EXHIBIT 10.60
INTEGRATED STATEMENT OF WORK FOR PRODUCTION PROCUREMENT GOODS AGREEMENT
GOODS AGREEMENT # ROC-P-68 MASTER AGREEMENT NUMBER
SOW # 4903RL1112SOW NUMBER
This Statement of Work ("SOW") No. # 4903RL1112 adopts and incorporates by
reference the terms and conditions of Goods Agreement # ROC-P-68 ("GA") between
International Business Machines Corporation "Buyer" or "IBM") and Brocade
Communications Systems, Inc with offices at 1745 Technology Drive, San Jose, CA
95110 ("Supplier" or "Brocade"). This SOW is effective beginning on December15,
2003 ("Effective Date") and will remain in effect until December 14, 2006, and
shall automatically renew for another term of one (1) year unless either party
gives written notice (90) days prior to the termination of this Agreement, this
process will be repeated for up to two (2) additional years. Transactions
performed under this SOW will be conducted in accordance with and be subject to
the terms and conditions of this SOW, the GA and any applicable Work
Authorizations ("WAs"). This SOW is not a WA. Product Unique Attachments and any
changes thereto must be in a writing signed by both parties, and the terms of a
Product Unique Attachment will apply only to the Products identified in such
Product Unique Attachment. The initial Product Unique Attachment is attached
hereto and incorporated herein by reference as "Product Unique Attachment # 1",
and the additional Attachments 2 through 5 are attached hereto and incorporated
herein by reference. Subsequent Product Unique Attachments or changes to
existing Product Unique Attachments will take effect on the effective date
provided therein and will be incorporated herein upon execution by the parties.
1.0 DEFINITIONS
All capitalized terms shall have the meaning provided in the Goods Agreement
unless otherwise defined in this SOW.
"AFFILIATE" means an entity(ies) that control, is/are controlled by, or are
under common control with, a party to this Agreement.
"APAR" means the form used to report suspected Problems to Supplier, and to
request their resolution.
"APAR CLOSING CODES" means the established set of codes used to denote the final
resolution of an APAR.
"APAR CORRECTION TIMES" means the objectives that Supplier will achieve for
resolution of Problems.
- - "SEVERITY 1" Problems will be resolved by Supplier [*], and Supplier
will [*] relief to affected Customers [*] of Supplier's receipt of the APAR.
- - "SEVERITY 2" Problem will be resolved by Supplier [*];
- - "SEVERITY 3" Problem will be resolved by Supplier [*]; and
- - "SEVERITY 4" Problem will be resolved by Supplier [*].
"AUTHORIZED THIRD PARTY" A party authorized to procure Product pursuant to a
Letter of Authorization by Buyer and mutually agreed to by Supplier and the
Authorized Third Party.
"CERTIFIED SERVICE PRODUCT" or "CSP" means Repaired Products. Notwithstanding
the relevant "Ongoing Warranties" provision in the GA, CSP may contain used or
reconditioned part(s), provided that such part(s) are properly marked as
"SERVICEABLE USED PART(S)" as further described in this SOW.
"CONSIGNED MATERIAL" means materials that Buyer owns and continues to own that
are entrusted to Supplier.
"CUSTOMER(S)" mean Buyer's customer(s).
"DEVELOPER TEST SYSTEMS" means a configuration of installed hardware and
software that Supplier maintains which is representative of typical Customer
installations for the Product and, at a minimum, contains current and current
minus 1 level of the Product and any prerequisite and co-requisite hardware and
software specified by Buyer.
"DEVELOPMENT PHASE" shall be defined as the period of time starting from the
effective date of this Agreement up to and including the date of first delivery
of production units of the Product.
"DISCRETEWA" means a Purchase Order issued from Buyer to Supplier that is not
pursuant to the hub warehouse order fulfillment.
"EMERGENCY ORDER" or "EO" means a WA placed by Buyer for FRUs with a Lead Time
not to exceed [*].
"END OF LIFE" OR "EOL" means the date and process by which Supplier discontinues
the manufacture of a product.
"END OF SERVICE" or "EOS" means date when Buyer officially discontinues Customer
service and support for a Product. EOS dates are only addressed for the purposes
of defining the date through which Supplier will make Repair Services available
for Products, and do not affect Supplier's obligations with respect to FRU or
other Product availability.
"ENGINEERING CHANGE" or "EC" means any change(s) to Product.
"FIELD REPLACEABLE UNIT" or "FRU" means a Product, Product component, Product
subassembly, Product documentation, Product code, or other Product part used to
service a Customer system as described in the Product Unique Attachment 1.
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* 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.
Form Title: Agreement Title Page 1 of 30 Form Release: 8/98
Form Owner: Global Procurement Revision: 05/02
INTEGRATED STATEMENT OF WORK FOR PRODUCTION PROCUREMENT GOODS AGREEMENT
GOODS AGREEMENT # ROC-P-68 MASTER AGREEMENT NUMBER
SOW # 4903RL1112SOW NUMBER
"GENERAL AVAILABILITY" shall mean, with respect to a particular Product, the
date on which such Product is available for purchase by members of the general
public by Buyer and or by Buyer's Authorized Third Party.
"HARMFUL CODE" means any computer code, programming instruction, or set of
instructions (including without limitation, self-replicating and self
propagating programming instructions commonly called viruses and worms) that is
constructed with the ability to damage, interfere with, or otherwise adversely
affect computer programs, data files, or hardware, without the consent or intent
of the computer user.
"INTEGRATED PRODUCTS" means products which contain one or more Supplier products
and or one or more Buyer products. Integrated Products may include both hardware
and software.
"LEAD TIME" means the minimum length of time prior to a specific delivery date
that Supplier must receive a WA from Buyer to ensure delivery by such date.
"MAINTENANCE LEVEL SERVICE" means the service provided, as set forth below, when
a Customer identifies a Problem:
- - "LEVEL 1" is initial service in response to Customer's request for
support in connection with a suspected Problem;
- - "LEVEL 2" is service provided to diagnose and resolve or assist Level 3
in resolving Problems identified by Level 1; and,
- - "LEVEL 3" is service provided to develop final resolutions for Problems
not resolved by Level 1 and Level 2.
"MAINTENANCE RELEASE" means an incremental software releases that provides
maintenance fixes and may provide additional; features. Maintenance releases are
designated by Supplier as a change in the digits(s) to the right of the tenths
digit of the software version number [X.X.(X)] or an alphabetic digit to the
right of that digit [X.X.X.(a)].
"MAJOR RELEASE" means a software release that provides additional software
features and/or functions. Major Releases are designated by Supplier as a change
in the ones digit of the Software version number [(X).X.X.].
"MINOR RELEASE" means an incremental software release that provides maintenance
fixes and additional features. Minor releases include all Maintenance Releases
issued from last minor release and are designated by Supplier as a change in the
tenths digit(s) of the software version number [X.(X).X].
"PROBLEM" means any Product defect, including, without limitation, any defects
arising as a result of the failure of the Products to function in accordance
with the written specifications and other requirements, or other failures or
errors or other defects arising as a result of the failure of the Products to
function in accordance with the written specifications and other requirements.
"PROBLEM MANAGEMENT RECORD" or "PMR" means a record documenting support actions
taken in response to a Customer's request for support in connection with a
suspected Problem.
"PRODUCT UNIQUE ATTACHMENT" is a document entitled Product Unique Attachment
which contains the additional terms and conditions unique to a specific Product.
"REPAIR" or "REPAIRED" means all required repair activity including,
disassembly, failure analysis, testing, component recovery, rework, warranty
process, packaging, final testing, and all other processes necessary to ensure
Products, which are sent to Supplier for repair within or outside of the
relevant Product warranty, meet all the functional performance requirements
applicable to newly manufactured Products in accordance with this SOW or
relevant WA.
"SOFTWARE MAINTENANCE" refers to the provision to Buyer by Supplier of certain
software updates at no additional charge during the Software Maintenance period.
Maintenance Releases and Minor Releases are generally included with Software
Maintenance. Major Releases generally are not included with Software
Maintenance.
"TAXES" means any and all applicable taxes, charges, fees, levies or other
assessments imposed or collected by any governmental entity worldwide or any
political subdivision thereof and however designated or levied on sales of
Products or Services, or sales, use, transfer, goods and services or value added
tax or any other duties or fees related to any payment made by Buyer to Supplier
for Product and/or Service provided by Supplier to Buyer under or pursuant to
this Agreement; exclusive, however, of taxes imposed upon the net income or
capital of Supplier or taxes in lieu of such net income taxes or such other
taxes which are to be borne by the Supplier under law. Supplier shall also bear
sole responsibility for all taxes, assessments, or other levies on its own
leased or purchased property, equipment or software.
"TURN AROUND TIME" or "TAT" means the elapsed time from the date of receipt
acknowledgment of a Product arriving at Supplier's location for Repair until
shipment notice of Repaired Product back to Buyer.
"YIELD" means the relationship between Product sent to Supplier for Repair and
the CSP returned to Buyer.
2.0 PRODUCT DEFINITION
2.1 PRODUCT DESCRIPTION.
The Products are described in the Product Unique Attachment #1. Products also
include all FRUs, CSPs, Product code, and Product documentation as applicable
and described in the Attachment #1.
Form Title: Agreement Title Page 2 of 30 Form Release: 8/98
Form Owner: Global Procurement Revision: 05/02
INTEGRATED STATEMENT OF WORK FOR PRODUCTION PROCUREMENT GOODS AGREEMENT
GOODS AGREEMENT # ROC-P-68 MASTER AGREEMENT NUMBER
SOW # 4903RL1112SOW NUMBER
2.2 PRODUCT SPECIFICATIONS & CERTIFICATIONS.
Products will comply with all the requirements set forth below:
- - CS1-1121-015, IBM Corporate Standard "Automatic Identification (AI) for
Packaging, Distribution and Manufacturing - Bar Coded Labels"
- - GA21-9261-11a, "Packaging and Handling - Supplier and Interplant
Requirements"
- - Product/Process Quality Plan, Quality Assurance Instruction 1057,
QAI-1057
- - ISO 2859, Sampling Procedures for Inspection by Attributes
- - ISO 3951, Sampling Procedures for Inspection by Variables
- - EIA - 599 - A, Continuous Improvement
- - EIA - 659 - A, Failure, Mechanism, Driven Reliability Monitoring
- - EIA - 670, Quality System Assessment
- - EIA - 671- A, Problem Analysis and Corrective Actions
- - EIA - JESD - 38, Standard for Failure Analysis Report Format
- - EIA - JESD - 46, Product Change Notice
- - EIA - JESD - 50, Maverick Product Elimination
- - Supplier's published specifications, catalogs, marketing materials, and
other documentation, including references in such materials to future upgrades
or performance
- - FAA Certification, Supplier certifies that Products and their packages
do not contain explosives, hazardous materials, incendiaries and/or destructive
devices as defined by the FAA
- - All Product claims, descriptions, specifications, and other
requirements described in the Product bill of material, elsewhere in this
Agreement, and via other written or electronic communications sent from or
approved by Buyer.
