EXHIBIT 10.28
August 6, 2001
Brocade Communications Systems, Inc.
1901 Guadalupe Parkway
San Jose, CA 95131
Attention: Mr. Patrick Johnston
Subject: Amendment 4 to SOW#1 of the IBM/Brocade Goods Agreement ROC-P-68
Dear Patrick:
This letter (the "Amendment") serves as Amendment Number 4 to SOW#1, including
all amendments thereto ("SOW#1") of the Goods Agreement ROC-P-68, including all
amendments thereto (the "Goods Agreement") which the parties hereto do mutually
agree to amend as follows:
1. Modify the first sentence in the first paragraph of the SOW#1 to read as
follows:
"This Statement of Work ("SOW") #1 adopts and incorporated by reference
the terms and conditions of the Goods Agreement # ROC-P-68 ("Agreement")
between International Business Machines ("Buyer"), and Brocade
Communications Systems, Inc."
2. Modify the third sentence in the first paragraph of the SOW#1 to read as
follows:
"The term of this SOW#1 shall be effective from April 15, 1999 to December
31, 2002."
3. Except for the pricing table in Section 2.1, any reference to "8-port and
16-port fibre channel switches" in the SOW#1 is modified to read "Product.
4. Section 1.0, "Product Description", delete in its entirety and replace
with the following:
"Except as provided in the next sentence, and for so long as this SOW is in
effect, Buyer agrees to purchase from Supplier [*] its SAN cross-divisional
Product Development Team or any successor group or groups [*] for IBM-logoed
versions of 16-port and 32-port fibre channel switches provided, however, that
Supplier's price to Buyer remains competitive with prices charged by others for
comparable products (the term "competitive" meaning [*] of the then current fair
market price of similar products of comparable functionality sold in comparable
quantities to OEM Customers), and that switches provided by Supplier continue to
meet the agreed to quality, schedule and supply requirements specified in this
Agreement. [*] same issue as in the original 1999 agreement re: redacting the
fact that this is a sole source 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.
EXHIBIT 10.28
5. Delete the table in Section 1.1, "Specifications," and replace with the
following table:
- -----------------------------------------------------------------------------------------------
IBM SPECIFICATION/ATTACHMENTS ENGINEERING CHANGE LEVEL DESCRIPTION
(IF APPLICABLE)
- -----------------------------------------------------------------------------------------------
NA Version 1.0 SilkWorm 2000 Family
Product Specification
90-0000001-01
- -----------------------------------------------------------------------------------------------
Attachment B Dated 8/06/2001 Supplier Quality Attachment
- -----------------------------------------------------------------------------------------------
GA-219261-11 Version 10 Packaging and Materials
Handling Specification
- -----------------------------------------------------------------------------------------------
Attachment A Dated 10/17/00 IBM CSP Requirements
- -----------------------------------------------------------------------------------------------
NA Version 2.0 Brocade Fabric OS
Publication 53-0001487-03
- -----------------------------------------------------------------------------------------------
NA Version 2.1 Brocade WebTools Reference
Manual Publication
53-0001490-02
- -----------------------------------------------------------------------------------------------
NA Version 2.0 Brocade Zoning Reference
Manual Publication
53-0001488-02
- -----------------------------------------------------------------------------------------------
NA Version 1.0 SilkWorm 3800 Product
Specification --
90-0000077-01
- -----------------------------------------------------------------------------------------------
Version TBD SilkWorm 3900 Product
Specification - TBD
- -----------------------------------------------------------------------------------------------
Version TBD SilkWorm 3250 Product
Specification - TBD
- -----------------------------------------------------------------------------------------------
6. Delete first sentence in Section 2.5, "Supply of Products", in its
entirety and replace with the following two sentences:
"Supplier shall deliver Products as specified in WA's for forecasted orders.
Unforecasted orders shall be subject to Supplier's acceptance in accordance with
the [*] order acknowledgement period set forth in Section 2.0 of the Goods
Agreement."
