS. The relationship of the parties
established under this Agreement is that of independent
contractors. This Agreement shall not be construed to establish a
partnership, joint venture, agency or other similar relationship
between the parties. Neither party shall enter into any commitment
on behalf of the other party.
23.4 ASSIGNMENT. Neither ********* nor Supplier shall delegate any
duties or assign any rights or claims under this Agreement, other
than an assignment of accounts receivable by Supplier. Any such
attempted delegation or assignment shall be void. Notwithstanding
the foregoing, either party may assign this Agreement to a
successor entity that acquires all or substantially all of its
business in a "Change of Control" under the procedures set forth
below, and Supplier may assign its rights to receive payments under
this Agreement. A "Change of Control" shall mean any acquisition
of all or substantially all the business of such party, whether by
merger, consolidation, operation of law, sale of assets or
otherwise or any assignment by operation of law. Each party shall
use best efforts to provide the other party with thirty (30) days
prior written notice in the event of its "Change of Control". Upon
such notice, the assigning party shall promptly provide the non-
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assigning party with all non-confidential information relating to
the "Change of Control" reasonably requested by the non-assigning
party. Upon receipt of such "Change of Control" notice, the
non-assigning party shall have the right to terminate this
Agreement if, in its reasonable opinion, the "Change of Control"
would be detrimental to the performance of this Agreement or to
the non-assigning party's business. In the event that the
non-assigning party elects to exercise its right to terminate
this Agreement, the non-assigning party shall so notify the other
party in writing within thirty (30) days after receipt of the
"Change of Control" notice. Prior to a "Change of Control", each
party agrees to notify all potential assignees of the provisions
of this Section 23.4, and of the non-assigning party's election
of its right to terminate this Agreement, if so exercised.
23.5 NO WAIVER. The waiver of any term, condition, or provision of
this Agreement by ********* or Supplier must be in writing. No
such waiver shall be construed as a waiver of any other term,
condition, or provision except as provided in writing, nor as a
waiver of any subsequent breach of the same term, condition, or
provision.
23.6 DEFINITION OF DAYS. All references to this Agreement to "days"
shall, unless otherwise specified herein, mean calendar days.
23.7 HEADINGS. The Section headings used in this Agreement are for
convenience of reference only. They shall not limit or extend the
meaning of any provision of this Agreement, and shall not be
relevant in interpreting any provision of this Agreement.
23.8 NO PUBLICATION. Neither party shall publicize or disclose to any
third party (including but not limited to publication or
disclosure by issuing a press release) without the written consent
of the other party, the terms or existence of this Agreement
except as required by law.
23.9 SEVERABILITY. The terms of this Agreement shall be applicable
severally to each product provided hereunder. Any dispute
affecting either party's rights or obligations as to any such
product shall not affect the rights granted hereunder as to any
other product, subject to the default provisions of Section 19
above.
23.10 ENTIRE AGREEMENT. This Agreement comprises the entire
understanding between the parties and supersedes any previous
communications, representations, or agreements, whether oral or
written. No modification of this Agreement shall be binding on
either party unless in writing and signed by an authorized
representative of each party.
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23.11 GOVERNING LAW. This Agreement shall be interpreted and governed
in all respects by the laws of the State of California without
reference to any choice of laws provisions. Supplier and
********* hereby consent to the jurisdiction and venue of such
courts.
APPROVED AND AGREED TO:
EIP MICROWAVE, INC. *********
By:__________________________ By:_________________________
Printed Name:__________________ Printed Name:_________________
Title:_________________________ Title:________________________
Date:_________________________ Date:_________________________
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EXHIBIT A
OEM PRODUCTS AND SPECIFICATIONS
OEM PRODUCTS
*********- 20 GHz counter
*********- 26.5 GHz counter
*********- 46 GHz counter
The foregoing OEM Products include all associated operating software and are
available with a High Stability Timebase Option and/or a Battery Option. All
OEM Products will be shipped to ********* with a Certificate of Calibration, a
complete manual set, and in ********* shipping package. The replacement parts
identified in Exhibit B are also included as OEM Products.
SPECIFICATIONS
1) The following table shows the operating specifications for the *********OEM
Products. *********
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EXHIBIT B
SUPPLIER'S PRICES
1 SUPPLIER PRICES
1.1 MAINFRAME & OPTIONS Supplier agrees to provide ********* with the
OEM Products described in Exhibit A for the following prices.
Average monthly run rate will be determined as of the date the
applicable order is accepted by Supplier:
*********
1.2 REPLACEMENT PARTS Supplier agrees to provide ********* with the
following replacement parts at the following prices:
*********
1.3 SERVICE RATES Supplier agrees to perform repair work other than
refurbishing Parts at the rate of $********* per hour.
2 LARGE ORDERS
For Orders meeting the Large Order requirements in EXHIBIT E, *********
shall receive discounts shown in that Exhibit.
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EXHIBIT C
SUPPORT TERMS
Supplier hereby agrees to provide the following parts and service for the OEM
Products.
1 REPAIR PROCESS OVERVIEW
********* repair facilities worldwide will repair the OEM Products using
replacement Parts supplied through *********'s distribution system.
