Goods Agreement - International Business Machines Corp. and Brocade Communications Systems Inc.
GOODS AGREEMENT
AGREEMENT # ROC-P-68
This Agreement dated as of April 15, 1999 ("EFFECTIVE DATE"), between
International Business Machines Corporation ("BUYER") and Brocade Communications
Systems, Inc. ("SUPPLIER"), establishes the basis for a multinational
procurement relationship under which Buyer may purchase from Supplier the
Products and Services which are described in SOWs issued under this Agreement.
1.0 DEFINITIONS:
"AFFILIATES" means entities that control, are controlled by, or are
under common control with a party to this Agreement and that have signed a PA.
"AGREEMENT" means this agreement and any relevant Statements of Work
("SOW"), Work Authorizations ("WA"), Participation Attachments ("PA"), and other
attachments or appendices specifically referenced in this Agreement.
"BUYER" means either IBM or one of its Affiliates.
"DAYS" means calendar days unless otherwise specified.
"BUYER PERSONNEL" means agents, employees, contractors or remarketers
engaged by Buyer.
"PARTICIPATION AGREEMENT" or "PA" means an agreement signed by
Affiliates and accepted by Supplier in writing, which incorporates by reference
the terms and conditions in this agreement, any relevant SOW, and other
attachments or appendices specifically referenced in the PA. Buyer to supply
Supplier with copies of all such documents.
"PRODUCTS" means items identified in the relevant SOW.
"SERVICES" means the services identified in the relevant SOW.
"STATEMENT OF WORK" or "SOW" means any document attached to or included
in this Agreement which describes the Products and Services, including any
requirements, specifications or schedules.
"SUPPLIER" means either Supplier or one of its Affiliates.
"SUPPLIER PERSONNEL" means agents, employees or subcontractors engaged
by Supplier.
"WORK AUTHORIZATION" or "WA" means a purchase order or other Buyer
designated document, in either electronic or hard copy form, issued by Buyer's
procurement personnel, and is the only authorization for Supplier to perform any
work under this Agreement. A SOW is a WA only if designated as such in writing
by Buyer.
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2.0 STATEMENT OF WORK: Supplier will provide the Products or Services as
specified in the relevant SOW only when specified in a WA. Supplier will not
make any changes to the form, fit or function of the Products without Buyer's
prior written consent, such consent not to be withheld unreasonably. Supplier
will maintain the capability to supply agreed upon Products, including parts of
Products, for a period of months after withdrawal of such Products as specified
in the relevant SOW. Supplier will notify Buyer of its intent to withdraw any
Product and will continue to deliver such withdrawn Products for the periods as
specified in the relevant SOW. Supplier shall process WAs issued by Buyer and
shall accept all WAs in Accordance with this Goods Agreement and the applicable
SOW. Supplier shall provide Buyer written sales order acknowledgment within [*]
of receipt. If order acknowledgment is not received with [*], the WA will be
deemed to be accepted by Supplier.
3.0 TERM AND TERMINATION
3.1 TERM: Products and Services acquired by Buyer on or after the
Effective Date will be covered by this Agreement. This Agreement will remain in
effect until terminated.
3.2 TERMINATION OF THIS AGREEMENT: Either party may terminate this
Agreement, without any cancellation charge, for a material breach of the
Agreement by the other party or if the other party becomes insolvent or files or
has filed against it a petition in bankruptcy ("Cause"), to the extent permitted
by law. Such termination will be effective at the end of a thirty (30) day
written notice period if the Cause remains uncured. Either party may terminate
this Agreement without Cause when there are no outstanding SOWs.