7. Add Section 1.4, "Quality Standards," to read as follows:
1.4.1 Supplier shall provide to Buyer applicable standard data and
calculations that support the Products' ability to meet the
quality standards set forth as Attachment B to this SOW #1.
1.4.2 Any of Supplier's contract manufacturers shall be approved to an
ISO 9000 standard or higher.
1.4.3 Supplier shall perform failure analysis on all failed Products
returned to Supplier. Upon determining the root cause of the
failure, Supplier shall establish a corrective action plan to
remove the Product defect. Buyer will assist Supplier with
tracking all open failures and will work with Supplier to
implement appropriate corrective action as reasonably determined
necessary by Supplier.
* 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.
EXHIBIT 10.28
8. Delete pricing table in its entirety Section 2.1, "Pricing," and replace
with the following:
- -----------------------------------------------------------------------------------------------------
IBM P/N / NUMA-Q P/N BROCADE P/N DESCRIPTION UNIT PRICE
-------------------- ----------- ----------- ----------
- -----------------------------------------------------------------------------------------------------
[*] [*] 8-Port Fibre Channel [*]
Switch Single Power
Supply (SW2400) Includes SES, Web
tools, Zoning and Fabric Watch -
whole unit switch Product
- -----------------------------------------------------------------------------------------------------
[*] [*] 16 Port Fibre Channel [*]
Switch Single Power
Supply (SW2800) Includes SES, Web
tools, Zoning and Fabric Watch -
whole unit switch Product
- -----------------------------------------------------------------------------------------------------
[*] [*] Silkworm 2000 Power Supply [*]
- -----------------------------------------------------------------------------------------------------
[*] [*] Mainboard, SW 2400 (8-port) [*]
- -----------------------------------------------------------------------------------------------------
[*] [*] Fan Tray, SW 2400 (8-port) [*]
- -----------------------------------------------------------------------------------------------------
[*] [*] Chassis, SW 2400 (8-port) [*]
- -----------------------------------------------------------------------------------------------------
[*] [*] Mainboard, SW 2800 [*]
[*] (16-port)
- -----------------------------------------------------------------------------------------------------
[*] [*] Fan Tray, SW 2800 (16-port) [*]
- -----------------------------------------------------------------------------------------------------
[*] [*] Chassis, SW 2800 [*]
(16-port) with operator
panel / LCD
- -----------------------------------------------------------------------------------------------------
[*] [*] Quick Loop License [*]
- -----------------------------------------------------------------------------------------------------
[*] [*] Fabric Watch License [*]
- -----------------------------------------------------------------------------------------------------
[*] [*] Extended Fabrics [*]
- -----------------------------------------------------------------------------------------------------
[*] [*] Remote Switch [*]
- -----------------------------------------------------------------------------------------------------
[*] [*] 16 Port Fibre Channel [*]
Switch Single Power
Supply (SW3800) Includes Web
tools, Zoning and Fabric Watch -
whole unit switch Product
- -----------------------------------------------------------------------------------------------------
[*] 32 Port Fibre Channel [*]
Switch Single Power
Supply (SW3900) Includes SES, Web
tools, Zoning and Fabric Watch -
whole unit switch Product
- -----------------------------------------------------------------------------------------------------
* 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.
EXHIBIT 10.28
- -----------------------------------------------------------------------------------------------------
[*] 8 Port Fibre Channel [*]
Switch Single Power
Supply (SW3250) Includes Web
tools, Zoning and Fabric Watch --
whole unit switch Product
- -----------------------------------------------------------------------------------------------------
[*] [*] Fan (SW3800) [*]
- -----------------------------------------------------------------------------------------------------
[*] [*] Power Supply (SW3800) [*]
- -----------------------------------------------------------------------------------------------------
[*] [*] Mainboard FRU (SW3800) [*]
- -----------------------------------------------------------------------------------------------------
[*] [*] Fan (SW3900) [*]
- -----------------------------------------------------------------------------------------------------
[*] [*] Power Supply (SW3900) [*]
- -----------------------------------------------------------------------------------------------------
[*] [*] Mainboard FRU (SW3900) [*]
- -----------------------------------------------------------------------------------------------------
[*] [*] LUN Zoning [*]
- -----------------------------------------------------------------------------------------------------
[*] [*] Advanced Security [*]
- -----------------------------------------------------------------------------------------------------
[*] [*] Enhanced Bundle [*]
(Trunking and
Performance Monitoring)
- -----------------------------------------------------------------------------------------------------
All prices are in U.S. dollars.