2.3 [*] PRODUCT CERTIFICATION.
Supplier certifies that the Products [*] specified in the Product Unique
Attachment(s) to this SOW. If there are any changes to this information,
Supplier will notify Buyer by providing a new [*] signed by an authorized
Supplier representative before shipping any affected Products. If any part
number has more than [*], Supplier certifies that each [*] in the Product Unique
Attachment(s), and Supplier will deliver to Buyer, instructions regarding how
Buyer can distinguish [*] for part numbers with more than one [*] prior to
shipping the affected Products.
2.4 ENGINEERING CHANGES.
Engineering Changes shall not be applied to any Product under this Agreement
unless implementation is conducted in accordance with the following engineering
process:
Supplier Changes: Supplier will not make any changes to the Products that affect
the form, fit or function, which have been certified by Buyer without Buyer's
prior written consent. Supplier will notify Buyer (through the Technical
Coordinator) of any engineering change proposed to be made by Supplier to the
Product and will supply Buyer with a written description of the anticipated
effect the engineering change will have on the Product, including price
(savings), performance, reliability, serviceability, manufacturability and any
cost impact to Buyer as a result of the implementation of the engineering
change. Buyer has the right to approve or disapprove of such engineering change,
which approval shall not be unreasonably withheld. Buyer may elect to evaluate
and test the prototype, parts and/or designs specified as part of the proposed
change and Supplier shall provide such parts to Buyer at no charge for such
evaluation and testing. Buyer (through the Technical Coordinator) shall approve
or disapprove Supplier proposed changes within [*], unless otherwise agreed to
by both parties, of receipt of a written request, except for changes required to
satisfy governmental standards or safety for which Buyer shall respond within
[*], unless extended by mutual consent. Failure to respond shall be deemed to be
Buyer's acceptance of such proposed change. If such change affects price, the
Buyer Business Coordinator must also provide approval. If Buyer approves the
engineering change, the product specification and unit pricing will be amended
as required. Buyer will not unreasonably refuse to approve Supplier's
engineering changes to the Product. In the event that Supplier makes such
changes to form, fit or function, that affect the Product without Buyer's
consent, at Buyer's discretion Supplier will either: [*] mutually agreed upon by
Supplier and Buyer, [*]
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* 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.
Form Title: Agreement Title Page 3 of 30 Form Release: 8/98
Form Owner: Global Procurement Revision: 05/02
INTEGRATED STATEMENT OF WORK FOR PRODUCTION PROCUREMENT GOODS AGREEMENT
GOODS AGREEMENT # ROC-P-68 MASTER AGREEMENT NUMBER
SOW # 4903RL1112SOW NUMBER
that are associated with such Products' [*] the price of the Products.
Buyer Changes: Buyer may request in writing (through the Technical Coordinator)
that Supplier incorporate an engineering change into the Product. Such request
will include a description of the proposed change sufficient to permit Supplier
to evaluate its feasibility. Within [*] of such request (or extended by mutual
consent), Supplier will advise Buyer of the conditions under which it would make
the engineering change. Supplier's evaluation will be in writing and will state
the increase or decrease price adjustment (if any) and the effect on the
performance, reliability, safety, appearance, dimensions, tolerances,
manufacturability and serviceability of the Product. Buyer's Technical
Coordinator shall approve or disapprove the engineering change based on
Supplier's written evaluation. If such change affects price, the Buyer's
Business Coordinator must provide approval prior to implementation. If Buyer
approves the engineering change, the product specification and unit pricing will
be amended as required. Supplier [*] Buyer's engineering changes into the
Product.
2.5 PRODUCT SOFTWARE AND DOCUMENTATION.
Supplier will deliver, at the earlier of a date requested by Buyer or prior to
its first shipment of Product, [*] and (ii) all Product code (as may be mutually
agreed upon and described in the Attachment 1 for the Product), publications,
and documentation in a format and media as specified by Buyer. Additionally,
Supplier will deliver to Buyer any Minor and Maintenance Releases (including bug
fixes) without an additional charge. Some software releases are considered a
Major Release and may be offered to Buyer for an additional fee as Supplier
offers such enhancements to other customers.
"Documentation" shall mean the OEM Manual and the Users Guide which Supplier
generally makes available to its customers containing descriptive, operating,
installation, engineering and maintenance information for Products, as such
documents may be amended from time to time and any updates, modifications and
enhancements made to them, during the term of this SOW.
Supplier shall provide Buyer with a master copy and one copy of all
Documentation for each Product, in both hardcopy format and electronic format,
suitable for dissemination by Buyer. Solely in conjunction with Buyer's sale,
installation, service and support of Products purchased under this Agreement,
Supplier grants Buyer a nonexclusive, royalty-free right and license to copy,
use, modify, translate [*] the Documentation and distribute the Documentation
and derivative works to its customers, provided that Buyer keep Supplier's
copyright and other proprietary notices as may appear on such Documentation and
refrain from doing anything that would jeopardize Supplier's proprietary and
other rights in the Documentation. Should Buyer require Supplier to make
modifications to said Documentation, the cost will be at Buyer's expense.
All Products purchased under this SOW are subject to an annual Software
Maintenance Support Program. Under the terms of this support program Supplier
shall provide Software Maintenance, which includes Maintenance Level Service,
for a period of one year commencing on the Effective Date of the Agreement.
Thereafter, the annual Software Maintenance Support Program shall be
automatically renewed for additional one-year periods commencing on the
anniversary of the Effective Date of the Agreement, unless cancelled by Buyer
with [*] prior written notice to Supplier. The fees for this annual Software
Maintenance Support Program shall be calculated as the Annual Software
Maintenance Fee per Unit, as described in Attachment 1, Section 4.1 "Product
Price List and Descriptions" multiplied by the average cumulative number of
units purchased each month (cumulative number each month added together divided
by 12) during the annual Software Maintenance Support period. For the
convenience of the Buyer, Software Maintenance shall be billed to Buyer with
each Product purchased as described in Attachment 1, Section 4.1 "Product Price
List and Descriptions" and will be used to determine the total billings. The
amounts for the Annual Software Maintenance Fee per Unit and the Software
Maintenance billed to Buyer with each Product purchased shall be mutually agreed
upon by the Supplier and the Buyer. If total billings for Software Maintenance
during an annual period exceed the fee for the annual Software Maintenance
Support Program as determined per the calculation as described in this section,
the excess billings will be used to offset fees for the annual Software
Maintenance Support Program in a subsequent period, may be refunded to the Buyer
should the Buyer elect not to
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* 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.
Form Title: Agreement Title Page 4 of 30 Form Release: 8/98
Form Owner: Global Procurement Revision: 05/02
INTEGRATED STATEMENT OF WORK FOR PRODUCTION PROCUREMENT GOODS AGREEMENT
GOODS AGREEMENT # ROC-P-68 MASTER AGREEMENT NUMBER
SOW # 4903RL1112SOW NUMBER
renew the annual Software Maintenance Support Program, or may be used as an
adjustment to amounts due to Supplier as mutually agreed upon. If total billings
for Software Maintenance during an annual period are less than the fee for the
annual Software Maintenance Support Program as determined per the calculation as
described in this section, Buyer at Buyer's option may elect to either have the
Supplier invoice such amount, adjust the unit price in subsequent period(s) for
the deficient amount, or adjust other amounts due to Supplier based on mutual
agreement between the parties. When initiating a technical support request with
Supplier, Buyer [*] the serial number or worldwide name of the Product. Supplier
shall have the right to assign support obligations to the appropriate local
Supplier subsidiary.
2.6 TAMPER EVIDENT PROTECTION.
To the extent that Supplier ships new Product in its final Customer ready form,
Supplier shall apply tamper evident protection on the finished Product packaging
in a form agreeable to both parties and in such a manner that if removed or
tampered with, it would be evident that the finished Product packaging has been
opened. Supplier will have controls to prevent unauthorized use or dissemination
of such tamper evident protection used on Product purchased by Buyer and to
limit the access to such materials to only those responsible for the tamper
evident sealing on the Products.
3.0 PURCHASING
3.1 WA ISSUANCE.
Buyer is under no obligation to purchase any Products and/or Services, except as
ordered in WAs and within thE liability limits addressed elsewhere in the
Agreement, including those addressed in the Product Unique Attachment(s) to this
SOW. Supplier will comply with Buyer's requested changes to delivery of Products
specified in a WA as described in the Product Unique Attachment(s) to this SOW.
If Buyer decreases Product quantities specified in a WA outside of allowances
described in the Product Unique Attachment(s) to this SOW, Supplier will use all
efforts to mitigate Buyer's liability. The parties acknowledge that WA's may be
placed on Supplier under this SOW by entities other than the Buyer, or its
Affiliates, but only to the extent preauthorized by Buyer in writing and
mutually agreed to by Supplier.
3.2 PRICE MODIFICATIONS
The parties agree to review in good faith price changes, based on market
conditions including but not limited to changes in Product cost, support
variances, and the business relationship. Such reviews shall occur as mutually
agreed upon between the parties. Furthermore, the parties agree to [*] after
General Availability for the Product. Any pricing changes which, may result of
such reviews and activities shall become effective on the first day of the
following month or as otherwise agreed to by the parties.