3.3 TERMINATION OF A SOW OR WA: Buyer may terminate a SOW with Cause
effective immediately or without Cause on 60 days written notice. Upon
termination, in accordance with Buyer's written direction, Supplier will
immediately: (i) cease work; (ii) prepare and submit to Buyer an itemization of
all completed and partially completed Products and Services; (iii) deliver to
Buyer Products satisfactorily completed up to the date of termination at the
agreed upon Prices in the relevant SOW; and (iv) deliver upon request any work
in process. In the event Buyer terminates without Cause, Buyer will compensate
Supplier for the actual and reasonable expenses incurred by Supplier for work in
process up to and including the date of termination, provided Supplier uses
reasonable efforts to mitigate Buyer's liability under this SubSection by, among
other actions, returning to its suppliers, selling to others, or otherwise using
the canceled Products (including raw materials or works in process) and provided
such expenses do not exceed the Prices.
* 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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4.0 PRICING
4.1 PRICING: Supplier will provide Products and Services to Buyer
for the Prices. Except as may be set forth in a SOW, the Prices for Products and
Services specified in the applicable SOW, and reflected in a WA, will be the
only amount due to Supplier from Buyer.
4.2 COMPETITIVE PRICING. [*] Prices will at least be competitive
with industry prices for like products and services and, if not, Supplier will
use commercially reasonable efforts to adjust its Prices so that they are
competitive.
5.0 PAYMENTS AND ACCEPTANCE: Terms for payment will be specified in the
relevant SOW. Payment of invoices will not be deemed acceptance of Products or
Services, but rather such Products or Services will be subject to inspection,
test and rejection by Buyer for a period as specified in the relevant SOW. Buyer
may reject Products or Services that do not comply with the specifications and
require prompt correction or replacement of such Products, as specified in the
relevant SOW. During the relevant warranty period, Buyer may reject entire lots
of Products which do not meet quality levels as specified in the relevant SOW
after such testing and evaluation, and such Products shall be returned to
Supplier as set forth in Section 6.2 ("Warranty Redemption") below.
6.0 WARRANTIES
6.1 ONGOING WARRANTIES: Supplier makes the following ongoing
representations and warranties: (i) it has the right to enter into this
Agreement and its performance of this Agreement will not violate the terms of
any contract, obligation, law, regulation or ordinance to which it is or becomes
subject; (ii) to the best of Supplier's knowledge, no claim, lien, or action
exists or is threatened against Supplier that would interfere with Buyer's use
or sale of the Products; (iii) Products are free from defects in design (except
for written designs provided by Buyer unless such designs are based entirely on
Supplier's specifications), material and workmanship and will conform to the
warranties and specifications in this Agreement for the time period from the
date of shipment as specified in the relevant SOW; (iv) Products are safe for
any use consistent with and will comply with the warranties and specifications
in this Agreement; (v) Products and Services are Year 2000 ready such that they
are capable of correctly processing, providing, receiving and displaying date
data, as well as exchanging accurate date data with all products with which the
Products are intended to be used as set forth in the accompanying documentation,
within and between the twentieth and twenty-first centuries, provided that all
other products (e.g., hardware, software and firmware) used in combination with
the Products properly exchange date data with the
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with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
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Products; (vi) none of the Products contain nor are any of the Products
manufactured using ozone depleting substances known as halons,
chlorofluorocarbons, methyl chloroform and carbon tetrachloride; (vii) Products
sold as new are new and do not contain used or reconditioned parts; however,
Products which are serviced under the applicable warranty may be new or
reconditioned; and (ix) Products and Services do not infringe any intellectual
property right of a third party. Supplier will promptly notify Buyer in writing
should there be any failure to adhere to the representations and warranties as
stated herein.
THE WARRANTIES IN THIS AGREEMENT ARE IN LIEU OF ALL OTHER WARRANTIES,
REPRESENTATIONS AND CONDITIONS, WHETHER EXPRESS, IMPLIED, STATUTORY OR
OTHERWISE, INCLUDING THOSE WARRANTIES, REPRESENTATIONS OR CONDITIONS OF
MERCHANTABILITY, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR FITNESS FOR A
PARTICULAR USE.