**Supplier shall provide Buyer with SW3900 Mainboard, Power Supply, and Fan
pricing to be effective on the dates referenced in the above table in this
Section 2.1 within [*] prior to Buyer's scheduled General Availability (GA) date
of the SW3900 product and the parties shall mutually agree upon such prices
within [*] following such provision.
9. Add the following sentence in the last paragraph of Section 2.1,
"Pricing":
"Supplier agrees to provide Buyer a minimum cost reduction (as a
percentage of the then current price of the SilkWorm 3800 and 3900
integrated switch Products only) of [*] commencing September 1, 2002 and
continuing through the term of this SOW #1."
10. Section 2.9, "Warranty Period", delete in its entirety and replace with
the following:
"Product warranty period is [*] from the date of shipment, except for
Products identified as FRU's (Field Replacement Units) in Section 2.1 for
which the warranty period will commence on the earlier of: (i) [*] from
the date of shipment, or (ii) upon installation at a customer site;
provided Buyer notifies Supplier in writing of the date the FRU is
installed, the serial number of the switch the FRU is installed into, and
the serial number of the defective FRU. Notwithstanding the foregoing, if
Supplier fails to include a RMA field return form in a shipment of FRU's,
Buyer shall be entitled to the extended warranty period set forth above
for such FRU's, whether or not Buyer has provided the written notice set
forth above. In the event Supplier had included the RMA field return form
in the applicable shipment of FRU's and Buyer fails to provide such
notice, Buyer's warranty period for the applicable FRU's will be [*] from
the date of shipment."
* 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.
EXHIBIT 10.28
11. Delete the first sentence in Section 2.10, "Notice of Product Withdrawal,"
in its entirety and replace with the following two sentences:
"Supplier will provide Buyer with [*] written notice of its intent to
withdraw any Product ("End of Life" or "EOL") prior to the last date of
manufacture of a Product, and Buyer may order such Products up to [*]
prior to the last date of manufacture.
12. Delete Section 2.11, "Epidemic Defect Rate", in its entirety and replace
with the following:
"The Epidemic Defect Rate is defined as [*] over a [*] rolling average,
the minimum sample size for the three months shall be [*], for the same or
similar defect. ([*] rounded to the nearest whole failing unit)."
13. Add Section 2.12, "Use of Subcontractors," to read as follows:
"Either party may use subcontractors to perform its obligations hereunder.
Notwithstanding this subsection, each party's use of subcontractors will
not relieve such party of the responsibility for the subcontractor's
performance."
14. Section 3.0, "Rescheduling/Cancellation", delete table after first
paragraph in its entirety and replace with the following:
- ------------------------------------------------------------------------------------------
MINIMUM DAYS NOTICE PRIOR TO DELIVERY DATE TO:
- ------------------------------------------------------------------------------------------
MAXIMUM MAXIMUM
PERCENTAGE OF PERCENTAGE OF
EACH ORDER THAT EACH ORDER THAT
NUMBER OF DAYS BUYER MAY BUYER MAY
PRIOR TO DELIVERY RESCHEDULE CANCEL WITHOUT CHANGE
DATE WITHOUT CHARGE CHARGE DELIVERY POINT DELIVERY EARLY
- ------------------------------------------------------------------------------------------
0 -- 15 Days [*] [*] 2 day notice 1 day
- ------------------------------------------------------------------------------------------
[*] [*] [*] 2 day notice 1 day
- ------------------------------------------------------------------------------------------
[*] [*] [*] 2 day notice 1 day
- ------------------------------------------------------------------------------------------
Supplier shall provide Buyer with cancellation charges pursuant to this Section
3.0 within [*] of the date of the latest signature below and the parties shall
mutually agree upon such cancellation charges within a reasonable time following
such provision.