3.3 FIELD REPLACEABLE UNIT (FRU) AVAILABILITY.
Supplier will maintain the capability to supply and shall provide Product FRU(s)
to Buyer's along with access to technical support from Supplier in accordance
with pricing as provided in this SOW for a term of [*] commencing upon the
earlier of either the Product End of Life (EOL) in accordance with the earlier
of Section 3.4 (Notice of Product Withdraw), or the termination of this SOW
(Section 3.0 Goods Agreement).
3.4 NOTICE OF PRODUCT WITHDRAW
3.4.1 Buyer's Product Withdraw Notice.
Product may be withdrawn from production and end of life at Buyer's sole option.
Buyer shall notify Supplier of withdrawal of any Product(s). Product withdrawals
will not affect spare parts. Upon Buyer's notice to Supplier of withdrawal of
Product, Buyer must make any last time buys for such Product within [*] of the
withdrawal notice, and must take delivery of all last time buys within [*] from
the date of the withdrawal notice. Orders made subsequent to withdrawal notice
under this section shall be non-cancelable and non-returnable.
3.4.2 Supplier Product Withdraw.
Supplier shall provide written notification to Buyer [*] ("Notice Period") in
advance of to its intent to discontinue the manufacture, sale or distribution of
any or all Products ("End of Life" or "EOL"), and such notification shall not
occur within the [*] following Buyer's General Availability date of such
Product(s). Buyer shall provide to Supplier a non-binding
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* 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.
Form Title: Agreement Title Page 5 of 30 Form Release: 8/98
Form Owner: Global Procurement Revision: 05/02
INTEGRATED STATEMENT OF WORK FOR PRODUCTION PROCUREMENT GOODS AGREEMENT
GOODS AGREEMENT # ROC-P-68 MASTER AGREEMENT NUMBER
SOW # 4903RL1112SOW NUMBER
forecast for Products and FRUs, [*] from the receipt of Suppliers notice of End
of Life and Buyer may place orders for such Products as Buyer seems necessary.
However, Buyer shall provide to Supplier last-time buy purchase FRU forecast [*]
prior to the End of Life date (last date of manufacture or sales/distribution
date) and shall provide a non-cancelable WA for [*] the total last time buy FRU
forecast. Such purchases which may be rescheduled will be delivered upon Buyer's
request during the [*] term. .For delivery requests outside of the Notice Period
or order requests after Buyer's last-time buy purchase has been placed, Supplier
will review on a case-by-case basis Buyer's request(s).
3.5 USE OF SUBCONTRACTORS.
Supplier's use of subcontractors will not relieve Supplier of the responsibility
for the subcontractor's performance, and Supplier's responsibilities assumed
under this SOW will be equally applicable to such subcontractors, as must be
agreed upon between Supplier and such subcontractors. [*].
3.5.1 DIVERSITY ENTERPRISES SPENDING
Supplier [*] join and support Buyer's efforts to utilize Minority and Women
Owned Businesses (M/WBE), Disabled Business Enterprises (DBE), and Small
Business Enterprises (SBE) for a target percentage of 10-15% of Suppliers total
enterprise spend. The parties recognize that Supplier does not participate in a
M/WBE formal program at the time of this SOW execution, however Supplier will
use reasonable efforts to establish such a formal program and provide status as
requested to Buyer. Supplier's failure to achieve this goal may be considered
non-compliance with Buyer's MWBE initiative and shall be considered a factor by
Buyer for future business with Supplier however; it shall not be considered a
material breach of this Agreement.
As part of the parties' obligations under this Section, the
parties will perform the following:
(i) Supplier shall identify M/WBE Direct Opportunities: Identify
procurement opportunities that may exist relating to this SOW
that include, or may include, M/WBE participation in the
production or distribution of the Supplier's Products and
Services.
(ii) If Buyer has a list of potential M/WBE suppliers who can
perform under this SOW, Buyer will provide that list to
Supplier, so long as Supplier identifies the opportunity and
specifies the product or service to Buyer
3.6 TAXES AND DUTIES.
Supplier will ensure that the Prices do not include any sales, use or other
similar taxes that do not apply to Buyer as a reseller of Products and/or
Services. The parties agree to negotiate in good faith to establish the terms
and conditions for all legal, regulatory and administrative requirements, in
addition to all associated duties and fees, associated with importation of
Products into the country where the Product is received by Buyer, no later than
February 15, 2004 which will be incorporated into this Agreement when signed by
both parties.
Supplier's invoices shall state applicable taxes owed by the Buyer, if any, by
tax jurisdiction and with a proper breakdown between taxable and non-taxable
Products and Services. Supplier shall remit such tax payments to the appropriate
jurisdiction. Supplier agrees to use its commercially reasonable efforts to
properly calculate any applicable Taxes at the time of invoice. Supplier and
Buyer agree to cooperate to minimize any applicable Taxes, including reasonable
notice and cooperation in connection with any audit. Any incremental taxes shall
be Supplier's responsibility. If Buyer provides certification of an exemption
from Tax or reduced rate of Tax imposed by an applicable taxing authority, then
Supplier shall not invoice for nor pay over any such Tax unless and until the
applicable taxing authority assesses such Tax, at which time Supplier shall
invoice and Buyer shall pay any such Tax that is legally owed.
Buyer shall withhold taxes, if required under the law to be withheld on payments
made to Supplier hereunder and shall be required to remit to Supplier only the
net proceeds thereof. Buyer shall remit the taxes withheld to the appropriate
government authority and agrees to provide Supplier in a timely manner with
properly executed documentation or other information or receipts or certificates
evidencing Buyers payment of any such withholding tax.
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* 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.
Form Title: Agreement Title Page 6 of 30 Form Release: 8/98
Form Owner: Global Procurement Revision: 05/02
INTEGRATED STATEMENT OF WORK FOR PRODUCTION PROCUREMENT GOODS AGREEMENT
GOODS AGREEMENT # ROC-P-68 MASTER AGREEMENT NUMBER
SOW # 4903RL1112SOW NUMBER
3.7 INVOICES.
Terms for payment on all Supplier invoices will be net [*] from: 1) receipt of
an acceptable invoice for a Discrete WA's purchases; or 2) as described in order
fulfillment models (see Attachment 5). [*] Invoices to Buyer must include, at a
minimum, the following: (i) applicable WA line item numbers; (ii) SOW and WA
numbers; (iii) terms of payment as provided herein; (iv) billing date (v)
applicable Product unit Prices; (vi) total amount invoiced; (vii) the Harmonized
Tariff Code of the importing country for every Product; and, (viii) Product
descriptions with sufficient detail to enable verification of associated Product
categorical classifications.
3.8 ELECTRONIC COMMERCE.
Buyer may issue scheduling documents ("Blanket Purchase Orders") which may have
the appearance of a normal WA, but do not include a delivery date. Such Blanket
Purchase Orders are issued only as a logistical processing document to enable
the use of electronic purchase order communications and are not binding in any
manner and shall not be considered as WA's by the parties, regardless of
quantities or prices that may be included in such Blanket Purchase Orders.
Unless previously submitted by Supplier, in order to initiate electronic
transfer of payments associated with this SOW, Supplier will complete the form
entitled "Authorization for Electronic Funds Transfer" as provided to Supplier
by Buyer and fax the completed form to Accounts Payable at the number included
on the form.
4.0 MAINTENANCE LEVEL SERVICE
Maintenance Level Services includes the Level 1, Level 2, and Level 3
responsibilities defined below, for Product, documentation and Maintenance and
Minor Releases arising out of technical support responsibilities, and all such
releases created or made available by Supplier.
4.1 LEVEL 1.
Supplier will assist Buyer as required by Buyer, in performing the following
Level 1 support responsibilities:
- - create the PMR;
- - obtain from Customer a description of the Problem;
- - search for any known resolution(s) relevant to the Problem;
- - if a resolution to the Problem is known, specify such resolution to
Customer;
- - if no resolution to Problem is known, generate APAR, assign APAR Correction
Time, forward APAR to Level 2; and
- - pass the PMR to Level 2, and update the PMR documenting Level 1 actions.
4.2 LEVEL 2.
Supplier will assist Buyer, as required by Buyer, in performing the following
Level 2 support responsibilities:
- - receive the PMR/APAR from Level 1;
- - analyze Problem symptoms and gather additional data from Customer as
required;
- - recreate Problem on the Developer Test System;
- - determine if Problem is due to improper installation of the Product by
Customer;
- - determine if Problem is due to operationally related hardware or software
at the Customer location;
- - attempt a bypass or circumvention for high impact Problems (i.e., Severity
1 and 2);
- - create APAR record if no resolution to Problem is attained; and
- - update the PMR documenting Level 2 actions.
4.3 LEVEL 3.
Supplier will perform the following Level 3 support responsibilities:
- - receive the APAR/PMR and supporting documentation and materials from Level
2;
- - analyze Problem symptoms and diagnose Problem;
- - notify Level 2 if additional information, materials or documentation are
required;
- - attempt to recreate Problem on the Developer Test System;
- - assist Level 2 in developing a bypass or circumvention for high impact
Problem (i.e., Severity 1 and 2);
- - deliver corrections to the Product and/or Product code (as defined in
Attachment 1) to Buyer within the applicable APAR Correction Times to fix
Problems identified by 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.
Form Title: Agreement Title Page 7 of 30 Form Release: 8/98
Form Owner: Global Procurement Revision: 05/02
INTEGRATED STATEMENT OF WORK FOR PRODUCTION PROCUREMENT GOODS AGREEMENT
GOODS AGREEMENT # ROC-P-68 MASTER AGREEMENT NUMBER
SOW # 4903RL1112SOW NUMBER
- - return all APARs to Buyer with an APAR Closing Code assigned, including
text describing the resolution of Problem
- - confirm resolution of Problem with Customer, and update PMR documenting
Level 3 actions; and
- - answer any questions from Buyer and/or Customer concerning the operation
and use of Products.
4.4 OTHER TECHNICAL SUPPORT RESPONSIBILITIES.
Supplier will provide to Buyer the name and phone numbers of Supplier Personnel
to contact for all technical support matters related to the Product. [*]
required by Buyer to enable Buyer to perform technical support functions for the
Product and will keep Buyer informed of any known Problems and their associated
solutions. Supplier shall contact IBM directly in the event IBM Customers
contact Supplier for Product support services. No other support shall be
provided unless directed by IBM for these Products.