6.2 WARRANTY REDEMPTION: If Products or Services do not comply with
the warranties in this Agreement, Supplier will repair or replace Products (at
the mutually agreed to level) or re-perform Services, or credit or refund the
then-current Price of Products or Services, such remedy at Supplier's
discretion. For such Products, Supplier will issue to Buyer a Return Material
Authorization ("RMA") within two (2) business days of Buyer's written notice.
Buyer may return Products which do not conform to the warranties in this
Agreement from any Buyer location to the nearest authorized Supplier location at
cost of Supplier and Supplier will, at cost of Supplier, return any repaired or
replaced Product in a timely manner. The foregoing states Supplier's exclusive
liability, and Buyer's sole and exclusive remedy, for the failure of the
Products to conform to the relevant specifications during the applicable
warranty period.
6.3 POST WARRANTY SERVICE: Supplier will offer post warranty
Services as specified in the relevant SOW or identify a third party which will
provide such Services. In the event a third party will provide such Services,
Supplier will provide the designated party with the information required for the
performance of the Services.
6.4 EPIDEMIC DEFECTS: Supplier will, at Buyer's discretion, repair
or replace, or provide a credit or refund (at the then-current Prices) for
Products which have the same or similar defect at a rate as specified in the
relevant SOW ("Epidemic Defect Rate"), after verification of such Epidemic
Defect Rate by Supplier, or where a safety defect is found. Supplier will
commence such performance within five (5) calendar days of Buyer's written
notice to Supplier of an Epidemic Defect Rate. Supplier will reimburse Buyer for
all actual and reasonable expenses incurred by Buyer, as mutually agreed to, for
such repair and replacement of Products, including expenses associated with
problem diagnosis, field and finished goods inventory repair or replacement.
7.0 DELIVERY
7.1 DELIVERY LOGISTICS: Delivery under this Agreement means delivery
to the Buyer location and/or Buyer delivery point as specified in the relevant
SOW or WA. Buyer may
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cancel or reschedule the delivery date or change the delivery point as specified
in the relevant SOW. The term of sale will be specified in the relevant SOW.
Buyer will use commercially reasonable efforts to issue a [*] rolling forecast
for quantities of Products that may be required. Supplier will only deliver the
Products specified in a WA. ANY PRODUCT QUANTITIES CITED IN OR PURSUANT TO THIS
AGREEMENT, EXCEPT FOR QUANTITIES CITED IN A WA, ARE PRELIMINARY AND NON-BINDING
ONLY. BUYER MAKES NO REPRESENTATION OR WARRANTY AS TO THE QUANTITY OF PRODUCTS
THAT IT WILL PURCHASE, IF ANY.
7.2 ON-TIME DELIVERY: The lead-time for Buyer to issue a WA prior to
delivery will be specified in a SOW. Except as provided in SubSection 14.8
("Force Majeure"), Products specified in a WA for delivery with such lead-time
will be delivered on time. Supplier will use commercially reasonable efforts
when Buyer requests delivery with a shorter lead-time. If Supplier cannot comply
with a delivery commitment, Supplier will promptly notify Buyer of a revised
delivery date and Buyer may: (i) cancel without charge any Products or Services
ordered under a given WA which have not yet been Delivered; (ii) require
Supplier to deliver Products using priority freight delivery at Supplier's
expense for the incremental freight charges; and (iv) exercise all other
remedies provided in this Agreement.
8.0 INTELLECTUAL PROPERTY: Supplier grants Buyer all intellectual
property rights licensable by Supplier which are necessary for Buyer to sell the
Products from Supplier and to use the Products as expressly provided for under
this Agreement.
