<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 6, 1999
REGISTRATION NO. 333-76539
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
PRE-EFFECTIVE
AMENDMENT NO. 2
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------
DIGITAL LIGHTWAVE, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 3663 95-4313013
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
</TABLE>
15550 LIGHTWAVE DRIVE
CLEARWATER, FL 33760
(727)442-6677
(Address, including zip code, and telephone number, including area code, of the
registrant's principal executive offices)
---------------------
STEVEN H. GRANT
EXECUTIVE VICE PRESIDENT, FINANCE AND CHIEF FINANCIAL OFFICER
DIGITAL LIGHTWAVE, INC.
15550 LIGHTWAVE DRIVE
CLEARWATER, FL 33760
(727)442-6677
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
---------------------
COPIES TO:
<TABLE>
<S> <C>
SCOTT D. LESTER GAIL CLAYTON HUSICK
ELIZABETH H. LEFEVER MARTIN A. WELLINGTON
ANGELA C. HILT KELLY S. BOYD
BROBECK, PHLEGER & HARRISON LLP WILSON SONSINI GOODRICH & ROSATI
ONE MARKET, SPEAR STREET TOWER 650 PAGE MILL ROAD
SAN FRANCISCO, CA 94105 PALO ALTO, CA 94304
(415) 442-0900 (650) 493-9300
</TABLE>
---------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
---------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION,
ACTING PURSUANT TO SUCH SECTION 8(A), MAY DETERMINE.
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<PAGE> 2
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the costs and expenses payable by the
Registrant in connection with the sale of Notes being registered. All amounts
are estimates except the registration fee, the NASD fee and the Nasdaq National
Market.
<TABLE>
<CAPTION>
AMOUNT
TO
BE PAID
-------
<S> <C>
Registration fee............................................ $6,394
NASD filing fee............................................. $2,800
Nasdaq National Market fee.................................. *
Printing and engraving...................................... *
Legal fees and expenses..................................... *
Accounting fees and expenses................................ *
Blue sky fees and expenses.................................. *
Trustee fees and expenses................................... *
Transfer agent fees and expenses............................ *
Miscellaneous............................................... *
------
Total..................................................... $ *
======
</TABLE>
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* To be filed by amendment.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the General Corporation Law of the state of Delaware (the
"Delaware Law") empowers a Delaware corporation to indemnify any persons who
are, or are threatened to be made, parties to any threatened, pending or
completed legal action, suit or proceedings, whether civil, criminal,
administrative or investigative (other than action by or in the right of such
corporation), by reason of the fact that such person was an officer or director
of such corporation, or is or was serving at the request of such corporation as
a director, officer, employee or agent of another corporation or enterprise. The
indemnity may include expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding, provided that such officer or
director acted in good faith and in a manner he reasonably believed to be in or
not opposed to the corporation's best interests, and, for criminal proceedings,
had no reasonable cause to believe his conduct was illegal. A Delaware
corporation may indemnify officers and directors in an action by or in the right
of the corporation under the same conditions, except that no indemnification is
permitted without judicial approval if the officer or director is adjudged to be
liable to the corporation in the performance of his duty. Where an officer or
director is successful on the merits or otherwise in the defense of any action
referred to above, the corporation must indemnify him against the expenses which
such officer or director actually and reasonably incurred.
The Company's Certificate of Incorporation provides that the Company shall
indemnify its directors to the fullest extent permitted by law either now or
hereafter. Article 5 of the Amended and Restated Bylaws of the Company provides
for
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<PAGE> 3
indemnification of the officers and directors of the Company to the fullest
extent permitted by applicable law. The Company has also entered into an
agreement with each of its directors and certain of its officers, a form of
which is attached as Exhibit 10.03 hereto, wherein it has agreed to indemnify
each of them to the fullest extent permitted by law. Reference is also made to
Section of the Underwriting Agreement contained in Exhibit 1.01 hereto,
indemnifying officers and directors of the Company against certain civil
liabilities that may be incurred in connection with this offering, including
certain liabilities under the Securities Act of 1933, as amended (the
"Securities Act").
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
(1) The Registrant granted options to the persons identified below as
follows:
(a) On March 17, 1995, Digital Lightwave, Inc., a California
corporation (the "Predecessor"), granted an option, solely in the event of
an initial public offering (an "IPO") to purchase $150,000 worth of shares
of Common Stock at a price equal to 50% of the IPO effective price per
share to Michael Baum and George Murgatroyd in reliance on Sections 3(b)
and 4(2) of the Securities Act;
(b) On June 19, 1995, the Predecessor granted an option, solely in the
event of an IPO of the Predecessor, to purchase $400,000 worth of shares of
Common Stock at a price equal to 1% of the IPO effective price per share to
Stanley P. Zurn in reliance on Sections 3(b) and 4(2) of the Securities
Act;
(c) On June 22, 1995, the Predecessor granted an option, solely in the
event of an IPO of the Predecessor, to purchase $30,000 worth of shares of
Common Stock at a price equal to 50% of the IPO effective price per share
to Edward F. Guignon in reliance on Sections 3(b) and 4(2) of the
Securities Act;
(d) On June 23 1995, the Predecessor granted an option, solely in the
event of an IPO of the Predecessor, to purchase $30,000 worth of shares of
Common Stock at a price equal to 50% of the IPO effective price per share
to Paul J. Hedlund in reliance on Sections 3(b) and 4(2) of the Securities
Act;
(e) On July 12 1995, the Predecessor granted an option, solely in the
event of an IPO of the Predecessor, to purchase $21,000 worth of shares of
Common Stock at a price equal to 50% of the IPO effective price per share
to Margaret A. Guignon in reliance on Sections 3(b) and 4(2) of the
Securities Act;
(f) On August 15, 1995, the Predecessor granted an option to purchase
200,000 shares of Common Stock to Michael Baum and Paul J. Hedlund upon
conversion of a promissory note evidencing a loan made by such persons to
the Registrant in reliance on Sections 3(b) and 4(2) of the Securities Act;
and
(g) On September 7, 1995, the Predecessor granted an option, solely in
the event of an IPO of the Predecessor, to purchase $70,000 worth of shares
of Common Stock at a price equal to 50% of the IPO effective price per
share to Tony Charles Lonstein in reliance on Sections 3(b) and 4(2) of the
Securities Act.
(2) On January 2, 1996, the Registrant issued a three-year subordinated
promissory note in the original principal amount of $1 million and a warrant to
purchase 200,000 shares of Common Stock at an exercise price of $5.00 per share
to Renato Kasinsky, a citizen and resident of Brazil, in reliance on Regulation
S promulgated under the Securities Act.