15. Modify the second sentence in Section 8.4, "Right to Manufacture," to read
as follows:
"Unless earlier terminated as set forth in Section 8.5 below, except with
respect to existing Products or Spare Parts that are being manufactured on
or after such time and except as specified in the next sentence, Buyer
acknowledges and agrees that the Limited Manufacturing License granted
under this Section 8.4 shall immediately terminate upon termination 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.
EXHIBIT 10.28
16. Modify first sentence in Section 9.1, "Product Repair -- Field Failures,"
to read as follows:
"Supplier shall use commercially reasonable efforts to comply with the
requirements set forth in the Certified Service Part (CSP) document hereby
included as part of this Agreement in Attachment A, outlining the Buyer
requirements of Supplier to bring a field returned, used Product to a
level that qualifies the Product as a CSP."
17. Replace the first sentence in Section 9.3, "Post Warranty Services," as
follows:
"Post Warranty repair pricing for the mainboard shall be as follows for
the applicable listed Products. The Post Warranty repair pricing for the
mainboard for the SW 3800 and SW 3900 Products shall be mutually agreed by
the parties upon the earlier of (i) [*] from Supplier's general
availability date of the applicable Product, or (ii) July 31, 2002.
SW 2400 [*]
SW 2800 [*]
Products returned to Supplier will include a description of the failure
specified on the RMA field return form provided that such form is included
by Supplier with each FRU shipment. If the total quantity of Product
returned to Supplier over the previous ninety (90) days exceeds more than
[*] verified NTF (which shall include both hardware and software
failures), Buyer will pay Supplier [*] for each verified NTF Product
returned in accordance with Section 9.2. The reloading of microcode to
repair a returned Product shall not constitute an NTF."
18. Modify the first sentence of the paragraph entitled, Packaging and
Delivery in Section 9.3, "Post Warranty Services," to read as follows:
"The Products will be individually packaged and labeled according to Buyer
specification GA-21-9261-11, unless specifically otherwise agreed to."
19. Add a paragraph entitled, "Product Support," to Section 9.3, "Post
Warranty Services," to read as follows:
"Supplier will continue to provide technical support as provided in
Section 9.4, for a period up to [*] after the termination of this
Agreement or up to [*] after an End of Life notice provided by Supplier
pursuant to Section 2.10, whichever is earlier."
20. Add to the second paragraph prior to the last sentence in Section 9.5,
"Training," the following:
"However, in the case of new Products added to this SOW #1, Supplier shall
provide mutually agreed upon presales training to Buyer to support new
Products at a mutually agreed upon time, date and location. Each party
shall be responsible for all costs associated with the attendance of such
training by such party's personnel."
* 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.
EXHIBIT 10.28
21. Section 9.6, "Cessation of Post Warranty Service", delete in first and
second sentence any reference to:
"the second paragraph of Section 9.3 ("Availability")"
and replace with the following:
"Section 9.3, in paragraphs titled Availability and Product Support"
22. Add Section 9.7, "Field Replaceable Units (FRU) Emergency," and
subsections, to read as follows:
9.7.1. Definition
"CODE A-ALERT EMERGENCY ORDER" or "EO" means WA placed by Buyer with a
leadtime from Supplier's receipt of the WA to the shipping date not to
exceed [*].
9.7.2 Code A-Alert Emergency Order Placement
Supplier will accept and respond to EO from Buyer 8:00 A.M. to 5:00 P.M.
Pacific Standard Time, Monday through Friday, except Supplier holidays.
