Corporate Supply Agreement
This Agreement is made on and as of the 31st day of March, 1997 by and between
Sun Microsystems, Inc. a Delaware corporation, with offices at 2550 Garcia Ave.,
Mountain View, CA 94043 (herein "Sun") and Network Peripherals, Inc., a
California corporation, with offices at 1371 McCarthy Boulevard, Milpitas, CA
95035 (herein "Supplier").
WHEREAS Supplier is a seller of certain component parts, materials or finished
goods, and
WHEREAS Sun is a manufacturer of computing devices and platforms that
incorporate such component parts, materials and finished products, and
WHEREAS Sun and Supplier desire to establish and agree upon a set of terms and
conditions that will apply to the purchase of Supplier's products by Sun.
NOW THEREFORE in consideration of the mutual promises and undertakings of the
parties hereto the parties agree as follows:
1. Definitions:
Award Letter shall mean that document delivered by Sun to, and accepted by,
Supplier setting out the particular commitments of the parties with respect
to specific Products, prices, Product Leadtimes, and other terms relative
to the purchase of specific Products, but shall not constitute a contract
for the purchase of any particular quantity of Product.
Leadtime shall mean the number of days, or fractions thereof, from
placement of a Purchase Release to the date of delivery to the F.O.B.
point. Leadtimes shall be set out in the Award Letter.
Notice shall mean the giving of notice in the following manner: notices or
communications made in writing and hand delivered, or sent by registered
mail return receipt requested, or sent by overnight courier service to the
receiving party at the address specified in the Award Letter, or such other
address as a party may specify.
Product(s) shall mean those component parts, materials or finished goods
offered for sale by Supplier and as further described in the Award Letter.
Purchase Release shall mean an offer from Sun received by Supplier, whether
in written or other form, or in electronic form pursuant to Exhibit 1,
attached hereto and incorporated herein, to purchase or schedule delivery
of a particular amount of Products. The Purchase Release shall specify the
relevant information such as quantity, price and proposed delivery dates of
the Products. When acknowledgement of receipt and acceptance thereof is
made by Supplier the Purchase Release shall be deemed a commitment to
purchase and sell the Products pursuant to the terms of this Agreement and
the Purchase Release.
Specifications shall mean the applicable product specifications for
Products, which may be changed from time to time by written agreement of
the parties, as set out in the Award Letter.
2. Purchase Of Product(s): This Agreement does not constitute a contract to
purchase any quantity of Products from Supplier. In the event that Sun
elects to purchase Products from Supplier Sun shall issue and deliver to
Supplier an Award Letter and subsequent Purchase Releases. Supplier shall
accept Sun's Purchase Releases to the extent that such Purchase Releases
are consistent with Sun's forecast and Leadtimes as set out in the Award
Letter. The parties agree that Purchase Releases therefor may be issued and
shall be deemed received in the manner provided in Exhibit 1.
3. * "Confidential portion has been omitted and filed separately with the
Commission."
4. Payment Terms: Sun shall make payment to Supplier in the manner and at the
times set out in the Award Letter.
5. Delivery: Unless otherwise set out in the Award Letter delivery shall be *
"Confidential portion has been omitted and filed separately with the
Commission.".
6. Cancellation/Rescheduling: * "Confidential portion has been omitted and
filed separately with the Commission."
7. Upside Support: When requested by Sun from time to time, Supplier shall use
best efforts to sell and deliver to Sun Product(s) (i) in excess of the
then latest forecast or (ii) at an accelerated delivery schedule
(collectively "Upside Support"). The particulars of Supplier's obligation
to provide Upside Support shall be set out in the Award Letter.
8. * "Confidential portion has been omitted and filed separately with the
Commission."
9. Product Discontinuance: Supplier shall provide Sun with * "Confidential
portion has been omitted and filed separately with the Commission." written
notice prior to discontinuing the manufacture or sale of a Product.
10. * "Confidential portion has been omitted and filed separately with the
Commission."
11. * "Confidential portion has been omitted and filed separately with the
Commission."
12. * "Confidential portion has been omitted and filed separately with the
Commission."
13. Confidential Information:
13.1. "Confidential Information" means information of a party, which
information is conspicuously marked with "Confidential". or "Proprietary"
or other similar legend. If Confidential Information is orally disclosed it
shall be identified as such at the time of disclosure and a brief written
description and confirmation of the confidential nature of the information
shall be sent to the recipient within thirty (30) days after the
disclosure. Quantities, schedules and pricing shall be considered
Confidential Information hereunder whether disclosed orally or in writing,
or whether or not marked "Confidential" or "Proprietary".
13.2. The receiving party shall protect the confidentiality and secrecy of
such Confidential Information and shall prevent any improper disclosure or
use thereof by its employees, agents, contractors or consultants, in the
same manner and with the same degree of care (but in no event less than a
reasonable degree of care) as it uses in protecting its own information of
a confidential nature for a period of three (3) years from the date of such
disclosure.
13.3. Confidential Information does not include information that: (a) was
in the possession of, or was known by, the receiving party prior to its
receipt from the disclosing party, without an obligation to maintain its
confidentiality; (b) is or becomes generally known to the public without
violation of this Agreement; (c) is obtained by the receiving party from a
third party, without an obligation to keep such information confidential;
or (d) is independently developed by the receiving party without use of
Information.