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<PAGE> 4
(3) On March 12, 1996, the Registrant issued an aggregate of 521,030 shares
of Common Stock and warrants to purchase 1,050,002 shares of Common Stock at an
exercise price of $5.00 per share to several noteholders of the Company, other
than those described in paragraph (1) above, in consideration of the
satisfaction of indebtedness of the Registrant in an aggregate amount of
$2,605,041 in reliance on Sections 3(b) and 4(2) of the Securities Act.
(4) On March 18, 1996, the Registrant issued 20,000,000 shares of Common
Stock to the sole stockholder of the Predecessor, upon the effective date of the
merger between the Registrant and the Predecessor in reliance on Section 3(a)(9)
of the Securities Act.
(5) On March 28, 1996, the Registrant issued 200,000 shares of Common Stock
for an aggregate purchase price of $263,192 to the persons identified in
subparagraph 1(f) above pursuant to the exercise of their option to purchase
shares of Common Stock described in subparagraph 1(f) in satisfaction of the
indebtedness evidencing their loan to the Registrant in reliance on Sections
3(b) and 4(2) of the Securities Act.
(6) Between March 31, 1996 and May 15, 1996, the Registrant issued an
aggregate of 448,212 shares of Common Stock to 57 persons for an aggregate of
$4,033,710 (consisting of cash subscriptions and the surrender of $2,449,000 of
the Company's indebtedness) in reliance on Sections 3(b) and 4(2) of the
Securities Act. Holders of the options described in subparagraphs 1(a), 1(c),
1(d) and 1(e) above surrendered such options in exchange for warrants
exercisable for an aggregate of 18,748 shares of Common Stock at a price of
$9.00 per share.
(7) On May 27, 1996, the Registrant issued 66,667 shares of Common Stock to
Bulldog Capital Partners for an aggregate purchase price of $1,200,000 in
reliance on Sections 3(b) and 4(2) of the Securities Act.
(8) On May 31, 1996, the Company issued an aggregate of $750,000 of its 18%
subordinated promissory notes due May 31, 1997 to 11 persons in reliance on
Sections 3(b) and 4(2) of the Securities Act.
(9) On July 29, 1996, the Registrant issued 26,668 shares of Common Stock
for an aggregate purchase price of $4,000 to the person identified in
subparagraph (1)(b) above pursuant to the exercise of his option to purchase
shares of Common Stock in reliance on Sections 3(b) and 4(2) of the Securities
Act.
(10) On July 29, 1996, the Registrant issued 4,667 shares of Common Stock
for an aggregate purchase price of $35,000 to the person identified in
subparagraph 1(g) above pursuant to the exercise of his option to purchase
shares of Common Stock in reliance on Sections 3(b) and 4(2) of the Securities
Act.
(11) During August and September 1996, the Registrant issued an aggregate
of 1,051,669 shares of Common Stock upon the exercise of warrants described in
items (3) and (6) above in reliance on Sections 3(b) and 4(2) of the Securities
Act and issued 200,000 shares of Common Stock upon the exercise of the warrants
described in item (2) above in reliance on Regulation S of the Securities Act.
(12) During the period August 1993 to December 1996, the Registrant granted
incentive and non-statutory stock options to employees, officers, directors and
consultants under the 1996 Stock Option Plan which were exercisable into an
aggregate of 1,250,037 shares of its Common Stock, none of which have been
issued upon exercise. These options are subject to vesting provisions following
their respective dates of grant and were issued in reliance on Sections 3(b) and
4(2) of the Securities Act.
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<PAGE> 5
(13) On March 31, 1999, the Company entered into a financing agreement with
certain investors pursuant to which the Company issued $3.0 million of 9%
Secured Bridge Notes due January 17, 2000. In connection with the financing
agreement, the Company issued warrants to purchase an aggregate of 550,000
shares of the Company's common stock at an exercise price of $2.75 per share,
the market price of the stock on the date prior to the issuance of the warrants.
The warrants have a term of five years from the date of issuance. The Company
has agreed to register the warrants and the common stock issuable upon exercise
thereof under the Securities Act of 1933. The warrants were issued in reliance
on section 3(b) and 4(2) of the Securities Act.
No underwriting discounts or commissions were paid in connection with any
of the foregoing transactions.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
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<C> <C> <S>
1.01* -- Form of Underwriting Agreement
3.01(1) -- Certificate of Incorporation of the Company
3.02(1) -- Amendment to Certificate of Incorporation of the Company
dated January 8, 1997
3.03(1) -- Amended and Restated By-laws of the Company
4.01(1) -- Specimen Certificate for the Common Stock
4.02* -- Form of Indenture
4.03* -- Form of Notes
5.01* -- Opinion of Brobeck Phleger & Harrison LLP
10.01(1) -- Lease Agreement dated October 7, 1994, between the Company
and Atrium at Clearwater, Limited
10.02(1) -- First Lease Agreement Amendment dated February 16, 1996,
between the Company and Atrium at Clearwater, Limited
10.03(1) -- Form of Indemnification Agreement between the Company and
officers and directors of the Company
10.04(1) -- Digital Lightwave, Inc. 1996 Stock Option Plan
10.05(3) -- Digital Lightwave, Inc. Employee Stock Purchase Plan
10.06(2) -- Second Lease Amendment, dated September 10, 1997, between
the Company and Atrium At Clearwater, Limited
10.07(2) -- Lease Agreement, dated June 30, 1997, between the Company
and Pinellas Business Center, Inc.
10.08(2) -- Lease Agreement, dated September 26, 1997, between the
Company and Monmouth/Atlantic Realty Associates
10.09(4) -- L.P. Lease Agreement, dated January 9, 1998, between the
Company and Orix Hogan-Burt Pinellas Venture.
10.10(4) -- First Lease Amendment, dated February 18, 1998, between the
Company and Orix Hogan-Burt Pinellas Venture.
</TABLE>
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<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
- ----------- -----------------------
<C> <C> <S>
10.11(4) -- First Lease Amendment, dated September 25, 1997, between the
Company and Monmouth/Atlantic Realty Associates L.P.
10.12(4) -- Second Lease Amendment, dated February 23, 1998, between the
Company and Monmouth/Atlantic Realty Associates L.P.
10.13(4) -- Employment Agreement, dated February 27, 1998, between the
Company and Steven H. Grant.
10.14(5) -- Accounts Receivable Agreement dated December 28, 1998
between the Company and Bankers Capital.
10.15(5) -- Stock Option Agreement dated November 13, 1998 among the
Company, Dr. Brian J. Zwan and Hugh Brian Haney
10.16(5) -- Mutual General Release dated November 13, 1998, by and among
Hugh Brian Haney, Great American Fun Corp., Great American
Fun (HK) Ltd., Dr. Bryan J. Zwan, the Company and Logical
Magic, Inc.