Order confirmation time period begins at the time Order is received by
Supplier. Supplier will provide a telephone service number for EO
coverage. Supplier will use commercially reasonable efforts to respond to
all EO within the time periods designated below. Buyer will place and
Supplier will respond to all EO with Supplier via fax, EDI (or other
electronic commerce approach) and/or telephone, such EO to be confirmed by
Buyer with a written WA mailed or electronically transmitted to Supplier
within two (2) Calendar Days of EO placement. Supplier will acknowledge EO
back to Buyer via fax or telephone within the specified order confirmation
time periods stated below.
9.7.3. Code A-Alert Emergency Order Work Authorizations WAs will include
Buyer's Purchase Order number, Buyer's part number, part number
description, quantity, unit Price, order type (short lead time, in the
event a short lead time order is placed, are orders with requested
Delivery Dates in less than the agreed to Lead Time), Delivery Date and
ship to address.
9.7.4. Code A-Alert Emergency Order Shipments
Supplier will use commercially reasonable efforts to ship Code A-Alert
Emergency Orders within 24 hours of receipt of WA, unless specifically
designated otherwise by Buyer, to arrive at the Buyer specified receiving
location. If requested by Buyer in writing, Supplier will use commercially
reasonable efforts to ship EOs via "Next Flight Out" and "Air Charter" to
arrive at Buyer's specified receiving location on the same day of the WA.
9.7.5. Code A-Alert Emergency Order Delivery and Cancellation Supplier
will deliver EOs directly to the address specified in the WA and in
accordance with this SOW. Code A-Alert Emergency Order(s) are
non-cancelable, however Buyer may contact Supplier anytime prior to time
of shipment to make changes to the specified receiving location.
* 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.
EXHIBIT 10.28
23. Modify the title of Attachment A, modify to read:
"IBM CSP Requirements"
24. Delete the table in Section 10.0, "Communications Coordinators" and in
Attachment A, delete the paragraphs entitled "Key IBM Contacts" and
"Brocade Contacts" in their entirety. Replace in both Section 10.0 and the
foregoing paragraphs in Attachment A with the following:
KEY IBM CONTACTS
Technical Coordinator
Ruoyi Zhou
Program Manager
Phone: (408) 256-4479
Fax: (408) 256-6843
Email: ruoyi@us.ibm.com
Business Coordinator
Karen Takahashi
Procurement Commodity Manager
Phone: (408)256-0111
Fax: (408)256-0111
Email: ktakahas@us.ibm.com
BROCADE CONTACTS
Technical Coordinator
Jim Baldyga
Sr. Systems Engineer
Phone: (408)487-8005
Fax: (408)603-584-8110
Email: jbaldyga@brocade.com
Business Coordinator
Patrick Johnston
OEM Sales Executive
Phone: (408) 487-8193
Fax: (208) 275-1497
pjohnsto@brocade.com
Please have your authorized representative indicate acceptance thereof by
signing both copies of the Amendment and returning one copy to the attention of
Karen Takahashi at 5600 Cottle Road, San Jose, California 95193.
The effective date of this Amendment shall be the date on the top of this
Amendment (the "Effective Date").
EXHIBIT 10.28
The parties acknowledge that they have read this Amendment, understand it, and
agree to be bound by its terms and conditions. All capitalized terms not defined
herein shall have the meaning set forth in the Goods Agreement or the SOW #1.
All other terms and conditions of the Goods Agreement and SOW#1 that are
unaffected by the revisions set forth in this Amendment shall remain in full
force and effect. Further, the parties agree that this Amendment and the Goods
Agreement and SOW#1 are the complete and exclusive statement of the agreement
between the parties, superseding all proposals or other prior agreement, oral or
written, and all other communications between the parties relating to this
subject.
ACCEPTED AND AGREED TO: ACCEPTED AND AGREED TO:
INTERNATIONAL BUSINESS MACHINES CORPORATION BROCADE COMMUNICATIONS SYSTEMS, INC.