13.4. Each party understands that the party receiving Confidential
Information may now or in the future be developing proprietary information
internally, or receiving proprietary information from third parties in
confidence that may be similar to disclosed Confidential Information.
Nothing in this Agreement shall be construed as a representation or
inference that the receiving party will not develop products, for itself or
others, that compete with the products, processes, systems or methods
contemplated by disclosed Confidential Information.
14. Subsidiaries: All current and future subsidiaries of Sun Microsystems,
Inc., and contractors of Sun, designated by Sun, may purchase Product
pursuant to this Agreement.
15. Compliance with Law: Supplier shall comply with all laws applicable to the
manufacture and sale of the Products, including, by way of example and not
limitation, Executive Order 11246 as amended by Executive Order 11375
(non-discrimination in employment) and the U.S. Clean Air Act of 1990.
Supplier shall use reasonable efforts to give Sun as much notice as is
practicable in the event Supplier uses ozone depleting chemicals in the
manufacture of the Products. Sun reserves the right to reject any Products
manufactured utilizing or containing such materials if Sun has not
previously been notified of the same.
16. Attorney's Fees: In the event of any litigation arising out of this
Agreement or its enforcement by either party, the prevailing party shall be
entitled to recover as part of any judgement, reasonable attorneys' fees
and court costs.
17. Integration: This Agreement and, when awarded, the Award Letter, constitute
the entire agreement between Supplier and Sun relating to the subject
matter hereof and: (i) supersede all prior or contemporaneous oral or
written communications, proposals and representations with respect to its
subject matter; and (ii) prevail over any conflicting or additional terms
of any quote, the preprinted terms of any Purchase Release or
acknowledgement, or similar communication between the parties during the
term of this Agreement. No modification to this Agreement will be binding
unless in writing and signed by a duly authorized representative of each
party.
18. Invalidity: In the event any one or more of the provisions of this
Agreement shall be held by a court of competent jurisdiction to be invalid,
illegal or unenforceable, the remaining provisions of this Agreement shall
remain in effect and the Agreement shall be read as though the offending
provision had not been written or as the provision shall be determined by
such court to be read.
19. Survival of Terms: The parties further agree that the rights and
obligations set forth in Sections 8, 9, 10, 11, 12, and 13 shall survive
the termination of this Agreement for any reason and enforcement thereof
pursuant to this Section shall not be subject to any conditions precedent.
IN WITNESS WHEREOF the parties have set their hand on and as of the day and date
first set out above.
SUN MICROSYSTEMS, INC. NETWORK PERIPHERALS, INC.
_____________________________ _____________________________
By By
_____________________________ _____________________________
Name Name
_____________________________ _____________________________
Title Title
_____________________________ _____________________________
Date Date
EXHIBIT 1
ELECTRONIC DATA INTERCHANGE
(EDI) TERMS
1. Definitions:
1.1 "EDI" means electronic data interchange.
1.2 "Adopted Format" is the accepted method for the interchange of
Documents under this Agreement based on the EDIFACT, ANSI ASC
X12 OR CII standards for the presentation and structuring of
the electronic transmission of Documents, or other such format
as may be agreed to in writing by the parties.
1.3 "Document" is data structured in accordance with the Adopted
Format and transmitted electronically between the parties.
2. Prerequisites:
2.1 Documents, Standards. Each party may electronically transmit to or
receive from the other party any Document which the parties have
mutually agreed to Test. The content of Test Documents will be
considered "dummy" data unless otherwise agreed to by the parties. All
documents which are intended to evidence a transaction shall be
transmitted in accordance with the Adopted Format.
2.2 Providers. Documents will be transmitted electronically to each
party through any Provider with which either party may contract and/or
the Internet. The Provider for each party shall be communicated to the
other party. Either party may change its designated Provider upon
thirty (30) days prior written notice to the other party. Each party
shall be responsible for the costs of any Provider with which it
contracts.
2.3 System Operations. Each party, at its own expense, shall provide
and maintain the equipment, software, services and testing necessary to
effectively and reliably transmit and receive Documents.
If Provider is down and this prevents either party from meeting the
pickup or delivery frequency agreed to, that party must notify the
other party the same day.
2.4 Security Procedures. Each party shall use security procedures which
are reasonably anticipated to: (a) ensure that all transmissions of
Documents are authorized and (b) protect its business records and data
from improper access.
2.5 Signatures. Each party may adopt as its signature an electronic
identification consisting of symbol(s) or code(s) which are to be
affixed to or contained in each Document transmitted by such party
("Signatures"). Each party agrees that any Signature of such party
affixed to or contained in any transmitted Document shall be sufficient
to verify such party originated such Document. Neither party shall
disclose to any unauthorized person the Signatures of the other party.
3. Transmissions.
3.1 Proper Receipt. Documents shall not be deemed to have been properly
received, and no Document shall give rise to any obligation, until
accessible to the receiving party at such party's electronic mailbox.
3.2 Verification. Upon receipt of any Document, the receiving party
shall promptly and properly transmit a functional acknowledgement in
return within one (1) business day after receipt of a Document.
3.3 Acceptance. If a transmitted document requires acceptance by the
receiving party, any such Document which has been properly received
shall not give rise to any obligation unless and until the party
initially transmitting such Document has properly received in return an
acceptance Document.