10.17(5) -- Settlement Agreement dated November 13, 1998 by and among
Hugh Brian Haney, Dr. Bryan J. Zwan and the Company.
10.18(5) -- Letter Agreement dated as of December 31, 1998 between the
Company and Gerry Chastelet.
10.19(5) -- Letter Agreement dated April 13, 1998 and addendum thereto
dated February 9, 1999 between the Company and George J.
Matz.
10.20(5) -- Form of Stock Purchase Agreement, dated March 31, 1999,
between the Company and certain Purchasers, with exhibits
thereto.
10.21(5) -- Letter of Commitment between the Company and Emergent Asset
Based Lending, L.L.C. d/b/a/ Emergent Business Capital,
dated March 31, 1999.
10.22(5) -- Letter Agreement dated as of September 8, 1997 between the
Company and Ali Haider as amended and supplemented by the
Letter Agreements dated July 27, 1998 and August 4, 1998.
10.23+ -- OEM Contract dated May 24, 1999 between Lucent Technologies
Inc. and the Company
21.01(5) -- Subsidiaries of the Registrant
23.01 -- Consent of PricewaterhouseCoopers LLP
23.02* -- Consent of Brobeck Phleger & Harrison LLP
24.01 -- Power of Attorney (included on the signature page of this
Registration Statement)
25.01* -- Statement of Eligibility of Trustee
</TABLE>
- ------------------
(1) Incorporated by reference to the similarly described exhibits filed in
connection with the Registrant's Registration Statement on Form S-1, File
No. 333-09457, declared effective by the Securities and Exchange Commission
on February 5, 1997.
(2) Incorporated by reference to the exhibit filed in connection with the
Registrant's Quarterly Report on Form 10-Q for the quarterly period ended
September 30, 1997.
(3) Incorporated by reference to the exhibit filed in connection with the
Registrant's Registration Statement on Form S-8, File No. 333-35375.
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<PAGE> 7
(4) Incorporated by reference to the similarly described exhibits filed in
connection with the Registrant's Annual Report on Form 10-K for the fiscal
year ended December 31, 1997.
(5) Incorporated by reference to the similarly described exhibits filed in
connection with the Registrant's Annual Report on Form 10-K for the fiscal
year ended December 31, 1998.
* To be filed by Amendment.
+ Specified portions of this agreement have been omitted and have been filed
separately with the Commission pursuant to a request for confidential
treatment.
(b) Financial Statement Schedules
Schedules not listed above have been omitted because the information
required to be set forth therein is not applicable or is shown in the financial
statements or notes thereto.
ITEM 17. UNDERTAKINGS
(1) The undersigned Registrant hereby undertakes to provide to the
Underwriters at the closing specified in the Underwriting Agreement,
certificates in such denominations and registered in such names as required by
the Underwriters to permit prompt delivery to each purchaser.
(2) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described in Item 14, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question of whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
(3) The undersigned Registrant hereby undertakes:
(a) That for purposes of determining any liability under the
Securities Act, the information omitted from the form of prospectus filed
as part of the registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the Registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be
part of the registration statement as of the time it was declared
effective.
(b) That for the purposes of determining any liability under the
Securities Act, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial BONA FIDE offering thereof.
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<PAGE> 8
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended (the
"Securities Act"), the Registrant certifies that it has duly caused this
Pre-Effective Amendment No. 2 to Registration Statement No. 333-76539 to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Clearwater, Florida, on the 6th day of August, 1999.
DIGITAL LIGHTWAVE, INC.
By: /s/ GERRY CHASTELET
-----------------------------------
Gerry Chastelet
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Act, this Pre-Effective
Amendment No. 2 to Registration Statement No. 333-76539 has been signed by the
following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
NAME TITLE DATE
---- ----- ----
<S> <C> <C>
/s/ GERRY CHASTELET President, Chief Executive August 6, 1999
- ------------------------------------------------ Officer and Director
Gerry Chastelet (Principal Executive
Officer)
/s/ STEVEN H. GRANT Executive Vice President, August 6, 1999
- ------------------------------------------------ Finance, Chief Financial
Steven H. Grant Officer and Secretary
(Principal Financial and
Accounting Officer)
* Director August 6, 1999
- ------------------------------------------------
Dr. Bryan J. Zwan
* Director August 6, 1999
- ------------------------------------------------
Dr. William F. Hamilton
* Director August 6, 1999
- ------------------------------------------------
William Seifert
*By: /s/ GERRY CHASTELET August 6, 1999
-------------------------------------------
Gerry Chastelet, Attorney-in-Fact
</TABLE>
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<PAGE> 1
EXHIBIT 10.23
NOTE: Portions of this exhibit are the subject of a Confidential Treatment
Request by the Registrant to the Securities Exchange Commission. Such portions
have been redacted and are marked with "[*]" in place of the redacted language.
EXHIBIT A
OEM CONTRACT
BETWEEN
LUCENT TECHNOLOGIES INC.
AND
DIGITAL LIGHTWAVE INC.
This AGREEMENT signed this 24th day of May 1999, by and between Lucent
Technologies Inc., a Delaware corporation, having an office at 101 Crawfords
Corner Road, Holmdel, NJ 07733 ("COMPANY") and Digital Lightwave Inc., a
Florida corporation, with offices located at 15550 Lightwave Drive, Clearwater,
FL 33760.
WHEREAS, COMPANY agrees to purchase and SUPPLIER agrees to sell in accordance
with the terms and conditions stated in Sections I and II of this Agreement and
any attachments to this Agreement, and
WHEREAS, COMPANY wishes to purchase products of SUPPLIER's design and
manufacture for resale to COMPANY's customers, and
WHEREAS, SUPPLIER desires to sell such materials to COMPANY for resale to
COMPANY's customers,
THEREFORE, the parties agree as follows:
CONTROLLED INTRODUCTION UNITS - "CONTROLLED INTRODUCTION UNITS" as used in this
Agreement shall mean [*] production units of PRODUCT which include [*] that are
certified by SUPPLIER as being fully functional and suitable for sale to an
end-user customer for evaluation and deployment.
PRODUCT - "PRODUCT" as used in this Agreement shall mean SUPPLIER's products as
listed in Attachment A which includes training documents and materials. Such
product is hereby offered for sale by SUPPLIER and may be purchased by COMPANY
in accordance with the terms, conditions and specifications stated in this
Agreement. This Agreement is a non-commitment agreement and material shall be
furnished by SUPPLIER on an as-ordered basis. "Specification(s)" as used in
this Agreement shall mean all of the specifications made part of this
Agreement.