4.5 TECHNICAL SUPPORT TRAINING.
Supplier shall make available to Buyer technical training for support of end
user implementation of the Product. Buyer shall not use any training materials
in a manner that provides revenue solely from the use of these materials to IBM.
Technical training requested by Buyer will be made available by Supplier to
Buyer as mutually agreed upon. Buyer acknowledges that the materials distributed
by the Supplier during the technical training are protected by copyright, and
that Buyer shall have no rights to reproduce such materials without the prior
written consent of Supplier, such consent shall not be unreasonably withheld.
5.0 QUALITY
5.1 QUALITY REQUIREMENTS.
Supplier shall provide to Buyer applicable standard data and calculations that
support the Products' ability to meet the quality standards set forth as
Attachment 2.
5.2 ACCEPTANCE CRITERIA.
Buyer may inspect and test all Product at Buyer's facility prior to acceptance
or rejection, and may refuse to accept Product which does not conform to the
specifications, certifications, and other requirements referenced in the
Agreement. If Buyer rejects Product and requests a replacement Product, Supplier
shall replace the rejected Product within [*] of Buyer's request, and shall pay
for the airfreight, if required by Buyer, and all other expenses associated with
the return of the rejected Product.
5.3 PRODUCT MODIFICATIONS.
Supplier will not make any changes to the Products affecting form, fit or
function of the Products that have been certified by Buyer, without Buyer's
prior written consent, such consent not to be withheld unreasonably. In the
event of such form, fit or function changes without Buyer's prior written
consent, Supplier will, at Buyer's discretion, either: (i) [*]; or (ii) [*] the
products. If Supplier improves the safety, function, cost, or reliability of
products that it builds for itself or for its other customers by changing a
design, component, part, supplier, or production process that may also be used
in or in connection with a Product that Supplier builds for Buyer, then Supplier
will inform Buyer of such improvement and implement changes to Product as
approved by Buyer to incorporate such improvement in Products.
5.4 ISO REQUIREMENTS.
For ISO compliance, the Supplier represents and warrants that the Supplier's
contract manufacturers are ISO 9001 compliant. Compliance hereunder may be
either by means of external accreditation or self-declaration. For external
accreditation, Supplier will provide to Buyer, upon Buyer's request, a copy of
Supplier's current registration, including the scope, Standard Industrial
Classification code or equivalent, all locations involved, and any restrictions
or exclusions. For self-declaration, Supplier will provide to Buyer, upon
Buyer's request, a letter from Supplier's chief executive officer, chief
operating officer, or other executive assuring that self-declaration was
performed with due diligence based upon a previously executed internal audit
report, and that such self-declaration has had executive management review and
approval.
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* 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.
Form Title: Agreement Title Page 8 of 30 Form Release: 8/98
Form Owner: Global Procurement Revision: 05/02
INTEGRATED STATEMENT OF WORK FOR PRODUCTION PROCUREMENT GOODS AGREEMENT
GOODS AGREEMENT # ROC-P-68 MASTER AGREEMENT NUMBER
SOW # 4903RL1112SOW NUMBER
5.5 PERIODIC QUALITY REVIEWS.
Supplier shall develop and implement a process for continuous Product
improvement. Buyer may conduct reviews and/or hold meetings related to
Supplier's performance under the SOW, including but not limited to the following
respects, and may compare Supplier's performance with that of similarly situated
suppliers:
- - Supplier's compliance with delivery dates in support of WAs issued by
Buyer;
- - Supplier's compliance with Emergency Orders issued by Buyer hereunder;
- - Supplier's compliance with the targeted Shipped Product Quality Level
(SPQL) as set by the parties on a monthly basis;
- - Supplier's compliance with the targeted Field Replace Action Level (FRAL)
as set by parties on a monthly basis;
- - Supplier's compliance with the targeted Incoming Product Quality Level
(IPQL) as set by the parties on a monthly basis;
- - Supplier's compliance with the targeted Cumulative Failure Rate (CFR) as
set by the parties on a monthly basis;
- - Percentage of Products failing to function properly upon delivery (also
known as the Product DOA rate);
- - Supplier's speed in taking corrective actions for any problems with Product
identified by Buyer;
- - Supplier's implementation of lessons learned in previous periodic quality
reviews.
In any calendar month in which Supplier shows poor performance with respect to
the criteria set forth above, Buyer may notify Supplier of such poor
performance. In such case, Supplier will respond to Buyer with an agreed upon
action plan within [*] of notification by Buyer demonstrating its ability to
achieve the required measurements. Supplier's failure to successfully execute an
action plan within an agreed upon time frame shall be a material breach of the
Agreement. Satisfying any or all criteria of this section shall not relieve
Supplier of its warranties or other obligations of the Agreement.
6.0 RESERVED.
7.0 EMERGENCY ORDERS
7.1 CODE A-ALERT EMERGENCY ORDER PLACEMENT
This provision 7.0 (Emergency Orders) and it subsections shall apply solely to
FRU purchases pursuant to a discrete WA. 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 [*] of EO placement.
Supplier will acknowledge EO back to Buyer via fax or telephone within the
specified order confirmation time periods stated below.
7.2 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.
7.3 CODE A-ALERT EMERGENCY ORDER SHIPMENTS
Supplier will use commercially reasonable efforts to ship Code A-Alert Emergency
Orders within [*] 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 [*] to arrive at Buyer's specified receiving location [*] WA. Buyer to pay
for all expedited freight/duty /insurance costs.
7.4 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 prior to time of shipment to make changes to
the specified receiving location.
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* 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.
Form Title: Agreement Title Page 9 of 30 Form Release: 8/98
Form Owner: Global Procurement Revision: 05/02
INTEGRATED STATEMENT OF WORK FOR PRODUCTION PROCUREMENT GOODS AGREEMENT
GOODS AGREEMENT # ROC-P-68 MASTER AGREEMENT NUMBER
SOW # 4903RL1112SOW NUMBER
8.0 WARRANTY SUPPORT
8.1 [*]
[*] shall mean Products and their associated Engineering Changes that experience
one or more of the following: (a) a similar defect at a rate of [*] or more in
any given [*] rolling period over the life of the Products, (b) a similar defect
at a rate of [*] or more (or other rate that may be specified in the Product
Unique Attachment) of total purchases over the life of the Products, [*].
8.2 WARRANTY PERIOD.
The warranty redemption set forth in the section of the GA entitled, "Warranty
Redemption" as it applies to the relevant subsection of the section of the GA
entitled, "Ongoing Warranties" will be available to Buyer for all Products
hereunder for the warranty period of [*] and as set forth in the applicable
Product Unique Attachment (as calculated from the date Buyer takes title of
Product). Supplier will be responsible for its warranty redemption
responsibilities under the Agreement for all Products returned to Supplier,
regardless of the reason why such Products fail to meet the requirements in the
Agreement. When initiating a technical support request with Supplier, Buyer
shall use commercially reasonable efforts to provide the serial number or
worldwide name of the Product unit. Such warranty redemption for Repaired
Product shall be the longer of the above period for the original Product or [*]
after the Buyer's receipt of the Repaired Product. Nothing in this section shall
be deemed to affect or amend the ongoing duration of the remaining ongoing
warranties.
8.3 NO TROUBLE FOUND
Buyer shall use commercially reasonable efforts to provide a description on the
RMA field return form of the failure. If the quantity of No Trouble Found (NTF)
Product returned to Supplier exceeds [*], then any additional NTF units returned
above and beyond the [*] of Product may be subject to Supplier's cost recovery
if [*] of the Product returned for failure or defects are found to be NTF during
any two out of three consecutive rolling quarters. The cost recovery to Supplier
will be limited to the quantities exceeding the [*] and shall be through an
increase in Product price as mutually agreed to by the parties.
8.4 LIMITATIONS
The foregoing warranty provided in the Goods Agreement and Section 8.0 shall not
apply to Product(s) that has been (i) damaged by accident, Act of God, shipment,
improper installation, inadequate maintenance, abnormal physical or electrical
stress, misuse or misapplication, or (ii) modified without Seller's express
written acceptance of such modification for warranty purposes, so long as such
occurrence has taken place after Product(s) has been received by Buyer or in
accordance with the shipping terms mutually agreed upon.
8.5 WARRANTY REDEMPTION LOGISTICS.
Supplier will label Products as specified by Buyer to enable Buyer to determine
Product warranty entitlement. Where Supplier is required to ship Product
pursuant to its warranty redemption responsibilities under the Agreement,
Supplier will ship such Product to Buyer's designated "ship to" location via
Buyer's designated carrier.
8.6 ADDITIONAL WARRANTIES.
Supplier represents and warrants that, on an ongoing basis:
(a) Products, Parts, EDI transmissions, and other deliverables shall not contain
any Harmful Code upon shipment;
(b) Supplier and Buyer shall comply with all applicable laws, regulations,
orders and policies relating to [*], including Chinese regulations regarding the
identification of country of origin (i.e., Taiwan cannot be referred to as
"R.O.C." or "Republic of China"; Hong Kong must be referred to as "China (Hong
Kong S.A.R.)"; and Macau must be referred to as "China (Macau S.A.R.)");
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* 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.
Form Title: Agreement Title Page 10 of 30 Form Release: 8/98
Form Owner: Global Procurement Revision: 05/02
INTEGRATED STATEMENT OF WORK FOR PRODUCTION PROCUREMENT GOODS AGREEMENT
GOODS AGREEMENT # ROC-P-68 MASTER AGREEMENT NUMBER
SOW # 4903RL1112SOW NUMBER
(c) Supplier shall secure and maintain all certifications (governmental, agency,
or otherwise) required for performance of Services or that are required for the
performance of such Services for Buyer, Buyer subsidiaries, and others
authorized by Buyer and agreed to by Suppler to sell the Products worldwide;
d) Supplier shall maintain comprehensive general liability insurance sufficient
to cover all claims that might arise from Supplier's activities under this
Agreement;
(e) If Supplier refers to performance and/or upgradeability features in the
Product or in marketing deliverables (e.g., advertisements, Internet pages,
brochures, bids, user guides) for similar products which Supplier offers to its
other customers, then Supplier represents that all such performance and/or
upgradeability claims are true, and Buyer may rely on such claims in creating
its own marketing deliverables for Products. Supplier will provide upgrades
within a reasonable period of time, [*]. Supplier will include in the Products
and upgrades all of the performance functions and features suggested by the
reference;
(f) Should Products and Services provided herein ever interact in any capacity
with monetary data, Supplier will make Product euro-ready such that they will
correctly process, send, receive, present, store, and convert monetary data in
the euro denomination, respecting the euro currency formatting conventions
(including the euro symbol).