3.4 Garbled Transmissions. If any document is received in an
unintelligible or garbled form, or otherwise contains evidence of
faulty transmission, the receiving party shall promptly notify the
originating party (if identifiable from the received Document) in a
reasonable manner. In the absence of such notice, the originating
party's records of the contents of such Document shall control.
3.5 Erroneous Transmissions. If either party receives a Document from
the other party which differs from the applicable terms and conditions,
(e.g. an order with a price, quantity or schedule different than that
mutually agreed upon), the receiving party shall promptly contact the
sending party to confirm the accuracy of the Document.
1
4. Transaction Terms.
4.1 Order Placement. Each Purchase Release electronically transmitted
shall reference the Sun Purchase Release number, and the Sun EDI
number.
4.2 Validity, Enforceability. The parties acknowledge their mutual
intent to create binding purchase, sale and payment obligations by
means of electronic transmission and receipt of Documents specifying
certain of the applicable terms. During the term of the Agreement, all
obligations concerning the delivery of such Documents in written form
may be satisfied by a transmission pursuant to the terms of this
Exhibit. However, either party shall have the option, at its
discretion, to transmit Documents in written form to other party.
Any Document properly transmitted pursuant to these terms shall be
deemed ("Signed Documents") and shall be considered, in connection with
any transaction, to be a "writing" or "in writing" and to have been
"signed" and to constitute an "original" when printed from electronic
files or records established and maintained in the normal course of
business.
The parties agree that the provisions of the Uniform Commercial Code,
Section 2-201 ("Formal Requirements: Statue of Frauds"), shall not
apply to Documents covered by this Exhibit since hard copies of
Documents will not be issued and the parties further agree that said
Documents shall be deemed to satisfy any statutory or legal formalities
requiring that agreements be in writing, including, but not limited to
the Statute of Fraud.
The conduct of the parties pursuant to this Exhibit, including the use
of Signed Documents properly transmitted, shall, for all legal
purposes, evidence a course of dealing an a course of performance
accepted by the parties in furtherance of this Agreement and Document.
The parties agree not contest the validity or enforceability of Signed
Documents under the provisions of any applicable law relating to
whether certain agreements be in writing or signed by the party to be
bound thereby. Signed Documents, if introduced as evidence on paper in
any judicial, arbitration, mediation or administrative proceedings,
will be admissible as between the parties to the same extent and under
the same conditions as other business records originated and maintained
in documentary form. Neither party shall contest the admissibility of
copies of Signed Documents under either the business records exception
to the hearsay rule or the best evidence rule on the basis that the
Signed Documents were not originated or maintained in documentary form.
2
Award Letter
March 27, 1997
Mark Wolter
Network Peripherals, Inc.
1371 McCarthy Boulevard
Milpitas, CA 95035
Dear Mark,
Sun is pleased to notify you that Network Peripherals, Inc. ("Supplier") has
been selected as a supplier of FDDI PCI products ("Product") subject to your
agreement to the following terms ("Agreement"):
1. Pricing: Product descriptions and pricing are set forth in Exhibit A
attached hereto.
Prices are exclusive of freight and taxes.
Currency: U.S. dollars.
2. Forecast: Sun shall use its reasonable efforts to provide Supplier with a
six (6) month rolling forecast of its intended purchases updated quarterly.
Such forecast is for Supplier's convenience only and shall in no way create
an obligation on Sun's part to meet such forecast.
3. Leadtime: * "Confidential portion has been omitted and filed separately
with the Commission."
4. Payment Terms: * "Confidential portion has been omitted and filed
separately with the Commission."
5. Shipping Point: * "Confidential portion has been omitted and filed
separately with the Commission."
6. Rescheduling:
Sun may reschedule delivery of all or part of any purchase order, at no
charge, to a date after the agreed delivery date as follows:
Notice Maximum Reschedule Period Maximum Reschedules
0-30 days * "Confidential portion has been omitted and filed
separately with the Commission."
30+ days * "Confidential portion has been omitted and filed
separately with the Commission."
"Confidential portion has been omitted and filed separately with the
Commission."
7. Cancellation:
* "Confidential portion has been omitted and filed separately with the
Commission."
8. Upside Support: "Upside" is defined as the maximum percentage increase set
forth below beyond Sun's requirements for the current quarter which
Supplier commits to manufacture and deliver to Sun, upon Sun's written
request, at no additional cost to Sun, within the timeframe indicated after
such request.
Notice Maximum % Increase
8+ weeks * "Confidential portion has been omitted and filed
separately with the Commission."
6-8 weeks * "Confidential portion has been omitted and filed
separately with the Commission."
4-6 weeks * "Confidential portion has been omitted and filed
separately with the Commission."
0-4 weeks * "Confidential portion has been omitted and filed
separately with the Commission."
9. Extraordinary Transportation for Late Deliveries: If it should be
reasonably expected that a shipment of Product will not be delivered on the
agreed delivery date, upon Sun's request Supplier shall, at its expense,
use any extraordinary transportation to deliver Product at the earliest
possible date.
10. Quality: Supplier shall deliver Product(s) which conforms to
(Sun/Supplier)'s specifications ("Product Specification(s)") attached as
Exhibit D and shall comply with Supplier's Quality Program attached hereto
as Exhibit C. The quantity of Product(s) which fails to conform to the
Product Specification at the time of delivery to Sun or during the term of
the warranty shall not exceed the following Defects Per Million ("DPW)
levels set forth in Exhibit C.