By: _______________________________________ By: ______________________________________
Authorized Signature Date Authorized Signature Date
___________________________________________ __________________________________________
Type or Print Name Type or Print Name
___________________________________________ __________________________________________
Title & Organization Title & Organization
EXHIBIT 10.28
ATTACHMENT B
SUPPLIER QUALITY ATTACHMENT
This Supplier Quality Attachment ("SQA") adopts and incorporates by reference
the terms and conditions of SOW #1 ("SOW") and Goods Agreement # ROC-P-68
("Agreement") between Buyer and Supplier.
1.0 INCORPORATION OF SQA DOCUMENTS
The SQA consists of this document, and applicable product specification
documents and specifications as referenced in Section 1.1 of SOW#1, which were
in effect upon execution of this SQA.
2.0 QUALITY REQUIREMENTS
The requirements of this SQA shall constitute Supplier's quality program which
must be implemented and maintained during the term of the SOW.
Supplier will set forth the yearly quality and reliability performance
commitments for the current year and through the remainder of the initial term
of the SOW in a product quality report ("PQR"). The PQR shall include the
mutually agreed product monitoring plan to be used to validate the effectiveness
of process control limits and the Product meets the quality and reliability
defined in such PQR. It is Buyer's expectation that Supplier will use e-business
platforms (Web based applications) for ongoing real time quality management,
including but not limited to information associated with Supplier Quality
Management Systems ("SQMS") and Product Change Notification ("PCN"), etc. or as
specified in the PQR.
3.0 ISO REQUIREMENTS
For ISO compliance, Supplier's contracted manufacturer is ISO 9001* compliant
("Compliant").
* Note: ISO 9001 & 9004 have been developed as a consistent pair of quality
management system standards. ISO 9001 is considered the standard by which the
Supplier is expected to be compliant with; it is understood ISO 9004 provides a
wider range of guidelines of objectives than ISO 9001, particularly for the
continuous improvement of an organization's overall performance and efficiency.
ISO 9004 is recommended as a guide to assist those suppliers who wish to move
beyond the basic requirements of ISO 9001.
4.0 AUDITS
On a periodic basis, upon reasonable written notice, the Buyer or Buyer's
quality representative shall conduct audits/visits at the Supplier's and
Supplier's contract manufacturer's manufacturing locations. The Supplier shall,
at Buyer's request, permit access to the auditors to manufacturing operations
and/or inspection of Products for Buyer, including access to the contract
manufacturer's facilities. Periodic audits shall include process control,
quality inspection test data, internal audit reports, and other information
related to Products to verify compliance to the terms of this SQA. Under normal
circumstances, Supplier shall be given at least a two weeks advance notice by
Buyer's representatives of their intent to visit. Buyer's inspection of Product
at the Supplier or contract manufacturer shall not relieve the Supplier's
responsibility to furnish Product compliant with the applicable specifications
as set forth in the SOW. Any Confidential Information exchanged in connection
with the audit shall be handled in accordance with Section 14.6 of the Goods
Agreement.
5.0 DOCUMENT CONTROL
Supplier shall use commercially reasonable efforts to ensure that all documents
such as software/firmware, engineering drawings, specifications, contracts,
policies, procedures, manufacturing process flow chart, and
EXHIBIT 10.28
work instructions (including test procedures) to be under revision control and
available to all necessary Supplier personnel in Supplier's manufacturing
environment. Supplier shall have a system for the effective updating/removal of
any obsolete documentation from all manufacturing areas.
6.0 RECORDS
Supplier shall establish and maintain procedures for identification, collection,
indexing, filing, storage, maintenance, and disposition of all quality records
including, but not limited to: Statistical Process Control ("SPC") data. This
includes raw data or control charts, Cp and Cpk for critical/identified process
parameters, and all records which provide evidence of sub-tier supplier
activity, such as source inspections and First Article inspections, and records
of all inspection and test activity to provide objective evidence that Products
have passed acceptance criteria. Records shall be maintained for the life of the
SOW plus the entire warranty period, as set forth in the SOW. All records shall
be maintained in a central location and shall upon request be made available to
Buyer's quality representative for review only. All such documents shall be
deemed to be the Confidential Information of Supplier.