9.0 REPAIR
9.1 REQUIRED REPLACEMENT.
All components of Products sent to Supplier for Repair that exhibit unsafe
conditions (including but not limited to cracking, chafing, and/or other unsafe
conditions) will be replaced with an identical (same manufacturer, part or model
number, electrical/thermal rating, physical dimensions and agency approval) or
an approved alternate component (identical mechanical, electrical/thermal,
physical, compositional and performance characteristics but different
manufacturer). Compliance with this section will not relieve Supplier of its
other obligations under the Agreement and this SOW.
9.2 SCOPE OF REPAIR SERVICES.
Supplier will make Repair Services available to Buyer up through and including
the relevant EOS date, as specified by Buyer in writing. Products sent to
Supplier for warranted Repair during the applicable warranty period will be
Repaired at no cost to Buyer and returned to Buyer at Supplier's cost. Products
sent to Supplier for Repair outside of the applicable warranty period shall be
subject to the out of warranty fees as applicable in Attachment 1. Inbound
freight to be paid by Buyer and outbound to be paid by Supplier in accordance
with the delivery date specified by Buyer in the WA for such Repair as mutually
agreed upon between the parties. All Repaired Products must meet the
requirements regarding CSPs set forth in this SOW. Repair Services [*] with the
exception of Product [*]. In such event, Supplier will, at Buyer's discretion,
[*]. Supplier must maintain a history of Repair activities and provide a monthly
report to Buyer in the format of the attachment to this SOW that is entitled
"Monthly Warranty Analysis Report."
9.3 CSP REQUIREMENTS.
Products will only be classified as CSP with Buyer's written approval. Products
classified as CSP may be used for field service only and may not be used in the
manufacturing of a new Product. CSPs will meet the following criteria: (i) the
functional performance of such Products will comply with all current and
applicable engineering drawings, written specifications, and other Product
requirements; (ii) the appearance of such Products will be equivalent to that of
a new counterpart; (iii) manufacturer warning labels will remain intact and
legible or will be replaced, and protective covers (e.g., guards or shields)
will be securely mounted as originally designed or will be replaced; and (iv)
the Repair of such Products (including EC related Repairs) will be in compliance
with all agreed upon listings and certifications issued by National
Certification Body (NCB). If Supplier is not able to meet specified criteria,
then Product will be deemed non-repairable and Buyer will be notified
accordingly. Suppliers will place on all CSPs, a "SERVICEABLE USED PART(S)"
label meeting the following criteria: (i) printed using high quality paper with
a shelf life of ten (10) years; (ii) using permanent pressure sensitive and
tamper evident adhesive (black printing on orange background); (iii) which do
not contain any voids, ink specks, ink fill-ins or edge-roughness; (iv) which
are applied in a manner that provides durable and wrinkle free labels that
permanently and securely bonds to the Product and container under variable
environmental conditions; (v) which are clearly visible; and (vi) which will not
adversely affect the functionality or aesthetics of the Product. The original
manufacture date will be preserved or restored as needed at the time of Repair.
Product labels (labels applied directly to the Product) will comply with the
following dimensions: (i) large labels will measure 3.0448 cm x 0.9615 cm
(1.1875 in x 0.3750 in); (ii)
Form Title: Agreement Title Page 11 of 30 Form Release: 8/98
Form Owner: Global Procurement Revision: 05/02
INTEGRATED STATEMENT OF WORK FOR PRODUCTION PROCUREMENT GOODS AGREEMENT
GOODS AGREEMENT # ROC-P-68 MASTER AGREEMENT NUMBER
SOW # 4903RL1112SOW NUMBER
small labels will measure 2.2435 cm x 0.6410 cm (0.8750 in x 0.2500 in).
Container labels (labels applied to the container) will comply with the
following dimensions: (i) 9.2948 cm x 4.4871 cm (3.6250 in x 1.7500 in).
10.0 CONSIGNED MATERIALS
10.1 HANDLING OF CONSIGNED MATERIALS.
In instances where Buyer sends Product to Supplier for Repair, and/or provides
to Supplier tooling and/or other items, Buyer may, but is not obligated to,
entrust such Products, tooling, and/or other items to Supplier as Consigned
Materials. Buyer will retain title to Consigned Material at all times. Supplier
will: (i) use Consigned Materials only in the performance of this SOW and will
not reuse or resell nor allow to be reused or resold any Consigned Material
without Buyer's prior written authorization; (ii) acknowledge receipt of
Consigned Materials within [*] of receipt to the Buyer's Business Coordinator
via email or fax, and such acknowledgment will include a detailed report of any
quantity shortages or overages (any shortages not reported to Buyer's
Coordinator in such acknowledgment will be deemed received by Supplier), all
relevant part numbers, and the relevant WA (if applicable) and quantity; (iii)
immediately notify carrier and Buyer's Business Coordinator of any Consigned
Materials that exhibit external damage at the time of delivery from Buyer to
Supplier, document on carrier's freight bill such damage, and receive either an
inspection report or a letter from carrier stating that such inspection has been
waived; (iv) ensure that Consigned Materials are not pledged, mortgaged,
assigned, borrowed or encumbered by security interests or otherwise and are not
be removed from Supplier's location without Buyer's prior written authorization,
unless provided to Buyer in accordance with the terms and conditions of this
SOW; (v) provide monthly reports of all transactions made by Supplier involving
Consigned Materials, together with the quantities remaining in Supplier's
custody as of the date of such report, and will make due settlement and payment
on a monthly basis, if not already made, for any and all Consigned Materials in
accordance with this SOW; (vi) maintain account books and records providing
complete information as to all such transactions involving Consigned Materials,
and such books and records will be available to Buyer during normal business
hours, upon [*] prior notice to Supplier; (vii) permit Buyer to inspect
Consigned Materials at any time during normal business hours, at Supplier's
location and to remove any or all of the same if Buyer so desires; (viii)
maintain replacement cost insurance on Consigned Materials; (ix) upon Buyer's
written request, or upon termination or expiration of this SOW, return Consigned
Materials to Buyer pursuant to Buyer's instructions and in the same condition as
received by Supplier; (x) upon Buyer request, mark Consigned Material in a
manner acceptable to Buyer to indicate Buyer's ownership; (xi) control Consigned
Materials in a secure and separate area so as to not commingle Consigned
Materials with other materials, parts, or other assets of Supplier or of any
third party; and (xii) notify Buyer immediately in writing of any personal
property taxes or assessments that may be levied on Consigned Materials.
Supplier shall not charge inventory fees or any other costs to Buyer regarding
Consigned Materials.
10.2 RETURN OF CONSIGNED MATERIALS.
Supplier will provide a packing slip with all return shipments of Consigned
Materials to Buyer, which specifies Supplier's name, Buyer part number(s) of
Consigned Materials being returned, quantity of Consigned Materials, by Buyer
part number being returned, and the relevant WA number. Consigned Materials
which Supplier is unable to Repair will be returned to Buyer with a packing slip
which additionally references a return authorization number, obtained from
Buyer, and provide a reason why Supplier is unable to Repair such Consigned
Materials. Supplier will reimburse Buyer for Consigned Materials that are not
returned to Buyer in accordance with the terms of this SOW, including, without
limitation, any Consigned Materials that have been stripped, stolen, lost,
damaged, or unaccounted for The calculations for reimbursement of Consigned
Materials is as follows: (i) for new Consigned Materials, Supplier will
reimburse Buyer an amount equal to Buyer's then current price for the Consigned
Materials; or (ii) for used Consigned Materials, Supplier will reimburse Buyer
an amount equal to [*] of Buyer's [*] cost per piece.
11.0 RESERVED.
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* 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.
Form Title: Agreement Title Page 12 of 30 Form Release: 8/98
Form Owner: Global Procurement Revision: 05/02
INTEGRATED STATEMENT OF WORK FOR PRODUCTION PROCUREMENT GOODS AGREEMENT
GOODS AGREEMENT # ROC-P-68 MASTER AGREEMENT NUMBER
SOW # 4903RL1112SOW NUMBER
12.0 PURCHASES THROUGH BUYER OR BUYER'S AUTHORIZED THIRD PARTIES
In the event Buyer wishes to authorize a third party ("Authorized Third
Parties") to purchase Products, Buyer shall issue and negotiate in good faith
with Supplier a Letter of Authorization ("LOA") which shall serve as "Written
Authorization" pursuant to the [*] Agreement (dated August 5, 2003) as executed
between the parties.
13.0 GRANTS OF RIGHTS AND LICENSES
13.1 AUTHORIZATION TO PURCHASE, INTEGRATE, AND RESELL
As provided herein, Seller authorizes Buyer to purchase Products, integrate them
with Buyer's products to create Integrated Products, and redistribute Products
(either independently, as components of Integrated Products, as upgrades and/or
spare parts) to End Users (both directly, and indirectly through Buyer's
Resellers).
13.2 PICTORIAL, GRAPHIC AND AUDIO/VISUAL WORKS
The grant of rights and licenses with respect to Documentation includes a grant
of all such rights and licenses in and to pictorial, graphic or audio/visual
works, including icons, screens, characters, with other programming or through
other means.