Sun shall not be required to accept any Product which is not qualified by
Sun for use in Sun's products.
11. Warranty: The warranty period is * "Confidential portion has been omitted
and filed separately with the Commission." from the date of Sun's
acceptance of Product.
12. Customer Support: During the term of this Agreement, and thereafter for the
period of time set out in Exhibit B, Supplier will provide warranty and
non-warranty customer service and support for Product as set forth in
Exhibit B, attached hereto.
13. Manufacturing Rights:
* "Confidential portion has been omitted and filed separately with the
Commission."
14. Notices: Sun and Supplier shall each assign an individual to administer
this Agreement throughout its term.
Sun's Administrator shall be: Supplier's Administrator shall be:
Debra Rossebo Mark Wolter
Sun Microsystems, Inc., Network Peripherals, Inc.
2550 Garcia Avenue (mailing address), 1371 McCarthy Boulevard
M/S UMPK14-309 Milpitas, CA 95035
Mountain View, CA 94043 Ph: (408) 321-7399
Ph: (415) 786-5634 Fax: (408) 321-9218
Fax: (415) 786-6981
Each party shall inform the Administrator of the other in writing of a
change of Administrator or such Administrator's address or telephone
number.
15. Survival of Terms: The parties further agree that the rights and
obligations set forth in Sections 11, 12 and 13 and Exhibits B and C shall
survive the termination of this Agreement for any reason and enforcement
thereof pursuant to this Section shall not be subject to any conditions
precedent.
16. Exhibits: The following is the list of Exhibits and Attachments which are
attached hereto and incorporated herein by this reference as if set forth
in full:
Exhibit A - Product Description & Pricing
Exhibit A-1 - Unique and Long Lead Time Materials
Exhibit B - Customer Support Provisions
Exhibit C - Supplier's Quality Program
Exhibit D - Product Specification
Please indicate your agreement to these terms by signing both copies in the
space provided below and returning to my attention. Upon execution of this
Agreement by Sun I will return an original to you. Thank you.
Sincerely,
Debra Rossebo
Commodity Manager
Sun Microsystems, Inc. Network Peripherals, Inc.
_____________________________ _____________________________
By By
_____________________________ _____________________________
Name Name
_____________________________ _____________________________
Title Title
_____________________________ _____________________________
Date Date
EXHIBIT A
Product Description & Pricing
* "Confidential portion has been omitted and filed separately with the
Commission."
EXHIBIT A-1
Unique and Long Lead Time Materials
* "Confidential portion has been omitted and filed separately with the
Commission."
Exhibit B
Customer Support Provisions
* "Confidential portion has been omitted and filed separately with the
Commission."
Exhibit B-1
Supplier's Repair Facilities
* "Confidential portion has been omitted and filed separately with the
Commission."
Exhibit B-2
Sun's Repair Depots and TPMs
* "Confidential portion has been omitted and filed separately with the
Commission."
Exhibit B-3
Out of Warranty Repair
* "Confidential portion has been omitted and filed separately with the
Commission."
Exhibit B-4
NTF Charges
* "Confidential portion has been omitted and filed separately with the
Commission."
EXHIBIT C
SUPPLIER'S QUALITY PROGRAM
1.0 Purpose
This Exhibit defines Sun's requirements for NP's ("Supplier's") quality
program ("Quality Program") and Supplier's responsibilities for
manufacturing, inspecting, testing and supplying production Product(s)
to Sun. Additional Customer Support requirements are set forth in
Exhibit C-1 attached hereto.
2.0 Scope
This Exhibit describes Sun's requirements for the Quality Program for
the manufacture of Product(s) for Sun. The term "quality" as used
herein means conformance to the following applicable Product
Specifications:
Product Specifications Title Dated Sun Part No.
Exhibit A: SunFDDI SBus Adapter N/A N/A
4.0 Product Specifications
which are attached hereto and incorporated herein by this reference.
Supplier shall address any concerns regarding requirements of the
Quality Program with the designated Sun supplier representatives.
2.1 Objective
Sun's objective is to achieve "ship to stock" status for all
Products shipped to Sun as a result of Supplier consistently
meeting the Quality Program defined in this Exhibit.
2.2 Applicable Documents
Sun's Product Specification
Supplier's Product Specification
MIL-STD-105E
MIL-HDBK-217E (or equivalent)
Supplier Scorecard Procedure
IS0 9000
3.0 Precedence of Documents
In the event of a conflict between the terms and conditions of this
Agreement, Sun's Product Specification, and this Exhibit C, the order
of precedence shall be as follows:
(1) this Agreement, (2) Sun's Product Specification, (3) this Exhibit
C.
4.0 Supplier Process Requirements
Supplier shall adhere to a quality/manufacturing plan (including a data
collection/tracking/reporting system) ("the Process"), that will ensure
compliance with the requirements of the terms and conditions of this
Agreement and ISO 9000. The Process and procedures developed by
Supplier shall be documented. Sun will review this Process during the
Process Certification period (see Section 5.5 of this Exhibit).
Supplier is solely responsible for the quality of Product(s) and/or
components procured or manufactured for Sun. Approval of Supplier's
Process by Sun does not relieve Supplier of this responsibility.