8.1 MICROCODE LICENSE: Supplier hereby grants Buyer a non-exclusive,
worldwide, right and license under all applicable intellectual property rights
of Supplier to (i) use, execute and display all device drivers, firmware and
software of Supplier used in the support and operation of the Products,
including upgrades, updates, bug fixes or back-up versions of the same (the
"Microcode"), in object code format only, in conjunction with, or for use with
the Products, (ii) reproduce, distribute and license the Microcode, in object
code format only, as part of, in conjunction with or for use with the Products
sold or leased by Buyer to end users, and (iii) to authorize, license and
sublicense third parties to do any, some or all of the foregoing. Buyer shall
distribute the Microcode (as incorporated into the Products) with an end user
agreement which is legally enforceable in the jurisdiction within which the
Products are distributed, and which is no less protective of Supplier's rights
than this Agreement. All rights in and to the Microcode which are not granted to
Buyer herein are expressly reserved to Supplier.
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with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
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8.2 RESTRICTIONS: Buyer shall have no right to (i) sell the
Microcode in stand-alone form; (ii) modify or adapt the Microcode for other
products or create derivative works of the Microcode; (iii) decompile, reverse
translate, or disassemble the Microcode for any reason, or (iv) use or
distribute the Microcode for any purpose other than as set forth in this
Agreement.
8.3 TRADEMARKS: This Agreement does not grant either party the right
to use the other party's trademarks, trade names or service marks.
8.4 OWNERSHIP: Notwithstanding the terms of SubSection 14.10 ("Prior
Communication and Order of Preference"), nothing in this Agreement or any SOW or
WA shall be construed to grant any title or rights of ownership of the Microcode
to Buyer, and that Supplier owns and shall continue to own all right, title and
interest in the Microcode.
9.0 INDEMNIFICATION
9.1 GENERAL INDEMNIFICATION: Supplier will defend, hold harmless and
indemnify, including attorney's fees, Buyer and Buyer Personnel against claims
that arise or are alleged to have arisen as a result of negligent or intentional
acts or omissions of Supplier or Supplier Personnel in performing its
obligations under this Agreement.
9.2 INTELLECTUAL PROPERTY INDEMNIFICATION: Supplier will defend,
hold harmless and indemnify, including attorney's fees, Buyer and Buyer
Personnel from claims that Supplier's Products or Services infringe the
intellectual property rights of a third party. If such a claim is or is likely
to be made, Supplier will, at its option: (i) obtain for Buyer the right to
continue to use and sell the Products and Services consistent with this
Agreement; (ii) modify the Products and Services so they are non-infringing and
in compliance with this Agreement; or (iii) replace the Products and Services
with non-infringing ones that comply with this Agreement. In the event that none
of the options in the preceding sentence are commercially practical, at Buyer's
request, Supplier shall accept the cancellation of infringing Services and/or
the return of infringing Products, and refund to Buyer the amounts paid in
respect of such infringing Services and/or infringing Products.
9.3 EXCEPTIONS TO INDEMNIFICATION: Supplier will have no obligation
to indemnify Buyer or Buyer Personnel for claims that Supplier's Products or
Services infringe the intellectual property rights of a third party to the
extent such claims arise as a result of: (i) Buyer's combination of Products or
Services with products or services not authorized by Supplier or approved for
use with the Products; (ii) Supplier's implementation of a Buyer originated
design; or (iii) Buyer's unauthorized modification of the Products. Supplier
will have no obligation to indemnify Buyer or Buyer Personnel for any claim
under this Section 9 unless Buyer has promptly notified Supplier of such claim,
has provided Supplier with reasonable assistance in defending any such claim and
has allowed Supplier to have sole control over the defense and settlement, if
applicable, of any such claim. Notwithstanding the foregoing, Buyer shall have
the right, at Buyer's expense, to retain counsel and assist in the defense of
any such claim.
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10.0 LIMITATION OF LIABILITY:
10.1 LIMITATION: Except for liability under the Section entitled
Indemnification and the SubSection entitled Epidemic Defects, in no event will
either party be liable to the other for any lost revenues, lost profits,
incidental, indirect, consequential, special or punitive damages, whether or not
such party was informed of the possibility of such damages.