13.3 SUPPLIER PRODUCT NAMES AND TRADEMARKS
Supplier grants Buyer, and its Affiliates, subsidiaries, distributors and agents
that market or sell the Products, a worldwide, non-exclusive, royalty free [*]
(except for Buyer's non-compliance with Supplier's Trademark Usage Guidelines as
set forth in more detail below) right and license in Supplier's trademarks,
service marks and trade names that Supplier uses in association with products
similar to Products ("Supplier Marks") for the sole purpose of advertising,
marketing, distributing, selling, or leasing the Product identified in
Attachment 1, Section 1.0. All goodwill resulting from Buyer's use of Supplier
Marks shall inure to the benefit of Supplier. Buyer's use of Supplier Marks
shall comply with Supplier's Trademark Usage Guidelines, which are attached
hereto as Exhibit X. Supplier's Trademark Usage Guidelines shall be limited to
reasonable and objective guidelines for proper usage of the Supplier Marks, and
may neither expand nor limit any other right of either party. This Agreement
shall take precedence over any inconsistent term or condition of Supplier's
Trademark Usage Guidelines. Supplier may amend its Trademark Usage Guidelines on
[*] advance written notice to Buyer. However, Buyer may continue to use any
advertising, marketing, sales, manuals and other documents that were prepared
prior to the end of any such [*] period. In the event that Supplier notifies
Buyer that its use of the Supplier Marks under this agreement is not in
compliance with Supplier's Trademark Usage Guidelines, Buyer shall have [*] to
correct such non-compliance. If Buyer fails to correct any material
non-compliance with Supplier's trademark Usage Guidelines within such [*]
period, then Supplier may revoke these rights and licenses to use Supplier
Marks; however, notwithstanding such revocation, Buyer may continue to use
Supplier Marks until its inventory of Products have been depleted.
14.0 [*]
14.1 TRIGGER EVENTS:
If during the term of this Agreement:
A) Supplier (or its contracted manufacturer) [*] (except as expressly
provided in Section 3.4.2 of this Agreement) contracted for hereunder;
or
B) An [*]; or
C) A [*]; or
D) A [*]; or
E) [*]; or
F) [*]
(each such event shall hereafter referred to as a "Trigger Event").
Buyer shall notify Supplier in writing if Buyer is aware or becomes aware
of the occurrence of such a Trigger Event or Supplier shall notify Buyer in
writing if Supplier is aware or becomes aware of the occurrence of such a
Trigger Event, and Supplier shall have [*] after the date of such written
notification or from the date of the occurrence of such a Trigger
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* 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.
Form Title: Agreement Title Page 13 of 30 Form Release: 8/98
Form Owner: Global Procurement Revision: 05/02
INTEGRATED STATEMENT OF WORK FOR PRODUCTION PROCUREMENT GOODS AGREEMENT
GOODS AGREEMENT # ROC-P-68 MASTER AGREEMENT NUMBER
SOW # 4903RL1112SOW NUMBER
Event in which to remedy such condition or conditions, or such longer
period as is mutually agreed to by the parties in writing (hereafter
referred to as the "Cure Period").
14.2 ELECTION OF REMEDIES BY BUYER.
If Supplier is unable to remedy the Trigger Event during the Cure Period, within
[*] after the end of the Cure Period, Buyer shall select one of the following
options to ensure an adequate supply of comparable Product: (i) [*] the [*]
Products pursuant to Section 14.3 through 14.6 inclusive, or (ii) purchase
comparable Product from third parties. If Buyer fails to provide Supplier with
written notice of such election within such [*] period, the parties agree that
Buyer will be deemed to have selection option (ii) of this section 14.2.
14.3 [*]
If [*] pursuant to option (i) in Section 14.2 above, Supplier will promptly
deliver to Buyer the following [*] (over which Supplier has control) that were
[*] if available for transfer; [*] documentation; [*] their addresses and [*]
supplies to Buyer. [*] to be provided by Supplier [*]. In addition, Supplier
shall, upon Buyer's request and payment by Buyer of Supplier's then-current
standard rates therefore, provide such technical assistance as may be reasonably
requested [*], subject to the reasonable availability of Supplier personnel.
Nothing contained herein shall obligate Supplier to disclose to Buyer any
confidential information of a third party, [*] shall be deemed to be
confidential to Supplier and shall not be disclosed to any employee or agent
without a need to know such information [*] both during the term of this SOW and
thereafter. Buyer shall ensure that it has obtained or will obtain from its
employees and agents, and the employees and agents of its Subsidiaries and
authorized third parties, who will receive Supplier Confidential Information a
written agreement to hold such Supplier Confidential Information in confidence
and to use the same care and discretion to avoid disclosure of such information
as Buyer uses with its own similar information which it does not wish to
disclose, but in no event less than commercially reasonable measure to protect
such information. All such Supplier Confidential Information shall be maintained
in a locked facility accessible only by authorized personnel.
14.4 [*].
[*] Notwithstanding the foregoing, [*], Supplier agrees that provided Buyer has
used commercially reasonable efforts [*] shall be eighteen months (18) from the
date that Buyer provides Supplier with written notice [*]
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* 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.
Form Title: Agreement Title Page 14 of 30 Form Release: 8/98
Form Owner: Global Procurement Revision: 05/02
INTEGRATED STATEMENT OF WORK FOR PRODUCTION PROCUREMENT GOODS AGREEMENT
GOODS AGREEMENT # ROC-P-68 MASTER AGREEMENT NUMBER
SOW # 4903RL1112SOW NUMBER
[*]
[*] as-is with no warranty of any kind. [*]
14.5 [*]
[*], Buyer shall use commercially reasonable efforts to return to Supplier or
destroy all Supplier Confidential Information to Supplier, retaining no copies
in any tangible form or medium, and provide to Suppler a certificate from a
Buyer executive attesting to their reasonable knowledge that all Supplier
Confidential Information has been returned or destroyed.
14.6 CANCELLATION OF PURCHASE ORDER(S) (WAS).
[*], any WAs of Buyer for Products issued by Buyer on or after the date of any
of the Trigger Events, may be canceled by Buyer, by a written notice to
Supplier, and Buyer will have no further obligations there under except Buyer's
obligations in connection with acceptable Products already delivered prior to
such cancellation, including but not limited to, payment obligations for such
delivered Products, unless otherwise agreed to by the parties.
15.0 SURVIVAL.
Any provisions of this Agreement which by their nature extend beyond its
termination (including, without limitation, Sections 1, 8, 12, 13 and 15 of this
SOW and Product Unique Attachment #1 hereto) and remain in effect until
fulfilled, and apply to respective successors and assignees. In addition, the
parties' obligations under Attachment 6 (reference CDA) hereto shall survive for
a period of five years following Buyer's last purchase of Product prior to the
termination or expiration of this SOW.
ACCEPTED AND AGREED TO: ACCEPTED AND AGREED TO:
International Business Machines Brocade Communications Systems, Inc.
Corporation ("Buyer") "Supplier"
By: /s/ Robert J. Tice 12/22/03 By: /s/ Jack Cuthbert 12/19/03
----------------------------- --------------------------------
Buyer Signature Date Authorized Signature Date
Robert J. Tice (for Mark Scheftel) Jack Cuthbert
- ---------------------------------- -------------------------------------
Printed Name Type or Print Name
Buyer's Title - Buyer's Org V.P. OEM Sales
- ---------------------------------- -------------------------------------
Title & Organization Title & Organization
OEM Team Lead
- ---------------------------------- -------------------------------------
Buyer Address: Supplier Address:
3039 Cornwallis Road 1740 Technology Drive
RTP, NC 27709 San Jose, CA 95110
Form Title: Agreement Title Page 15 of 30 Form Release: 8/98
Form Owner: Global Procurement Revision: 05/02
INTEGRATED STATEMENT OF WORK FOR PRODUCTION PROCUREMENT GOODS AGREEMENT
GOODS AGREEMENT # ROC-P-68 MASTER AGREEMENT NUMBER
SOW # 4903RL1112SOW NUMBER
PRODUCT UNIQUE ATTACHMENT #1 EFFECTIVE BEGINNING _DECEMBER 15, 2003
1.0 PRODUCT DESCRIPTION
The Product is a Fibre Channel Switch Module, to be used in the BladeCenter
server. The Fibre Channel (FC) Switch Module will provide 14 separate internal F
ports to service each Blade Center processor slot plus 2 external ports that
support FL_Port, F_Port, and E_Port; self-discovery based on switch type
(U_Port) peripherals running at 1Gbps or 2Gbps rates. Incorporated with the
Fibre Channel Switch Module is Fabric OS, Web Tools, Zoning and Fabric Watch and
documentation will be available in the following languages: English.
1.1 ADDITIONAL DESCRIPTION OF PRODUCTS.
Products must conform to the following specifications (including any subsequent
revisions, as mutually agreed to between the parties), which are hereby
incorporated by reference, and sold exclusively to IBM including providing
supporting Services:
- - "Brocade BladeCenter Fibre Channel Switch Module", Product Requirements
Document ("PRD") Version 1.60, December, 2003, Owner, Patrick Caporale,
IBM.
- - IBM/Intel BladeServer Base Specification for Switch Module Subsystems,
Version 1.02, August 25,2003, Owner: Intel /IBM Collaboration Architecture
Review Board, provided to Supplier under the terms of the Technical
Information License Agreement. ("TILA"} dated August 5, 2003 between the
parties.
2.0 DEVELOPMENT REQUIREMENTS
2.1 PRODUCT TESTING
Product Qualification and Test Plans shall be performed as documented in the PRD
and agreed to by both parties.
2.2 DELIVERABLES
Seller shall, at its cost, use commercially reasonable efforts during the
Development Phase to provide deliverables requested by Buyer in conformance with
the development schedule that has been documented and mutually agreed to by both
parties.
2.3 DEVELOPMENT MODULES
Buyer will provide WA's to Supplier for [*] each P0.1development modules (SDV)
and for [*] each P.1 development modules (SIT) at a price not to exceed those
identified in the table below. P0.1 and P1 development modules will comply with
the PRD specification agreed to in writing by the parties. and will incorporate
all of the design change requests mutually agreed to by the parties in writing.
No later than [*] days following Supplier's delivery of P1 development modules
to Buyer, Supplier shall at its sole expense modify, replace or otherwise
upgrade all P0.1 level switches previously provided to be functionally
equivalent to a P1 Product. For the upgrade, Buyer shall pay all freight,
duties, and bare the risk of loss for the shipment of the Products to Supplier
for upgrade and Supplier shall pay all freight, duties, and bare risk of loss
for the shipment of the Products back to Buyer. The parties agree that those
software features included in this Product Attachment will be available for the
P0.1 and P1 switches at the currently available level of code and will be
included as part of the prices listed below.