1
February 15, 1995 - Exhibit C - Generic November 27, 1995 ff
Document, Rev. D Network Peripherals, Inc.
4.1 Process Flow Charts
Supplier shall provide a general process flowchart for the
Product(s) and major subassemblies as agreed to by both
parties and shall identify all assembly, test, and inspection
subprocesses.
4.2 Data Collection Systems
The Data Collection System will show where failure data is
collected and detailed process yield targets. Supplier shall
provide on-going reports of current yields at Sun's option.
This will be reviewed during the Process Certification.
4.3 Control of Purchases
The Supplier will have a Quality Program that provides a
reliable means of determining the quality and reliability
levels of all purchased supplies, material, and components
used in the manufacture of Product(s).
In the event Supplier desires to change the vendor or selected
source of a component used in the manufacturing of Product(s),
Supplier shall collect quality/evaluation data to support and
justify the change (data must show that quality levels are
sustained and/or improved). The quality data will be made
available to Sun upon request. Section 4.6 below details what
source changes require prior notification.
In the event that a problem is identified in the availability
or quality of purchased supplies, materials or components used
in the manufacture of Product(s), upon Sun's request, Supplier
agrees to permit Sun to participate in the development of a
corrective action plan, which may include Sun personnel
accompanying Supplier's person I to vendor sites to perform
process and design audits and view corrective actions.
4.4 Defect Free Program/Corrective Actions
Sun's goal is to receive Product(s) that are defect free.
Supplier shall document and implement a defect free program as
part of the Process which constantly reduces the defect rate
of its Product(s) to a level which achieves zero defects. Sun
shall not be obligated to accept any defective Product(s)
shipped by Supplier.
Supplier will establish a program to ensure the performance of
effective corrective actions. This program will be based upon
information derived from failure reporting and analysis and
will ensure that parts, components or assemblies are corrected
so as to properly perform their intended function.
Supplier shall maintain records of corrective actions
indicating the frequency of defect during fabrication of
Product(s), the proposed corrective change in process,
evaluation of its effectiveness. and an effective date for
implementation. Such records are subject to review by Sun
4.5 Changes in Manufacturing Process
In the event that Supplier desires to change the fundamental
manufacturing process in such a way as to affect the
mechanical fit, electrical performance, serviceability, or
safety requirements of such Products. Supplier shall notify
Sun in writing within a reasonable period (no less than thirty
(30) days) prior to the effective date of the proposed change.
Examples of changes which require notification include, but
are not limited to, the following:
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February 15, 1995 - Exhibit C - Generic November 27, 1995 ff
Document, Rev. D Network Peripherals, Inc.
o Changes in major test equipment
o Changes in burn-in time or environment
o Change in manufacturing facility locations
Supplier agrees to provide verbal notification to the
appropriate Sun Supplier Engineer of all other process changes
which do not affect form, fit, function, serviceability or
safety.
Supplier shall implement such changes in the process only if
collected quality/evaluation data verifies that quality and
reliability levels would be sustained and/or improved as a
result of such change. The quality data will be submitted to
Sun for review before implementing the change.
4.6 Changes to Product
Supplier shall notify Sun in writing thirty (30) days prior to
implementing any of the following types of changes to the
Product(s):
o Any changes that affect the form, fit or function of
the Product(s).
o Any change of a programmed part on the Product(s).
o Any change to the Product affecting clock speeds.
o Any change to a custom or semi-custom I.C.
o Any change made to correct a problem in a Sun
application, made at the request of Sun.
o Any change made to the board fab.
o Supplier shall supply Sun copies of all ECO's
affecting the Product.
4.7 Re-Qualification
Major changes in manufacturing process or product
construction/design will require re-qualification and/or
process re-certification to the Product Specification. Sun may
require, at its sole discretion. that Supplier perform
reliability tests to confirm an equivalent or improved
reliability of the Product(s). Supplier shall coordinate
notification of planned major changes with Sun. At Sun's
request. Supplier shall run a pilot production.
5.0 Product Qualification Program
This section describes a series of reviews and tests that Supplier must
accomplish during the product development and pilot build of its
Product(s).
5.1 Design Review
Supplier will present to Sun engineering, upon request, a
comprehensive review consisting of:
Theory of Operation
Thermal Review
Mechanical Review
EMI/Safety Data
Environmental Test Results
Field Service Manual
Specification Performance Data
3
February 15, 1995 - Exhibit C - Generic November 27, 1995 ff
Document, Rev. D Network Peripherals, Inc.
The Sun review team will consist of the Development Engineer
and Supplier Engineer. Supplier shall submit appropriate
documentation to Sun one (1) week prior to the scheduled
review.
5.2 Reliability Prediction
Supplier shall perform an MTMF reliability prediction in
accordance with Mil-Hdbk-217D (or E) or Bell Core based on the
preliminary Bill of Material. Results of the reliability
prediction shall be submitted to Sun for review.
5.3 First Prototype Shipments
Supplier shall submit preliminary design documents to Sun,
upon request, with the first pass prototypes.
Electrical and mechanical drawings and Specifications
Schematics
Bill of Material
5.4 Second Prototype Shipments
"Second prototype" shipments will be used at Sun to run a
reliability demonstration test. Supplier will demonstrate the
reliability goal at an 80% confidence level. Supplier will
start design validation testing, reliability testing, and life
testing at Supplier's site prior to "second prototype"
shipment.