* Confidential treatment requested for redacted portion.
Page 1 of 15
<PAGE> 2
PROTOTYPE - "PROTOTYPE" as used in this Agreement shall mean any sample or
samples of PRODUCT, which includes [*] and is certified by SUPPLIER as being
fully functional and suitable for lab evaluation.
EFFECTIVE PERIOD OF AGREEMENT - The term of this Agreement shall commence upon
delivery of CONTROLLED INTRODUCTION UNITS, [*] in Attachment B, and shall,
except as otherwise provided in this Agreement, continue in effect thereafter
for a period of [*].
CONTINUING AVAILABILITY - SUPPLIER agrees to offer for sale to COMPANY, during
the term of this Agreement and for at least [*] after the expiration of this
Agreement, PRODUCT conforming to Attachment C. SUPPLIER further agrees to offer
for sale to COMPANY, during the term of this Agreement and until [*] after the
expiration of this Agreement, maintenance, replacement, and repair parts
("Parts") which are functionally equivalent and identical in form and fit for
the PRODUCT covered by this Agreement. The price for the PRODUCT and Parts
shall be the price set forth in SUPPLIER's then current agreement with COMPANY
for said PRODUCT or Parts or, if no such agreement exists, at a price agreed
upon by COMPANY and SUPPLIER. If the parties fail to agree on a price, the
price shall be a reasonably competitive price for said PRODUCT or Parts at the
time for delivery. The PRODUCT and parts shall be warranted as set forth in the
WARRANTY clause of this Agreement.
In the event SUPPLIER fails to supply such PRODUCT or parts and SUPPLIER is
unable to obtain another source of supply for COMPANY, then such failure or
inability shall be considered noncompliance with this clause and SUPPLIER
shall, without obligation of or charge to COMPANY, provide COMPANY with [*]
In addition, in the event SUPPLIER does not satisfy COMPANY's requirements for
future product extension or feature enhancements, SUPPLIER shall [*] so that
COMPANY can manufacture, have manufactured or obtain such extended or enhanced
products, subject to the negotiation of reasonable terms and conditions
compensating SUPPLIER for such information, which SUPPLIER and COMPANY agree to
negotiate in good faith.
DISTRIBUTION RIGHTS-[*]
FOB - The PRODUCT shall be shipped FOB Boston, MA.
FREIGHT CLASSIFICATION - PRODUCT purchased under this Agreement shall be
shipped to COMPANY or COMPANY's customers subject to freight charges
appropriate for goods classified as Electrical Condensers or Parts Not
Otherwise Indexed NOI.
INSIGNIA-Upon COMPANY's written request, "Insignia", including certain
trademarks, trade names, insignia, symbols, decorative designs or packaging
designs of COMPANY, or evidences of COMPANY's inspection will be properly
affixed by SUPPLIER to the product furnished or its packaging. Such Insignia
will not be affixed, used or otherwise displayed on the product furnished or in
connection therewith without written approval by COMPANY. The manner in
* Confidential treatment requested for redacted portion.
Page 2 of 15
<PAGE> 3
which such Insignia will be affixed must be approved in writing by COMPANY in
accordance with standards established by COMPANY. COMPANY shall retain all
right, title and interest in any and all packaging designs, finished artwork
and separations furnished to SUPPLIER. This clause does not reduce or modify
SUPPLIER's obligations under the IDENTIFICATION and USE OF INFORMATION clauses.
INSPECTION - Source Inspection is required and SUPPLIER shall notify the
COMPANY when PRODUCT is ready for inspection. Arrangements will be made by
COMPANY for inspection of PRODUCT prior to shipment. SUPPLIER shall provide,
without charge, any production testing facilities and personnel required to
inspect the PRODUCT to determine that the PRODUCT meets the requirements of the
specifications. COMPANY shall have the right to review the test setups test
procedures, and test data used by SUPPLIER in meeting the specifications.
JOINT PRESS RELEASE - In accordance with the schedule outlined in Attachment B,
COMPANY agrees to issue a joint press release with SUPPLIER, Milestone #8 of
Attachment B, announcing this contract. Both COMPANY and SUPPLIER will approve
the content of the joint press release. Nothing in this contract precludes
disclosure of this contract or its existence if such disclosure is required to
comply with any applicable law or regulation. In this event, SUPPLIER will
notify COMPANY of its need to make a disclosure, will only disclose the minimum
amount of information required, and will give COMPANY an opportunity to review
and make reasonable revisions to the disclosure. SUPPLIER agrees to seek
confidential treatment from the SEC or any other regulatory body in the event
that such a body requires SUPPLIER to disclose information that is
competitively sensitive to COMPANY (including but not limited to pricing and
volume) and will give COMPANY an opportunity to participate in seeking
confidential treatment.
MARKING-All PRODUCT furnished under this Agreement shall be marked for
identification purposes in accordance with the specifications set forth in this
Agreement and as follows:
(a) with SUPPLIER model/serial number; and
(b) with month and year of manufacture.
In addition, SUPPLIER shall add any other identification which might
be requested by COMPANY such as but not limited to indicia conforming to
COMPANY's serialization Plan. Charges, if any, for such additional
identification marking shall be as agreed upon by SUPPLIER and COMPANY. This
clause does not reduce or modify SUPPLIER's obligations under the
IDENTIFICATION clause.
MATERIAL ON CONSIGNMENT - COMPANY and SUPPLIER shall mutually agree to the
quantity of each part that will be in the initial inventory. Thereafter,
COMPANY shall send to SUPPLIER via facsimile, EDI or electronic mail
transmission by Tuesday of each week, a Weekly Demand Summary for each part
number.
(1) Consignment Site - [*]. If this site is not controlled by COMPANY,
arrangements for such storage shall be made between COMPANY and the entity
which controls this site.
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<PAGE> 4
(2) Consigned Material Storage - Upon receipt of each shipment of
Consigned Material, COMPANY shall cause it to be placed in storage ("Consigned
Material Storage") at the Consignment Site. SUPPLIER may physically inspect
Consigned Material in Consigned Material Storage, with proper advance
notification, at mutually agreeable times during normal business hours.
(3) Blanket Consignment Order and [*] Demand Report - A consignment order
will cover a [*] period (the "Blanket Consignment Order"). Each [*] COMPANY
shall furnish to SUPPLIER a [*] Demand Report which sets forth a [*] rolling
forecast, the number of units received the previous [*], the number of units
withdrawn by COMPANY the previous [*], and the balance of Consigned Material in
Consigned Material Storage. The forecasts are not commitments. COMPANY's
commitment is for the number of units withdrawn by COMPANY from Consigned
Material Storage plus the authorized stock set forth in the subsection entitled
"Authorized Stock", subject to the subsection below entitled "Termination".