PRODUCT QUANTITY NOT TO EXCEED EXPENSE PER UNIT(USD)
P0.1 Level Switches [*] [*]
(SDV Switches)
P1 Level Switches [*] [*]
(SIT Switches)
- --------------------
* 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.
Form Title: Agreement Title Page 16 of 30 Form Release: 8/98
Form Owner: Global Procurement Revision: 05/02
INTEGRATED STATEMENT OF WORK FOR PRODUCTION PROCUREMENT GOODS AGREEMENT
GOODS AGREEMENT # ROC-P-68 MASTER AGREEMENT NUMBER
SOW # 4903RL1112SOW NUMBER
3.0 PROPRIETARY OWNERSHIP
3.1 BUYER PROPRIETARY OWNERSHIP.
Buyer will own rights to the following technology contained in the Blade Center
Fibre Channel Switch Module:
- - Molex Connector is Buyer proprietary as long as Buyer controls the
design of this connector, and the connector is not publicly available
as an off the shelf item [*]
- - Buyer Mechanicals:
[*] Assembly Module, top mechanical assembly to include the following:
[*] Filler, Switch, Management Module
[*] Guide, Latch
[*] Cover Module
[*] Assemble Lever Bottom
[*] Insulator Base
[*] Safety Label
xxxxxx EMC Blank Template Design (Brocade to modify and own
customized design for product)
Buyer's Midplane Connector mechanical Part and Pin Assignments
- - Buyer's Cosmetic Customization, which includes Buyer logo, Buyer name
and Buyer product names.
- - Buyer's two unique signals (I2C Bus Reset signal and I2C Interrupt
signal) added to the I2C industry standard protocol, and the contents specified
by Buyer for the I2C Register interfaces and Vital Product Data (VPD) table.
- - Buyer's Standard BladeCenter and eServer Documentation and CD Contents
- - Common BladeCenter Labeling and Artwork
- - IBM Director SDK Interface Requirements
The I2C signal protocol is an industry standard and not proprietary to Buyer or
Supplier. Nothing in this Agreement should be construed as: (1) prohibiting or
restricting either party from independently developing, having independently
developed, acquiring, licensing, marketing, or distributing products, services,
or other materials which compete with products or services offered by the other
party. Each party is free to enter into similar agreements with third parties.
3.2 SELLER'S PROPRIETARY OWNERSHIP
Seller Proprietary Ownership.
Except for the proprietary information provided by Buyer under the TILA, the
items listed in Section 3.1 above and Buyer patents that read on the
implementation, Buyer makes no further claims of ownership.
- --------------------
* 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.
Form Title: Agreement Title Page 17 of 30 Form Release: 8/98
Form Owner: Global Procurement Revision: 05/02
INTEGRATED STATEMENT OF WORK FOR PRODUCTION PROCUREMENT GOODS AGREEMENT
GOODS AGREEMENT # ROC-P-68 MASTER AGREEMENT NUMBER
SOW # 4903RL1112SOW NUMBER
4.0 PART NUMBER UNIQUE TERMS
4.1 PRODUCT PRICE LIST AND DESCRIPTION
FULFILLMENT
HUB
BUYER INTEL SUPPLIER UNIT LOCATIONS
PART PART PART PRODUCT PRICE OF SHIP GROUP **SOFTWARE TOTAL (IF
NUMBER NUMBER NUMBER DESCRIPTION PRODUCT ADDER MAINTENANCE PRICE REQUIRED)
- ------ ------ ------ ----------- ------- ----- ----------- ----- ---------
[*] [*] [*] Option, FC Switch [*] [*] [*] [*] [*]
Module, includes
Fabric OS, Fabric
Watch, Advance
Zoning, Web Tools
and ship group
[*] [*] [*] Option, FC Switch [*] [*] [*] [*] [*]
Module, includes
Fabric OS, Fabric
Watch, Advance
Zoning, Web
Tools, and ship
Group
[*] [*] [*] Option, FC [*] [*] [*] [*] [*]
Switch Module,
includes Fabric
OS, Fabric Watch,
Advance Zoning,
Web Tools, and
Ship Group
[*] [*] CRU, Value line [*] [*] [*] [*] [*]
FC Switch Module
[*] [*] Asm, FC Switch [*] [*] [*] [*] TBD
Module, includes
Fabric OS, Fabric
Watch, Advance
Zoning, and Web
Tools
[*] [*] [*] Option, Value [*] [*] [*] [*]
Line Module
[*] [*] Asm, Value Line [*] [*] [*] [*]
Module
[*] [*] [*] Performance [*] [*] [*] [*]
Bundle
(Performance
Monitor and
Trunking)
[*] [*] [*] ISL Trunking [*] [*] [*] [*]
[*] [*] [*] Advance [*] [*] [*] [*]
Performance
Monitor
[*] [*] [*] Extended Fabrics [*] [*] [*] [*]
[*] [*] [*] Fabric Manager [*] [*] [*] [*]
v4.x
[*] [*] [*] Remote Switch [*] [*] [*] [*]
Activation
[*] [*] [*] Advanced Security [*] [*] [*] [*]
Activation
[*] [*] [*] Full SAN Scaling [*] [*] [*] [*]
**FOR PURPOSE OF CALCULATING THE FEES FOR THE ANNUAL SOFTWARE MAINTENANCE
SUPPORT PROGRAM AS DESCRIBED IN SECTION 2.5, THE ANNUAL SOFTWARE MAINTENANCE FEE
PER UNIT FOR EACH PART NUMBER WHERE IT IS APPLICABLE IS AS FOLLOWS:
ANNUAL
BUYER INTEL SUPPLIER SOFTWARE
PART PART PART PRODUCT MAINTENANCE
NUMBER NUMBER NUMBER DESCRIPTION FEE PER UNIT
- ------ ------ ------ ----------- ------------
[*] [*] [*] Option, FC Switch [*]
Module, includes
Fabric OS, Fabric
Watch, Advance
Zoning, Web Tools
and ship group
[*] [*] Asm, FC Switch [*]
Module, includes
Fabric OS, Fabric
Watch, Advance
Zoning, and Web
Tools
[*] [*] [*] Fabric Manager v4.x [*]
[*] [*] [*] Advanced Security [*]
Activation
- --------------------
* 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.
Form Title: Agreement Title Page 18 of 30 Form Release: 8/98
Form Owner: Global Procurement Revision: 05/02
INTEGRATED STATEMENT OF WORK FOR PRODUCTION PROCUREMENT GOODS AGREEMENT
GOODS AGREEMENT # ROC-P-68 MASTER AGREEMENT NUMBER
SOW # 4903RL1112SOW NUMBER
[*] [*] [*] Option, Value Line [*]
Module
[*] [*] Asm, Value Line [*]
Module
4.2 PRODUCT UNIT TERMS & REPAIR PRICING
Hub
Warehouse Lead Warranty Repair Price
Buyer P/N Intel Part number Supplier P/N Description Location Time Period (USD)* TAT Yield
- --------- ----------------- ------------ --------------- --------- ---- -------- ------------ --- -----
[*] [*] [*] Option, FC [*] [*] [*] [*] [*]
Switch Module
[*] [*] [*] Option, FC [*] [*] [*] [*] [*]
Switch Module
[*] [*] [*] Option, FC [*] [*] [*] [*] [*]
Switch Module
[*] [*] CRU, Value [*] [*] [*] [*] [*] [*]
Line Switch
Module
[*] [*] Asm, FC Switch TBD [*] [*] [*] [*]
Module
[*] [*] [*] Option, Value [*] [*]
Line Module
[*] [*] Asm, Value [*] [*]
Line Module
[*] [*] [*] Performance [*] [*]
Bundle
(Performance
Monitor and
Trunking)
[*] [*] [*] ISL Trunking [*] [*]
[*] [*] [*] Advance [*] [*]
Performance
Monitor
[*] [*] [*] Extended Fabrics [*] [*]
[*] [*] [*] Fabric Manager [*] [*]
v4.x
[*] [*] [*] Remote Switch [*] [*]
Activation
[*] [*] [*] Advanced Security [*] [*]
Activation
[*] [*] [*] Full SAN Scaling [*] [*]
*Repair Price applies only to Products sent to Supplier for Repair, which are
not covered by the warranties in the Agreement.
5.0 WA FLEXIBILITY
Increase Cancellation
of Product Quantity to a WA of Product Quantity to a WA Rescheduling of Product Quantity to a WA
Number of Days prior to a WA Scheduled Delivery Date Scheduled Delivery Date Scheduled Delivery Date
Scheduled Delivery Date (% of WA Quantity) (% of WA Quantity) (% of WA Quantity)
- ---------------------------- ----------------------------- --------------------------- ----------------------------------------
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*]
While the above flexibility terms also apply to Pull Products, in the event the
relevant Pull Profile has more favorable terms, then such more favorable terms
shall take precedence.
6.0 RESERVED
- --------------------
* 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.
Form Title: Agreement Title Page 19 of 30 Form Release: 8/98
Form Owner: Global Procurement Revision: 05/02
INTEGRATED STATEMENT OF WORK FOR PRODUCTION PROCUREMENT GOODS AGREEMENT
GOODS AGREEMENT # ROC-P-68 MASTER AGREEMENT NUMBER
SOW # 4903RL1112SOW NUMBER
7.0 SUPPLY OF PRODUCTS
In the event that materials or capacity is in such short supply, Supplier will
notify Buyer immediately upon knowledge of such supply deficiencies. If Supplier
is unable to fill Buyer's WAs in full ("Scarce Resources"), at a minimum Brocade
agrees to allocate Scarce Resources to Buyer and to utilize any materials in
short supply to manufacture Supplier Products under Supplier's then-current
standard allocation formula, which as of the Effective Date, is as follows:
(a) [*];
(b) [*];
(c) [*].
In addition, Supplier will provide in writing to Buyer a supply strategy along
with timeline to correct such Scarce Resources within [*] after such
notification to Buyer.
8.0 COMMUNICATIONS
All communications between parties will be carried out through the following
designated coordinators. All notices required in writing under this Agreement
will be made to the appropriate contact listed below at the following addresses
and will be effective upon actual receipt. Notices may be transmitted
electronically, by registered or certified mail, or courier. All notices, with
the exception of legal notices, may also be provided by facsimile.
