Corporate Purchase Agreement - Brocade Communications Systems Inc. and Compaq Computer Corp.
COMPAQ COMPUTER CORPORATION
CORPORATE
PURCHASE AGREEMENT
WITH
BROCADE COMMUNICATIONS SYSTEMS, INC.
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COMPAQ COMPUTER CORPORATION
CORPORATE
PURCHASE AGREEMENT
This purchase agreement and all attachments and Exhibits (called the
"Agreement") is made and entered into as of the 1st day of February, 2000, by
Compaq Computer Corporation, a Delaware Corporation and its subsidiaries and
affiliates collectively referred to a ("Buyer",) and Brocade Communication
Systems, Inc. ("Seller") a Delaware Corporation; herein referred to collectively
as the ("Parties"). The terms and conditions herein exclusively govern the
purchase and sale of the Products, Spares and/or Services more fully described
in Exhibits A and B ("Product Part Numbers, Descriptions, Unit prices and
Lead-Times") and ("Spare Part Numbers, Descriptions, Unit Prices and
Lead-Times") and in applicable specifications, attached hereto and incorporated
herein by reference.
Notwithstanding anything to the contrary in this Agreement, this Agreement is
[*] a [*] and [*] Buyer to [*] of Products but only establishes the terms and
conditions [*] Buyer submits orders in accordance with this Agreement
For good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Buyer and Seller hereby agree as follows:
1. DEFINITIONS
In addition to terms defined elsewhere in this Agreement, capitalized
terms used herein shall have the meanings set forth below:
"AFFILIATE" means, with respect to Buyer, (a) any other legal entity
controlling, controlled by, or under the common control with Buyer, and
(b) any OEM subcontractor of Buyer (c) any subcontractor of Buyer. As
used in this definition, the term "control" means the possession,
directly or indirectly or the power to direct, or cause the direction of
the management and policy of the controlled person.
"BUSINESS DAY" shall mean any day other than a Saturday, a Sunday, or
holidays on which banks in the State of Texas are generally closed.
"BUYER FURNISHED ITEMS" - may include components, tools and services
identified in the applicable Exhibit ___ ("Buyer Furnished Items") which
Buyer provides to Seller.
* 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.
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"BUYER PRODUCTS" - will mean those products manufactured, marketed,
distributed and/or otherwise made available by Buyer to Buyer's
customers, which include hardware and software proprietary to Buyer
and/or Buyer's suppliers, including, without limitation, the Products
acquired from Seller under this Agreement.
"CHANGE ORDER" - will mean any written document or Order, including but
not limited to standard industry Electronic, internet prepared and
properly authorized by Buyer and expressly accepted by Seller to
identify changes to a Purchase Order previously accepted by Seller for
Products, Spares and/or Services. A Change Order issued shall contain
the Purchase Order No. affected, a Change Order Number, a Change Order
date signifying the effective date of the change(s). The Change Order
may include changes that affect, but are not necessarily limited to (i)
rescheduling item(s) Delivery Date(s), (ii) adding [*] item(s) in whole
or in part, and/or (iii) changes to Buyer designated destination
point(s).
"DEFAULT" shall mean:
(i) with respect to Buyer, (a) Buyer's failure to comply with any
material provision of this Agreement or any Order issued hereunder, and,
in the case of a breach which is capable of remedy, such failure
continues unremedied for a period of [*] days of written notification of
said breach; provided, delays in delivery shall be deemed incurable and
not subject to the [*] day cure period herein; or (b) Buyer becomes
insolvent, becomes subject to any bankruptcy proceeding, makes an
assignment for the benefit of creditors, or a receiver or similar
officer is appointed to take charge of all or a part of such party's
assets and such condition is not cured within [*] days; and
(ii) with respect to Seller, (a) Seller's failure to comply with any
material provision of this Agreement or any accepted Order issued
hereunder, and in the case of a breach which is capable of remedy, fails
to remedy same within [*] days of written notification of said breach;
(b) Seller becomes insolvent, becomes subject to any bankruptcy
proceeding or makes an assignment for the benefit of creditors, or a
receiver or similar officer is appointed to take charge of all or a part
of Seller's assets and such condition is not cured within thirty [*];
(c) Seller assigns or attempts to assign, or subcontracts or attempts to
subcontract, any or all of its rights or obligations under this
Agreement or any Orders issued hereunder to a third party without
Buyer's prior written approval, provided, however that Seller shall not
be considered to be in Default in the event that Seller assigns, or
subcontracts or attempts to subcontract, without consent from Buyer or
notice to Buyer, any or all of its rights or obligations under this
Agreement or any Orders issued hereunder to a successor-in-interest in
connection with a merger, reorganization, acquisition, or sale of all or
substantially all of Seller's assets.
* 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.
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"DEFECTIVE Products" shall mean Products, Spares and/or Services that do
not conform to the Specifications or that contain any defect in
material, workmanship or design.
"DELIVERY DATE" - will mean; (i) the date stipulated on Buyer's Purchase
Order for the delivery of the Products and/or Spares during normal
business hours and days at the [*]; and (ii) the date stipulated on
Buyer's Purchase Order for the performance of Services to be completed
by Seller as specified within Buyer's Purchase Order.
"ELECTRONIC INTERCHANGE" shall mean the transmission of data in an
electronic format including but not limited Electronic Data Interchange,
("EDI") Electronic Funds Transfer, ("EFT"), Facsimile, Electronic Mail
(email), World Wide Web ("WWW") and Electronic File Exchange of any of
the transaction sets listed in Exhibit L, (Electronic Commerce
Agreement), electronic Orders, credit card Orders, and internet Orders
transmitted via the internet between the parties.
"INFORMATION" shall mean confidential information, which might include
but is not limited to business plans, forecasts, capacity, pricing and
inventory levels.
"LEAD-TIME" shall mean the period of time extending from the date the
Purchase Order is received by Seller to the Seller delivery date for
Products, Spares and/or Services. The lead-times for the Products,
Spares and/or Services shall be set forth in Exhibits A and B ("Product
Part Numbers, Descriptions, Unit prices and Lead-Times") and ("Spare
Part Numbers, Descriptions, Unit Prices and Lead-Times") respectively,
or as otherwise mutually agreed to in writing by the parties herein.
"ORDER(S)" shall mean collectively any written Purchase Order; or
electronic Purchase Order employing industry standard Electronic
Commerce techniques; and internet orders employing the Internet and
industry standard Ecommerce techniques that are properly authorized and
issued by Buyer and expressly accepted by Seller for the purchase of
Products, Spares and/or Services.
"PROPRIETARY RIGHTS" - shall mean all current and future patents, mask
works, copyrights, trade secrets, know-how and all other intellectual
property rights, including all applications, continuations and
registrations with respect thereto.
"PURCHASE ORDER" - will mean a written document prepared by Buyer and
expressly accepted by Seller to identify Products, Spares and/or
Services to be furnished by Seller under the terms and conditions of
this Agreement. Such Purchase Order shall contain, at a minimum: (i)
Purchase Order Number, (ii) Purchase Order date, (iii) Purchase Order
Item No. for each item ordered, (iv) quantity of each Product, Spares or
Service ordered, (v) Buyer and/or Seller part number, (vi) revision
designator for each Product/Spare, (vii) unit price of each item, (viii)
Delivery Date of each item, and (ix) Buyer's designated destination
point for each item.
* 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.
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"PRODUCTS" - will refer to goods that are either manufactured,
distributed or otherwise made available from Seller to Buyer for
acquisition by Buyer pursuant to the terms and conditions of this
Agreement. The Products shall include the products described under
Exhibit A ("Product Part Numbers, Descriptions, Unit Prices, and
Lead-Times"), as may be amended from time to time.
"RMA" - will mean a Return Material Authorization number assigned by
Seller for a shipment of Products and/or Spares being returned by Buyer
to Seller unless otherwise defined herein.
"SERVICES" - will mean the services made available to Buyer by Seller,
as described in Exhibit E attached hereto ("Services Addendum").
"SOFTWARE" - will mean (i) the software which is a component of, or
bundled with, the Products and Spares (whether in firmware or on
magnetic, optical or other media) and (ii) the end user documentation
for such software, including all updates and enhancements to such
software and documentation. "Updates" as used herein will mean
non-feature improvements, workarounds, bug-fixes, media replacements
and/or maintenance corrections to the Software or hardware components of
a Product. Enhancements as used herein will mean feature improvements,
new functionality, improved performance, and any increase in value,
however caused or arising.
"SPARE(S)" - will mean any replacement parts/components, assemblies, or
sub-assemblies for the Products. Such Spare Parts shall include, without
limitation; the items described within the applicable Exhibit B ("Spare
Part Numbers, Descriptions, Unit Prices and Lead-Times"), as may be
amended from time to time.
"SPECIFICATIONS" - may include as applicable (i) the specifications for
the specific Product, Spare and/or Service set forth in Exhibit F
("Product, Spares and Repairs Specifications"); (ii) the specifications
with regard to the specific Products, Spares and/or Services generally
published by Seller; (iii) the General Quality Requirements set forth
under Exhibit D, ("Quality Assurance") and (iv) the Product Agency And
Regulatory Compliance Requirements set forth under Exhibit J.
Specifications also include, but are not limited to, physical or
operational performance parameters, characterization and/or attributes
of the Products and Spares as identified elsewhere within this
Agreement.
2. PRODUCT PURCHASES
The terms and conditions contained in this Agreement shall govern the
purchase and sale of Products, Spares and/or Services listed in a
Products, Spares and/or Services Exhibit entered into from time to time
by Buyer and Seller, which Exhibit shall be substantially in the form of
Exhibits A and/or B ("Product Part Numbers, Descriptions, Unit prices
and Lead-Times") and ("Spare Part Numbers, Descriptions, Unit Prices and
Lead-Times") attached hereto.
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3. PRODUCT FORECASTS
3.1 Buyer shall provide at a minimum, a monthly forecast of its
intended purchases for a [*] month period. Such forecasts
are for Seller's convenience only, and Seller hereby
expressly acknowledges that such forecasts shall not create
any liability whatsoever for Buyer, including but not
limited to an obligation to purchase Products, Spares,
unique or industry standard material.
3.2 Seller agrees to review forecasts provided by Buyer and
advise Buyer if Seller anticipates that Seller will be
unable to achieve the requested volumes. Buyer volume
forecasts will be provided to Seller in accordance with the
terms and conditions of Exhibit C, ("Flexibility Agreement")
contained herein. Seller may from time to time request Buyer
to review Buyer's forecast and advise of any changes.
4. ORDERS
4.1 Orders shall set forth the following items: quantity, price,
delivery date, part number, and revision level.
4.2 Seller shall accept any Order that materially conforms with
the terms of this Agreement. Seller shall use commercially
reasonable efforts to send written confirmation of such
acceptance within [*] days after Seller's receipt of a
written Order from Buyer subject to Terms referenced in
Exhibit C.
4.3 The parties hereby agree that prior to commencement of
Electronic Commerce between the parties, Buyer and Seller
shall execute an Electronic Commerce Trading Agreement
listed in Exhibit L.
* 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.
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4.4 If Buyer issues an electronic Order, Seller shall
electronically "Verify" receipt of the electronic Order
within [*] of the electronic Order transmission by Buyer.
"Verify" or "Verification", as used herein shall mean
Seller's determination of successful receipt, from
electronic mailbox, of all necessary Order information and
requirements, (e.g. quantity, price, delivery date, part
number, and revision level), and notification to Buyer of
both the receipt of the electronic Order from Buyer any
discrepancies relating to the readability of such electronic
Order. Seller shall return an electronic Order
acknowledgment ("Electronic Transmission Acknowledgment") to
Buyer within [*] following Verification. Seller shall be
conclusively presumed to have accepted all electronic Orders
issued by Buyer and verified received by Seller, unless
Buyer is notified specifically, that Seller has not accepted
a particular electronic Order. Such notification by Seller
must take place within the said [*] day period from Buyer's
electronic Order transmission.
4.4.1 All electronic Orders, Verifications, and Electronic
Transmission Acknowledgments and other related data
electronically transmitted shall;
4.4.1.1 reference and be subject to the terms and conditions of
this Agreement, and
4.4.1.2 contain information in a specified format in accordance
with Buyer's policies, specifications and procedures
regarding electronic data interchange information.
4.5 No additional or different or conflicting provisions
proposed by Seller in any oral, electronic or written
acceptance, confirmation or acknowledgment shall apply
unless expressly agreed to in writing by Buyer. Buyer hereby
gives notice of its objection to any additional or different
terms. No additional or conflicting provisions proposed by
Buyer in any Order, or in any oral, written or electronic
data interchange, confirmation, verification or
acknowledgment, shall be binding on Seller unless as
expressly agreed to in writing by Seller. Seller hereby
gives notice of its objection to any additional or different
or conflicting terms.
4.6 Seller agrees that all of Buyer's Affiliates, wherever
located, shall be entitled to make purchases under this
Agreement. Seller agrees to sell to Buyer's Affiliates as
notified to Seller in writing, and extend pricing, lead time
and warranty terms from this agreement to such Affiliate
upon credit approval.
* 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.
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4.7 The parties agree: i) the provision of the Uniform
Commercial Code Section 2-201 (Statute of Frauds) shall not
apply to these Electronic Transmissions; ii) these
Electronic Transmissions shall be deemed to satisfy any
legal formalities requiring that agreements be in writing;
iii) computer maintained records when produced in hard copy
form shall constitute business records and shall be
admissible to the same extent as other generally recognized
business records.
4.8 BROCADE IS CURRENTLY UNABLE TO ACCEPT CREDIT CARD
TRANSACTIONS]
5. TERM OF AGREEMENT
The initial term ("Term") of this Agreement shall be [*] years,
commencing on the date of this Agreement (the "Effective Date"). This Agreement
will be automatically renewed at the conclusion of the initial Term for a [*]
month period unless one of the parties notifies the other party not less than
[*] days prior to the end of such [*] year period that it does not intend to
renew this Agreement. Such automatic renewal provision shall apply at the end of
each subsequent [*] month period unless either party indicates, in accordance
with the [*] day notice provision described in the preceding sentence, that
renewal is not intended. This Agreement may terminate prior to the
aforementioned stated term under the circumstances set forth in Section 15.
Notwithstanding the foregoing, this Agreement shall remain in full force and
effect and shall be applicable to any Order issued by Buyer to Seller during the
term of this Agreement until all obligations under such Order have been
fulfilled.
6. PRICING
6.1 The prices for the Products, Spares and/or Services shall be
established from time to time by the parties executing and
delivering a ("Pricing Schedule") in the form set forth in
Exhibits A and/or B, ("Product Part Numbers, Descriptions,
Unit Prices and Lead-Times") and ("Spare Part Numbers,
Descriptions, Unit Prices and Lead-Times"). The Product
prices (the "Prices") set forth in any Pricing Schedule
shall be fixed for the period set forth therein.
6.2 The Prices shall include all direct, indirect and incidental
charges relating to the sale and delivery of the Products,
Spares and/or Services to Buyer including, without
limitation, packaging pursuant to the attached
specification, packing and crating,storage, forwarding agent
and brokerage fees, insurance costs, freight shipping
charges, and document fees.
* 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.
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6.3 Notwithstanding the above, Seller agrees to sell the
Products to Buyer at [*] to the [*] by Seller to a [*] the
Products under an agreement with [*] and [*] to those in
this Agreement. The [*] and [*] are [*] to, or [*] those [*]
by Seller [*]. If at any time during the term of this
Agreement, Seller [*] the Products to a [*] at a [*] that
[*] Buyer under an agreement with [*] and [*] to those in
this Agreement, Seller shall promptly notify Buyer in
writing and Buyer shall then have the [*] to [*] from Seller
at the [*] to such [*].
6.4 Upon reasonable prior notice, Buyer shall have the right,
exercisable not more than once every [*] months, to appoint,
at Buyer's expense, an [*] firm reasonably acceptable to
Seller to [*], during Seller's normal business hours
Seller's [*] and [*] to the [*] of the [*] and/or [*],
subject to such [*] of a mutually agreeable confidentiality
agreement. In the event Seller [*] Products, Spares and/or
Services in accordance with this Section 6, Buyer shall be
entitled to (a) with respect to any Product, Spare and/or
Service that Buyer has received, but has [*], a [*] in the
[*] and (b) with respect to any Product, Spare and/or
Service [*] an [*].
6.5 Seller shall use [*] efforts to maintain a [*] program and
to ensure that the [*] are [*] at all times. If Buyer does
not consider the Prices aggressive and competitive, Buyer
shall have the right, at any time and from time to time, to
request an immediate meeting with Seller, and if a [*] is
mutually agreed upon by the parties, Seller shall use [*]
efforts to amend the Subject Terms to comply with this
Section 6 by entering into a new [*] Schedule.
6.6 Seller shall deliver Products to Buyer on the date (the
"On-dock Date") and to the location (the "Specified
Location") specified in the related Order. If Seller
anticipates or becomes aware that it will not supply the
Products on the due-on-dock delivery date acknowledged by
Seller for any reason, Seller shall proactively notify Buyer
immediately after Seller has knowledge of the situation. The
notification may be communicated by facsimile, telephone,
electronic mail, or any other method agreed to by the
parties, provided that Seller shall obtain Buyer's actual
acknowledgment of the notice of anticipated delay. Seller
and Buyer will jointly develop alternatives to resolve any
late delivery of the Products, including use of premium
routing [*]. Seller will develop recovery plans with new
committed due-on-dock dates and communicate such plans to
Buyer within [*] business day of missed shipments.
* 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.
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6.7 The terms governing all Products, Spares and/or Services
received by Buyer will be interpreted in accordance with the
International Chamber of Commerce Incoterms 1990 Edition.
All N. American requirements for Products or Spares shall be
shipped F.O.B. [*] N. American location. Unless otherwise
mutually agreed, all Product and Spares received by Buyer at
any [*] will be received as [*], Incoterms 1990 Edition.
Once minimum volume run-rates are realized, Seller will
implement up to [*] buffer stock in hub(s), and [*]
inventory at seller's location of choice. Unless otherwise
expressly agreed to in writing by Seller, title and risk of
loss of Products shall pass to Buyer upon receipt of goods
by Buyer from [*].
6.8 If Seller delivers Products, Spares and/or Services in more
than [*] Business Day advance of the On-dock Date therefor,
Buyer may, at its option, either (i) return such Products,
Spares and/or Services to Seller at Seller's risk and
expense, including but not limited to any transportation,
import, or export related expenses or duties, (in which case
Seller, at its expense, shall redeliver such Products or
Spares to Buyer on the correct On-dock Date therefor) or
(ii) retain such Products or Spares and make [*] on the date
[*] would have been [*] based on the [*] On-dock Date
therefor.
6.9 Changes to delivery dates may only be made by Buyer's
authorized purchasing representatives, as specified by
Buyer. Buyer may, [*], issue Change Orders for Products or
Spares quantities and schedule dates in accordance with the
flexibility agreement attached as an Exhibit C hereto (the
"Flexibility Agreement"). All Change Orders must be provided
in writing by confirmed facsimile or email.