(4) Authorized Stock - SUPPLIER shall review the [*] Demand Report and
adjust Consigned Material Storage stocks and SUPPLIER's work in process as set
forth herein. SUPPLIER shall manufacture and ship enough material into
Consigned Material Storage so that Consigned Material Storage contains the
first [*] forecast for such part numbers based on the most current [*] Demand
Report.
(5) Title and Risk of Loss - Upon receipt at the Consignment Site of a
particular lot of Consigned Material for Consigned Material Storage risk of
loss of such lot shall pass to COMPANY. Upon withdrawal of such lot by COMPANY
from Consigned Material Storage, title to such lot shall pass to COMPANY and
sale of that lot shall be deemed to occur.
(6) Withdrawal from Consigned Material Storage - COMPANY may withdraw or
cause to be withdrawn Consigned Material from Consigned Material Storage, at
any time and from time to time. COMPANY shall keep or cause to be kept records
and report to SUPPLIER the quantities withdrawn and the balance of Consigned
Material in Consigned Material Storage. SUPPLIER's invoices for the Consigned
Material shall be based upon such withdrawal reports. All invoices for material
withdrawn from consignment shall be dated as of the first day of the month
following withdrawal. SUPPLIER shall regularly replace quantities withdrawn to
maintain mutually agreed stock support levels as indicated on the applicable
orders.
(7) Shipping Information - Promptly after each shipment of Consigned
Material under this Agreement, SUPPLIER shall furnish to COMPANY and, if
COMPANY so requests, to a designated party at the Consignment Site, a written
report setting forth at least the following: (a) COMPANY's Order Number; (b)
Consignment Destination; (c) Origin Location; (d) Name of Carrier and Truck
Number or Railcar Number; (e) Lot Identification Number of each lot; (f) Net
weight of each lot; and (g) Description and Quantity of Material in each lot.
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<PAGE> 5
(8) Personal Property Taxes - SUPPLIER shall be responsible for the
reporting and payment of personal property taxes, if any, on such Consigned
Material Storage by COMPANY.
(9) Transportation Loss and Damage or Hidden Manufacturing Defects. As to
loss of or damage to Consigned Material which is reasonably apparent upon
delivery from a carrier, COMPANY shall cause the following to be done:
(a) at time of the delivery, mark delivery receipt with appropriate
exceptions describing the damage before signing; and
(b) at the time of delivery, request the carrier to either inspect the
loss or damage and forward to SUPPLIER a signed exception report outlining the
extent of loss or damage, or issue a written waiver of inspection and forward
it to SUPPLIER; and
(c) within [*] after delivery, inspect the damaged material and notify
SUPPLIER whether COMPANY will (i) accept it at a mutually agreed lower price
reflecting the transportation damage (if SUPPLIER had the risk of loss) or the
manufacturing defect, or (ii) reject it. Rejected lots shall be set aside by
COMPANY pending disposition by SUPPLIER as soon as reasonably possible but no
later than sixty days following delivery, after which time any such damaged
Consigned Material remaining undisposed of shall be deemed to be abandoned and
COMPANY may dispose of it as it sees fit without any obligation to SUPPLIER.
As to concealed transportation damage or hidden manufacturing defects in
material, if after withdrawal of Consigned Material from Consigned Material
Storage, COMPANY discovers concealed transportation damage or defective
material, COMPANY shall notify SUPPLIER within five days of such discovery,
take reasonable steps to preserve evidence of how such damage occurred and take
all actions provided for in subparagraph (c) above. Where Consigned Material
Storage is located on premises other than COMPANY premises, COMPANY shall
direct the owner of such other premises to comply with the procedure set forth
in this clause.
(10) Termination - COMPANY may at any time, and without cause terminate
any or all Blanket Consignment Orders, in whole or in part, upon written notice
to SUPPLIER. Upon receipt of such notice, SUPPLIER shall immediately stop work
as specified in the notice to SUPPLIER. COMPANY's liability to SUPPLIER with
respect to such termination shall be limited to: [*] If requested, SUPPLIER
agrees to substantiate the manufacturing costs for work in process and the
purchase price of the raw material with proof satisfactory to COMPANY. Upon
such termination, the parties shall meet promptly to determine the finished
material, work in process and raw material for which COMPANY is responsible as
set forth above. SUPPLIER shall ship the finished material (to the extent not
already in transit or in Consigned Material Storage) and raw materials to
COMPANY pursuant to shipping schedules agreed upon by the parties. As to work
in process, SUPPLIER shall, at COMPANY's option, ship it to COMPANY pursuant to
shipping schedules agreed upon by the parties or scrap it.
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<PAGE> 6
[*] ORDER AND SHIPMENT REPORTS- SUPPLIER agrees to render [*] order and
shipment reports on or before the [*] working day of the succeeding [*]
containing the information required on report forms furnished by COMPANY.
NEW AND CHANGED METHODS, PROCESSES, AND EQUIPMENT - SUPPLIER agrees to keep
abreast of major developments in SUPPLIER's industry and to promptly advise
COMPANY of any developments, which might affect the production of any material
under this Agreement.
[*].
NON-EXCLUSIVE MARKET RIGHTS-This Agreement neither grants to SUPPLIER an
exclusive right or privilege to sell to COMPANY PRODUCT which COMPANY may
require, nor requires the purchase of any PRODUCT or other products from
SUPPLIER by COMPANY. Therefore, COMPANY may contract with other manufacturers
and SUPPLIERs for the procurement of comparable products. In addition, COMPANY
shall, at its sole discretion, decide the extent to which COMPANY will market
advertise, promote, support or otherwise assist in further offerings of the
PRODUCT. Purchases by COMPANY under this Agreement shall neither restrict the
right of COMPANY to cease purchasing nor require COMPANY to continue any level
of such purchases.
OPTION TO EXTEND - COMPANY shall have the right to extend the period specified
in the clause AGREEMENT EFFECTIVE PERIOD up to [*]by giving SUPPLIER at least
[*]prior written notice. Within [*] of the date of COMPANY's notice to extend
the period, SUPPLIER shall notify COMPANY in writing whether SUPPLIER proposes
to revise the price(s) under this Agreement. If the parties fail to agree on
the revised price(s) within [*] after the date of SUPPLIER's notice, COMPANY's
notice of extension shall be considered withdrawn and prices for outstanding
orders or orders placed during the term of this Agreement shall not be revised.