10.2 LIABILITY CAP: Except for liability under Section 9.0
("Indemnification"), Supplier's liability for all claims, however caused and on
any theory of liability arising out of this Agreement, shall in no event exceed
an amount equal [*] of the total purchase revenue actually received by Buyer in
respect of the affected Products in the [*] immediately preceding the event
giving rise to such damages or [*], whichever is greater.
11.0 SUPPLIER AND SUPPLIER PERSONNEL: Supplier is an independent
contractor and this Agreement does not create an agency relationship between
Buyer and Supplier or Buyer and Supplier Personnel. Buyer assumes no liability
or responsibility for Supplier Personnel. Supplier will: (i) ensure it and
Supplier Personnel are in compliance with all laws, regulations, ordinances, and
licensing requirements; (ii) be responsible for the supervision, control,
compensation, withholdings, health and safety of Supplier Personnel; (iii)
ensure Supplier Personnel performing Services on Buyer's premises comply with
the On Premises Guidelines, which will be provided to Supplier; and (iv) to the
best of Supplier's knowledge, inform Buyer if a former employee of Buyer will be
assigned work under this Agreement, such assignment subject to Buyer approval.
12.0 ELECTRONIC COMMERCE: The parties will use commercially reasonable
efforts to establish procedures that would enable the parties to conduct
transactions using an electronic commerce approach under which the parties will
electronically transmit and receive legally binding purchase and sale
obligations ("Documents"), including electronic credit entries transmitted by
Buyer to the Supplier account specified in the relevant SOW. Each party, at its
own expense, will provide and maintain the equipment, software, services and
testing necessary for it to effectively and reliably transmit and receive such
Documents. Either party may use a third party service provider for network
services, provided the other party is given sixty (60) days prior written notice
of any changes to such services. A Document will be deemed received upon arrival
at the receiving party's mailbox or Internet address and the receiving party
will promptly send an acknowledgment of receipt of such Document from the
receiving party. The receiving party will promptly notify the originating party
if a Document is received in an unintelligible form, provided that the
originating
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respect to the omitted portions.
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party can be identified. In the absence of receiving party's acknowledgment of a
given Document, the originating party will be obligated to re-send the Document
until such time as it receives an acknowledgment that the Document has been
received by the receiving party as set forth above. Each party will authenticate
Documents using a digital signature or User ID mutually agreed by the parties,
and will maintain security procedures to prevent its unauthorized use.
13.0 RECORDKEEPING AND AUDIT RIGHTS: Supplier will maintain (and provide
to Buyer upon reasonable notice and frequency to Supplier) relevant accounting
records to support invoices under this Agreement for three (3) years following
completion or termination of the relevant SOW. All accounting records will be
maintained in accordance with generally accepted accounting principles.
14.0 GENERAL
14.1 AMENDMENTS: This Agreement may only be amended by a writing
specifically referencing this Agreement which has been signed by authorized
representatives of the parties.
14.2 ASSIGNMENT: Neither party will assign their rights or delegate
or subcontract their duties under this Agreement to third parties or affiliates
without the prior written consent of the other party, such consent not to be
withheld unreasonably, except that Buyer may assign this Agreement in
conjunction with the sale of a substantial part of its business utilizing this
Agreement. Any unauthorized assignment of this Agreement is void.
14.3 CHOICE OF LAW AND FORUM; WAIVER OF JURY TRIAL; LIMITATION OF
ACTION: This Agreement and the performance of transactions under this Agreement
will be governed by the laws of the country in which the transaction is
performed, except that the laws of the State of New York applicable to contracts
executed in and performed entirely within that State will apply if any part of
the transaction is performed within the United States. The parties expressly
waive any right to a jury trial regarding disputes related to this Agreement.
Unless otherwise provided by local law without the possibility of contractual
waiver or limitation, any legal or other action related to this Agreement must
be commenced no later than two (2) years from the date on which the claim of
action arose. The parties expressly disclaim the applicability of the United
Nations Convention on the International Sale of Goods (CISG).