6.10 In the event that Products or Spares scheduled for delivery
are more than [*] Business Day late, Buyer may (i) at its
request, require Seller, [*], to ship and deliver such
Products or Spares via a different mode of transportation or
(ii) pursue [*] available to Buyer, [*] or in [*],
consistent with the terms of this Agreement.
* 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.
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6.11 Buyer may measure Seller's On Time Delivery performance
against commitments for the purpose of establishing Seller's
rate of On Time Delivery, Lead-Time and cycle time
improvement against requirements of this Agreement. Unless
otherwise agreed to by the parties, On Time Delivery shall
mean delivery of scheduled Products no more than [*] days
early and [*] days late. Lead-Times for all Products, Spares
and/or Services ordered hereunder shall not exceed that
listed in Exhibit A and/or B, ("Product Part Numbers,
Descriptions, Unit prices and Lead-Times") and ("Spare Part
Numbers, Descriptions, Unit Prices and Lead-Times") attached
hereto.
7. PACKING, MARKING, AND SHIPPING INSTRUCTIONS
7.1 Seller shall prepare and pack all Products and Spares in
accordance with the specifications identified in Exhibit K
or as mutually agreed to in writing.
7.2 Seller shall mark, or cause to be marked, each shipping
container to adequately show Buyer's Order number, part
number, revision level, and quantity contained therein.
Packing list may be placed outside the box
8. QUALITY
8.1 Seller shall ensure that all Products, Spares and/or
Services conform to the Specifications, drawings, samples,
revision levels and other descriptions designated in the
Product Schedule for such Products, Spares and/or Services.
The Specifications shall include any labeling requirements
as detailed in the Project Schedule or in Exhibit I.
8.2 Seller shall establish and/or maintain a quality improvement
plan acceptable to Buyer. Seller's initial Quality Plan is
attached to this Agreement as an Exhibit D, Appendix 2 (the
"Quality Plan") and shall not be amended without Buyer's
prior written consent.
8.3 Upon reasonable notice, Buyer shall be entitled to visit and
inspect Seller's facility sites during normal business hours
and Seller shall cooperate to facilitate such visits. Seller
authorizes and agrees to assist Buyer in performing sourcing
inspection and quality assurance reviews and or
certifications at Seller's manufacturing facilities and/or
its subcontractors or authorized agents. Buyer's inspections
shall in no way relieve Seller of its obligation to deliver
conforming Products, Spares and/or Services or waive Buyer's
right of inspection and acceptance at the time the Products
and Spares are delivered, nor does said right of inspection
waiver any rights under the warranty provisions.
* 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.
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8.4 At Buyer's request, Seller shall provide Buyer with relevant
inspection, quality, and reliability data.
9. CHANGES
9.1 Buyer may from time to time request a change in the
Specifications for the Products, Spares and/or Services, and
Seller shall commercially reasonable efforts to evaluate and
respond in writing to such change request within [*]
business days. If Buyer's changes result in a material
change in Seller's costs or in the time for performance,
Seller and Buyer shall negotiate in good faith such
adjustments as the parties deem appropriate to address such
changes.
9.2 Except for Mandatory Engineering Changes (as defined below),
no changes shall be made by Seller in the form, fit, or the
function of the Product or Spares to be purchased hereunder
without Buyer's prior written approval. Seller agrees to use
commercially reasonable efforts to (i) provide [*] days
notice to Buyer of any changes to form, fit, function, [*],
or [*] for the Products or Spares, and (ii) ensure that such
changes do not compromise specifications, quality, or
reliability of Products ordered by Buyer. Buyer shall review
any proposed change within [*] business days of such notice
and provide Seller with written approval of such proposed
change or request samples which incorporate the proposed
change. In the event samples are requested, Buyer will have
an additional [*] business days to accept or reject in
writing the proposed changes. In the event Buyer fails to
respond in writing within the applicable period, the
proposed change will be deemed accepted by Buyer.
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the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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9.3 Seller shall provide notice to Buyer within [*] business
days of becoming aware of the need to make any Mandatory
Engineering Changes to Buyer in "Mandatory Engineering
Change" as used herein shall mean any mechanical, electrical
firmware or other change which is necessary to (i) the
Products or Spares previously furnished, (ii) Product(s) or
Spares to be furnished to Buyer by Seller, to Products or
Spares meet the specifications outlined in Exhibit F,
reliability, safety, agreed to in Exhibit F and/or to insure
continuity of supply. Seller shall promptly make the
Mandatory Engineering Change at no charge to Buyer for
Products and Spares not yet shipped to Buyer. If the
Mandatory Engineering Change is applicable to previously
delivered Products and Spares to conform to the applicable
revised specifications, the change shall be supplied in the
form of a mandatory field exchange kit ("Field Kit") at no
charge to Buyer. Buyer may (i) exchange the Field Kit
itself, and either [*] for, or [*], which will include
Buyer's [*] for doing so; (ii) return the affected Products
and Spares to Seller, FOB [*], and Seller will make the
change at no cost to Buyer, or (iii) a combination of (i) or
(ii) as stated within this Section.
10. INSPECTION AND ACCEPTANCE
10.1 Products, Spares and/or Services purchased or to be
purchased pursuant to this Agreement shall be subject to
inspection and test by Buyer at all times (including during
the period of manufacture or development) and places
(including Seller's facilities or Seller's subcontractor
facilities). Unless otherwise specified in the Order, final
inspection and acceptance of Products, Spares and/or
Services by Buyer shall be at Buyer's facilities. Buyer
reserves the right to reject Defective Products discovered
after [*] days of the date of delivery. Products which have
not been accepted or rejected in writing by Buyer within [*]
days of the date of [*] will be deemed accepted by Buyer.
The remedy for Defective Products discovered after [*] days
shall be as set forth under the terms of Section 11
"Warranty".
10.2 If Buyer returns Defective Products to Seller for
correction, credit or replacement, Seller shall repair or
replace same within [*] business days of receipt thereof.
Seller shall bear [*] risk and [*] associated with replacing
or repairing verified Defective Products and [*] Seller
agrees to provide failure verification of Defective Products
within [*] business days after receipt thereof and failure
analysis within an additional [*] business days. Seller will
also provide Buyer with a written corrective action report
addressing the steps that will be taken to eliminate the
recurrence of the problem, and will use commercially best
efforts to implement the actions addressed in such report.
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the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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10.3 Seller shall reimburse Buyer for the out-of-pocket costs for
any special inspection measures deemed necessary by mutual
agreement.
11. WARRANTY
11.1 Seller hereby warrants (a) that for [*] months from the date
of shipment of Products and/or Spares by Buyer that all
Products and/or Spares shall conform to applicable
specifications drawings, samples, and descriptions referred
to in this Agreement. Seller further represents and warrants
that Products and/or Spares purchased hereunder shall (i)
vest in Buyer good and valid title to such Products or
Spares free and clear of all liens, security interests,
encumbrances, burdens and other claims, and (ii) that
Products or Spares do not infringe any U.S. patent issued as
of the Effective Date, copyright or trade secret of any
third party. The warranty for replaced or repaired Products
or Spares shall be the remainder of the original Products
and Spares warranty or [*] days, whichever is longer.
11.2 Upon discovery of a Defective Product during the warranty
period, Buyer shall promptly notify Seller in writing of
such Defective Product, including a detailed description of
the applicable defect, and promptly return such Defective
Product to Seller's facility. Seller will, at its option,
repair or replace the Defective Product, or credit an amount
equal to the [*], whichever is lower, for such Defective
Product. Seller shall bear all costs related to the
replacement or repair of Defective Product, including the
costs of the relevant turn-around shipment. Buyer shall use
commercially reasonable efforts to ensure that all Products
to be returned to Seller are verified to be defective. In
the event that Product(s) returned to Seller as defective
are determined to be No-Trouble-Found (NTF), Seller shall
return the Product to Buyer. In the event that NTF's exceed
[*] of the total returns over a [*] day period, Buyer may
subject to the NTF charge as listed in Exhibit E. THE
REMEDIES SET FORTH IN THIS SECTION 11.2 SHALL BE BUYER'S
SOLE AND EXCLUSIVE REMEDIES IN THE EVENT OF A BREACH OF THE
LIMITED WARRANTIES SET FORTH IN SECTION 11.1(A).
11.3 As further provided in Section 31.10, IN NO EVENT WILL [*]
BE RESPONSIBLE TO THE OTHER FOR ANY INCIDENTAL OR
CONSEQUENTIAL DAMAGES ARISING OUT OF THIS WARRANTY. HOWEVER,
NOTHING HEREIN SHALL BE DEEMED AN ASSUMPTION BY EITHER PARTY
OF LIABILITY THAT THE OTHER PARTY HAS IN CONTRACT OR AT LAW,
WITH REGARD TO ANY THIRD-PARTY CLAIMS.
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11.4 Seller warrants that Seller has not previously or otherwise
granted any rights to any third party which conflict with
the rights granted herein; as of the Effective Date, to
Seller's knowledge, there is no litigation, arbitration, or
other pending proceeding, pending or threatened with regard
to Seller before any court or any other governmental or
administrative agency that would interfere with Seller's
ability to provide the Products or Spares to Buyer under the
terms of this Agreement; that, as of the Effective Date, no
judgment, order, injunction or decree of any court or any
other governmental or administrative agency regarding
Products, Spares and/or Services have been entered against
or served upon Seller; and that Seller has the full power
and authority to enter into this Agreement, to carry out
Seller's obligation, as set forth herein and grant the
rights granted herein.
11.5 Seller represents and warrants that all Products, Spares
and/or Services provided to Buyer under this Agreement
including own operating and manufacturing systems
("Systems") used in support of providing Products, Spares
and/or Services to Buyer will operate accurately in the
manner in which they are intended as it relates to date
related operations when given a valid date containing
century, year, month and day, including, but not limited to,
the following specific performance features: (i) the
Products, Spares and Systems must accurately calculate and
execute dates using a four digit year; (ii) the Products,
Spares and Systems' functionality (on-line and batch),
including but not limited to entry, inquiry, maintenance and
update, must accurately support and execute four digit year
processing; (iii) the Products, Spares and Systems'
interfaces and reports must accurately support and execute
four digit processing; (iv) the Products, Spares and Systems
shall accurately execute the translations into the year 2000
with the correct system date (e.g., 1/1/2000) without human
intervention; (v) the Products, Spares and Systems must
accurately process with a four digit year after transition
to and beyond the year 2000, including accurate calculations
of leap year, without human interventions; and (vi) the
Products, Spares and Systems must accurately provide results
in forward and backward date calculation spanning century
boundaries, and shall accurately convert years previously
stored as two digits to four digits. The foregoing
representations and warranties shall not apply to the extent
that any such failure arises from any third party software
and/or firmware. In the event of any breach by Seller of the
foregoing representations and warranties, Seller shall, upon
receipt of written notice from Buyer and at Seller's sole
option, either: (i) use commercially
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reasonable efforts to promptly correct any such
nonconformance in the affected Products, Spares and/or
Systems; or (ii) [*] by Buyer to Seller for such Products,
Spares and/or Systems. THE FOREGOING REMEDIES SHALL BE
BUYER'S SOLE AND EXCLUSIVE REMEDIES FOR ANY BREACH OF THE
REPRESENTATIONS AND WARRANTIES SET FORTH IN THIS SECTION
11.5.
11.6 Software Warranty/Maintenance Seller warrants the Product
base Fabric OS and optional features (i.e. WebTools, Zoning,
etc) for a period of [*] days. Remedial fixes and [*] are
provided during this warranty period.
New functionality may be provided as a new optional feature to enhance
the functionality provided by the Product (i.e. Remote Fabrics).
Seller [*] new license keys to enable these features (i.e. Webtools,
Zoning, SES etc, users need to purchase a license key to enable new
features.)
12. OUT OF WARRANTY REPAIRS AND SPARES AVAILABILITY
12.1 Seller agrees to refurbish to a mutually agreed "minimum
acceptance level" any Products and Spares no longer covered
by the express warranties set forth elsewhere in this
Agreement (an "Out of Warranty Product") at the
refurbishment prices and according to the terms set forth in
Exhibit B ("Spare Part Numbers, Descriptions, Unit Prices
and Lead-Times") attached hereto.
12.2 In addition, Seller shall make available for purchase by
Buyer replacement and repair Spares for Products in
accordance with the terms set forth in the applicable
Exhibit B attached hereto.
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13. TERM OF AVAILABILITY
13.1 In consideration for Buyer's purchase of any Products or
Spares hereunder, Seller grants to Buyer the option to
purchase replacement Products and Spares at the last
revision level purchased under this Agreement for the period
[*] after Seller's formal "End of Life" or "EOL"
notification during the term of this Agreement (or the
Agreement's termination, as applicable), or for as long as
said Products or Spares is made available to any of Seller's
other customers, whichever is the later. Buyer shall use
commercially reasonable efforts to provide Seller with a
forecast for Buyer's anticipated purchases of Products and
related Spares for each Product within [*] days of the date
of "EOL" notification or the termination of this Agreement,
as applicable, and Seller shall make commercially reasonable
efforts, to provide Product or Spares in excess of such a
forecast.
13.2 Thereafter, Seller may discontinue availability of Products
or Spares by giving Buyer [*] months prior written notice,
provided that, at Buyer's option, Seller shall sell Buyer,
pursuant to a last time Purchase Order for each Product
placed by Buyer prior to the expiration of such [*] month
period
sufficient quantities of Products and/or Spares [*]
necessary. Such last time purchase order shall be a
non-cancellable order and delivery must be scheduled to
occur within the above [*] month window. Seller shall use
reasonable efforts to delay [*] for the Products until
Seller deems necessary to meet Buyer's requested deliveries.
Should Buyer not require all of Product on such final order,
Seller shall make commercially reasonable efforts to [*] and
[*] for Buyer. Buyer shall pay all reasonable documented
costs including, but not limited to material, labor,
overhead as charged to Seller by Seller's subcontract
manufacturer, and reasonable profit margin. Such cost
liability shall be no more than the purchase price for the
Products.
13.3 The parties shall negotiate in good faith the Terms and
Conditions of the purchase set forth in Sections 13.1. and
13.2 above. However, in no event shall the [*] for Products
or Spares, or any other charges related to Buyer's exercise
of its rights in Section 13.2 above, [*] then [*] to
Seller's other customers for [*] of Products or Spares.
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14. PAYMENT
14.1 Buyer shall make payment in full for the purchase price of
all Products, Spares and/or Services purchased hereunder
(other than items disputed by Buyer in good faith) and
received by Buyer on or before the [*] day after the date of
Seller's invoice; provided, Seller's invoice shall not be
dated earlier than the shipment date of Products covered
thereby.
14.2 Unless otherwise specified in an Exhibit or otherwise agreed
to in writing by the parties, payment shall be made in U.S.
dollars.
15. TERMINATION
15.1 Either party (the "Non-Defaulting Party") may terminate this
Agreement and/or any Order issued hereunder at any time by
written notice to the other party (the "Defaulting Party")
upon the occurrence of a Default by the Defaulting Party
This Agreement shall terminate on the date of such written
notice (the "Termination Date").
15.2 Upon termination by Seller of this Agreement and/or any
Order due to Buyer's Default or upon termination by Buyer
for reasons other than Seller's Default, Buyer's liability
shall be to purchase the Products and Spares in accordance
with Exhibit C and any and all Products and Spares that
Buyer has received and had not previously paid for.
Notwithstanding the foregoing, Seller may exercise any other
remedies available to Seller at law or in equity.
15.3 Upon termination by Buyer of this Agreement and/or any Order
due to Seller's Default, Buyer may, at its option, (i)
return Defective Products to Seller, [*] , (ii) return
Defective Products to Seller for Seller's correction or
replacement or (iii) [*] any [*] as Buyer may have [*] or
[*] that are consistent with the other provisions of this
Agreement. Products or Spares required to be corrected or
replaced shall be subject to the same inspection and
acceptance provisions of this Agreement as Products or
Spares originally delivered under any Order.
16. FORCE MAJEURE
16.1 Neither party shall be liable for its failure to perform any
of its obligations hereunder during any period in which
performance is delayed by fire, flood, war, embargo, riot or
an unforeseeable intervention of any government authority
that causes complete business interruption ("Force
Majeure"), provided that the party suffering such delay
immediately notifies the other party of the delay.
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16.2 If, however, either party's (the "Delayed Party")
performance is delayed for reasons set forth above for a
cumulative period of [*] days or more, the other party,
notwithstanding any other provision of this Agreement to the
contrary, may terminate this Agreement and/or any Order
issued hereunder by [*] to the Delayed Party. In the event
of such termination by either party, Buyer's [*] hereunder
shall be for the [*] to Seller of [*] and owing for Products
or Spares previously delivered by Seller and accepted by
Buyer or on order as of the date of termination pursuant to
the Flexibility Model in Exhibit C. In the event the parties
do not [*] and/or [*] due to a Force Majeure, the time for
performance or cure will be extended for a period equal to
the duration of the Force Majeure.
17. NOTICES
Any notice given under this Agreement shall be written or sent by telex
or facsimile. Written notice shall be sent by registered mail or
certified mail, postage prepaid, return receipt requested, or by any
other overnight delivery service which delivers to the noticed
destination, and provides proof of delivery to the sender. Any telex or
facsimile notice must be followed within three (3) days by written
notice. All notices shall be effective when first received at the
following addresses:
If to Seller: If to Buyer:
CFO Corporate Commodity Manager
------------------------------------ --------------------
Brocade Communications Compaq Computer Systems
------------------------------------ ------------------------
1901 Guadalupe Pkwy 20555 SH 249
------------------------------------ ----------------------------------
San Jose, CA 95131 Houston, TX 77269-2000
------------------------------------ ------------------------
with copies to: with copies to;
Compaq Sales Executive
------------------------------------ ------------------------------------------------
Brocade Communications Systems
------------------------------------ ------------------------------------------------
1901 Guadalupe Parkway
------------------------------------ ------------------------------------------------
San Jose, CA 95131
------------------------------------ ------------------------------------------------
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18. COMPLIANCE WITH LAWS
18.1 All Products or Spares supplied and work performed under
this Agreement shall comply with all applicable United
States and foreign laws and regulations including, but not
limited to, emission and safety standards, the Occupational
Safety and Health Act (29 U.S.C. Sections 651 et seq.), the
Fair Labor Standards Act of 1938 (29 U.S.C. Sections
201-219), the Toxic Substance Control Act of 1976 (15 U.S.C.
Section 2601), all laws restraining the use of convict
labor, and Worker's Compensation Laws. Upon request, Seller
agrees to certify compliance with any applicable law or
regulations. Seller's failure to comply with any of the
requirements of this Section may result in a material breach
of this Agreement.
18.2 The following provisions and clauses of the Federal
Acquisition Regulation (FAR), 48 CFR Chapter 1, are hereby
incorporated by reference, with the same force and effect as
if they were given in full text and are hereby made binding
upon the subcontractor or vendor, if applicable. Where the
clauses or provisions say "Contractor", substitute
"subcontractor or vendor."