ORDERING COMPANIES - COMPANY or any affiliated corporation, partnership, or
venture, both U.S. and foreign, as may be designated in writing by COMPANY, may
order under this Agreement. For the purpose of this Agreement, the term
"COMPANY" shall mean the corporation or other entity which enters into or
issues a contract or order under this Agreement. An affiliated corporation,
partnership, or venture is an entity, a majority of whose voting stock or
ownership interest is owned directly or indirectly by COMPANY. Any contract or
order issued under this Agreement will be a contractual relationship between
the ordering COMPANY and the SUPPLIER and SUPPLIER shall look only to the
ordering COMPANY for performance of the ordering COMPANY's obligations under
such contract or order.
PACKING, LABELING AND SERIALIZATION- Product purchased, repaired, replaced or
refurbished under this Agreement shall be packed, labeled and serialized by
SUPPLIER at no additional charge in accordance with specifications to be
provided by COMPANY.
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<PAGE> 7
PAYMENT TERMS- [*]from the date of delivery of the PRODUCT to COMPANY or
receipt of the applicable invoice by COMPANY, whichever occurs later. Delivery
occurs upon transfer of title.
PRICE AND DISCOUNTS-Prices and discounts shall be as shown in Attachment A.
Prices and discounts as listed in Attachment A shall remain in effect during
the term of this Agreement.
PURCHASE ORDERS-Purchase orders issued under this Agreement shall be sent to
the following address:
Digital Lightwave
15550 Lightwave Drive
Clearwater, FL 33760
Attention: Eric Mitchell
Purchase orders shall specify: (a) description of product,
inclusive of any numerical/ alphabetical identification referenced in
the price list in this Agreement, (b) delivery date, (c) applicable
price, (d) location to which the product is to be shipped and (e)
location to which invoices shall be sent for payment.
Subsequent to the placement of purchase order(s) under this
Agreement, COMPANY shall have the right to reschedule shipment of some
or all of the quantity of such purchase order(s) for up to [*]at no
charge for a maximum of [*]. Thereafter, COMPANY shall pay SUPPLIER a
storage fee to be mutually agreed to by the parties, of such
rescheduled PRODUCT for a maximum of [*] additional days.
COMPANY may at any time subsequent to the issuance of a
purchase order under this Agreement change the purchase order quantity
at [*] in accordance with the schedule below:
<TABLE>
<CAPTION>
Number of Weeks Prior to Allowable Increase/Allowable Decrease
Scheduled Shipment Date (% of P.O. Quantity)
------------------------ -------------------------------------
<S> <C>
[*]
</TABLE>
These intervals are subject to component availability and therefore
may change.
If a purchase order is cancelled by COMPANY pursuant to the above,
COMPANY shall have the right to retain or return any or all PRODUCT
received by or paid for by COMPANY under such purchase order. Within
[*] of SUPPLIER's receipt of returned PRODUCT, SUPPLIER shall
reimburse COMPANY for the costs of shipping the PRODUCT returned to
SUPPLIER and for any amounts, including shipping costs, previously
paid by COMPANY for the PRODUCT. COMPANY shall pay for any
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<PAGE> 8
PRODUCT it retains at the prices set forth in Attachment C, less
applicable discounts which shall be applied on the basis of the
quantity specified in the purchase order.
QUALITY -
A. SUPPLIER shall attain and maintain "acceptable" ratings on all quality
system elements noted in the "Quality" section of this contract.
Ratings specified in this section are to be verified through a Quality
System Audit (QSA) specified by COMPANY, and periodically performed by
COMPANY. COMPANY to provide due notice to SUPPLIER prior to noted QSA
activity.
B. All manufacturing and design operations that contribute to the design,
development, production, and service of PRODUCT performed by SUPPLIER
shall be ISO 9001 certified by May 1, 1999.
C. SUPPLIER shall establish an end of the line Quality Assurance product
audit on PRODUCT prior to first shipment of PRODUCT to COMPANY's
customer. The focus of this audit shall be to replicate the user
application of PRODUCT as specified to customer. COMPANY to provide
equipment and or facility to enable SUPPLIER such testing of PRODUCT.
Test and examination of PRODUCT under the quality audit shall be at a
system level, and shall include but is not limited to:
a) Exercising said PRODUCT over the full spectrum of
temperature ranges over which PRODUCT is designed to
operate.
b) Full operation of PRODUCT over a period of time not
less than 72 hours.
c) A system for continuous monitoring of all primary
and ancillary product functions and fault detection
of the PRODUCT while under this test.
SUPPLIER also agrees to continuously review customer return (defect)
data to insure that the scope of the Quality Assurance audit function
includes the requirement(s)/condition(s) under which the return
failed.
D. SUPPLIER shall establish a program of tracking return rates. PRODUCT
that has been in operation for any period of time up to, and including
[*] shall be considered part of this tracking program. For the purpose
of this article, the term "circuit packs" shall be used to define the
lowest replaceable unit of PRODUCT supplied to COMPANY.
For the purpose of calculating the return rate, the following
[*]
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<PAGE> 9
All returns will be included in the calculation of the return rate
including, but not limited to, failures, no trouble founds, and
recalls. Returned circuit packs found to be damaged through transport
or misuse shall not be included in the calculation.
A Quarterly Return Rate (QRR) is to be calculated using the following:
[*]
This calculation shall be made on a quarterly basis for product
installed under this contract.
The SUPPLIER agrees to update and report QRR's on a quarterly basis to
COMPANY, and to comply with the Annual Return Rate (ARR) requirement
in accordance with the following schedule:
Installed Year ARR Requirement Measurement Due
[*]
[*]
E. SUPPLIER shall maintain a system for tracking and analysis of all
defective PRODUCT returned, as well as any PRODUCT failures which
occur through the COMPANY's end of the line quality assurance audit.
For all PRODUCT in the above two categories, SUPPLIER agrees to
perform a failure mode analysis, which at a minimum will be down to
the component level. Component level failure modes will be recorded,
and failed components found defective will be accumulated for the
purpose of determining repetitive occurrences.
PRODUCT shall be considered defective if, under proper use, it fails
to meet the specifications of this Agreement (including performance,
appearance specifications, and warranty requirements), or if during
customer testing, installation, or use, the PRODUCT fails to operate
as specified.
If the return rate is in excess of [*] of the return rate specified in
paragraph D of this clause, or repetitive occurrences are observed
with regard to component level failures then the SUPPLIER shall
provide a written Correction Action Report to the COMPANY, explaining
in detail the nature of the problem detected, and the step(s) SUPPLIER
proposes to correct the problem. As part of the plan to correct the
problem, it is agreed that the SUPPLIER shall:
a) Incorporate the remedy in affected PRODUCT.
b) Ship all subsequent PRODUCT incorporating the required
modification correcting the problem at no additional charge
to COMPANY; and
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<PAGE> 10
c) Repair and/or replace previously shipped PRODUCT that may
contain the same problem trend. SUPPLIER shall bear risk of
in transit loss and damage for such repaired and/or replaced
PRODUCT.