8.1 BUSINESS COORDINATORS.
SUPPLIER BUYER
- -------- -----
Name Daniel Cohen Name Robert Tice
Title Technical Development Representative Title OEM Global Commodity Manager
Address 19393 Fairhaven Court Address 3039 Cornwallis Road
Round Hill, VA 20141 Raleigh, NC 27709-2195
Phone 408-333-5043 Phone 919-543-0165
Fax Fax 919-254-9751
E-mail E-mail tice@us.ibm.com
8.2 TECHNICAL COORDINATORS.
SUPPLIER BUYER
- -------- -----
Name Biswa Ghosh Name Andy Huryn
Title Director Volume Platform Development Title BladeCenter Fibre Channel Technical Manager
Address 1745 Technology Drive Address 3039 Cornwallis Rd
San Jose, CA RTP, NC 27709
Phone 408-333-1753 Phone 919-254-9686
Fax Fax 919-543-2820
E-mail E-mail ahuryn@us.ibm.com
- --------------------
* 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.
Form Title: Agreement Title Page 20 of 30 Form Release: 8/98
Form Owner: Global Procurement Revision: 05/02
INTEGRATED STATEMENT OF WORK FOR PRODUCTION PROCUREMENT GOODS AGREEMENT
GOODS AGREEMENT # ROC-P-68 MASTER AGREEMENT NUMBER
SOW # 4903RL1112SOW NUMBER
All legal notices will be sent to the following addresses and will be deemed
received (a) two (2) days after mailing if sent by certified mail, return
receipt requested or (b) on the date confirmation is received if sent by
facsimile transmittal, to the party set forth below.
SUPPLIER BUYER
- -------- -----
Name General Counsel, Legal Department Name Robert Tice
Title Title OEM Commodity Manager
Address 1745 Technology Drive Address 3039 Cornwallis Road Raleigh, NC 27709-2195
San Jose, CA 95110
Phone Phone 919-543-0165
Fax Fax (Fax 919-254-9751
notice shall
be valid
only when
verbal
confirmation
of receipt
is obtained.)
E-mail E-mail tice@us.ibm.com
Form Title: Agreement Title Page 21 of 30 Form Release: 8/98
Form Owner: Global Procurement Revision: 05/02
INTEGRATED STATEMENT OF WORK FOR PRODUCTION PROCUREMENT GOODS AGREEMENT
GOODS AGREEMENT # ROC-P-68 MASTER AGREEMENT NUMBER
SOW # 4903RL1112SOW NUMBER
MONTHLY WARRANTY ANALYSIS REPORT
SUPPLIER NAME: ____________________________
MONTH: ____________________________________
Actual Explanation Root Cause Analysis Action
Buyer P/N Description Barcode Symptoms Finding Code Taken to Fix
- --------- ----------- ------- -------- ------- ---- ------------
SUMMARY REPORT
Total Units Repaired in Current Month [ ]
Total Warranty Claims Received
Actual Warranty Accepted
Warranty %
High Flyers (more than __%) High Flyers Require a Corrective Action Plan
and Date of Implementation.
EXPLANATION CODE DESCRIPTION
Code 03 Warranty Expired
Code 04 Missort
Code 07 Cannibalized or Missing Parts
Code 08 Warranty Product Received
Code 09 Physical Damage
Code 10 No Defect Found
Code 11 Other
Form Title: Agreement Title Page 22 of 30 Form Release: 8/98
Form Owner: Global Procurement Revision: 05/02
INTEGRATED STATEMENT OF WORK FOR PRODUCTION PROCUREMENT GOODS AGREEMENT
GOODS AGREEMENT # ROC-P-68 MASTER AGREEMENT NUMBER
SOW # 4903RL1112SOW NUMBER
ATTACHMENT 2
SUPPLIER QUALITY ATTACHMENT
This Supplier Quality Attachment ("SQA") adopts and incorporates by reference
the terms and conditions of SOW # ("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 2.0 of SOW# 4903RL1112 and
Section 1.0 of Attachment 1, SOW# 4903RL1112, 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 prior 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. Any such audit is subject to the contract
manufacturers security requirements and shall not allow access to contract
manufacturer's proprietary or confidential information. Periodic audits shall
include process control, quality inspection test data, internal audit reports,
and other information solely 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 written 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 written 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 (ROC-P-68, dated April
15, 1999).
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 work instructions
(including test procedures) to be under revision control and available to all
necessary Supplier personnel in Supplier's manufacturing
Form Title: Agreement Title Form Release: 8/98
Form Owner: Global Procurement Revision: 05/02
Page 23 of 30
INTEGRATED STATEMENT OF WORK FOR PRODUCTION PROCUREMENT GOODS AGREEMENT
GOODS AGREEMENT # ROC-P-68 MASTER AGREEMENT NUMBER
SOW # 4903RL1112SOW NUMBER
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.) [*]. The notification should include an immediate
containment plan and a schedule for definition and implementation of permanent
corrective actions. [*]
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 (form, fit or function), 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 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.
Form Title: Agreement Title Form Release: 8/98
Form Owner: Global Procurement Revision: 05/02
Page 24 of 30
INTEGRATED STATEMENT OF WORK FOR PRODUCTION PROCUREMENT GOODS AGREEMENT
GOODS AGREEMENT # ROC-P-68 MASTER AGREEMENT NUMBER
SOW # 4903RL1112SOW NUMBER
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
[*] from notification, failure analysis response times from Supplier will be
within [*] of Buyer's lot rejection or the quality problem notification for
preliminary analysis and [*] 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 [*].
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.
- -----------------------------
* 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.
Form Title: Agreement Title Form Release: 8/98
Form Owner: Global Procurement Revision: 05/02
Page 25 of 30
INTEGRATED STATEMENT OF WORK FOR PRODUCTION PROCUREMENT GOODS AGREEMENT
GOODS AGREEMENT # ROC-P-68 MASTER AGREEMENT NUMBER
SOW # 4903RL1112SOW NUMBER
17. SUPPLIER QUALITY & RELIABILITY ("SQR") REVIEW MEETINGS
Buyer requires regular Supplier quality/reliability meetings determined by a
mutually agreeable schedule, to 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)
Form Title: Agreement Title Form Release: 8/98
Form Owner: Global Procurement Revision: 05/02
Page 26 of 30
INTEGRATED STATEMENT OF WORK FOR PRODUCTION PROCUREMENT GOODS AGREEMENT
GOODS AGREEMENT # ROC-P-68 MASTER AGREEMENT NUMBER
SOW # 4903RL1112SOW NUMBER
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
Form Title: Agreement Title Form Release: 8/98
Form Owner: Global Procurement Revision: 05/02
Page 27 of 30
INTEGRATED STATEMENT OF WORK FOR PRODUCTION PROCUREMENT GOODS AGREEMENT
GOODS AGREEMENT # ROC-P-68 MASTER AGREEMENT NUMBER
SOW # 4903RL1112SOW NUMBER
ATTACHMENT 3
[*]
The [*] questionnaire may be used to cover one complete [*], even if that
Developed Works includes multiple modules. Write "not applicable" or "N/A" if a
question is not relevant to the furnished software material.
- The following [*] applies to all [*] described in this
Statement of Work.
- [*]
1) [*]
a) [*]
b) [*]
c) [*]
2) [*]
- [*]
- [*]
- [*]
- [*]
Although the answers above are correct to the best of our
knowledge, they are provided for informational purposes only.
Any warranties on the software and associated hardware
products shall be as provided in the Goods Agreement between
Supplier and Buyer. Accordingly, provision by Supplier of the
information in this document shall create no additional
warranties of any kind beyond those in the Goods Agreement,
and Supplier shall have no liability, unless otherwise
expressly provided in the Goods Agreement, related to the
provision of this information.
Authorized Signature: ________________________
Name: ________________________
Title: ________________________
Date: ________________________
Form Title: Agreement Title Form Release: 8/98
Form Owner: Global Procurement Revision: 05/02
Page 28 of 30
INTEGRATED STATEMENT OF WORK FOR PRODUCTION PROCUREMENT GOODS AGREEMENT
GOODS AGREEMENT # ROC-P-68 MASTER AGREEMENT NUMBER
SOW # 4903RL1112SOW NUMBER
[BROCADE LOGO]
Brocade Communications Systems, Inc.
1745 Technology Drive
San Jose CA 95110
408-487-8000
[*]
AFFIDAVIT OF MANUFACTURER
I declare that the following products are manufactured by Brocade Communications
Systems, Inc. or a sub-contractor of Brocade, at one the following locations:
Solectron Corp. Solectron Corp. Solectron Corp.
1000 Technology Drive 260 South Milpitas Blvd. 3803 Cherry St.
West Columbia SC 29170 Milpitas CA 95035 Newark CA 94560
USA USA USA
Hon Hai Precision/Foxconn-NSG Tech. Hon Hai Industries-Foxconn
1705 Junction Ct. #205 8801 Fallbrook Drive
San Jose CA 95112 Houston, TX 77064
USA Long
Hon Hai Industries- Foxconn
No. 2, 2nd Donghuan Road
10th You Song Industrial District
Long Hua Town, Baoan, Shenzhen, Gua, China
Products:
- ----------------------------------
(signature)
- ----------------------------------
(printed name)
- ----------------------------------
(title)
- ----------------------------------
(date)
Form Title: Agreement Title Form Release: 8/98
Form Owner: Global Procurement Revision: 05/02
Page 29 of 30
INTEGRATED STATEMENT OF WORK FOR PRODUCTION PROCUREMENT GOODS AGREEMENT
GOODS AGREEMENT # ROC-P-68 MASTER AGREEMENT NUMBER
SOW # 4903RL1112SOW NUMBER
ATTACHMENT 5
FULFILLMENT
PARTIES AGREE TO NEGOTIATE IN GOOD FAITH TERMS AND CONDITIONS RELATING TO THE
FULFILLMENT OF PRODUCT BY SUPPLIER TO BUYER'S DISTRIBUTION HUBS TO BE ADDED BY
AMENDMENT TO THIS SOW NO LATER THAN FEBRUARY 15, 2004.
Form Title: Agreement Title Form Release: 8/98
Form Owner: Global Procurement Revision: 05/02
Page 30 of 30