1) Nonexempt Subcontracts and Purchase Orders over $2,500:
52.222-36 Affirmative Action for Handicapped Workers (APR
1984)
2) Nonexempt Subcontracts and Purchase Orders over $10,000 or
subcontracts and Purchase Orders the aggregate value of which
in any twelve month period exceeds or can be expected to
exceed $10,000: 52.222-26 Equal Opportunity (APR 1984)
3) Nonexempt Subcontracts and Purchase Orders over $10,000:
55.222-21 Certification of Nonsegregated Facilities (APR
1984) 52.222-35 Affirmative Action for Special Disabled and
Vietnam Era Veterans (APR 1984)
18.3 This Agreement is subject to all applicable United States
laws and regulations relating to exports and to all
administrative acts of the U.S. Government pursuant to such
laws and regulations.
18.4 The 1980 United Nations Convention on contracts for the
international sale of goods shall not apply to this
Agreement or any Order issued under this Agreement.
18.5 Seller agrees to comply with all terms and conditions of the
Compaq Supplier Compliance Policy, attached as Exhibit G
hereto.
18.6 In the event that Buyer licenses any Software to the U.S.
Government, Buyer shall identify such Software to the
Government as "commercial computer software" developed
exclusively at private expense, and in accordance with FAR
Section 12.212
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or Defense FAR Supplement Section 227-7202, as applicable.
Buyer shall license the Software to the Government in
accordance with the terms of the Alliance Master Agreement
dated April 16, 1999.
19. INDEMNITY AND REMEDIES
19.1 Seller shall indemnify, defend and hold harmless Buyer and
its Affiliates and their respective directors, officers,
shareholders, employees and agents ("Buyer Indemnified
Parties") from and against any and all claims, demands,
suits, actions, judgments, costs and liabilities (including
attorneys' fees) (each, an "Indemnified Loss"), relating to
or arising out of any allegation that Products or Spares
furnished under this Agreement infringe or violate any U.S.
patent issued as of the Effective Date, copyright or trade
secret of any third party and shall pay all costs and
damages awarded; provided, the foregoing indemnity shall not
apply to the extent any such claim is attributable solely to
design specifications furnished by Buyer to Seller. If an
injunction or exclusion order preventing the use, sale,
lease license, or other distribution of the Products or
Spares of any part thereof of the Products or Spares results
from such a claim (or, if Buyer [*] such an injunction is
[*]) Seller shall, at its expense, and at Buyer's request,
use commercially reasonable efforts to [*] for Buyer the [*]
to [*] the Products or Spares. In the event that Seller
cannot [*] for Buyer, Seller shall be deemed to have
breached its warranty set forth in Section 11.1 and
thereupon Seller shall [*] all such Products and Spares from
Buyer at the [*]. The foregoing indemnity obligation shall
not extend to any claims of infringement arising out of or
related to (i) a modification of the Products and/or Spares
by anyone other than Seller without Seller's prior written
consent; (ii) a combination of the Products and/or Spares
with any third party software or hardware where such
combination is the cause of such infringement; (iii) the use
of a version of Software other than the then-current version
if infringement would have been avoided with the use of the
then-current version; and (iv) any design specifications
provided by Buyer to Seller. The foregoing sets forth
Buyer's sole and exclusive remedy with respect to claims of
infringement of third party intellectual property rights of
any kind.
19.2 Seller shall defend, indemnify and hold Buyer, its officers,
directors, agents and employees harmless from and against
any and all claims, [*], expenses (including reasonable
attorney's fees), [*], or judgments ("Claims") which are
caused by Seller and result from or arise out of:
19.2.1 The [*] of Seller's agents, employees or subcontractors
(Personnel), or equipment [*] of Buyer or its customers; or
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19.2.2 The [*] by Seller or its Personnel of any [*] for or on
behalf of Buyer; or
19.2.3 The [*] or [*] of Seller or its Personnel; or
19.2.4 The use by Seller or its Personnel of [*] or [*] whether or
not any [*] are [*] upon the [*] of such [*] or Buyer's, its
agents', or employees' [*] in permitting its use. Permission
by Buyer to use any such [*] shall be gratuitous.
19.2.5 The use of any [*] and/or [*].
19.3 Buyer shall defend, indemnify and hold Seller, its officers,
directors, agents and employees harmless from and against
any and all Claims which result from or arise out of any
design specifications provided by Buyer to Seller.
19.4 In the event one party (the "Indemnifying Party") is
obligated to indemnify the other party (the "Indemnified
Party") under this Agreement, this obligation is contingent
upon the Indemnified Party providing the Indemnifying Party
with prompt written notice of any claim for which
indemnification is required, tender the defense of any such
claim to the Indemnifying Party, provide full cooperation
for such defense at the Indemnifying Party's expense. The
Indemnified Party shall not settle a claim without the
Indemnifying Party's prior written approval. The Indemnified
Party may participate in any such defense or settlement with
counsel of its own choosing at its expense.
19.5 Except as otherwise provided in this Agreement, upon the
occurrence of a Default by a party hereto the other party
shall be entitled to exercise such rights and remedies as
are available at law or in equity
19.6 [*] SHALL BE LIABLE FOR ANY CONSEQUENTIAL DAMAGES
(INCLUDING, WITHOUT LIMITATION, LOST PROFITS AND
UNLIQUIDATED INVENTORY). INDIRECT, SPECIAL OR PUNITIVE
DAMAGES EVEN IF THE OTHER PARTY HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES EXCEPT (I) IN CONNECTION WITH A
BREACH OF THE [*] SET FORTH IN THIS AGREEMENT AND (II) TO
THE EXTENT ANY SUCH DAMAGES ARE A PART OF AN [*] AGAINST
WHICH BUYER IS ENTITLED TO BE [*] PURSUANT TO THE OTHER
PROVISIONS OF THIS SECTION 19.
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20. TRADEMARKS; LOGOS
Seller is authorized to use the Compaq logo and trademark only to the
extent necessary to meet the required specification for the Products. No
other rights with respect to Buyer's trademarks, trade names or brand
names are conferred, either expressly or by implication, upon Seller.
21. GRATUITIES
Each party represents that it has not offered nor given and will not (i)
offer nor give any employee, agent, or representative of the other party
any gratuity, or (ii) influence such person's normal job
responsibilities in any way with a view toward securing any business
from the other party or influencing such person with respect to the
business between the parties.
22. INSURANCE
22.1 Seller shall maintain such minimum insurance coverage as
listed below.
22.2 Seller agrees to carry at all times and with financially
reputable companies insurance of the kinds and in the
amounts listed below:
a. WORKER'S COMPENSATION Statutory limits in each state in
which Supplier is required to provide Worker's
Compensation coverage including "All States" and
Voluntary Compensation" endorsement;
b. EMPLOYER'S LIABILITY -- with limits not less than [*]
Bodily Injury Each Accident; [*] Disease - Policy Limit,
[*] Disease - Each Employee;
c. COMPREHENSIVE GENERAL LIABILITY for Bodily Injury and
Property Damage - including Premises/Operations,
Products/Completed Operations, Contractual Liability,
Independent Contractor's Liability, Broad Form Property
Damage, Personal/Advertising Injury with a limit of not
less than [*] per occurrence and [*] in the annual
aggregate;
d. AUTOMOBILE LIABILITY For owned, non-owned, leased and
hired vehicles with a combined single limit of not less
than [*] for Bodily Injury and Property Damage;
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e. EXCESS/UMBRELLA LIABILITY [*] following form over
underlying liability coverages;
f. Insuring loss of or damage to goods, tools, equipment
owned by Compaq Computer Corporation, to the attention of
the Corporate Risk Management Department, indicating that
the insurance policies of the kind and limits listed
above are in effect for the full term of the Agreement.
Such Certificates of Insurance shall be kept current and
on file with Corporate Risk Management until the
conclusion of the term of this Agreement;
g. LEGAL LIABILITY insuring loss or damage to goods,
tools and equipment in Seller's care, custody and control
with a limit of not less than [*] per occurrence. Any
claims that occur shall be deemed to be valued at full
replacement cost (dealer sales cost).
23. CONFIDENTIAL INFORMATION
23.1 The parties hereto will keep the terms of this Agreement
confidential and will not disclose such terms to any third
party except: (i) with the prior written consent of the
other party; (ii) as may be required by law or legal
process, including to legal and financial advisors in their
capacity of advising a party in such manners; (iii) in
confidence to its legal counsel, accountants, banks and
financing sources and their advisors solely in connection
with complying with financial transactions; or (iv) to the
extent disclosed in any mutually agreed press release.
23.2 "Confidential Information" means all non-public information
that the party disclosing the information (the "Disclosing
Party") designates at the time of disclosure as being
confidential, or if disclosed orally or visually is
identified as such prior to disclosure and summarized, in
writing, by the Disclosing Party to the receiving party (the
"Recipient") within [*] days, or which, under the
circumstances surrounding disclosure, the Recipient knows or
has reason to know should be treated as confidential without
the need to be marked as "confidential", including without
limitation, the terms and conditions of this Agreement, and
information regarding either party's financial condition,
business opportunities, plans for development of future
products or new versions of existing products, know-how,
technology or customers.
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23.3 A party receiving Confidential Information agrees (a) that
it shall use the same degree of care and means that it
utilizes to protect its own information of a similar nature,
but in any event not less than reasonable care and means, to
prevent the unauthorized use or the disclosure of such
confidential information to third parties, (b) not to
disclose or use any of such Confidential Information for any
purpose except as necessary and consistent with the terms of
this Agreement, (c) to limit the use of and access to such
Confidential Information to such employees and
subcontractors who have a need to know such Confidential
Information and have signed legally binding non-disclosure
agreements, and (d) that it will promptly notify the other
party in writing of any unauthorized disclosures and/or use
thereof. The aforementioned notice shall include a detailed
description of the circumstances of the unauthorized
disclosure or use and the parties involved therewith.
23.4 Both parties agree that the party receiving Confidential
Information will maintain such Information in confidence for
a period of [*] years from the date of disclosure of such
Confidential Information.
23.5 Each party shall protect the other party's Confidential
Information to the same extent that it protects it own
confidential and proprietary information and shall take all
reasonable precautions to prevent unauthorized disclosure to
third parties.
23.6 The parties acknowledge that the unauthorized disclosure of
such Confidential Information will cause irreparable harm.
Accordingly, the parties agree that the injured party shall
have the right to seek immediate injunctive relief enjoining
such unauthorized disclosure.
23.7 The provisions of this Section 23 shall not apply to
information (i) known to the receiving party at the time of
receipt from the other party, (ii) generally known or
available to the public through no act or failure to act by
the receiving party, (iii) furnished to third parties by the
disclosing party without restriction on disclosure, (iv)
furnished to the receiving party by a third party as a
matter of right and without restriction on disclosure or (v)
furnished as required by court order or similar governmental
authority or by the imminent likelihood thereof or by
applicable law.
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omitted portions.
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23.8 Immediately upon termination of this Agreement or at the
request of the other party, each of the parties shall
promptly return all materials in its possession containing
Confidential Information of the other party.
24. DOCUMENTATION, TRAINING AND TECHNICAL SUPPORT
24.1 During the Term, Seller shall supply the documentation, and
technical support as listed in attached Exhibit H hereto
(Documentation and Technical Support).
24.2 Seller hereby grants to Buyer a worldwide, nonexclusive,
nontransferable right to use, reproduce (in whole or in
part), have reproduced, [*] of, and distribute the Seller's
end user documentation and derivatives thereof through
multiple tiers of distribution. Buyer agrees to defend,
indemnify, hold Seller, its agents, officers and employees
harmless from all claims, losses, damages, costs or
liabilities arising from, resulting from or relating to the
introduction of Buyer of any inaccuracies, misstatements or
material omissions into such documentation or any
derivatives thereof except that Seller shall have no
liability for any errors or omissions introduced into the
documentation by Buyer's modifications or derivative works.
24.2 Seller hereby grants to Buyer a worldwide, nonexclusive,
nontransferable right to use internally all documentation
supplied by Seller for purposes of implementation,
maintenance and support of the Products and Spares and any
development necessary to integrate the Products and Spares
into Products.
25. COUNTRY OF ORIGIN, DUTY DRAWBACK
25.1 "Country of Origin" Marking: The Seller shall mark, in
English, all Products - with the Country of Origin
(manufacture),in compliance with Section 304 of the United
States Tariff Act. Both the Products and its container must
be conspicuously marked with the Country of Origin per
Buyer's Labeling Specification in Exhibit I . If the
Products itself cannot be marked legibly due to size, then
its immediate container must be marked. signed certificate
stating Country of Origin (manufacture) by quantity and part
number (Buyer's and Seller's).
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omitted portions.
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26. BUYER OWNED PROPERTY
Any tools, drawings, specifications, or other materials furnished by
Buyer for use by Seller in its performance under this Agreement or any
Order issued hereunder shall be identified and shall remain the property
of Buyer and shall be used by Seller only in its performance hereunder.
Seller shall keep such material, tools, drawing, and specifications
separate and identified as Buyer owned property. Such property shall be
delivered, upon request, to a destination specified by Buyer in good
condition, except for normal wear and tear.
27. SIMILAR PRODUCTS
Seller understands that Buyer designs, develops and acquires hardware
and software for use with its own computer system products, and that
existing or planned hardware and software independently developed or
acquired by Buyer may contain ideas and concepts similar or [*] to those
contained in the Products and/or Spares. Seller agrees that entering
this Agreement shall not preclude Buyer in any way, from using such
ideas or concepts to develop or acquire similar hardware or software for
any purpose, [*], provided Buyer does not (i) copy for such use, in
whole or in part, the Seller's Products and/or Spares.
28. RIGHTS IN DEVELOPMENTS REFERENCE ALLIANCE AGREEMENT
The rights in any custom development to the products developed by Seller
pursuant to this Agreement shall be as specified in the Alliance Master
Agreement # MA-99-105 entered into by the parties as of April 16, 1999.
* Certain information on this page has been omitted and filed separately
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respect to the omitted portions.
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29. EMBEDDED SOFTWARE
Seller hereby grants to Buyer a non-exclusive, non-transferable,
worldwide license to market and distribute, in object code form only,
the Software (and to sublicense the Software, in object code form only,
directly or through Buyer's channels of distribution) as a component of
the relevant Products or Spares as part of or in conjunction with Buyer
Products. Title to and ownership of the Software in the unmodified
Products or Spares, Updates and Enhancements delivered by Seller will at
all times remain the property of Seller or Seller's licensers unless
otherwise agreed to in writing by the parties. Except as expressly set
forth herein, Buyer agrees not to reproduce, copy, modify, translate,
disassemble, reverse engineer or otherwise attempt, or permit others to
attempt, to discover the source code of the Software, in whole or in
part, except to the extent that such prohibition is restricted by
applicable law. Upon mutual written agreement of the parties, [*] all
Proprietary Rights in all modifications, Enhancements and derivative
works of the Products or Spares developed by [*], subject to Seller's
ownership of the Products and/or Spares.
30. [*]
If there is a [*] representing the [*] of [*] or more of the [*] of
Seller by one (1) of the [*] set forth in Exhibit M (a [*] ) and as a
result of such [*], Buyer's access to technology relating to the
Products is [*], Buyer may (i) [*] the then-current Seller technology
for a mutually [*], or (ii) [*] the then-current Products [*] from
Seller's third party [*] (currently [*]) for a period of up to [*] years
following such [*] or until expiration of that certain Alliance
Agreement between the parties dated April 16, 1999, whichever occurs
first. Within [*] days after the date of this Agreement with respect to
[*], and prior to contracting with any new or additional [*] for
Products, Seller shall enter into a written agreement with any such [*]
that will grant all rights to such [*] necessary to effectuate the
intent of this Section 30. In the event that Seller fails to do so, the
parties expressly agree that Buyer may provide a copy of the relevant
portion of this Agreement to any such [*] (including [*]) and such [*]
(including [*]) shall be entitled to rely on this Section 30 as
representing Seller's approval of the [*] of Products [*] to Buyer
without the necessity of any further action or approval by Seller. This
Section 30 is not exercisable as long as Seller is not subject to a [*]
involving one of the companies on Exhibit M
31. GENERAL
31.1 SECTIONS 5, 10, 11, 13, 14, 15, 16, 17, 18, 19, 23, 27, 28 AND 31
of this Agreement shall survive any such expiration or termination and
remain in effect.
* 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.
27
<PAGE> 29
31.2 If any provision or provisions of this Agreement shall be
held to be invalid, illegal or unenforceable, such provision
shall be enforced to the fullest extent permitted by
applicable law and the validity, legality and enforceability
of the remaining provisions shall not in any way be affected
or impaired thereby.
31.3 Any waiver of any kind by a party of a breach of this
Agreement must be in writing, shall be effective only to the
extent set forth in such writing and shall not operate or be
construed as a waiver of any subsequent breach. Any delay or
omission in exercising any right, power or remedy pursuant
to a breach or Default by a party shall not impair any
right, power or remedy which either party may have with
respect to a future breach or Default.
31.4 Neither party shall export, re-export or otherwise disclose,
directly or indirectly, technical data received from the
other party or the product of such technical data to any
person or destination when such export, re-export or
disclosure is prohibited by the laws of the United States or
regulations of a Department of the United States.
31.5 Neither Seller nor Buyer shall take [*] against disputed
amounts, or amounts not yet due and payable under this
Agreement. In the event an undisputed amount is past due
based upon the agreed terms, [*].
31.6 To the extent the confidentiality provisions set forth in
Section 23 conflict with confidentiality provisions set
forth in any other confidentiality or non-disclosure
agreement between the parties hereto, this Agreement
represents the entire agreement with respect to the subject
matter hereof and supersedes all prior discussions and
agreements between the parties relating to the subject
matter hereof. This Agreement can be modified only by a
written amendment duly signed by persons authorized to sign
agreements on behalf of both parties, and shall not be
supplemented or modified by any course of dealing or trade
usage. Variance from or addition to the terms and conditions
of this Agreement in any Order, or other written
notification from Seller will be of no effect. Seller,
including its servants, agents and employees, is an
independent contractor and not an agent or employee of
Buyer. Without limiting the generality of the foregoing,
Seller is not authorized to represent or make any
commitments of behalf of Buyer, and Buyer expressly
disclaims any liability therefore.
* 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.
28
<PAGE> 30
31.7 THE CONSTRUCTION, VALIDITY, AND PERFORMANCE OF THIS
AGREEMENT AND ANY ORDER ISSUED UNDER IT SHALL BE GOVERNED BY
THE LAWS OF THE STATE OF [*] WITHOUT REGARD TO THAT BODY OF
LAW CONTROLLING CONFLICTS OF LAW. THE PARTIES HEREBY WAIVE
APPLICATION OF THE U.N. CONVENTION ON CONTRACTS FOR THE
INTERNATIONAL SALE OF GOODS.
31.8 Neither party shall assign or transfer this Agreement or any
rights and obligations under this Agreement without the
prior written consent of the other party. Notwithstanding
the foregoing, no consent to or notice of assignment is
required in the case of [*] merger, reorganization,
acquisition or sale of all or substantially all of its
assets. This Agreement will bind and inure to the benefit of
the parties and their respective successors and permitted
assigns.