SUPPLIER and COMPANY shall mutually agree in writing
as to the implementation schedule of the corrective action
plan. SUPPLIER agrees to use its best efforts to implement
the plan in accordance with the agreed upon schedule. It is
also agreed that the COMPANY shall be entitled to postpone at
no charge to COMPANY, further deliveries of orders until such
time as the remedy is implemented consistent with this
Article.
F. In the event that the SUPPLIER 1) exceeds the customer return rate
established in paragraph D of this clause by more than [*] during any
period of [*] months or more, then COMPANY may 1a) develop and
implement such remedy for already purchased PRODUCT defined under the
Corrective Action Plan, the cost of which will be borne by the
SUPPLIER; and/or 2a) cancel or postpone other orders and/or terminate
this Agreement subject to the provisions of this Agreement. SUPPLIER
reserves the right, as a substitution for 1a) to 2a) above, to
instruct COMPANY to return all PRODUCT that is affected by the problem
for full refund, payable by SUPPLIER to COMPANY within thirty (30)
days after receipt of returned PRODUCT (with risk of loss or
in-transit damage to be borne by SUPPLIER).
In the event that SUPPLIER fails to complete and issue Corrective
Action Reports as required in paragraph E of this clause, COMPANY may
put SUPPLIER on notice that continued non-compliance for more than 30
days could result in cancellation or postponement of orders shown in
the clause entitled TERMINATION OF PURCHASE ORDER of this Section II.
G. As part of a program of continuous improvement, SUPPLIER agrees to
establish annually, improvement goals for a series of key quality
objectives. These goals should include, but are not limited to a)
customer return rates as specified in paragraph D of this clause, b)
Quality Assurance product quality audit defect rates c) final system
test yields. SUPPLIER agrees to track these goals on a monthly basis,
and to commit the resources necessary for the attainment of these
goals.
H. SUPPLIER commits to provide to COMPANY on a regular basis, quality
performance data in a format which may be specified by COMPANY. This
data shall include, but is not limited to quality assurance results,
and process monitoring and test results.
I. SUPPLIER shall commit to implement and maintain a program pertaining
to Electro-static Discharge (ESD) control. This program should include
provisions for the definition of all policies and procedures
associated with ESD control, the classification of work area, and a
program for auditing for compliance assessment.
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REJECTIONS-If COMPANY rejects any or all of the PRODUCT, COMPANY may, in
addition to all its other rights and remedies at law or equity, exercise one or
more of the following remedies: (1) return rejected PRODUCT for full credit at
the price charged plus transportation charges from SUPPLIER's plant and return;
or (2) accept a conforming part of any shipment; or (3) consider this Agreement
breached to the extent of the quantity rejected; or (4) have rejected PRODUCT
replaced by SUPPLIER at the purchase price stipulated in this Agreement.
REPAIR PROCEDURES-COMPANY shall furnish the following information with PRODUCT
returned to SUPPLIER for repair: (a) COMPANY's name and complete address; (b)
name(s) and telephone numbers(s) of COMPANY's employee(s) to contact in case of
questions about the PRODUCT to be repaired; (c) ship-to address for return of
repaired PRODUCT if different than (a); (d) a complete list of PRODUCT
returned; (e) the nature of the defect or failure if known; and (f) whether or
not returned PRODUCT is in warranty. SUPPLIER shall, within ten (10) days of
the execution of this Agreement, provide a written notice to COMPANY specifying
(i) the name(s) and telephone number(s) of the individual(s) to be contacted
concerning any questions that may arise concerning repair, and (ii) if
required, any special packing of PRODUCT which might be necessary to provide
adequate in-transit protection from transportation damage.
PRODUCT repaired by SUPPLIER shall have the repair completion date
stenciled or otherwise identified in a permanent manner at a readily visible
location on the PRODUCT and the repaired PRODUCT shall be returned with a tag
or other papers describing the repairs which have been made.
All invoices originated by SUPPLIER for repair services must be
clearly identified as such, and must contain: (1) a reference to COMPANY's
purchase order for these repair services, (2) a detailed description of repairs
made by SUPPLIER and the need therefor, and (3) an itemized listing of parts
and labor charges, if any. Replaced parts will, upon request, be available for
inspection by or returned to COMPANY. Further, the provisions of the INVOICING
and SHIPPING clauses, other than provisions relating to transportation charges
with respect to PRODUCT repaired under warranty, shall apply to SUPPLIER's
return to COMPANY of repaired PRODUCT.
REPAIRS NOT COVERED UNDER WARRANTY-In addition to repairs provided for in the
WARRANTY clause, SUPPLIER shall provide repair service on all PRODUCT ordered
under this Agreement during the term of this Agreement and until [*] after the
expiration of this Agreement. Product to be repaired under this clause will be
returned to a location designated by SUPPLIER, and unless otherwise agreed upon
by SUPPLIER and COMPANY, SUPPLIER shall ship the repaired PRODUCT which meets
the specifications set forth in the SPECIFICATIONS OR DRAWINGS clause and all
other specifications within thirty (30) days of receipt of the defective or
non-conforming PRODUCT. With the concurrence and scheduling of COMPANY, repair
may be made by SUPPLIER on site.
If PRODUCT is returned to SUPPLIER for repair as provided for in this
clause and is determined to be beyond repair, SUPPLIER shall so notify COMPANY.
If requested by COMPANY, SUPPLIER will sell to COMPANY a replacement at the
price set forth in
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<PAGE> 12
SUPPLIER's then current agreement with COMPANY for said PRODUCT or, if no such
agreement exists, at a price agreed upon by SUPPLIER and COMPANY. If the
parties fail to agree on a price, the price shall be a reasonably competitive
price for such PRODUCT at the time for delivery. Further, if requested by
COMPANY, SUPPLIER shall take the necessary steps to dispose of the unrepairable
PRODUCT and pay to COMPANY the salvage value, if any.
Replacement and repaired PRODUCT shall be warranted as set forth in
the WARRANTY clause.
This Agreement does not grant SUPPLIER an exclusive privilege to repair
any or all of the PRODUCT purchased under this Agreement for which COMPANY may
require repair; and COMPANY may perform the repairs or contract with others for
these services. In addition, SUPPLIER authorizes COMPANY and any qualified
repairer with whom COMPANY may contract to perform repairs on all PRODUCT
purchased under this Agreement.