7.0 CONTINUOUS IMPROVEMENT PROCESS
Supplier shall develop and implement a continuous improvement process that will
provide for a cost-effective reduction in process-related excursions. The
program, at a minimum, shall include: the supplier management strategy;
manufacturing process controls (i.e., Maverick Product Elimination); a
documented, systematic approach for identifying focus areas for continuous
improvement for the current year, through the end of the term of the SOW, or for
three years from the start of the SOW, whichever is shorter; and Early Failure
Rate, Intrinsic Failure Rate, Shipped Product Quality Level and Failure Rate
commitment and reduction plans to achieve Buyer goals. Supplier shall provide,
at Buyer's request, status of the continuous improvement process and results.
8.0 QUALITY PROBLEM NOTIFICATION TO BUYER
Supplier must notify Buyer of any quality or reliability problem which may
affect Products, that have been identified by Supplier's internal testing (i.e.,
process control data, internal test data, burn-in data, etc.), by contract
manufacturers which produce Products on behalf of Supplier, or by another
customer (see ISO 9001). In case of problems, Supplier shall provide Buyer with
the requested traceability data (p/n, lot number, date code, volumes, ship to
locations, etc.) within 24 hours. The notification should include an immediate
containment plan and a schedule for definition and implementation of permanent
corrective actions. After the notification there shall be no shipment of suspect
Products to Buyer without prior approval from Buyer's quality representative.
9.0 PRODUCT RE-QUALIFICATION COSTS
Following Buyer qualification of the Product, Buyer reserves the right to
re-qualify any product if the Supplier changes the manufacturing process or
product, or; raw materials or specifications which may affect performance,
function, quality or reliability. Supplier shall bear the reasonable costs of
any re-qualifications required for changes made without Buyer's approval in
accordance with Section 6.0 of the SOW.
10. PART HISTORY
Supplier shall maintain a history file for each Product part number manufactured
that tracks: materials and/or design changes controlled by the supplier; design
changes controlled by Buyer (engineering changes, etc.), and; and purchased part
manufacturer source changes.
11. PART QUALITY
Unless otherwise specifically agreed upon within the SOW, Supplier shall be
responsible for the quality levels of each of Supplier's components that
comprise the Product or final assembly, except with respect to
EXHIBIT 10.28
GBICs or SFPs, if any. If applicable, Supplier agrees to make available to Buyer
third party warranties for GBICs or SFPs, to the extent Supplier is permitted to
pass through such warranties to Buyer.
12. CORRECTIVE ACTION PROCESS
Following a lot rejection by Buyer under Section 6.0 of the Goods Agreement, or
a quality problem notification under Section 8 of this SQA, Supplier shall
implement a corrective action process which shall provide documentation to
identify the following: a) Specific defect description and failure mechanism; b)
Containment of affected Product; c) Technical investigation/root cause analysis;
d) Corrective action plan and preventive actions to preclude a recurrence, and;
e) Verification of effectiveness of actions. With the exception of safety
defects which Supplier shall provide a complete failure analysis not to exceed
forty-eight (48) hours from notification, failure analysis response times from
Supplier will be within forty-eight (48) hours of Buyer's lot rejection or the
quality problem notification for preliminary analysis and fourteen (14) days for
detailed analysis. The corrective action process shall include a checkpoint to
determine if additional Products are exposed and the corrective action process
and documentation specified within this Section.
13. EXCEPTION APPROVAL PROCESS
Supplier shall not knowingly ship nonconforming Product to Buyer without written
approval from Buyer's quality representative. In certain cases, Buyer's quality
representative may approve shipment of suspected nonconforming Product if an
evaluation plan pre-approved by the quality representative is executed with
results acceptable to the representative.