31.9 EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT, ANY AND ALL
WARRANTIES (EXPRESS OR IMPLIED, STATUTORY OR OTHERWISE) OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND
NON-INFRINGEMENT OF THIRD PARTY RIGHTS ARE HEREBY DISCLAIMED
IN THEIR ENTIRETY. NO PERSON IS AUTHORIZED TO MAKE ANY
WARRANTY OR REPRESENTATION ON BEHALF OF SELLER CONCERNING
THE PERFORMANCE OF THE PRODUCTS, SPARES OR SERVICES.
31.10 Upon the request of either party, the parties shall
cooperate and use commercially reasonable efforts to
implement as soon as practicable an electronic data
interchange system to process the submission and acceptance
of Orders, the payment of Products and such other matters as
the parties may mutually agree upon having such terms and
transmissions standards and formats as the parties may agree
IN WITNESS, THE AUTHORIZED REPRESENTATIVES OF THE PARTIES
HAVE EXECUTED THIS AGREEMENT AS OF THE DATE FIRST WRITTEN
ABOVE.
31.11 EXCEPT TO THE EXTENT ANY DAMAGES ARE A PART OF AN [*] TO
WHICH EITHER PARTY IS ENTITLED TO BE [*] PURSUANT TO THE
PROVISIONS OF [*], IN NO EVENT SHALL SELLER'S TOTAL
LIABILITY UNDER THIS AGREEMENT EXCEED THE [*] OF (I) [*], or
(ii) [*] of the [*] received by Seller from Buyer during the
[*] immediately preceding the imposition of liability.
* 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.
29
<PAGE> 31
For the Buyer For the Seller
-------------------------------- --------------------------------
-------------------------------- --------------------------------
Signature Signature
-------------------------------- --------------------------------
Name Name
-------------------------------- --------------------------------
Title Title
-------------------------------- --------------------------------
Date Date
30
<PAGE> 32
EXHIBIT A
PRODUCT PART NUMBERS,
DESCRIPTIONS, UNIT PRICES AND LEAD-TIMES
PRICING
Seller agrees that the price is firm for the period of [*] and that price will
be [*] prior to the end of the firm pricing period. Seller agrees to furnish a
non-binding price forecast for the following three calendar quarters. Seller
further agrees to provide price in US$.
Table 1
COMPAQ
P/N BASE UNIT UNIT
BROCADE PROGRAM LEAD UNIT COST PRICE PRICE SHIP SHIPPING HUB
P/N NAME SITE TIME PRICE ADDERS FOB DDP MODE CONFIGURATION LOCATION
------------- ---------- ---------- ------ ------ ------- -------- -------- ----- --------------- --------
127552-B21 [*] N.America [*] [*] TBD 1 [*] N/A [*] Pallet (16 unit) [*]
CQ-1630-0002
127553-B21 [*] N.America [*] [*] TBD 1 [*] N/A [*] Pallet (16 unit) [*]
CQ-1630-0001
127552-B21 [*] EMEA [*] [*] NA 1 [*] N/A [*] Pallet (16) [*]
CQ-1630-0002
127553-B21 [*] EMEA [*] [*] NA 1 [*] N/A [*] Pallet (16) [*]
CQ-1630-0001
SPECIFICATION
Buyer's specification number [*] is incorporated by reference.
THIS EXHIBIT IS AGREED TO AS OF THE DATE OF SIGNATURE BELOW, BY AND
BETWEEN:
For the Buyer For the Seller
-------------------------------- --------------------------------
Signature Signature
-------------------------------- --------------------------------
Name Name
-------------------------------- --------------------------------
Title Title
-------------------------------- --------------------------------
Date Date
* 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.
31
<PAGE> 33
EXHIBIT B
SPARE PART NUMBERS,
DESCRIPTIONS, UNIT PRICES AND LEAD-TIMES
8 PORT SWITCH
-----------------------------
BROCADE COMPAQ P/N's
----------------------------- --------------------------------------------------------------------------------
OOW Repair
Order P/N Mfr. P/N 2-5-2 part # 6-3 part # Spare part # Price Lead Time Price
------------ ------------- ------------ ---------- ------------ ----- --------- ----------
w/o GBIC CQ-1630-0002 80-0000106-04 30-56042-01 127552-B21 127660-001 [*] [*] [*]
w/ GBIC
FRU'S:
Motherboard XCQ-000001 60-0000005-01 29-34243-01 401930-001 [*] [*] [*]
CPU Board XCQ-000002 60-0000006-01 29-34244-01 401931-001 [*] [*] [*]
G-Port Board XCQ-000003 60-0000007-01 29-34245-01 401932-001 [*] [*] [*]
Power Supply XCQ-000004 60-0000012-01 29-34246-01 401933-001 [*] [*] [*]
3" Fan with XCQ-000005 60-0000008-01 29-34249-01 401934-001 [*] [*] [*]
Tachometer
Front Panel XCQ-000009 60-0000009-01 29-34468-01 128328-001 [*] [*] [*]
subassembly
16 PORT SWITCH
-----------------------------
BROCADE COMPAQ P/N's
----------------------------- --------------------------------------------------------------------------------
OOW Repair
Order P/N Mfr. P/N 2-5-2 part # 6-3 part # Spare part # Price Lead Time Price
------------ ------------- ------------ ---------- ------------ ----- --------- ----------
w/o GBIC CQ-1630-0001 80-0000105-04 30-56042-02 127553-B21 127660-002 [*] [*] [*]
FRU'S:
Motherboard Same as [*] [*] [*]
8-port
CPU Board [*] [*] [*]
G-Port Board [*] [*] [*]
Power Supply [*] [*] [*]
3" Fan with [*] [*] [*]
Tachometer
Front Panel [*] [*] [*]
subassembly
Seller agrees that the [*] is [*] for the period of [*] and that [*]
will be [*] prior to the end of the [*]. Seller agrees to furnish a
non-binding price forecast for the following [*].
Seller further agrees to provide price in US$.
* 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.
32
<PAGE> 34
SPECIFICATION
Buyer's specification number [*] is incorporated by reference.
* 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.
33
<PAGE> 35
EXHIBIT C
FLEXIBILITY AGREEMENT
I. Requirements
A. The following flexibility provisions apply to changes in purchase
volume and/or delivery for existing orders and may be made [*] or [*]
to [*].
Table 1
Number of Weeks
Prior to Scheduled Percentage Percentage Percentage
On-Dock Dates Increase Decrease Reschedule
------------------ ---------- ---------- ----------
12 weeks plus [*] [*] [*]
8-12 weeks [*] [*] [*]
4 to 8 weeks [*] [*] [*]
< 4 weeks [*] [*] [*]
Run Rate, Buffer Stock, and Replenishment
B. Buyer's expectation is that increase, decrease, and reschedule
percentages may be executed by part number once per [*] day planning
cycle.
II. Liability
A. Buyer's liability in the event of notice of project discontinuance or
cancellation without re-order shall be calculated based on using the
[*]. Both Buyer and Seller will review the current [*] and past [*] to
determine liability. At no time is Compaq liable for any material
positioned in excess of the average of the last [*] or discrete
P.O.s., governed in Table 1, above.
B. A Reclaim Value shall be calculated to value material. "Reclaim Value"
shall mean the value of components that can be [*] or [*], less [*],
to original manufacture within [*] days, once Buyer has provided
notice of a volume decrease, and will be negotiated at the time
required. Upon Buyer's approval, Seller shall use [*] commercially
reasonable efforts to obtain the maximum Reclaim Value available in
the market.
C. The value of Finished Goods shall be calculated as follows: Number of
units in Buffer [*] as defined in III A. below) plus units in transit
([*] utilizing ocean freight and [*] utilizing air freight) times the
unit price minus Reclaim Value.
* 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.
34
<PAGE> 36
D. The value of Work in Process (WIP) shall be calculated as follows:
Number of parts in WIP to be assessed based on point in process when
decision to stop build is issued (defined as maximum liability) minus
Reclaim Value. The number of parts in WIP shall be no greater than
[*].
E. The value of Raw Material shall be calculated as follows: Quantity of
Buyer unique components [*] the material cost of individual component
[*] the Reclaim Value.
III. Buffer Stock Provisions:
A. Seller agrees to maintain [*] of buffer stock in finished goods
inventory for shipment at Buyer's request. The [*] buffer stock
requirement shall be calculated as the average [*] demand calculated
over the next [*] of demand forecasted by the Buyer via the Electronic
Commerce [*] and the previous [*] weeks of consumption.
B. Buffer stock may not be used to meet the Buyer's flexibility
requirements. Seller shall use commercially reasonable efforts to
replenish within [*] weeks of the Buyer's consumption.
C. Buffer stocks must be maintained in current dates and revisions
consistent with Buyer's specification(s).
THIS EXHIBIT IS AGREED TO AS OF THE DATE OF SIGNATURE BELOW, BY AND BETWEEN:
For the Buyer For the Seller
-------------------------------- --------------------------------
Signature Signature
-------------------------------- --------------------------------
Name Name
-------------------------------- --------------------------------
Title Title
-------------------------------- --------------------------------
Date Date
* 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.
35
<PAGE> 37
EXHIBIT D
QUALITY ASSURANCE
TABLE OF CONTENTS
1.0 INTRODUCTION
2.0 QUALITY AND RELIABILITY ASSURANCE
2.1 CONFORMANCE TO THE MATERIAL PURCHASE/ENGINEERING SPECIFICATION
2.2 MATERIAL SAFETY COORDINATOR
2.3 MATERIAL TRACEABILITY
2.4 WORKMANSHIP
2.5 DIAGNOSTICS, BIOS, AND SOFTWARE CONTROLS
2.6 QUALITY SYSTEM PLAN
2.7 MATERIAL ACCEPTANCE REQUIREMENTS
2.8 RELIABILITY ACCEPTANCE REQUIREMENTS
2.9 CONTINUOUS IMPROVEMENT PROCESS
2.10 CORRECTIVE ACTION
2.11 FAILURE ANALYSIS REPORTING
2.12 [*]
2.13 ASSESSMENTS
2.14 PROCESS OR FACILITY CHANGES
* 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.
<PAGE> 38
3.0 MATERIAL SPECIFIC REQUIREMENTS
3.1 QUALITY ACCEPTANCE REQUIREMENTS
3.1.1. MEASUREMENT OF MATERIAL PERFORMANCE AT SELLER'S FACILITY
3.1.2 MEASUREMENT OF MATERIAL PERFORMANCE AT BUYER'S FACILITY
3.2 RELIABILITY ACCEPTANCE REQUIREMENT
3.3 CONTINUOUS IMPROVEMENT
3.4 PERFORMANCE DATA REPORTING
3.5 SPARE MATERIAL DOCUMENTATION REQUIREMENTS
3.6 MATERIAL PACKAGING REQUIREMENTS
<PAGE> 39
1.0 INTRODUCTION
This document sets forth and defines the standards for quality and reliability
performance pertaining to the Material as defined in this Agreement to which
this Exhibit is attached. Such Material shall be Material for use in Buyer's
manufacturing operations, new spare Material, or repaired spare or refurbished
Material used by the Buyer's field operations. Seller shall insure that all
Material submitted to Buyer's manufacturing operations shall not be combined in
any way with repaired spare or refurbished Material supplied to Buyer's field
operations and that processes for treating such Material shall be separate and
distinct.
Seller shall insure that the requirements stated herein are imposed by Seller
upon any third party or subtier supplier which Seller might utilize in its
performance under the Exhibit.
2.0 QUALITY AND RELIABILITY ASSURANCE
2.1 CONFORMANCE TO THE MATERIAL PURCHASE/ENGINEERING SPECIFICATION
Prior to production of the Material, Seller shall perform all
necessary tests including, but not limited to, environmental, [*],
safety, and regulatory to assure conformance to the Buyer's
Purchase/Engineering Specification. In addition, Seller shall work
with Buyer's designated engineering representatives to assure
conformance to any and all end-use (systems configuration) performance
requirements. Seller shall, upon Buyer's request, provide any test
results or agency reports that Buyer may require, for review and
concurrence.
Seller shall acquire all materials and manufacture said materials in
such a manner that all necessary agency certifications and ratings are
maintained in the Material.
Seller shall provide Buyer copies of all regulatory and safety agency
submittal reports and approvals, in order to facilitate Buyer's timely
achievement of required end-use system-level agency submittals.
2.2 MATERIAL SAFETY COORDINATOR
Seller shall designate a representative within its organization to
interface with Buyer's representative on Material product safety
issues. The Seller shall establish a Safety Incident Reporting
Procedure which shall insure that Buyer is notified within [*] of
Seller's gaining knowledge of real or potential safety problems or
issues.
* 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.
<PAGE> 40
2.3 MATERIAL TRACEABILITY
Seller shall assure that records are maintained for traceability of all
regulatory controlled parts listed in agency reports. Regulatory controlled
parts must be traceable to the source of manufacture by lot or date code,
and must be traceable through the manufacturing process to their final
destination via serialization of finished Material. Such information will
be shared with Buyer upon request.
Finished Material shipped to Buyer shall be serialized in accordance with
the requirements of Buyer's Purchase/Engineering Specification. The general
format shall be SSYWWxxxxx, where SS is the Seller's supplier code
(assigned by the Buyer), Y is the last digit of the calendar year, WW is
the calendar week, and xxxxx is a unique, sequential, 5-digit alpha-numeric
sequence.
2.4 WORKMANSHIP
Seller shall assure that Material provided to Buyer meets all requirements
of Seller's workmanship standards and practices. And that such standards
and practices are sufficient to assure that the Material provided to Buyer
meets all quality, reliability, safety and regulatory agency requirements.
Seller shall insure that all repaired, refurbished, upgraded, tested, or
advanced exchange items submitted to Buyer shall meet the same workmanship
criteria as above except when otherwise specified by Buyer. Seller shall
provide the same level, or higher, of environmental, electrical, or
mechanical test for spare parts and accessories as in the corresponding
items in a finished or higher level assembly of Material except where, with
Buyer's approval, sufficient statistical evidence validates reduction of
such testing. Seller shall inform Buyer before any such process changes are
instituted.
2.5 DIAGNOSTICS, BIOS, AND SOFTWARE CONTROLS:
Seller shall be required to demonstrate adequate controls over the
distribution use of diagnostics, BIOS and the software shipping with the
product.
A program for the regular maintenance of diagnostics shall be required by
Seller to ensure that a virus is not present in the Material.
Revision controls for both the BIOS and the software shall be traceable to
the serial number of the units. This information shall be maintained in the
event of a change and conveyed to Buyer for field tracking purposes.
<PAGE> 41
2.6 QUALITY SYSTEM PLAN
Seller shall submit to Buyer for review and concurrence a Quality Manual
and a Quality Control Plan, no later than [*] days prior to Seller's first
scheduled production build. These documents shall define the Seller's
overall Quality Assurance system elements, and detail inspection, test and
audit points for manufacture of Buyer's Material. The Quality Manual shall
demonstrate compliance to the applicable ISO 9000 Quality Systems series of
standards, and shall identify any level of registration if achieved (ISO
9001, 9002, or 9003), by facility and location. Seller shall provide Buyer
with a copy of any and all ISO 9000 certificates. The initial Supplier
Quality Plan is included as Appendix 2 to this Exhibit.
2.7 MATERIAL ACCEPTANCE REQUIREMENTS
Seller shall insure that Material delivered to Buyer's receiving facility
meets all the requirements of:
o Buyer's Purchase/Engineering Specification and [*] standards and
requirements referenced therein.
o Material marking per external agency requirements.
o [*]
o Material specific performance levels.
o Compliance to then current European Economic Community standards and
application of "CE" mark to product marking, as applicable.
o Material protection against damage and loss.
Seller shall make all Material acceptance data available to Buyer for
review upon request. Seller shall, upon Buyer's request, hold initial
shipments of Material until it is verified to be in compliance with Buyer's
specifications.
Seller shall not begin production or repair and distribution of spare or
refurbished Material in this Exhibit to Buyer until their process has been
assessed to have produced Material that meets the requirements of this
Exhibit and as specified in the Technical Statement of Work supplied, if
appropriate, with the Request for Quote. This assessment, applicable to all
contracted Material unless agreed otherwise by Buyer, shall be performed by
the Buyer or Buyer's authorized representative. All results of this
assessment shall be on file at the Seller's site and with the Buyer's
authorized representative.
* 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.
<PAGE> 42
2.8 RELIABILITY ACCEPTANCE REQUIREMENTS
All qualification and reliability testing of Material shall be conducted by
Seller at Seller's site with Buyer's representatives present at [*] option.
Seller shall perform at Seller's site all regulatory testing requirements
and support any regulatory agency testing of the Material. Buyer may elect
to perform any testing at Buyer's sites for Material verification and
compliance.
Buyer shall have full access to all reliability plans and test results data
generated by Seller including, but not limited to, MTBF predictions and
associated environmental parameters, acceleration factors, component
derating factors, stress test parameters, test conditions, test failures,
[*], failure modes and symptoms, root cause failure analysis, and resultant
corrective actions.
Reliability Testing shall be performed by Seller in three phases. These
three phases will conform to the mutually agreed upon processes reviewed
during the Supplier Audit and is documented in the Seller's Quality Plan:
o Phase I shall assure that [*] is [*] of [*] the [*].
o Phase II shall assure that the [*] does [*].
o Phase III shall assure that the [*] of the [*] and the [*] are [*]
during [*]. It shall also serve as an [*] with [*].
Summary reports of results for each phase of reliability testing shall be
published and provided to Buyer. The content, format, and frequency of
reporting shall be mutually agreed.
Buyer reserves the right to review Seller's test plans for each phase of
reliability testing, at least one month prior to the start of that phase.
If such review is conducted, Seller shall resolve any of Buyer's concerns
before the test phase shall commence. Seller's plans will include mutually
agreed-upon statistical confidence limits for each phase of testing, where
applicable.
Seller shall be solely responsible for assuring that the Material design,
third party vendor components, and manufacturing processes employed in the
production of the Material meet the Material reliability requirements as
set forth in the Buyer's Purchase/Engineering Specification. Seller shall
further assure that any changes to the Material design as a result of
engineering change, vendor change, or process change do not adversely
affect the reliability of the Material as delivered to Buyer.
* 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.
<PAGE> 43
2.9 CONTINUOUS IMPROVEMENT PROCESS
Having achieved the requirements of the Buyer's Purchase/Engineering
Specification, Seller shall implement a process to continuously improve the
level of Material performance within the manufacturing process. Seller
shall establish a performance baseline for Buyer's Material and shall
establish with Buyer mutually acceptable goals for periodic Material and
process improvement.
2.10 CORRECTIVE ACTION
If at any time data from either Seller's or Buyer's control and measurement
systems indicates that Material quality and/or reliability has fallen below
the minimum established levels identified in Table 1, corrective action
shall commence immediately and will continue until the quality and/or
reliability again meets or exceeds the minimum acceptable level. In such
event, the following shall be [*] of Seller, as a minimum:
o Immediately notify Buyer of the problem, its manifestations, symptoms,
and an initial assessment of the problem severity and impact, in the
case Seller first identifies the problem.
o Perform root cause failure analysis.
o Communicate corrective action to Buyer within a mutually agreeable time
frame.
o Take whatever actions are deemed necessary, including additional
inspections and tests, until Seller's manufacturing process is
demonstrated to be under control.
o Instruct Buyer in dispositioning Material if Material in Buyer's
possession or at Buyer's customers' sites is affected or suspect.
o If required, discontinue shipment to Buyer until the corrective action
has been proven to be satisfactory to Buyer.