Supplier is responsible for conducting and documenting a
complete Design Validation Test ("DVT"). The DVT must show
that the Product is capable of meeting all of Sun's
specifications. (The Product Specification contains a complete
listing of those specifications and the Sun reference part
numbers.)
Supplier shall submit for Sun approval the reliability test
plan to be used by Supplier to demonstrate that the MTBF meets
the Product Specification.
5.5 Process Certification
Sun will conduct a Process Certification Test prior to the
start of Sun Production. The purpose of this test is to have
Supplier demonstrate that the Manufacturing process is stable
and capable of producing high quality product in volume.
Required documentation will include, but not be limited to,
the following:
o Parts lists, schematics. and mechanical drawings
that have been released to manufacturing for
production build.
o Procedures for all phases of the production assembly
and test of the Product.
o Demonstration that test/burn-in times am adequate to
eliminate residual infant mortality.
o Yield and pareto data for all test and inspection
points covering a sample quantity defined by Sun.
Pareto, as defined herein, shall mean a list of
failures. At Sun's option, a representative of Sun
may be sent to Supplier's factory to observe the
build.
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February 15, 1995 - Exhibit C - Generic November 27, 1995 ff
Document, Rev. D Network Peripherals, Inc.
5.6 Pilot Run at Sun
As part of any new product introduction, or changes to
existing Products, Sun will conduct a manufacturing pilot
build. The purpose of the manufacturing pilot is to ensure
manufacturability of Sun's product. During the manufacturing
pilot Sun will monitor the acceptance rates of all purchased
components and assemblies through the assembly and test
process. Sun will determine if the minimum acceptable yields
for the components have been achieved. Failure to meet the
minimum yield goals could result in Sun not introducing the
Product(s). If the Product(s) fail to meet the minimum pilot
yield goals, Sun may, at its option, cancel this Agreement and
any purchase orders issued hereunder for default Any failure
occurring in the pilot build will require Supplier to perform
root cause failure analysis and corrective actions. The time
frames as specified in section 7.3 below are applicable for
all failures.
5.7 Acceptance Rates at Sun
* "Confidential portion has been omitted and filed separately
with the Commission."
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February 15, 1995 - Exhibit C - Generic November 27, 1995 ff
Document, Rev. D Network Peripherals, Inc.
6.0 Supplier Audit Program
Supplier shall perform a series of monitoring tests to ensure that its
Product(s) conform to Sun's requirements. A brief description of each
test requirement follows.
6.1 On-Going Reliability Test (ORT)
Supplier shall conduct on-going reliability tests in
accordance with mutually agreed upon criteria. The testing
will be conducted at Supplier's site in a manner mutually
agreed upon between the parties. The ORT test results shall be
delivered to Sun on a monthly basis and shall include details
of any corrective actions taken to address any ORT failure.
Supplier shall report ORT failures to Sun within twenty-four
(24) hours.
6.2 Outgoing Quality Audit
Sun and Supplier shall agree to a statistically valid method
for estimating the out-going quality level of every shipment
prior to delivery to Sun. Any lots not meeting the agreed upon
quality level will be 100% screened by Supplier to ensure
their conformance to the Product Specification.
At Sun's request, Supplier shall conduct Sun
application-specific process monitoring tests.
The purpose of this testing is to monitor the ongoing
performance of manufacturing processes and product designs and
to identify Supplier's manufacturing process and design
problems at Supplier's site, rather than in the Sun
manufacturing processes.
Testing will be conducted on equipment as specified by Sun.
Sun shall provide procedures, equipment lists, and analysis of
test results. Supplier shall set up the test, maintain the
equipment, analyze the root cause of all failures and take
appropriate corrective actions.
6.3 Periodic Specification Testing (PST)
Supplier shall retest the Product to the full Sum Product
Specification on a periodic basis to confirm ongoing
performance to this specification. The specific timing of this
test will be determined upon the start of production, and
jointly agreed upon between the parties. Supplier shall put
forward a plan, for Sun's approval, which shall not be less
than once per year.
7.0 Sun Audit Programs
After the Product(s) have been introduced to manufacturing, Sun may
choose to conduct the following tests to ensure conformance to the
Product Specification.
7.1 Source Inspection
Sun may elect to source inspect lots prior to shipment from
Supplier's factory during initial stages of production or
until a reasonable confidence level has been established.
Source inspection may be initiated or terminated at Sun's
option. Supplier shall permit a Sun employee or representative
to visit the factory to source inspect finished lots.
Inspection shall be performed and lot acceptance shall be
determined in accordance with a pre-agreed upon sample plan.
Supplier shall assist the source inspector in unpackaging,
staging, inspecting, testing, and re-packaging sample units.
6
February 15, 1995 - Exhibit C - Generic November 27, 1995 ff
Document, Rev. D Network Peripherals, Inc.
Supplier shall screen rejected lots for discrepant
parameter(s) and re-submit for source inspection.
Acceptance at source inspection does not limit Supplier's
responsibilities for failures. Product quality and reliability
is at all times the responsibility of the Supplier. If source
inspection is required for more than three (3) months,
Supplier will incur this expense.