Refurbishing of Parts will be done by Supplier. Supplier agrees to use its
reasonable commercial efforts to refurbish Parts within 5 business days or
less after receipt of such Parts from *********.
2 PARTS
2.1 AVAILABILITY Supplier will make Parts available for purchase by
********* distribution system. Delivery shall be reasonable for
quantities ordered.
2.2 SUPPLIER REFURBISHED PARTS Refurbished Parts in the *********
distribution system will be identified by distinct part numbers and
be coded with date of last repair.
2.3 FAILED REFURBISHED PARTS Refurbished Parts that fail will, at
*********'s discretion, be returned to Supplier at Supplier's
expense. Refurbished Parts that cannot be repaired will be replaced
with new Parts at refurbished prices per EXHIBIT B. New parts shall
have 100% backward compatibility. Supplier will collect failed
product data and create a pareto of component and or workmanship
faults by Part. Supplier shall provide this information to
********* quarterly or as requested.
2.4 DOA PARTS Parts returned which are DOA (dead on arrival) will be
identified with a special mark. Any Part being returned twice with
DOA will be replaced at Supplier's expense.
2.5 TESTS Parts returned in which "no trouble found" shall be tested
before being placed back into the supply system.
3 PRICING
3.1 NON-WARRANTY REPAIRS For failures not covered by the warranty terms
of Section 10.1 of the Agreement, Supplier will provide Parts and
repair services to ********* at the prices noted in EXHIBIT B.
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3.2 WARRANTY REPAIRS For failures covered by the warranty terms of
Section 10.1 of the Agreement, Supplier will provide Parts and
repair services to *********, and Supplier will reimburse *********
for the cost of Parts and labor at rates no higher than the internal
rates paid by ********* to its service centers. For each warranty
repair by *********, ********* will provide Supplier with a repair
report containing information reasonably requested by Supplier and,
upon request, all defective parts.
4 SUPPORT DOCUMENTATION AND TRAINING
4.1 MANUALS Supplier shall generate and update operating, service and
programming manuals in the English language as part of the
Documentation for the OEM Product. ********* will be responsible
for any translations of manuals into other languages. Supplier will
cooperate with ********* in providing manuals on Microsoft Word
compatible diskettes or hardcopy as requested by translators.
Supplier will use reasonable efforts to cause the OEM product
manuals to have the look and feel of the ********* manuals currently
being sold by *********. The manuals shall contain the following
sections.
a) Introduction to the product
b) Getting started information
c) Operating and Performance verification
d) Troubleshooting
e) Parts list
f) Programming information
4.2 SHIPPING Supplier shall when requested by ********* provide a
certificate of conformance as part of the shipping documentation for
*********'s customers.
4.3 TRAINING Supplier shall provide technical training in accordance
with Section 13 prior to delivery of the first production units at a
mutually agreed upon time and place. Training will include the
following topics and be fully documented.
a) Troubleshooting of the product for failure diagnosis
b) Applications training
c) Programming training including command set and conditions
d) Function training for *********'s customers
5 LARGE ORDERS
Supplier shall from time to time as requested by ********* provide
additional support for Large Orders as described in Exhibit E. *********
will compensate Supplier for costs incurred to provide this additional
support at charges to be mutually agreed.
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EXHIBIT D
PROGRAM MANAGERS
*********
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EXHIBIT E
LARGE ORDERS
1 DEFINITION
A "LARGE ORDER" means any Order that is identified on its face by *********
as a "Large Order" and consists of at least ********* units with the same
configuration (Model *********) to be resold to one customer. The units
delivered by Supplier under any Large Order may be sold by ********* only
to the same customer for whom the Large Order was placed.
*********
2 DISCOUNTS
The following discounts are applicable to Models ********* on Large
Orders.
*********
3 ADDITIONAL SUPPORT
For Large Order transactions, Supplier shall use reasonable efforts to
provide from time to time the following types of support to ********* and
its customers as reasonably required by *********:
a) Provide Component Level Information Package (CLIP). CLIP will
include schematics, component locator drawings, parts lists with
vendors and an indented bill of material.
b) Technical support to provide customer specific versions of
operating, programming and service manuals.
c) Engineering services to modify products to *********'s requirements.
d) Perform Mil Calibration, with and without data, before shipment to
*********.
e) Affix bar code markings and Mil-Std-130/Warranty labels, before
shipment to *********.
f) Technical support to develop technical proposals.
g) Technical support to develop and perform First Article Tests.
h) Support for Government Configuration Control requirements.
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i) Any other support reasonably required by ********* to meet
*********'s customer needs.
********* will compensate Supplier for costs incurred to provide this
additional support at charges to be mutually agreed.
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EXHIBIT F
QUALITY SYSTEM REQUIREMENTS
1 QUALITY PROCESSES
1.1 QUALITY SYSTEMS. Supplier shall maintain systems that ensure a high
level of quality. At a minimum, ********* expects Supplier's system
to include:
a) internal audit programs to help assure the quality of products
and internal processes; and
b) systems to collect information on product failures and improve
production processes; and
c) processes which allow customers to provide feedback on
products.
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