Buyer's personnel may become involved in problem evaluation activities at
Seller's facility if Buyer determines that such involvement is necessary
and appropriate, or if Seller requests such support. Any such involvement
by Buyer however, shall not relieve Seller of its obligations hereunder.
Seller's personnel may be requested to come to Buyer's facility to
participate in problem evaluation activities to facilitate timely problem
resolution.
* 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.
<PAGE> 44
Buyer may also issue SCAR (Supplier Corrective Action Requests) from time
to time to address specific failures. Seller will be expected to respond to
all such VCAR forms within [*] of receipt at Seller's facility.
2.11 FAILURE ANALYSIS REPORTING
From time to time, Material which does not meet Buyer's
Purchasing/Engineering Specification shall be returned to Seller as set
forth in the Agreement ("failed Material"). This section applies to all
returned Material whether under warranty or not.
When failed Material is detected at Buyer's facilities or at Buyer'
customer site(s), it will be returned to Seller for analysis and repair.
Seller shall generate a Failure Analysis Report listing returned Material
by model and serial number, detailing type of failure, verification testing
process performed, and whether or not the failure mode could be verified or
duplicated. If the failure mode was duplicated, the report should also list
specific action taken to repair the Material and any action(s) taken within
Seller's manufacturing process or the design of the Material to prevent
recurrence of the problem. Such Failure Analysis Report shall be provided
to Buyer within [*] business days of receipt of failed Material at Seller's
facility.
Seller further agrees to perform upon request an expedited root cause
analysis on selected failed Material. Such expedited Failure Analysis
Report shall be provided within [*] business days as a goal.
Unverified Material failures shall be prominently identified in the report
to allow Buyer's personnel to engage in further analysis activities when
the returned Material is received at Buyer's manufacturing facility. Should
Buyer determine after further testing that such returned Material continues
to demonstrate the same failure modes, Buyer shall return such Material to
Seller for further analysis and corrective action.
* 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.
<PAGE> 45
2.12 [*]: COMPAQ TO PROVIDE ADDITIONAL WORDING
"[*]" shall mean a series of the same component [*], which is attributable
to Seller, based on at least a [*] rate of the Material, Spares, or Repairs
during a consecutive [*] day period, or any violation of the Buyer safety
standard requirements. Seller shall be notified in writing of the
occurrence of an [*] together with reasonable evidence thereof. Seller
shall be responsible for providing full corrective action as outlined at
Section 2.10 of this Exhibit, as well as the programs required to correct
the fault at Seller's cost, either at Buyer's stocking location or
potentially at customer sites. [*] is defined as the yearly projection of
the [*] of a particular sample of Material based upon repair data, with a
minimum established [*] of [*] per [*] for a [*].
Prior to Seller undertaking any corrective action process identified
herein, Seller shall have the right to disassemble the Material, Spares,
repairs, or examine test results obtained by Buyer. Such corrective action
shall be completed within [*] days of Buyer's original notification, or
immediately in case of a safety related failure or defect. Seller shall be
solely responsible for [*] to repair or replace the defective or failed
Material, Spares, and Repairs ([*] associated with the shipment of
defective or failed Material, Spares, or Repairs, as well [*] associated
with the shipment of repaired or replacement units of Material, Spares, or
Repairs), in addition to bearing [*] which are associated with the [*].
2.13 ASSESSMENTS
Buyer reserves the right to engage in assessments of the Seller's
facilities involved with the assembly, test, repair, or other activities
associated with the contracted Material of the Agreement during the life of
this Agreement. Buyer shall notify Seller at least seven (7) working days
in advance of its desire to perform an assessment and shall identify areas
to be covered by the assessment.
2.14 PROCESS OR FACILITY CHANGES:
Seller shall [*] any [*] to the process used to produce Material without
notification to Buyer. Seller shall be responsible for any [*] associated
with non-conforming Material which is the result of an [*] to the
manufacturing process.
Seller may change the location of equipment, tooling, fixtures, and test
equipment within the authorized facility [*] providing Seller bears the
responsibility for re-qualifying such equipment, tooling, fixtures and test
equipment for the Material and process. Such changes shall not impact
delivery schedules of Material to Buyer.
* 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.
<PAGE> 46
Seller shall not change the currently approved location of the facility
which produces or distributes the Material to another site [*] which shall
not be unreasonably withheld or delayed. Seller shall notify Buyer at least
[*] days before any such move. If Buyer does not approve or reject such
relocation within [*] days of the date of Seller's notice, such relocation
shall be deemed approved by Buyer. In the event of a timely rejection,
Seller and Buyer agree to promptly negotiate in good faith to reasonably
resolve any concerns that Buyer may have. Material may not be accepted by
Buyer without a full site certification approval performed in accordance
with Buyer's Supplier System Assessment which shall be supplied prior to
any certification assessment.
3.0 MATERIAL SPECIFIC REQUIREMENTS
3.1 QUALITY ACCEPTANCE REQUIREMENTS
3.1.1 MEASUREMENT OF OUTGOING MATERIAL PERFORMANCE AT SELLER'S
FACILITY
Prior to shipment to Buyer, the quality of new Product, spare parts,
and repaired and refurbished Material shall be measured by Seller. If
the quality falls below the minimum acceptable level specified by
mutual agreement and identified in Table 1 below, the corrective
action process of Sec. 2.10 shall commence immediately.
3.1.2 MEASUREMENT OF MATERIAL PERFORMANCE AT BUYER'S FACILITY
Buyer shall employ a standardized data collection and reporting system
to measure the performance of Seller's Material in Buyer's processes.
It is expected that the performance of Seller's Material as measured
at Buyer's facility shall be substantially equivalent to the outgoing
Material performance per section 3.1.1. If major differences in
performance beyond the expectations stated in section 3.1.1 are
experienced, then Seller shall immediately commence corrective action
activity per section 2.9.
Specified Material quality failure rates, specified in [*] are
identified in Table 1 of this Exhibit.
* 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.
<PAGE> 47
3.2 RELIABILITY ACCEPTANCE REQUIREMENTS
Seller shall assure that reliability performance is maintained during
volume production. Phase III testing as specified in Section 2.7 shall
begin with the first production shipment to Buyer and shall continue
for the life of the Exhibit. Seller shall [*] a comprehensive plan for
Phase III testing that describes how the [*] will be demonstrated and
maintained.
Specified Material MTBFs and lower statistical confidence limits of
Seller's test methods are identified in Table 1 below.
3.3 CONTINUOUS IMPROVEMENT
During the term of this Agreement, Seller shall establish plans and
goals to continuously improve the outgoing Material performance. As
continuous improvement is achieved, Material performance expectations
shall be updated periodically.
3.4 PERFORMANCE DATA REPORTING
Data shall be reported to Buyer in a mutually acceptable format on a
[*] basis.
Seller shall submit to Buyer, or Buyer's designated representative,
all spares repair activity data on Material as specified in Appendix 1
of this Exhibit on a [*] basis. A Microsoft Excel format is preferred
and a soft copy template shall be provided by Buyer.
Seller shall provide Buyer, or Buyer's authorized representative, all
revision information necessary for Buyer to maintain a complete and
accurate revision matrix for all Material supplied to Buyer.
3.5 SPARE MATERIAL DOCUMENTATION REQUIREMENTS
For any spare Material requiring alignment, adjustment, or switch or
jumper configuration settings in the field, Seller shall include in
the Material package a brief technical document describing the method
of performing such alignment, adjustment, or configuration settings.
This document shall be provided by Buyer with Buyer's authorization
for Seller's reproduction. Seller shall include, at Buyer's request,
any special temporary instructions issued during the assembly of the
unit if such instructions affect the form, fit, or function of the
Material.
* 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.
<PAGE> 48
3.6 MATERIAL PACKAGING REQUIREMENTS
Seller shall meet the packaging, ESD, container, labeling, and marking
requirements as defined in the applicable specification provided by
Buyer.
For spare Material supplied to field operations, Seller shall provide
the following information in addition to those packing slip
requirements listed in Appendix 2, Paragraph 5.4. Seller's packing
slip must contain: Seller's Name, Seller's part numbers, Seller's part
descriptions, Seller's ship date, and the Buyer's specific ship-to
address including Buyer's Stockroom Number if applicable.
<PAGE> 49
TABLE I
While no defects are expected, the following limits in Table 1 depict the
maximum allowable limit by product as specified and measured by Buyer.
PART MATERIAL [*] SPECIFIED LOWER
NUMBER PERFORMANCE MATERIAL MTBF CONFIDENCE LIMITS
------- ----------- ------------- -----------------
(See Appendix 2, Attachment D (A)1.1)
OTHER CONSIDERATIONS:
1. QUALITY PERFORMANCE REQUIREMENTS:
Should the above limits be exceeded by [*] for [*] corrective action per para.
2.10 shall immediately commence to bring the levels below the limit
requirements. Corrective action shall bring the level within limits within [*].
* 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.
<PAGE> 50
APPENDIX 1
REPAIR DATA REQUIREMENTS
DATA ELEMENTS DESCRIPTION OF FIELD
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
DATA ELEMENTS FROM DEFECT TAG (RETURNED WITH / ATTACHED TO PART)
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
* 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.
<PAGE> 51
EXHIBIT D, APPENDIX 2
COMPAQ COMPUTER CORPORATION
SUPPLIER QUALITY PLAN, DELIVERABLE WORKSHEETS
and
PROCESS MANAGEMENT PLAN
prepared for
BROCADE COMMUNICATIONS SYSTEMS, INC.
"[*]"
APPROVALS
COMPAQ COMPUTER CORP. BROCADE
COMMUNICATIONS SYSTEMS, INC
On File On File
------------------------- ---------------------------
[*] [*]
Director, Corporate Procurement Director of Quality
On File On File
------------------------- ---------------------------
[*] [*]
Commodity Manager VP Operations
On File On File
------------------------------ --------------------------
[*] [*]
Procurement Engineer Director Strategic Accounts
* 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.
<PAGE> 52
I. PURPOSE
This plan documents the specific system of process and product controls required
to assure products and services provided by the Supplier, and his sub-suppliers
meet the specifications, process requirements, and business goals of Compaq
Computer Corporation.
II. SCOPE
This document lists actions required to improve the working relationship between
Compaq and the Supplier, event incidents of non-conforming product from entering
the Compaq manufacturing processes, and improve the process to reduce overall
costs. This document is a supplement to Compaq Computer Corporation's
contractual requirements and engineering specifications. In any case of
conflicting requirements Purchasing and Engineering documents shall take
precedence. This plan identifies actions and goals necessary to assure
conformance of:
1. [*]
2. [*]
3. [*]
4. [*]
5. [*]
6. [*]
7. [*]
8. [*]
9. [*]
10. [*]
11. [*]
12. [*]
13. [*]
III. REFERENCES
Applicable product specification: Rev. A or higher
Supplier Development Process Reference (SDPR)
IV. QUALITY SYSTEM SURVEY
A full Quality System Survey may be conducted at the discretion of Compaq. The
intent of the survey is to allow Compaq the opportunity to evaluate the
supplier's quality, engineering, manufacturing capacity, and manufacturing
capabilities relative to critical parameter requirements. The survey is intended
to identify areas which may require improvement to meet Compaq's requirements
and establish a long-term business relationship. If deficiencies are found
within the Supplier's operations, the supplier and Compaq will develop an
improvement plan and schedule for action items and/or future activity.
V. ENVIRONMENTAL SURVEY
An environmental survey will be conducted. Compaq's Environmental Survey is a
tool that examines the environmental performance of a potential supplier.
Failure to meet the requirements of the survey can impact Compaq's compliance
with national and international labeling, certification and procurement
requirements. The Environmental Survey is designed to identify areas of risk and
develop improvement plans to bring the supplier to an acceptable standard.
* 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.
<PAGE> 53
VI. QUALITY PLANNING
1.0 Quality Planning Timeline
Compaq and the Supplier will develop a basic timeline to complete the
actions that are identified within this document.
2.0 Critical Parameter Attachment A
A critical product parameter is a product feature, property, attribute,
or performance that affects product performance if found to be beyond
specification limits. Compaq and the Supplier will mutually identify and
agree on the critical process and product parameters to be monitored by
the supplier and note them in attachment A.
3.0 Print / Specification Review Attachment B
As a part of the product evaluation process, Compaq and the Supplier are
responsible for reviewing the specification, requirements, information
packages, etc. to assure:
1. All documentation is present and legible.
2. Requirements are understood
3. Critical product characteristics
4. Effect of tolerances on manufacturing and ability of the process to
meet the tolerances.
5. Identification of special handling, transportation and storage during
manufacturing.
6. Specified dimensions and does not conflict with other documentation.
7. Workmanship standards are understood
4.0 Capacity Risk / Analysis
A Capacity Risk Analysis will be provided by the Supplier in the
Deliverable Worksheet. As a part of the process/product evaluation
process, members of the Compaq/Supplier team may conduct a detailed
review of the current manufacturing process and equipment to assure
capacity is available to meet the Compaq requirements. At minimum, the
Capacity Risk Analysis shall include the following:
1. [*]
2. [*]
3. [*]
4. [*]
5. [*]
6. [*]
7. [*]
8. [*]
9. [*]
5.0 Material Risk / Analysis
A Material Risk Analysis will be provided by the Supplier in the
Deliverable Worksheet. At a minimum the Material Risk Assessment shall
include the following: [*]
* 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.
<PAGE> 54
6.0 Process Management Plan (PMP)
A Process Management Plan shall be completed by the Supplier. The PMP
must be implemented prior to volume shipments to Compaq. The PMP
identifies parameters which require Statistical Process Control (SPC)
monitoring during the manufacturing process. For critical parameters in
the sub-tier supplier's process, a PMP will be developed between Compaq's
supplier and his suppliers. The Process Management Plan at minimum will
note the following :
1. [*]
2. [*]
3. [*]
4. [*]
5. [*]
6. [*]
7. [*]
8. [*]
9. [*]
10. [*]
7.0 Product and Process Flow
The Supplier shall submit both a product and process flow diagram. The
product and process flow diagrams will document the actual path of the
material/assembly through the Supplier's manufacturing facilities.
Information included in the diagram shall include
1. [*]
2. [*]
3. [*]
4. [*]
5. [*]
6. [*]
7. [*]
8.0 Field Failure Rates and Reliability Test
The Annual Field Return Rate (AFR) and the Annual Return Rate (ARR) will
be referenced in the Compaq Product Specification. The supplier shall [*]
quality control and reliability testing to ensure that the Annual Field
Return Rate (AFR) and Annual Return Rate (ARR) is not exceeded. If the
ARR/AFR exceeds the specified requirement the supplier must inform Compaq
within [*] working days and a written corrective action plan [*] must be
submitted to Compaq. Compaq reserves the option to stop shipment until
containment and/or corrective action is in place. The Supplier is
responsible for conducting On-Going Reliability Testing (ORT) on product
supplied to Compaq. The conditions and criteria for On-Going Reliability
Testing shall be defined and agreed on by Compaq and the Supplier
Failures causing test to enter the failure zone will be reported to
Compaq Procurement Engineering within 24 hours.
9.0 Critical Process Data Review
10.0 Preliminary Process Capability Studies
All processes directly affecting critical parameters may be evaluated to
establish a preliminary [*] . Critical parameters requiring process
capabilities are listed in the Attachment A. Processes are considered
capable if the [*] Any process resulting in [*] will require an
appropriate corrective action or an equivalent containment plan.
* 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.
<PAGE> 55
11.0 Measurement Precision
Measurement Precision is the extent to which a repeated measurement gives
the same result. Variations may arise from the inherent capabilities of
the instrument, from variations of the operator's use of the instrument,
or from changes in operating conditions. All instruments, gages and test
equipment used to evaluate critical parameters shall be evaluated for
Repeatability and Reproducibility as documented in the SDPR (Measurement
System Analysis and Evaluation-Gauge R&R) and/or by means of similarly
effective methods.
12.0 Supplier Corrective Action Process Attachment C
The supplier will use the [*] format attachment C and adhere to the
required response times to report internal problem issues including
failure to meet agreed upon quality goals. In the event that Compaq
encounters problems affecting late product shipment, product shortage,
and receiving inspection failures, in-line manufacturing failures,
material purges, etc., Compaq will notify the Supplier and generate a
Supplier Corrective Action Request (SCAR) using the [*] format.
The Supplier is required to acknowledge receipt of the Request
for Corrective Action within [*] supplier workday. The Supplier is
required to define and implement an effective containment within [*]
working days of receipt of the SCAR. A long term, corrective action plan
should be available within [*] working days of root cause identification.
The proposed timeframes should be considered general guidelines. Each
SCAR should be assessed for its criticality and urgency and appropriate
action taken. In the [*] the Supplier is expected to respond with the
following information:
ROOT CAUSE: [*]
CONTAINMENT ACTION PLAN: [*]
CORRECTIVE ACTION PLAN: [*]
VERIFICATION PLAN: [*]
13.0 Engineering / Process / Product Change Notification Guidelines
The Supplier must notify Compaq of any proposed change to the [*]
process, product, critical components, or suppliers of critical
components that affect form, fit, or function prior to the implementation
of the change. During the development phase all proposed ECN/PCNs should
be sent to the appropriate Design Engineer. During the production phase
all proposed ECN/PCNs should be forwarded to the appropriate Compaq
Program Manager. The notification must be received at Compaq no later
than [*] days prior to the planned implementation date. At a minimum, the
notification must contain the following information:
1. Title and date of implementation.
2. A list of part numbers and documents affected by the proposed change.
3. A complete description of the change, including affected portions of
any process, material, and affected parameters. Any change to process
monitors or controls should be specified.
4. Any information relating to urgency which must be considered.
5. Description as to why the change(s) were made.
6. Reliability data qualifying the change(s). Statistical data, including
distribution and capability analysis [*] supporting the proposed
change(s).
7. Date codes or markings
8. [*]
9. Availability of samples
* 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.
<PAGE> 56
Final approval is granted by Compaq, based on successful product analysis
and qualification ([*] ) and is subject to audit by Compaq. The Supplier
and all affected departments shall be notified in writing of the final
status. Until formal, written approval is received, the Supplier is
required to deliver standard product as required by Compaq Procurement
and to maintain an adequate backup position in the event the change is
rejected. Compaq will provide reasonable grounds for the rejection of any
ECN. Exceptions to the above requirements will be made with issues that
affect safety standards, data loss, failure to meet specifications,
applicable laws, regulations or standards. Each ECN will be reviewed for
criticality and urgency and appropriate action taken.
14.0 Program Goals Attachment D
Attachment D notes goals which have been identified as significant to
meeting the business objectives of Compaq Computer Corporation. These
goals will be utilized to assess the supplier's performance and assist
the Supplier in determining their impact on the process, products, and
services provided to Compaq.