7.2 Supplier Process Audits
Sun may conduct quality audits at any time of Supplier's
facility during normal business hours to determine Supplier's
compliance with Sun's quality requirements. These audits will
include review of all aspects of the Process.
7.3 Sun Out of Box Audit Program
Sun performs Out of Box quality audits on all Product
shipments. If any failure occurs in this audit testing,
Supplier shall analyze the root cause and take all appropriate
corrective actions. In the event Supplier's part(s) are
determined to be cause of audit failure, Supplier shall:
1) Provide confirmation of failure within twenty-four
(24) hours of receipt of failing part.
2) Provide root cause analysis of failure within
seventy-two (72) hours of receipt of failing part.
3) Implement corrective actions to prevent recurrence
of failure as necessary. Corrective actions shall be
implemented as soon as possible, but in no event
more than thirty (30) days after the discovery of
the failure.
7.3 Sun Process Yield/Pareto Reports
Sun shall send monthly yield and pareto reports to Supplier.
Supplier shall review the reports and investigate any product
in-process for the top three (3) failures listed and advise
Sun of the results. Supplier shall provide detailed root cause
failure analysis and Supplier pareto information on a monthly
basis in response to the Sun report.
Semi-annual meetings will be conducted to review Supplier's
progress in improving its yields. Summaries of this
information will be distributed to management in both
companies. Sun will use this information as a basis for
awarding future business.
8.0 Supplier Test Systems Program
As referenced in Sections 5 & 6 above, Supplier is responsible for both
initial and on-going testing to ensure the quality of its products.
Where this testing requires the use of Sun Systems, Sun has implemented
the "Supplier Test Systems Program." This program enables Supplier to
rent systems through third party rental companies at a Sun negotiated
below market rental rate or to purchase systems at significant savings.
To be entitled to the above referenced discounts, Supplier must use
these systems exclusively for the testing of Product supplied to Sun.
Sun and Supplier agree to work together to determine the need for Sun
systems to be used in the testing process and Sun will at that time
provide the program details to Supplier.
7
February 15, 1995 - Exhibit C - Generic November 27, 1995 ff
Document, Rev. D Network Peripherals, Inc.
EXHIBIT C-1
ADDITIONAL CUSTOMER SUPPORT REQUIREMENTS
1.0 Acceptance Rates
Refer to Section 6.0 below.
2.0 Applicable Documents
Title Dated Sun Part No.
* "Confidential portion has been omitted and filed separately with the
Commission."
3.0 Supplier Process Requirements
3.1 General
All requirements in Exhibit C applicable to Manufactured
Product are also applicable to Repaired or replacement Product
shipped to SunService. Changes made to the requirements in
Exhibit C must also have SunService approval.
3.2 Reports
Supplier shall provide monthly repair quality reports as
specified in Q16.1 "Vendor Data Reporting Specification".
3.3 Marking
A Supplier identification marking may be required on Product
in accordance with "CMFG CS Labeling Procedure for Repaired
FRUs" and "Multiple Return ID Process". If required, the
location will be specified by SunService in writing.
3.4 ECOs
Supplier must have the capability to manage ECO levels on
Product. No verbal changes will be authorized; i.e. all
changes must be according to Sun approved documentation,
either by an issued ECO, released drawing or an approved
deviation. All deviations must be approved by SunService
Quality, Test Engineering, and Purchasing.
Supplier shall provide copies of its ECOs affecting Product to
SunService as they are released.
July 18, 1994 November 29, 1995 ff 1 Network Peripherals, Inc.
3.5 Packaging
Specific packaging requirements beyond the standard process
will be supplied by Sun as required. In all cases, packaging
must be provided by Supplier to ensure all material arrives at
Sun undamaged. Packaging in single-pack Sun labeled boxes is
required for Product shipped to SunService unless otherwise
agreed to in writing.
3.6 Changes in Manufacturing/Repair Process
Further to Section 4.5 of this Exhibit C, other changes which
require notification are:
o Packaging
o Cosmetic ("like new" conditions)
3.7 Corrective Action
Supplier's corrective action response shall be in accordance
with the requirements of Q14.3 "Supplier Corrective Action".
This is applicable to defects identified during Source
Inspection, Receiving Inspection, Out-of-Box Audit, or when
Product is received Dead-on-Arrival (DOA) at customer's site.
Supplier shall notify SunService in writing of any discrepancy
discovered by Supplier which could have a detrimental effect
on previously shipped Products. In conjunction therewith,
Supplier will make recommendations regarding the disposition
of such previously shipped material and agrees, at Sun's
request, to sort all such affected material located at
SunService Distribution Centers.
3.8 Product Returning For Repair Multiple Times
Supplier shall have the capability to recognize any returned
Product which was previously repaired by Supplier. Supplier
will notify SunService if the Product is returned within the
warranty period and if the Product will not be repaired at no
charge, explain to SunService the reasons for the decision. In
any event, Supplier must ensure that the Product undergoes a
reliable repair process.
3.9 No Trouble Found (NTF)
Returned Product which includes a specific complaint or
failure mode and which is initially determined to be NTF by
Supplier must be processed through a more strenuous,
documented test process tailored to duplicate the reported
failure mode.
4.0 Supplier Audit Programs
4.1 Process Monitoring Testing (PMT)
At Sun's request Supplier shall conduct Sun
application-specific process monitoring tests.