14. REVIEW AND DISPOSITION OF NONCONFORMING PRODUCTS
If Supplier intends to ship nonconforming Product to Buyer, then Supplier shall
implement a Material Review Board ("MRB") to review and determine the
disposition of nonconforming materials. At a minimum, the MRB shall consist of
representatives from Manufacturing, engineering and Quality Engineering. The
Supplier's process shall include the following dispositions: a) Rework - Product
reworked to meet specified requirements; b) Use As Is - No actions taken on
Product, Product does not meet specified requirements but is functional; c)
Repaired - Product has been reworked to be functional but does not meet
specified requirements; d) Scrap - Product not useable and does not meet
specified requirements, or; e) Screen -- additional product test/inspection to
meet specification. Any plans to rework or repair nonconforming materials shall
be subject to final approval by Buyer's quality representative, such approval
not to be unreasonably withheld. Any plans to use as-is must be pre-approved by
Buyer's quality representative. All MRB records shall be maintained by Supplier
and upon request, made available to Buyer for review. All MRB records shall be
deemed the Confidential Information of Supplier.
15. PRODUCT IDENTIFICATION AND LOT TRACEABILITY
Supplier shall establish and maintain procedures and processes for the
identification and lot traceability of critical components during all stages of
production, delivery, and installation per applicable ISO standards.
Identification must be traceable through to the finished Product by serial
numbers or equivalent methods. Both forward and backward traceability shall be
available. Response time for traceability requests shall not exceed 24 hours.
16. QUALITY REPORTING
Monthly executive summary reports in a format mutually agreed upon format shall
be forwarded to Buyer at a mutually agreeable time or as specified in specific
PQRs. Continuous quality reporting real time will be via SQMS or as specified in
specific PQRs.
17. SUPPLIER QUALITY & RELIABILITY ("SQR") REVIEW MEETINGS
Buyer requires regular Supplier quality/reliability meetings determined by a
mutually agreeable schedule, to
EXHIBIT 10.28
increase visibility into product and field performance. The intent is to conduct
timely meetings in preparation for future business reviews/contractual
negotiations. The agenda for the meeting shall be as set forth in exhibit 1
unless otherwise mutually agreed by the parties.
18. APPLICABLE PRODUCT SPECIFICATIONS & TESTS
A. ISO 2859-1 (SAMPLING PROCEDURES FOR INSPECTION BY ATTRIBUTES)
B. ISO 3951 (SAMPLING PROCEDURES FOR INSPECTION BY VARIABLES)
EXHIBIT 10.28
SUPPLIER QUALITY ATTACHMENT (CONT.)
EXHIBIT 1. QUALITY REVIEW MEETING AGENDA
The following typical meeting agenda has been formulated to address all the
pertinent quality/reliability topics.
a) Supplier facility and subcontractor locations where BUYER product is
fabricated, assembled and tested
Physical addresses and line id's
Review Group A, B, C test results
b) Average Outgoing Quality (AOQ) fallout for SUPPLIER and total customer
database
Defect and root cause analysis
Pareto distribution of fails
Corrective action and data verification
Point of origin and incidence contributions associated with internal, assembly
and final test operations.
c) Field Return data for BUYER and total customer database
EFR/IFR estimates
Defect and root cause analysis
Pareto distribution of fails and associated POH distribution for Buyer and total
customer database
Failure mechanism driven corrective actions
d) In-Process monitoring data
Defect monitoring, elimination and analysis results
Modeling techniques - Experimental, Analytical Analysis
SPC parameter and control limits - data review
Maverick Product Elimination occurrences (if applicable) and related data
Yield cut limit compliance
e) Internal Audit Results
Last internal audit findings and corrective action of one manufacturing location
& future audit plans
f) PCN activity since last BUYER meeting
Product, process, materials or specifications affecting form, fit or function
Traceability history for date code inception
g) Continuous Improvement Program for entire fab, assembly, test and field
performance
AOQ and Failure Rate Improvement targets for next 3 years
h) Specification Compliance/Commitment to " BUYER Specifications"
Any deviations/exceptions? If so, provide details and traceability information.
i) Joint discussion followed by a summary wrap-up and activities