V.II PRODUCTION QUALIFICATION AND VERIFICATION
1.0 First Article Inspection
The Supplier is required to submit first article samples. These samples
shall be representative of final production and are required to meet all
applicable specifications. The samples will be inspected/tested as
required to verify conformance specifications. The First Article results
will be documented and reviewed with the Supplier. Unacceptable results
will require the Supplier to initiate and implement corrective action,
after which another sample will be submitted for evaluation and final
approval. It is the responsibility of the Supplier to procure and approve
first article samples from its sub-tier suppliers. Compaq may, at its
option, require the Supplier to submit such parts and/or review
associated documentation.
2.0 Capability Studies
A preliminary process capability study will be performed on all critical
parameters (Attachment A) prior to revenue production to ensure
statistical control.
3.0 Equipment verification
Gauge reproducibility and repeatability, along with equipment correlation
studies, will be evaluated at this time
* 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.
<PAGE> 57
4.0 Out of Box Audit-OBA
The supplier or the supplier's agent will perform an out-going product
inspection to assure conformance to the specification and associated
quality criteria. All failures will require an [*] for closure. Compaq
must be notified immediately (within [*] ) of any failure. The results of
the inspection will be used to determine product acceptability and to
evaluate product problems during manufacturing. Inspection data will be
reported to Compaq per the PMP. The report shall consist of, but not
limited to, the following:
1. Lot quantity
2. Inspection sample size
3. Quantity rejected
4. P-chart
5. [*]
6. Defect Pareto for all failures
At a minimum the inspection criteria will include the following:
Workmanship, Compaq cosmetic specification, Kiting, Documentation,
Labels, Packaging, and Pallet sizes
5.0 Compaq System Test
(Compaq System Test will [*] at this time)
6.0 Program/Product/Process Review
The primary goals of the program/product/process review are
identification and elimination of potential trouble areas early in the
business relationship and to establish a system which will assure all
products and processes reflect continuous improvement and uniformity.
Compaq and the Supplier will review all available information.
Discrepancies will be identified and documented prior to production.
Corrective action shall be established to reduce and/or eliminate any
problems. Approval to initiate shipment to Compaq is signified by
completion and approval by Compaq of the following:
1. Compaq Product Specification at Revision A or greater.
2. Certification to applicable National and International Standards
3. Meeting all Compaq product specification requirements
a) Electrical
b) Visual
c) Mechanical
d) Agency
e) Quality
f) Shock and Vibrations / Packaging
7.0 Environmental
* 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.
<PAGE> 58
VII. MANUFACTURING PROCESS/SUPPLIER CERTIFICATION
The following minimum requirements must be fulfilled in order for a
supplier to be approved as a Compaq Certified Participant
Process Capability: All critical parameters must maintain a process
capability index [*] or demonstrated equivalent capability.
Correlation: if required, the [*] must maintain a minimum correlation
coefficient [*]
Measurement Precision / Correlation: Repeatability/reproducibility and
correlation requirements as stated in the SDPR must be satisfied.
[*] documented performance as a Compaq supplier measured from
initiation of the certification process.
[*] with an overall Supplier Rating of "Excellent" as measured by a
documented supplier rating system. This criteria directly relates
to the supplier's immediate past performance concerning support of
corporate materials objectives.
The amount of business conducted with the supplier shall be judged and
documented by the commodity group to be a significant proportion or of
strategic importance.
The Supplier must be a [*]
A Compaq Supplier Survey shall be on file at Compaq.
Objective evidence of supplier continuous improvement must be available.
ATTACHMENT A
CRITICAL PARAMETERS
PROCESS NAME PARAMETER [*]
------------ --------- ---
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
* 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.
<PAGE> 59
ATTACHMENT B
SPECIFICATION REVIEW
The supplier has reviewed the Compaq product specifications for the applicable
part numbers and agrees to the product specifications or notes the following
exceptions.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
---------------------------------------
NAME DATE
<PAGE> 60
ATTACHMENT C
[*]
Supplier Corrective Action Request
SCAR# Open Date
Closed Date
CPN Reference Doc.
CPN disc.: Supplier
Requester Supplier Contact
Lot #
Lot Qty
Rej. Qty
[*]
Defect
Discipline 1 [*] [*]
Discipline 2 [*] Date:
Discipline 3 [*] Date
Discipline 4 [*] Date
Discipline 5 [*] Date
Discipline 6 [*] Date
Discipline 7 [*] Date
Discipline 8 [*] Date
* 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.
<PAGE> 61
ATTACHMENT D
PROGRAM GOALS
In the event this product goes through a Compaq factory integration the [*] goal
for Supplier fault failures in the Compaq factory is [*].
PROGRAM GOALS -
These goals are set [*] year with [*] - Brocade will reset these goals this [*].
Brocade has consistently bettered these goals.
PROCESS GOAL
------- ----
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
* 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.
<PAGE> 62
DELIVERABLE WORKSHEETS
SUMMARY
Supplier: Brocade
1901 Guadalupe Parkway
San Jose, CA 95131
Manufacturer: [*], San Jose, CA
Compaq P/N: 380591-B21 8-port fiber channel switch, rack mount kit
380578-B21 16-port fiber channel switch, rack mount
Supplier Model #: BR1630 -0011, -0010
Purpose: Approve [*] and Brocade as supplier for the fiber channel
switch used in Storage Area Networks. The [*] (Brocade
silkworm) is a fibre channel switch for Storage Area Networks
(SAN) which contains a gigabyte Interface Connector (GBIC)
which is field serviceable. [*] has been producing the
product since [*]. RMAs will go through Brocade and [*] will
perform repairs. FW is field up-gradable. The switch itself,
the PCAs, and the GBICs are serialized. [*] purchases
components, builds, tests, and ships the units.
QUALITY SYSTEMS SURVEY: Rating [*]
Supplier Self Survey: Performed at [*] and Brocade by
[*]
Survey on file with Compaq Procurement engineering.
ENVIRONMENTAL SURVEY: Rating [*]
Supplier Self-Survey: Performed at [*] performed by [*],
Manager, Environmental Health and Safety on 2 Dec 98
Survey on file with Compaq Procurement engineering.
Business Survey: RATING = [*]
Supplier Self survey: Performed by [*]
Survey on file with Compaq Procurement engineering.
* 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.
<PAGE> 63
CAPACITY: No capacity Issues
[*] submitted capacity analysis states capacity as [*] currently and increasing
to [*] in [*] as [*] adds a second manufacturing line. Current build plan is [*]
increasing to [*] in [*] . Compaq is currently forecasting [*].
STEP 2
STEP 2 RISKS AND ISSUES: No open issues
STEP 3
2.12 Line Audit/Survey
Line audit performed by [*] and [*] on [*].
FAI Sample unit passed visual/cosmetic and final functional test.
2.13 Line Audit Findings
A trip report detailing the line audit and FAI is on file. [*] and [*] during
the audit are listed in the following table:
DISCREPANCY RESOLUTION STATUS
----------- ---------- ------
[*] 1. [*] CLOSED
2. [*]. This printout would accompany the
switch to final QA. Due (4/7)
Provide OBA sample plan Document and return to revision A sampling plan CLOSED
[*] [*] CLOSED
[*] [*] Any failures or defective materials are CLOSED
expeditiously sent to MRB.
[*] [*] CLOSED
* 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.
<PAGE> 64
YIELDS AT RELEASE
MARCH MARCH
(GENERIC) (COMPAQ)
--------- --------
In-circuit (PCA) [*]
Functional (PCA) [*]
Burn-in [*]
Final Test [*] [*]
Final Inspection [*] [*]
[*] [*] [*]
STEP 3 RISKS AND ISSUES: No issues.
STEP 3 CONTINGENCY/DEVIATIONS/WAIVERS: None
RECOMMENDATION:
Recommend Brocade and [*] be approved to manufacture the [*] Fibre channel
switch.
CAPACITY: ASSESSMENT
MAR APR MAY JUN JUL
--- --- --- --- ---
TOTAL CAPACITY [*] [*] [*] [*] [*]
BUILD SCHEDULE [*] [*] [*] [*] [*]
CPQ FORECAST 8 PORT [*] [*] [*] [*]
CPQ FORECAST 16 PORT [*] [*] [*] [*]
CAPACITY: PLANS TO MEET UPSIDE REQUIREMENTS
LEAD TIME
UPSIDE REQ'D WEEKS
------ -----------
[*] [*]
[*] [*]
[*] [*]
[*] [*]
* 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.
<PAGE> 65
MATERIAL: ASSESSMENT:
Supplier Component Lead Time Plans to meet upside
-------- --------- --------- --------------------
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
Burn-in oven would require [*] time. All other commodities are [*] lead time for
[*] flex. Silkworm production capacity is currently [*] . Brocade reviews
capacity requirements on a [*] basis with our manufacturing partner and key
component suppliers. Capacity is assessed and documented for each step in the
manufacturing process, and capital requirements to support incremental increases
in capacity are documented and modified monthly.
Brocade has developed partnerships with suppliers of strategic components (e.g.,
ASICs, optical modules, Brocade unique components) that involve ongoing
communication of forecast information, technology roadmap exchanges, [*]
supplier performance reviews, executive forums, and supply chain optimization
activities. Brocade and [*] jointly manage Brocade's component supply base, with
Brocade as the lead for strategic components and [*] as the lead for standard
components. [*] provides turnkey inventory management.
STEP 3
DESCRIPTION OF TEST AND INSPECTION EQUIPMENT, TOOLS, PLANS, AND PROCESSES
[*] The units next go to final test which is a [*] a longer cable to check
attenuation. Next all units go through final inspection for cosmetics and a
shortened functional test. Units next proceed to packing, post packing
inspection or OBA, and shipping. [*] is pulled from packing to go to ORT.
IN-CIRCUIT TEST
ICT is done on a [*]. The test coverage is approximately [*] on the [*] boards.
On the [*] the test coverage is limited by number of test points available in
the fixture - we are using all the approx. [*] test points available. There are
a large number of [*] resistors on the board. The components that [*] using [*]
that [*] the [*].
* Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with respect to
the omitted portions.
<PAGE> 66
Functional test (PCA)
At functional test the [*] is assembled into a [*] for test. The test is done
using the [*] test. This test executes on [*] ports. The ports [*] configured
such that certain [*]. The processor transmits [*] then enters a monitoring
state during which it prints status information to the telnet session.
Burn-In
In burn-in an assembled switch runs the dynamic Burn-in test to cycle test for
[*] . Temperature is elevated to [*] for [*] and then to [*] for the remaining
burn-in time. The tests run include [*] Test, [*] test, [*] Test, [*] test, [*]
Test and [*] test. Automatic power cycling occurs [*] and monitoring is
performed.-
Configuration
The switch is loaded with the port cards and GBICs according to customer
requirements. The manufacturing FW is replaces with customer specific FW.
Final Test / Inspection
The configured switch is tested using a telnet session running the Special
System test that includes [*], [*], and [*] tests. A cosmetic inspection and a
final check of the configuration are done using appropriate customer checklist.
Out Of Box Audit (OBA)
Units ready to be sealed are removed from their packaging and functionally
tested and inspected as called out in the appropriate instructions.
RELIABILITY TEST
From the packaging area [*] is loaded into the ORT test bed until a [*] units
are under test. A new unit is placed in test and the oldest unit is removed [*].
ORT consists of looping the [*] for [*]. The test environment remains at [*]
during this time. Brocade performed ORT from [*]. From [*] has been performing
ORT. Copies of the Brocade ORT procedure and the [*] instruction for ORT burn-in
log record is on file. [*] is currently performing the ORT testing. To date a
total of [*] switches accumulating [*] with [*] have been run. From [*] switches
were run and [*] were accumulated with [*] failures as follows:
1. [*]
2. [*]
3. [*]
* Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with respect to
the omitted portions.
<PAGE> 67
YIELD HISTORY (GENERIC)
JAN
STATION OCT NOV DEC 99 FEB MAR
------- ------- ------- ------- ------ ------ --------
ICT [*] [*] [*] [*] [*] [*]
FCT [*] [*] [*] [*] [*] [*]
Burn-in [*] [*] [*] [*] [*] [*]
Final test [*] [*] [*] [*] [*] [*]
Final Inspection [*] [*] [*] [*] [*] [*]
OBA [*] [*] [*]
HASS [*] [*] [*]
OBA
Feb : [*]
[*]
Mar: [*]
ARR HISTORY
JAN
DATE 1Q98 2Q98 3Q98 4Q98 TOTAL 99 FEB MAR
---- ---- ---- ---- ---- ----- ---- --- ---
Install base [*] [*] [*] [*] [*] [*] [*] [*]
Returns [*] [*] [*] [*] [*] [*] [*] [*]
ARR [*] [*] [*] [*] [*] [*] [*] [*]
ARR Monthly [*] [*] [*]
FA OF RETURNS
JAN 99:
[*]
4Q98:
(NDF and customer caused defects are included):
[*]
[*]
[*]
[*]
FA and corrective actions for returns are on file with procurement engineering.
* 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.
<PAGE> 68
MTBF
Based on ARR calculation = [*]
TOP DEFECT PARETOS AT RELEASE:
STATION DEFECT AND PERCENT OF PARETO
------- ----------------------------
Burn-in [*]
Final test [*]
OBA [*]
[*] [*]
CORRECTIVE ACTIONS AND IMPROVEMENT PLANS:
[*]
[*]
[*]
[*]
[*]
PRODUCT CONFIGURATION
CPQ P/N DESCRIPTION UPC JAN SUPPLIER MODEL
------- ----------- --- --- --------------
380591-B21 8-port fiber channel 741372751188 4948382083043 CQ-1630-0002
switch, rack mount kit
380578-B21 16-port fiber channel 743172751171 4948382083036 CQ-1630-0001
switch, rack mount kit
1. Agency approvals:
COUNTRY SAFETY EMC
------- ------ ---
United States UL 1950 FCC Part 15 Class A
Canada CSA 22.2 No. 950 CSA 108.8 Class A
Japan IEC 60950 VCCI (CISPR-22)
EC and EFTA countries EN60950 EN 55022:1994/EN50082-
1:1992
(CE MARK)
Australia New Zealand AS/NZS 3260:1993 AS/NZ 3548
(C-Tick mark)
International IEC 950 CNS 1348 (BCIQ logo)
<PAGE> 69
Labels:
Compaq P/N, Description, Count contained, UPC or JAN codes, [*] [*],
Spares label, Compaq Logo tape
Jumpers / switch setting: Power Switch in OFF position
FW at release: [*]]
Bezel color: [*]
Bezel marking: 'Compaq Storage works Fibre Channel Switch'
* 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.
<PAGE> 70
PROCESS MANAGEMENT PLAN
LOT SIZE STOP SHIP CRITERIA/
SAMPLE REPORT REPORT REACTION OUT OF
PROCESS PARAMETER SPECIFICATION PLAN METHOD FREQUENCY CONTROL CONDITION
------------ ----------- -------------- ------------ ----------- --------- ------------------------------------------
BURN-IN YIELD PASS/FAIL [*] YIELD CHART [*] 1. [*]
PRODUCTION OF PRODUCT.
GENERIC DIAGNOSTICS, NOTIFY COMPAQ WITHIN 24 HOURS.
PRODUCT POWER
CYCLING
SYSTEM - YIELD PASS/FAIL [*] YIELD CHART [*] 1. IF FAILURES EXCEED [*] DUE TO
FINAL TEST - WORK [*] [*] FAILURES NOTIFY COMPAQ WITHIN [*].
COMPAQ FUNCTIONAL INSTRUCTION OPEN [*]; DETERMINE ROOT CAUSE AND
PRODUCT TEST TAKE CORRECTIVE ACTION FOR ALL [*]
FAILURES.
OUT OF BOX YIELD COMPAQ BOM, SAMPLE
AUDIT DESIGN AND PER [*] POST YIELD/DPPM, [*] 1. ON [*] RELEVANT [*],
(OBA) VISUAL- COSMETIC SPECS, PACKAGING [*] 2. INSPECT/TEST ALL UNITS IN THE LOT
MECHANICAL- PACKAGING, INSPECTION 3. NOTIFY COMPAQ WITHIN [*] WORKING
COMPAQ COSMETIC LABELS, AND PROCEDURE HOURS OF ANY [*] FAILURE
PRODUCT INSPECTION, PALLETIZATION OPEN [*]; DETERMINE ROOT CAUSE AND TAKE
ACCESSORY CORRECTIVE ACTIONS FOR ALL [*] FAILURES.
KITS,
PALLETS
FINAL YIELD PASS/FAIL [*] YIELD CHART [*] 1. ON [*] FAILURE STOP SHIPMENT,
QUALITY [*] 2. INSPECT/TEST ALL UNITS IN THE LOT
AUDIT 3. NOTIFY COMPAQ WITHIN [*] WORKING
HOURS OF ANY [*] FAILURE
COMPAQ 4. OPEN [*] DETERMINE ROOT CAUSE AND
PRODUCT TAKE CORRECTIVE ACTIONS FOR
ALL [*] FAILURES.
* 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.
<PAGE> 71
PROCESS MANAGEMENT PLAN
STOP SHIP CRITERIA/
LOT SIZE REPORT REPORT REACTION TO
PROCESS PARAMETER SPECIFICATION SAMPLE PLAN METHOD FREQUENCY OUT OF CONTROL CONDITION
----------- --------------- ---------------- --------------- --------------- -------------- ------------------------------
[*] SUMMARY N/A N/A N/A LIST [*] REPORT DUE SUMMARY OF ALL [*] BOTH CLOSED
BY THE [*] OF AND OPEN FOR THE MONTH
THE [*] FOR
THE PREVIOUS
[*] DATA
ECN / PCN ECNs / PCNs ALL IMPLEMENTED N/A LIST [*] REPORT DUE SUMMARY OF ALL ECNs / PCNs
LOG AND PROPOSED BY THE [*] OF IMPLEMENTED TO DATE AND
ECN/PCNs WITHIN THE [*] FOR ECNs / PCNs TO BE IMPLEMENTED
90 DAY THE PREVIOUS WITHIN [*] DAYS
LEAD TIME [*] DATA
DEFECT DEFECT PARETO N/A N/A LIST [*] REPORT DUE SUMMARY OF TOP [*] FROM FINAL
PARETOS AND FOR TOP BY THE [*] OF [*] TEST, [*], AND CORRECTIVE
CORRECTIVE DEFECTS THE [*] FOR ACTIONS WITH IMPLEMENTATION
ACTIONS CAUSING [*] OF THE PREVIOUS DATES FOR EACH [*]
REJECTS AND [*] DATA
CORRECTIVE [*].
ACTIONS
ORT/HASS PER BROCADE PER BROCADE [*] UNDER TEST NUMBER OF [*] REPORT DUE NOTIFY COMPAQ WITHIN [*]
ORT TEST ORT/HASS PER BROCADE UNITS TESTING, BY THE [*] OF WORKDAYS OF A [*] FAILURE IN
PROCEDURE TEST PROCEDURE ORT/HASS FAILURES, THE [*] FOR ORT TESTING. SUBMIT CORRECTIVE
PROCEDURE DEFECT PARETO, THE PREVIOUS ACTION AND IMPROVEMENT PLANS
CORRECTIVE [*] DATA WITHIN [*] WORKDAYS.