The purpose of this testing is to monitor the ongoing
performance of repair processes to identify Supplier's repair
process problems at Supplier's site.
Testing will be conducted on equipment as specified by Sun.
Sun shall provide procedures, equipment lists, and analysis of
test results. Supplier shall set up the test, maintain the
equipment, analyze the root cause of all failures and take
appropriate corrective actions to prevent reoccurrence.
July 18, 1994 November 29, 1995 ff 2 Network Peripherals, Inc.
Supplier shall maintain and calibrate test equipment to a
documented calibration procedure and all calibration checks
must be traceable to the National Bureau of Standards or to an
equivalent multinational agency. All test equipment or
measuring devices not subject to periodic calibration shall be
so marked, with reference to the equipment vendor
specification exempting such calibration.
5.0 Sun Audit Programs
5.1 Source Inspection
All source inspection will be at .25 AQL in accordance with Q
10.2 "Repaired Product Inspection Procedure". Supplier is
required to take corrective action for the non-conforming
items prior to shipment of succeeding lots in accordance with
Q14.3 "Supplier Corrective Action".
5.2 Discovery/Specification Conformance Testing
Sun may conduct random audits of repaired or replacement
Product(s) at any time.
6.0 Supplier DTS Repair Qualification Program-Outline
6.1 Objective
Sun's objective is for Supplier to achieve Dock-to-Stock (DTS)
status for all Products shipped to Sun in accordance with
Q10.4, "Supplier Dock-to-Stock Qualification Process". It is
the intent under a DTS program that Products received are
defect free thereby eliminating the need for incoming
inspection.
6.2 Supplier Qualification Program consists of the following
sequential steps:
* "Confidential portion has been omitted and filed separately
with the Commission."
6.3 DTS Requirements
Sun's goal is to receive Product(s) that are defect free to
support a DTS program without adverse affect to Sun's repair
stock and customer support operations. Supplier shall document
and implement a defect free program as part of the Process
which constantly reduces the defect rate of its Product(s) to
a level which achieves zero defects. Sun shall not be
obligated to accept any defective Product(s) shipped by
Supplier.
July 18, 1994 November 29, 1995 ff 3 Network Peripherals, Inc.
Failure to meet an average of 99.8% yield per month during the
last three months of Phase 3 shall result in Supplier paying
for the cost of the third-party source inspection activity
until measured results meet agreement specifications over a
thirteen (13) week period. The third party source inspector
must be pre-approved by Sun and perform inspections under Sun
procedures and direction.
Third party inspection results shall be communicated to Sun on
a weekly basis and be included in Sun's Quality Reporting
Database. In no event shall the cost of this source inspection
activity be passed on to Sun.
Phases I through 3 above may take as long as seven (7) months
to complete for a new supplier. Sun will pay for source
inspection for Phase 1, followed by source inspection for a
maximum of six (6) months (during Phase 2 & 3) on Product
repaired by Supplier to ensure that the repair process meets
Sun's quality requirements.
6.4 DTS Process
Upon written notification from Sun of Supplier's DTS approval,
the following requirements shall apply.
All DTS Products will be released by Supplier by stamping the
packing list on the front side with a SimService Quality
approved DTS stamp (or other Sun approved identification
means). Each packing list will contain information which will
facilitate traceability to Supplier's quality control document
for dud Product shipped.
Supplier shall maintain a log of lots shipped to SunService
Distribution Centers as DTS Product. This log shall be
available to Sun for inspection/review.
Supplier will continue to be responsible for the requirements
outlined in previous sections of this Exhibit.
Following DTS approval status, any Supplier repaired Product
found to be defective will require timely failure analysis and
corrective action as specified in Section 7.3 of this Exhibit
C and Q 14.3 "Supplier Corrective Action". Failure to maintain
a quality level of 99.8% based on thirty (30) calendar days
worth of repaired Product will disqualify Supplier from DTS
status and lead to reinstituting third-party source inspection
which will be paid for by Supplier. Supplier will then be
required to repeat the DTS qualification process.
July 18, 1994 November 29, 1995 ff 4 Network Peripherals, Inc.
Sun FDDI/PCI Adapter
Product Specifications
__________________________________________________________
This document defines the Sun FDDI/PCI product line.
The adapter is referred to Sun FDDI/PCI in the remainder
of this specification.
A more detailed specification is given below.
* "Confidential portion has been omitted and filed
separately with the Commission."
AMENDMENT TO SUN MICROSYSTEMS, INC.
CORPORATE SUPPLY AGREEMENT
Sun Microsystems, Inc. ("Sun") and Network Peripherals, Inc. ("Supplier") hereby
agree to amend the Corporate Supply Agreement between them of even date
("Agreement") as follows:
1. Add the following at the end of the first paragraph of Section 8:
* "Confidential portion has been omitted and filed separately with the
Commission."
2. Section 12 is deleted in its entirety and replaced by the following:
* "Confidential portion has been omitted and filed separately with the
Commission."
Except as so amended, the Agreement is confirmed in its entirety.
SUN MICROSYSTEMS, INC. NETWORK PERIPHERALS, INC.
BY: _________________________ BY: _________________________
NAME: _________________________ NAMES: _________________________
TITLE: _________________________ TITLE: _________________________
DATE: _________________________ DATE: _________________________
March 3, 1997 ff 1