14.4 COMMUNICATIONS: All communications between the parties
regarding this Agreement will be conducted through the parties' representatives
as specified in the relevant SOW. Supplier will use reasonable efforts to
participate in replenishment logistics programs presented by Buyer.
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14.5 COUNTERPARTS: This Agreement may be signed in one or more
counterparts, each of which will be deemed to be an original and all of which
when taken together will constitute the same agreement. Any copy of this
Agreement made by reliable means is considered an original.
14.6 EXCHANGE OF INFORMATION: Unless required otherwise by law, all
information exchanged by the parties will be considered non-confidential. If the
parties require the exchange of confidential information, such exchange will be
made under the Confidential Disclosure Agreement (CDA) #OEM99026 dated February
2, 1999 and any Supplements thereto which have been signed or which may be
signed in the future. The parties will not publicize the terms or conditions of
this Agreement in any advertising, marketing or promotional materials except as
may be required by law, provided the party publicizing obtains any
confidentiality treatment available. Supplier will use information regarding
this Agreement only in the performance of this Agreement.
14.7 FREEDOM OF ACTION: This Agreement is nonexclusive and either
party may design, develop, manufacture, acquire or market competitive products
or services. Buyer will independently establish prices for resale of Products or
Services and is not obligated to announce or market any Products or Services and
does not guarantee the success of its marketing efforts, if any.
14.8 FORCE MAJEURE: Neither party will be in default or liable for
any delay or failure to comply with this Agreement due to any cause beyond the
control of the affected party, excluding labor disputes, provided such party
promptly notifies the other.
14.9 OBLIGATIONS OF AFFILIATES: Affiliates will acknowledge
acceptance of the terms and conditions of this Agreement through the signing of
a PA before conducting any transaction under this Agreement.
14.10 PRIOR COMMUNICATIONS AND ORDER OF PRECEDENCE: This Agreement
replaces any prior or contemporaneous oral or written agreements or other
communication between the parties with respect to the subject matter of this
Agreement, excluding any confidential disclosure agreements. In the event of any
conflict in these documents, the order of precedence will be: (i) the quantity,
delivery location and method of shipment of Products ordered under a WA; (ii)
the relevant SOW; (iii) the relevant PA; (iv) this Agreement.
14.11 SEVERABILITY: If any term in this Agreement is found by
competent judicial authority to be unenforceable in any respect, the validity of
the remainder of this Agreement will be unaffected, provided that such
unenforceability does not materially affect the parties' rights under this
Agreement.
14.12 SURVIVAL: The provisions set forth in the following Sections
and Subsections of this Agreement will survive after termination of this
Agreement and will remain in effect until fulfilled: SubSection 6.1 ("Ongoing
Warranties"), SubSection 6.2 ("Warranty Redemption"), Section 8.0 ("Intellectual
Property"), Section 9.0 ("Indemnification"), Section 10.0 ("Limitation of
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Liability"), Section 13.0 ("Record Keeping and Audit Rights"), SubSection 14.3
("Choice of Law and Forum; Waiver of Jury Trial; Limitation of Action"),
SubSection 14.6 ("Exchange of Information") and SubSection 14.10 ("Prior
Communications and Order of Precedence").
14.13 WAIVER: An effective waiver under this Agreement must be in
writing signed by the party waiving its right. A waiver by either party of any
instance of the other party's noncompliance with any obligation or
responsibility under this Agreement will not be deemed a waiver of subsequent
instances.
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AGREEMENT # ROC-P-68
ACCEPTED AND AGREED TO: ACCEPTED AND AGREED TO:
International Business Machines Corporation Brocade Communications Systems, Inc.
I
By: _______________________________________ By: _____________________________________
Authorized Signature Authorized Signature
_______________________________________ _____________________________________
Date Date
Jeffrey S. Mueller Charles Smith
___________________________________________ _________________________________________
Printed Name Printed Name
Manager, Materials Operations Vice President, Worldwide Sales
___________________________________________ _________________________________________
Title & Organization Title & Organization