ACTIONS,
IMPROVEMENT [*]
PLAN
ARR VERIFIED FIELD [*] MONTHLY REPORT RETURNS [*] REPORT DUE IF ARR EXCEEDS LIMIT NOTIFY
FAILURES AND RETURNS BY MONTH BY THE [*] OF COMPAQ WITHIN [*] WORKDAYS.
TOTAL FIELD COMPAQ ARR % THE [*] FOR SUBMIT CORRECTIVE ACTION
RETURNS INSTALLED BASE THE PREVIOUS PLAN WITHIN [*] WORKDAYS.
AND [*] DATA
ALL OTHER ARR% [*]
* 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.
<PAGE> 72
EXHIBIT E
SERVICES ADDENDUM
This Addendum to the Corporate Purchasing Agreement ("CPA") between Buyer and
Seller ("Addendum") provides additional terms and conditions governing the
procurement of Services and/or Spares designated in Exhibit 1, "Schedule of
Spares" by Buyer. In the case of conflict between the CPA and this Addendum,
this Addendum will take precedence. Terms not otherwise defined herein shall
have the corresponding definitions ascribed to them in the CPA.
A. SPARE PARTS AVAILABILITY
1. Seller shall make available for purchase by Buyer and/or Buyer's
authorized third party, replacement Products in "new" and/or
"like new" condition (collectively designated herein as
"Spares") as set forth in the Schedule of Spares. Spares are
considered either whole units (switches), or sub-assemblies (ex.
[*]), "Like new" is defined as Spares that have been refurbished
to the latest mandatory revision to meet all applicable
electrical, mechanical, firmware and cosmetic specifications and
Engineering documentation, including the replacement of damaged
or missing non-functioning parts.
2. Seller and Buyer agree that Spares will be owned and held by
Buyer. Buyer reserves the right to purchase Spares on an "as
needed" basis subject to lead time. Buyer will maintain stock on
hand sufficient to service the anticipated needs of Buyer's
installed base.
B. PRICING
1. Pricing for Spares is set forth in the Schedule of Spares.
Pricing shall remain fixed for the Contract Pricing Period as
set forth herein of [*] days. [*] days prior to the end of the
then current Contract Pricing Period, Buyer and Seller shall
meet to review the pricing of Spares. The Schedule of Spares
will be amended to reflect any adjustment in pricing the parties
mutually agree will apply to the subsequent Contract Pricing
Period.
2. If pricing for Spares referenced in the Schedule of Spares
cannot be agreed upon for a subsequent Contract Pricing Period,
those items of Spares for which pricing can not be agreed upon
will be deleted from this Addendum. If pricing for [*], Buyer
shall have the [*] to [*] this [*], upon written notice to
Seller, as it [*].
* 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.
72
<PAGE> 73
3. In the event that No Trouble Found (NTF) returns exceed the
terms outlined in section 11.2 of the Corporate Purchase
Agreement, the following NTF charges may apply:
BROCADE COMPAQ P/"s
-------------------------------- ----------------------------------------------------------------
Order P/N Mfr. P/N 2-5-2 part # 6-3 part # Spare part # NTF Charge
------------ ------------- ------------ ---------- ------------ ----------
8-port switch CQ-1630-0002 80-0000106-04 30-56042-01 127552-B21 127660-001 [*]
16-port switch CQ-1630-0001 80-0000105-04 30-56042-02 127553-B21 127660-002 [*]
FRUS:
Motherboard XCQ-000001 60-0000005-01 29-34243-01 401930-001 [*]
CPU Board XCQ-000002 60-0000006-01 29-34244-01 401931-001 [*]
G-Port Board XCQ-000003 60-0000007-01 29-34245-01 401932-001 [*]
Power Supply XCQ-000004 60-0000012-01 29-34246-01 401933-001 [*]
[*] XCQ-000005 60-0000008-01 29-34249-01 401934-001 [*]
[*] XCQ-000009 60-0000009-01 29-34468-01 128328-001 [*]
C. DELIVERY
1. Seller agrees to stock replacement inventory of Spares at a
minimum of [*] geographical location of [*].
2. Seller shall utilize failure data or any other information
available to Seller as manufacturer of the Spares, coupled with
a non binding forecast supplied by Buyer, to establish proper
stocking levels required for Seller to ship [*] percent [*] of
orders received to the specified location within [*] business
day of order receipt. The [*] percent [*] metric applies to all
orders transmitted to Seller between the hours of [*]. on the
same business day pst time. Seller shall immediately notify
Buyer, in writing, if Seller has knowledge of any event which is
reasonably likely to delay any specified delivery.
3. Seller further agrees that it will maintain a standard of [*]
percent [*] for mistake free order processing and that less than
[*] of Spares delivered to Buyer or Buyer's customer will be
[*]. For purposes of this metric, [*] is defined as an out of
box Spare that is [*] either due to wrong part shipped, under
[*], incomplete, damaged, or functional failure ([*] within [*]
following installation). Seller will resolve any order
processing errors, delivery issues or [*], the [*] after
notification by Buyer.
4. Buyer will measure Seller's performance to delivery metrics set
forth in C.2 based upon the date stated on Buyer's electronic
order. In the event Seller fails to meet these metrics, Buyer
may, at its option, (I) establish a new mutually agreed upon
delivery schedule for the Spares whereby [*] for premium
transportation required to expedite delivery of such Spares, or
(ii) [*]. If Seller delivers Spares outside of the required
delivery "window", Buyer reserves the right to refuse said
shipment and return the shipment, freight collect, to the
Seller. These [*] and [*] are in addition to any other [*] and
[*] or elsewhere in this Addendum.
D. TIME IS OF THE ESSENCE
Buyer and Seller hereto acknowledge that TIME IS OF THE ESSENCE to this
Agreement, and that Buyer will suffer substantial damage in the event
Spares are not delivered on time.
* 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.
73
<PAGE> 74
E. QUALITY
Seller shall ensure that all Spares and/or Services delivered hereunder
comply with the CPA "Quality Assurance" Addendum.
F. RIGHTS AND ASSISTANCE TO [*]
1. It is mutually agreed between Buyer and Seller that Seller [*]
or [*] Products or Spares should Seller [*] herein, and a
reasonable cure period of at least [*]. Should Seller be [*],
Seller will provide Buyer, at [*], a list of [*] and the list of
[*] for those [*]. The [*] that are not available to Buyer from
[*] other than Seller are to be listed. Those [*] having generic
industry [*] and available to Buyer shall be [*] to generic [*].
Seller further [*] Buyer with the [*] for [*] the [*] and/or [*]
Products or Spares, along with [*], etc, of the [*]
involved/required to perform such [*]. Seller [*] to the Buyer
within [*] days from Buyer's written request and from Seller's
written notification of [*].
2. Upon mutual agreement, Seller shall, [*], and upon reasonable
notice, provide technical assistance and any [*] (subject to
availability) necessary to [*]. Seller shall provide this
service within [*] after 'mutual agreement for on-site support.
3. Upon mutual agreement Seller [*] Buyer or Buyer's selected [*]
parties in any way with respect to the [*]. This support will
continue during the Term of Availability and for so long as such
Products and/or Spares are made available to any of Seller's
other customers; [*].
G. WARRANTY
1. Seller hereby warrants refurbished Spares for [*] months from
the date of shipment from Seller. Refurbished Spares will be
date coded indicating date of repair, to include human readable
characters, in English, in plain sight.
2. Seller shall use commercially reasonable efforts to provide
Flow-Through Warranty for Spares that are sold to Buyer from
Seller utilizing 3rd party suppliers. This warranty passed to
Buyer from Seller shall be no less than the warranty provided by
the Seller. Such Spares should be noted as such in the Schedule
of Spares
3. Buyer may appoint an Authorized Service Agent to administer the
warranty process. Seller will recognize said appointment and
will assist Buyer's Authorized Service Agent, as required by
Buyer, to maintain the warranty process described herein
4. Seller shall bear all warranty costs such as labor, material,
and inspection. If Buyer or [*] any such [*] them [*]. Buyer
shall bear the cost of shipping Product to Seller's facility and
Seller shall bear the cost of shipping Product back to Buyer's
facility.
* 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.
74
<PAGE> 75
H. OUT-OF-WARRANTY SERVICE
1. Spares submitted by Buyer for repair once the warranty period
has expired will be in reasonably good condition and repairable.
In the event Spares submitted for repair have been damaged
beyond repair as determined by Seller, Seller will not be
obligated to refurbish such Spares. Seller agrees to notify
Buyer's Service Organization within [*] business days of receipt
of discrepant or non-repairable Spares, as long as quantity
returned at any one time does not exceed mutually agreed
volumes.
2. Seller shall have [*] business days from the date the Spares [*]
for repair and return to Buyer.
3. Seller hereby warrants Replacement Spares for [*] months from
the date of shipment.
4. Buyer will provide Seller with a non-binding estimated rolling
twelve (12) month forecast on a monthly basis.
5. Delivery of repaired Spares by Seller shall be FOB origin. Buyer
shall pay all transportation charges and bear all risk of loss
or damage during transit
I. ENGINEERING CHANGES
Seller agrees to provide Buyer's authorized representative all
information necessary for Buyer to maintain a complete and accurate
revision matrix for all parts supplied to Buyer. The revision matrix
allows a Field Engineer to understand the functional relationship
between the revision levels of parts in a unit and the revision level of
the item being installed. This information allows Buyer to determine if
a specific Engineering Change to any part affects the upward or downward
compatibility of any part or subassembly in the whole option or device.
J. ESCALATION
Seller agrees that during the term of this Addendum, it shall designate
a Seller Representative who shall act as Buyer's primary contact for any
service issues regarding parts procurement, exchange, repair or quality.
Seller must prepare and present to Buyer an internal written escalation
process and said Representative or designated backup(s) must be
available to Buyer, at least by pager, Monday-Friday, 7:00am-7:00pm pst
Seller shall provide technical support to Buyer for duration of this
Addendum including the [*] Term of Availability. Seller will resolve all
issues deemed to be Priority 1 Product "bugs", correct any problems with
production, and provide a service solution to Buyer for its customers.
Seller shall acknowledge escalated cases within [*] business day and
both parties shall agree to provide a resolution within a mutually
acceptable time to be decided on a case by case basis. At Buyer's
request, and if available locally, on-site technical support by Seller
shall be made available to Buyer or its authorized third (3rd) party.
This will be determined on a case by case basis.
K. DIRECT PROCUREMENT OF SPARES
EXHIBIT F, SCHEDULE OF SPARES, DATED: _________.
* 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.
75
<PAGE> 76
AGREED TO AND ACCEPTED BY:
(SELLER) COMPAQ COMPUTER CORPORATION (BUYER)
BY: BY:
------------------------------ --------------------------------
(AUTHORIZED SIGNATURE) (AUTHORIZED SIGNATURE)
NAME: NAME:
------------------------------ --------------------------------
(TYPED OR PRINTED) (TYPED OR PRINTED)
TITLE: TITLE:
------------------------------ --------------------------------
(TYPED OR PRINTED) (TYPED OR PRINTED)
DATE: DATE:
------------------------------ --------------------------------
76
<PAGE> 77
EXHIBIT F
PRODUCT, SPARES AND/OR SERVICES SPECIFICATIONS
8 PORT SWITCH
----------------------------------------------------------------------------------------------------
BROCADE COMPAQ P/"s
--------------------------- -----------------------------------------------------------------------
Order P/N Mfr. P/N 2-5-2 part # 6-3 part # Spare part # UPC code JAN code Rev. Level
------------ ------------- ------------ ---------- ------------ ------- -------- ----------
w/o GBIC CQ-1630-0002 80-0000106-04 30-56042-01 127552-B21 127660-001 N/A N/A [*]
w/GBIC CQ-1630-0004 80-0000108-04 N/A N/A N/A N/A
FR"S:
Motherboard XCQ-000001 60-0000005-01 29-34243-01 401930-001 N/A N/A
CPU Board XCQ-000002 60-0000006-01 29-34244-01 401931-001 N/A N/A
G-Port Board XCQ-000003 60-0000007-01 29-34245-01 401932-001 N/A N/A
Power Supply XCQ-000004 60-0000012-01 29-34246-01 401933-001 N/A N/A
[*] XCQ-000005 60-0000008-01 29-34249-01 401934-001 N/A N/A
[*] XCQ-000009 60-0000009-01 29-34468-01 128328-001 N/A N/A
16 PORT SWITCH
-----------------------------------------------------------------------------------------------------
BROCADE COMPAQ P/"s
---------------------------- -----------------------------------------------------------------------
Order P/N Mfr. P/N 2-5-2 part # 6-3 part # Spare part # UPC code JAN code Rev Level
------------ ------------- ------------ ---------- ------------ -------- -------- ---------
W/o GBIC CQ-1630-0001 80-0000105-04 30-56042-02 127553-B21 127660-002 N/A N/A [*]
W/GBIC CQ-1630-0003 80-0000107-04 N/A N/A N/A N/A
FR"S:
Motherboard Same as 8-port
CPU Board
G-Port Board
Power Supply
[*]
[*]
* 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.
77
<PAGE> 78
EXHIBIT G
COMPAQ SUPPLIER COMPLIANCE POLICY
Compaq Computer Corporation is proud of its reputation for integrity and honesty
in its business dealings. Our corporate culture of fairness and quality is one
of our most valuable assets. Maintaining this reputation is an ongoing process,
and Compaq considers it to be one of its most important jobs.
It is essential that the highest standards of conduct be observed by Compaq, as
well as its suppliers. In fact, Compaq believes that it suppliers must operate
at the same high level of integrity as Compaq. In this regard, Compaq has
adopted a Supplier Compliance Policy. As part of this policy, Compaq suppliers
must comply fully with the requirements set forth below. This policy requires
that Compaq suppliers and their employees exercise the highest degree of honesty
and integrity in conducting their business with Compaq, as well as other third
parties.
I. ETHICAL STANDARDS Compaq expects its suppliers to avoid conflicts of
interest that create opportunities for abuses and allegations of
commercial bribery.
A. Conflicts of Interest -- Suppliers are expected to avoid any
action which may involve, or appears to involve, a conflict of
interest with Compaq.
B. Business Courtesies -- Business should be won or lost on the
merits of the products and services being offered by its
suppliers. Therefore, supplier funds or personal funds of its
employees should not be used to provide a business courtesy
unless the gift is commemorative, ceremonial or customary in
nature and has an insubstantial value. Under no circumstances
should a kickback or bribe ever be offered to Compaq or its
employees.
II. ENVIRONMENTAL STANDARDS Compaq expects its suppliers to conduct their
business in a manner that provides a safe, healthy and environmentally
friendly workplace and meets or exceeds all applicable environment and
work place legal requirements.
A. Hazardous Materials, Air Emissions & Waste Water Discharges --
Compaq requires that each of its suppliers comply with all
applicable environmental laws and regulations regarding
hazardous materials, air emissions and waste water discharges,
including those regarding the manufacture, transportation,
storage, disposal, and release to the environment of such
materials.
B. Health & Safety -- Compaq expects its suppliers to maintain
their facilities in a safe and healthy manner and in compliance
with all applicable laws and regulations.
III. EMPLOYMENT STANDARDS Compaq expects its suppliers to foster human
dignity by treating their employees fairly and with respect. Compaq
requires that its suppliers comply with all applicable national, state
and local employment laws.
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<PAGE> 79
A. Child Labor -- Compaq expect its suppliers to refrain from using
child labor. Workers can be no less than 14 years of age and not
younger than the compulsory age to be in school. Compaq supports
the development of legitimate workplace apprenticeship programs
for the educational benefit of young people.
B. Prison Labor -- Compaq expects its suppliers to refrain from
utilizing prison or forced labor within their work forces.
C. Disciplinary Practices -- Compaq expects its suppliers to
refrain from using corporal punishment or other forms of mental
or physical coercion with their employees.
D. Working Hours -- Compaq expects its suppliers to comply with all
applicable laws regarding compensation for overtime work
performed by their employees. Additionally, employees should be
allowed at least one day off in seven.
IV. COMPETITIVE STANDARDS Compaq expects its suppliers to compete fairly and
vigorously within the marketplace. Compaq discourages anti-competitive
practices by its suppliers that inhibit the operation of a free-market
economy. Compaq requires that its suppliers comply with all applicable
competition laws.
A. Price fixing -- Compaq expects its suppliers to refrain from
collaborating with competitors to fix prices for its goods.
B. Anti-competitive Practices -- Compaq will not tolerate
anticompetitive practices by its suppliers, including efforts to
allocate markets or customers among their competitors or to fix
bids.
V. CONFIDENTIALITY Compaq requires that its suppliers enforce a policy that
ensures the confidentiality of all proprietary or confidential
information provided by Compaq.
A. Non-disclosure Agreement -- Compaq requires that its suppliers
comply with the terms of the Confidentiality and Non-disclosure
Agreements that have been entered into with Compaq.
B. Other Confidentiality Obligations -- Compaq requires its
suppliers to refrain from making unauthorized disclosures to
Compaq of third party confidential information.
VI. COMPLIANCE WITH GOVERNMENT LAWS AND REGULATIONS Compaq expects its
suppliers to comply with all applicable laws and regulations governing
their business relationships with Compaq. In addition, Compaq requires
that its Suppliers agree to implement and maintain a Small, Woman-Owned,
Minority Business Enterprise (SWMBE) program in accordance with Federal
Acquisition Regulations (FAR) 52.219-0(d)(ll)(iii). Upon request by
Compaq, Suppliers agree to provide Compaq with written certification of
its compliance with the SWMBE Federal Acquisition Regulations.
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<PAGE> 80
Compaq is dedicated to maintaining its reputation for fairness and integrity. In
many ways the future success of both Compaq and its suppliers depends on our
ability to build on these high standards.
The foregoing requirements are not intended to be all-inclusive, and Compaq
expects its suppliers to exercise ethical judgment beyond strict compliance with
the law, and to be responsive to the concerns of the communities in which they
operate. Failure to comply with the above requirements may result in reduction
of business with Compaq, or in some instances, termination of your relationship
with Compaq. Understanding and complying with the above requirements will help
to ensure that our mutual business activities are conducted in the highest
ethical and professional manner.
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<PAGE> 81
EXHIBIT H
DOCUMENTATION, TRAINING AND TECHNICAL SUPPORT
I. SERVICE AND SUPPORT REQUIREMENTS
Buyer will be responsible for working directly with the End Users, and
Seller Support will work directly with Buyer to support Buyer personnel,
as necessary. Buyer represents and warrants that it is experienced in,
capable of, and staffed to provide, Level 1 and Level 2 support (as
defined below). Seller offers training programs to assist in attaining
this level of expertise on Seller Products. Seller Support will accept
calls for technical assistance only from Level II engineers who have
attended Seller instructed training Courses 1 through 3.
Seller will provide Level 3 support (as defined below).
II. SUPPORT LEVEL DEFINITIONS
1.0 LEVEL 1 SUPPORT
Level 1 support is the first line, direct End User contact, most likely
via a telephone call handling group provided by Buyer. Level One support
includes:
- First contact, direct Buyer/End User interaction
- Information collection and analysis
- Identification of whether the problem is known and has a known
solution
- Troubleshooting and problem reproduction
- Problem report administration and tracking
The parties agree that End Users shall not have the right to contact
Seller directly for questions related to the Products.
2.0 LEVEL 2 SUPPORT
Level 2 support is "technical support" provided by Buyer personnel.
Level 2 support is typically provided by experts in the applicable
Product and who serve as the escalation point for Level 1. Level 2
support personnel are expected to resolve all known problems,
installation and configuration issues, assist in firmware or driver
updates at the End User site, search Seller posted Technical Notes and
other technical information supplied that will assist in providing
problem resolutions. All pertinent data shall be entered in Buyer's
problem tracking database.
Should the Level 2 analyst be unable to resolve a problem, either
because of lack of expertise, exhausted troubleshooting knowledge, or
expiration of the allotted Level 2 resolution time, the Level 2 analyst
may escalate the problem to Level 3 for resolution. Level 2 personnel of
Buyer will continue to diligently work with Level 3 personnel of Seller
to accomplish resolution. Level 2 personnel of Buyer will communicate
all resolutions back to the End Users.
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<PAGE> 82
Escalations should be presented to Seller engineers in the form of a problem
tracking data base record with all pertinent configuration detail and failure
information or symptoms documented in detail.
In an effort to maintain an efficient support organization and crisp exchange of
information, Buyer will limit the number of support personnel (Level 2)
authorized to contact Seller (Level 3) to [*] and ensure that these personnel
have attended courses 1, 2, and 3 taught at the Seller training facility.
3.0 LEVEL 3 SUPPORT
Level 3 support is provided by Seller System Engineers (SE) and/or Technical
Support Engineers (TSE). Level 3 is the first point of contact for technical
issues between Seller and Buyer. Once a problem is accepted by Seller in its
sole discretion for escalation to Level 3, Seller is responsible for resolution
and will utilize commercially reasonable resources to resolve such problem.
Prior to escalating to Level 3, it is expected that Buyer shall provide the
following information and documentation:
- Any error information from the device connected to the switch and
from the switch.
- All names and revisions of hardware equipment.
- All firmware revisions of the drivers.
- Any log files from the devices connected to the switch.
- Any trace file from the devices connected to the switch.
- The configuration information of the equipment being used.
- Detailed definition of all steps taken to reproduce and resolve
this situation prior to escalation to Level 3.
Assigned Level 3 support personnel (SE and/or TSE) can be contacted via direct
dial, email to an established "support" alias, web site initiated input, and by
calling Seller's [*] support number. Direct access to Seller support personnel
will be possible during normal Seller's business hours (8 AM to 5 PM PST, M-F).
Emergency situations for [*] problems are handled via [*] at [*].
4.0 SELLER'S SEVERITY
Definitions and Support Goals
The goal for initial response time to all telephone support requests is [*] or
less during normal Seller working hours. For after hours telephone requests, the
goal is [*] or less. The targeted response time for requests submitted by other
means, such as email, or fax, is [*].
* 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.
82
<PAGE> 83
----------------------------------------------------------------------------------------------------------------------
Severity Definition Service Objective Resolution Time
----------------------------------------------------------------------------------------------------------------------
1 SELLER Product is completely Respond to initial request [*] using commercially
non-functional, or deemed a safety hazard, within [*] during normal reasonable efforts.
situation has high impact on development SELLER business hours, and
or delivery efforts. Installation problems. [*] for non-business hours.
Resources applied until a
solution or acceptable work-
around is found.
----------------------------------------------------------------------------------------------------------------------
2 SELLER Product is functionally impaired, Respond to initial request [*]
has substantially degraded performance but within [*] during normal
is not completely dysfunctional. There are SELLER business hours.
no available work-arounds. Situation has Resources applied
medium impact on customer activity. continuously, during business
hours, until a solution or
work-around is found.
----------------------------------------------------------------------------------------------------------------------
3 SELLER Product or advertised functionality Resources applied on a [*]
may be slightly impaired but is priority basis, until a
operational, has low to no impact on solution or a work-around is
customer activity, and there are found.
work-arounds available.
----------------------------------------------------------------------------------------------------------------------
4 Generic questions, and enhancement Answer generic questions or Commercially reasonable
requests. provide path to answers efforts for generic
within reasonable time questions. Enhancement
frames. The SELLER web site requests are processed on
will be the prime repository a case by case basis.
for this type of information.
Enhancement requests will be
reviewed and implemented in
the next major release, where
feasible, or to meet specific
commitments made.
----------------------------------------------------------------------------------------------------------------------
* Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has bee
requested with respect to the omitted portions.
83
<PAGE> 84
TECHNICAL TRAINING PROGRAM
TRAINING OUTLINE
-----------------------------------------------------------------------------
COURSE DAYS COST
-----------------------------------------------------------------------------
1.1 FC & SAN intro: 1 [*]
Audience: Sales/Marketing/SE's
1.2 Switch intro & features: 3 [*]
Audience: Sales/Marketing/SE's
1.3 Install/Config/Troubleshoot/Mgmt tools: 2 [*]
Audience: SE's, Tech support
FULL COURSE 5 [*]
Note: Includes non-reproduceable copy of all course materials for each person.
Additional binders of training materials may be purchased from SELLER.
Courses will be offered at SELLER's offices in San Jose, CA or at such other
facility notified to Buyer from time to time. A minimum of [*] students will be
required to attend, or the course in question may, at SELLER's sole option, be
canceled. Buyer agrees that it shall pay any and all travel and lodging expenses
related to such training. SELLER will make these courses available to End User
customers, on terms to be negotiated at SELLER's then-current rates for end user
training courses.
-----------------------------------------------------------------------------
* Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has bee
requested with respect to the omitted portions.
84
<PAGE> 85
EXHIBIT I
SILKWORM II LABEL MATRIX: COMPAQ
-----------------------------------------------------------------------------------------------------------------------
POSITIONING
-----------------------------------------------------------------------------------------------------------------------
on
Pallet
or
Single
on on Shipping
Label Name Brocade P/N Compaq Spec # Switch Carton Container Comments
-----------------------------------------------------------------------------------------------------------------------
[*] 56-0001488-01 Rev A [*] [*] Approved (email) 2/25/98
-----------------------------------------------------------------------------------------------------------------------
[*] 47-0001351-01 Rev 1 [*] [*] Approved (email) 2/25/98
-----------------------------------------------------------------------------------------------------------------------
[*] 56-0001486-01 Rev A [*] [*] Approved (email) 2/25/98
-----------------------------------------------------------------------------------------------------------------------
[*] 56-0000312-01 Rev 1 [*] [*]
-----------------------------------------------------------------------------------------------------------------------
[*] 56-0001484-01 Rev A [*] X Approved (email) 4/29/98
-----------------------------------------------------------------------------------------------------------------------
[*] 56-0001485-01 Rev A [*] [*]
-----------------------------------------------------------------------------------------------------------------------
[*] 55-0000969-01 Rev 1 [*] [*]
-----------------------------------------------------------------------------------------------------------------------
[*] 56-0000003-01 Rev A [*] [*]
-----------------------------------------------------------------------------------------------------------------------
[*] 85-0000003-01
-----------------------------------------------------------------------------------------------------------------------
* Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has bee
requested with respect to the omitted portions.
85
<PAGE> 86
EXHIBIT J
PRODUCT AGENCY AND REGULATORY COMPLIANCE
REQUIREMENTS
COUNTRY SAFETY EMC
United States UL 1950 FCC Part 15 Class A
Canada CSA 22.2 No. 950 CSA 108.8 Class A
Japan IEC 60950 VCCI (CISPR-22)
EC and EFTA countries EN60950 EN 55022:1994/EN50082-1:1992 (CE
MARK)
Australia New Zealand AS/NZS 3260:1993 AS/NZ 3548 (C-Tick mark)
International IEC 950 CNS 1348 (BCIQ logo)
<PAGE> 87
EXHIBIT K
PACKAGING SPECIFICATION
USE COMPAQ DRAWING NO. [*] (LATEST REVISION)
* Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has bee
requested with respect to the omitted portions.
<PAGE> 88
EXHIBIT L
ELECTRONIC COMMERCE AGREEMENT
BETWEEN COMPAQ COMPUTER CORPORATION AND
BROCADE COMMUNICATIONS
This Electronic Commerce Agreement ("Agreement") is made and entered into on
___________ ("Effective Date"), by and between Compaq Computer Corporation
("Compaq"), a Delaware corporation with offices at 20555 SH 249, Houston, Texas
77070 and Brocade Communications _____________________a corporation with offices
at _______________, herein collectively referred to as the "Parties".
WHEREAS the Parties desire to transmit and receive data electronically and
WHEREAS the Parties desire to ensure that such transmissions are legally valid
and enforceable;
NOW THEREFORE, in consideration of the premises and of the covenants and
conditions set forth herein, the Parties agree as follows:
TRANSMISSION REQUIREMENTS. (a) Each Party may electronically transmit to or
receive from the other Party through any means of Electronic Commerce defined to
include, but is not limited to, Electronic Data Interchange (EDI), Facsimile,
Electronic Mail, Internet and World Wide Web, any of the transaction sets
("Electronic Interchanges") listed in Appendix A to this Agreement or such other
sets as the Parties agree to in writing from time to time. Any transmission of
data that does not conform to the applicable requirements as specified in
Appendix A for the type of Electronic Interchange(s) between the Parties, is/are
not an Electronic Interchange(s) and shall have no force or effect between the
Parties.
(b) Each Party shall adopt as its signature an electronic identification number
or code ("User ID") and shall use such signature in each Electronic Interchange
with the other Party. The Parties agree that a User ID, when affixed to or
contained in an Electronic Interchange, shall be legally sufficient to verify
the identity of the transmitting Party and to authenticate the Electronic
Interchange. (C)) Electronic Interchanges shall not be deemed to have been
properly received, and no Electronic Interchange shall give rise to any
obligation, until accessible to the receiving Party. Upon proper receipt of any
Electronic Interchange, the receiving Party shall promptly transmit a functional
acknowledgment or alternate acknowledging Electronic Interchange agreed to by
the Parties, which shall constitute conclusive evidence that a Electronic
Interchange has been properly received) If acceptance of a Electronic
Interchange is required by Appendix A, any such Electronic Interchange that has
been properly received shall not give rise to any obligation unless and until
the Party initially transmitting such Electronic Interchange has received a
business response Electronic Interchange, as specified in Appendix A.
<PAGE> 89
(e) Each Party shall establish reasonable controls to ensure the timely handling
of all data transmissions and shall contact promptly the sending Party for
corrective action in the event of a transmission error, such as an
unintelligible or garbled transmission, or in the event electronic transmission
operations are lo2. VALIDITY AND ENFORCEABILITY. (a) This Agreement has been
executed by the Parties to evidence their mutual intent to create binding
obligations pursuant to the Electronic Interchange specifying certain of the
applicable terms. Any Electronic Interchange properly transmitted pursuant to
this Agreement shall be considered a "writing" or "in writing" and any such
Electronic Interchange that contains or has a User ID affixed to it ("Signed
Electronic Interchanges") shall be deemed for all purposes (i) to have been
"signed" and (ii) to constitute an "original" when printed from electronic files
or records established and maintained in the normal course of business.
(b) The Parties agree not to contest the validity or enforceability of Signed
Electronic Interchanges under the provisions of any applicable law relating to
whether certain agreements are to be in writing or signed by the Party to be
bound thereby. Signed Electronic Interchanges shall be admissible if introduced
as evidence on paper in any judicial, arbitration, mediation, or administrative
proceeding to the same extent and under the same conditions as other business
records originated and maintained in documentary form. Each Party agrees that it
will not contest the admissibility of copies of Signed Electronic Interchanges
under either the business records exception to the hearsay rule or the best
evidence rule on the basis that such Signed Electronic interchanges were not
originated or maintained in documentary f
3. THIRD PARTY SERVICE PROVIDERS. (a) The Parties may transmit Electronic
Interchanges either directly or through third party service providers or
networks. Each Party shall be responsible for the costs of any third party
service provider with which it contracts and any other costs it incurs in the
electronic transmission or receipt of Electronic Interchanges under this
Agreem(b) Either Party may modify its election to use, not use, or change a
third party service provider upon thirty (30) days prior written notice to the
other Pa
4. OBLIGATION TO MAINTAIN RECORDS. Neither Party has an obligation to maintain
the storage of data records or other files for the other Pa
5. GENERAL TERMS AND CONDITIONS FOR PURCHASES AND SALES. This Agreement does not
express or imply any commitment to purchase or sell goods or services. Where the
Parties mutually agree to engage in such transactions using Electronic Commerce,
the general terms and conditions for such transactions shall be those contained
in the applicable purchase contract
6. SECURITY PROCEDURES AND CONFIDENTIALITY OF USER IDS. (a) Each Party shall
adopt and use security procedures that are reasonably sufficient to ensure that
all transmissions of Electronic Interchanges are authorized and to protect its
business records
<PAGE> 90
and data from improper acc
(b) The Parties agree that User IDs are confidential and shall not disclose the
other Party's User ID to any unauthorized par
7. TERM AND TERMINATION. This Agreement shall remain in effect until terminated
by either Party with not less than [*] days prior written notice; provided,
however, that any termination shall not affect the respective obligations or
rights of the Parties arising under any Electronic Interchanges or otherwise
under this Agreement prior to the effective date of terminat
8. LIMITATION OF DAMAGES. Neither Party shall be liable to the other for any
special, incidental, exemplary, or consequential damages arising from or as a
result of any delay, omission, or error in the electronic transmission or
receipt of any Electronic Interchanges pursuant to this Agreement, even if the
other Party has been advised of the possibility of such dama
9. CONTINGENCIES BEYOND A PARTY'S CONTROL. Neither Party shall be liable for any
failure to fulfill its obligations under this Agreement if such failure is
caused by the occurrence of any contingency beyond its reasonable control,
including but not limited to any mechanical, electronic, or communications
failure, that prevents it from transmitting or receiving any Electronic
Interchan
10. EXPIRATION OF CLAIMS. No action, regardless of form, arising out of this
Agreement may be brought by either Party more than [*] after the cause of action
has arisen.
11. GOVERNING LAW. This Agreement is governed by the laws of the State [*],
U.S.A., excluding its conflict of law rules.
NON-ASSIGNABILITY. This Agreement shall not be assigned or transferred by either
Party without the prior written consent of the other Pa
13. ENTIRE AGREEMENT. The
entire understanding between the Parties is incorporated herein and supersedes
all prior discussions and agreements between the Parties relating to the subject
matter hereto. This Agreement can be modified only by written amendment executed
by the Parties, and shall not be supplemented or modified by any course of
dealing or trade usa
14. TITLES AND CAPTIONS. All titles or captions in this Agreement are for
convenience only. They shall not be deemed part of this Agreement and in no way
define, limit, extend, or describe the scope or intent of its provisi
15. INVALIDITY OF PROVISIONS. If any provision or provisions of this Agreement
shall be held to be invalid, illegal, or unenforceable, such provision shall be
enforced to the fullest extent permitted by applicable law and the validity,
legality, and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
* 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.
<PAGE> 91
16. ADDRESSES AND NOTICES. Written notices required or permitted hereunder,
shall be deemed given and received when properly posted by registered or
certified mail, postage prepaid, first class, in an envelope properly addressed
to the addresses set forth in an Appendix to this Agreement, or such other
address, as a Party specifies in writing to the other Party.17. AUTHORITY TO
SIGN. The individuals signing this Agreement hereby represent and warrant that
they are empowered and authorized to sign on behalf of and bind the Party for
whom they have signed.
THE PARTIES ACKNOWLEDGE THAT THEY HAVE READ THIS AGREEMENT AND AGREE TO BE BOUND
BY ITS TERMS AND CONDITIONS.
BROCADE COMMUNICATIONS
--------------------------------
Name:
--------------------------------
Title:
--------------------------------
Date:
COMPAQ COMPUTER CORPORATION
--------------------------------
Name:
--------------------------------
Title:
--------------------------------
Date:
<PAGE> 92
ELECTRONIC COMMERCE AGREEMENT
BETWEEN COMPAQ COMPUTER CORPORATION AND
BROCADE COMMUNICATIONS SYSTEMS
APPENDIX A
This appendix provides for the Electronic Interchange requirements for the
specific means of Electronic Commerce as provided.
31.12 Electronic Data Interchange (EDI) Edifact Standard
The network Compaq will use is [*] or [*].
The Electronic Commerce business partners agree to notify each other when there
are unforeseen disruptions in normal process or when changes are about to occur
that have the potential of disrupting the use of Electronic Commerce for normal
business communications.
A Trading Partner Profile shall be received by Compaq Electronic Commerce
Services prior to establishing Seller as an Electronic Commerce Trading Partner.
31.12.1 Electronic Commerce Transaction Sets
Below are the transaction sets Compaq supports for Purchasing Activities.
(Direction is from Compaq's perspective)
Planning Process:
Send [*] - Planning Schedule(version [*])
Receive [*] - Commit signal (version [*] )
Purchase Order Process
Send [*] - Purchase Order (version [*])
Receive [*] - Purchase Order Acknowledgment (version [*])
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has bee requested with respect to the
omitted portions.
<PAGE> 93
Closed Loop Process
Send [*] - Shipping Schedule (version [*])
Receive [*] - Ship Notice (version [*])
Send and Receive [*] - Inventory Report (version [*])
NOTE: Timeline of implementation of Compaq sending [*] is still to be determined
Return Material Process
Send/Receive [*] - Return Material Notification/Authorization
NOTE: Timeline of implementation to be determined
All Documents
For all documents, the 997 - Functional Acknowledgment will be used. It should
be returned immediately and at the SET level.
31.13 Electronic Mail
All data transmitted in the form of a business or sales transaction as an
obligation from either party through electronic mail must be digitally signed
and encrypted using the S/MIME format prior to being transmitted.
31.14 Internet and World Wide Web
31.14.1 Data Security
All data transmitted in the form of a business or sales transaction as an
obligation from either party via the Internet or World Wide Web between the
parties shall be considered confidential information. Such information shall be
transmitted using a secure internet protocol or be encrypted when it is
electronically transmitted or stored as files, whether on a user's PC or a
network file share and shall remain encrypted unless it is being accessed by the
intended recipient.
If Seller does use Company-Sanctioned Encryption due to domestic or local laws,
Seller must have direct dial-up lines over which to transmit the decrypted
confidential information and shall be responsible for providing adequate
protection for the Seller's confidential information.
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has bee requested with respect to the
omitted portions.
<PAGE> 94
Access to Seller's URL
Seller shall provide Buyer read access to Seller's URL. Seller shall ensure that
Buyer has information and access to the most current URL.
31.14.1.1 CUSTOMS AND EXPORT COMPLIANCE
Encrypted communications between the Parties and affiliates in other countries
or suppliers or customers in other countries, whether or not those customers or
suppliers are subsidiaries or affiliates of United States firms, are subject to
United States export licensing requirements.
<PAGE> 95
EXHIBIT M
CHANGE OF CONTROL COMPANIES
[*]
[*]
[*]
[*]
[*]
[*]
[*]
* Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has bee