All transportation costs of and in transit risk of loss and damage to
PRODUCT returned to SUPPLIER for repair under this clause will be borne by
COMPANY and all transportation costs of and in transit risk of loss and damage
to such repaired or replacement PRODUCT returned to COMPANY will be borne by
COMPANY.
Price schedules for repairs under this clause are listed in Attachment
C.
SHIPPING INTERVAL- The delivery schedule applicable to each purchase order is
shown in Attachment A.
In the event that SUPPLIER exceeds the above maximum interval, then in addition
to all other rights and remedies at law or equity or otherwise, and without any
liability or obligation of COMPANY, COMPANY shall have the right to: (a) cancel
such purchase order, or (b) extend such delivery date to a later date, subject,
however, to the right to cancel as in (a) preceding if delivery is not made or
performance is not completed on or before such extended delivery date. If
COMPANY elects to extend such delivery date, SUPPLIER agrees to absorb the
difference between the charges to ship normal transportation and the charges to
ship premium overnight.
If a purchase order is canceled by COMPANY pursuant to the above,
COMPANY shall have the right to retain or return any or all PRODUCT received by
or paid for by COMPANY under such purchase order. Within [*] of SUPPLIER's
receipt of returned PRODUCT, SUPPLIER shall reimburse COMPANY for the costs of
shipping the PRODUCT returned to SUPPLIER and for any amounts, including
shipping costs, previously paid by COMPANY for the PRODUCT. COMPANY shall pay
for any PRODUCT if retains at the prices set forth in Attachment C, less
applicable discounts which shall be applied on the basis of the quantity
specified in the purchase order.
If, during the course of this Agreement, SUPPLIER determines that
SUPPLIER will no longer be able to ship within the above interval, SUPPLIER
shall immediately notify COMPANY's buyer to that effect. SUPPLIER shall also
notify COMPANY's buyer, as soon as it becomes apparent, if SUPPLIER is unable
to meet the delivery date for an order. However, nothing contained in this
paragraph shall waive COMPANY's rights as set forth above in this clause.
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<PAGE> 13
SPECIFICATIONS OR DRAWINGS - Final product documentation shall be attached and
made a part of this Agreement as Attachment C.
In accordance with the notification requirements outlined in the clause NOTICES,
SUPPLIER shall provide COMPANY with at least thirty (30) days prior written
notice of any change proposed to be made by SUPPLIER in the PRODUCT furnished
pursuant to Attachment C of this Agreement.
If COMPANY, in its sole discretion, does not agree to the change proposed by
SUPPLIER, then in addition to all other rights and remedies at law or equity or
otherwise, and without any cost to or liability or obligation of COMPANY,
COMPANY shall have the right to terminate this Agreement and to terminate any or
all purchase orders for PRODUCT affected by such change. SUPPLIER shall continue
to supply PRODUCT to COMPANY pursuant to the specification for the term of the
Agreement. If SUPPLIER is unable to continue to thus supply or discontinues
manufacture of PRODUCT, COMPANY shall be entitled to one year's advance notice,
plus a manufacturing license and appropriate specifications and drawings to
enable COMPANY to manufacture or have manufactured the PRODUCT.
TECHNICAL SUPPORT-COMPANY shall be entitled to ongoing technical support during
the term of this Agreement and for a period of [*] after termination or
expiration including field service and assistance, provided, however, that the
availability or performance of this technical support service shall not be
construed as altering or affecting SUPPLIER's obligations as set forth in the
WARRANTY clause or elsewhere provided for in this Agreement. COMPANY shall
provide direct technical support to its customers and SUPPLIER shall provide
technical support to COMPANY.
[*]
TERMINATION- COMPANY may at any time terminate the work related to this
Agreement, in whole or in part, upon written notice to SUPPLIER. Unless
otherwise specified in this Agreement, COMPANY may at any time terminate any
portion or the total quantity of any purchase order(s) placed under this
Agreement. COMPANY's liability to SUPPLIER with respect to such termination
shall be limited to [*]. However, no such termination charges will be invoiced
if, within sixty (60) days of notice of termination, PRODUCT equivalent in kind
to that being terminated is ordered by COMPANY. If requested, SUPPLIER shall
substantiate such cost and price with proof satisfactory to COMPANY.
TITLE AND RISK OF LOSS-Title and risk of loss and damage to PRODUCT purchased
by COMPANY under this Agreement shall vest in COMPANY when the PRODUCT has been
delivered at the FOB point. If this Agreement or an order issued pursuant to
this Agreement calls for additional services to be performed after delivery,
SUPPLIER shall retain title and risk of loss and damage to the PRODUCT until
the additional services have been performed. If SUPPLIER is authorized to
invoice COMPANY for PRODUCT upon shipment or prior to the performance of
additional services, title to PRODUCT shall vest in COMPANY upon payment of the
invoice, but risk of loss and damage shall pass to COMPANY when the additional
services have been performed.
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<PAGE> 14
WARRANTY - SUPPLIER warrants to COMPANY and its customers that material
furnished will be new, merchantable, free from defects in design, material and
workmanship and will conform to and perform in accordance with the
specifications, drawings and samples. These warranties extend to the future
performance of the material and shall continue [*] after the material is
accepted by COMPANY. SUPPLIER also warrants to COMPANY and its customers that
services will be performed in a first class, workmanlike manner. If material
furnished contains manufacturers' warranties, SUPPLIER hereby assigns such
warranties to COMPANY and its customers. All warranties shall survive
inspection, acceptance and payment. Material or services not meeting the
warranties will be, at COMPANY's option, returned for or subject to refund,
repaired, replaced or reperformed by SUPPLIER at no cost to COMPANY or its
customers. Repaired and replacement material shall be warranted as set forth
above in this clause.
DOCUMENTS FORMING THE CONTRACT- This Agreement consists of the following:
A. This SECTION I including
<TABLE>
<S> <C>
Attachment A (to be incorporated) Product List and Pricing
Attachment B Milestone Schedule for Delivery of Prototypes
Attachment C (to be incorporated) Final Product Specifications
</TABLE>
B. SECTION II -GENERAL PROVISIONS OF THE OEM CONTRACT, consisting
of pages 1 through 11.
If anything in SECTION II is inconsistent with SECTION I of this Agreement,
SECTION I shall govern.
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<PAGE> 15
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
BY:
DIGITAL LIGHTWAVE INC LUCENT TECHNOLOGIES INC
BY: /s/ George J. Matz BY: /s/ Gus DeCapua
------------------------ --------------------------
NAME: George J. Matz NAME: Gus DeCapua
---------------------- ------------------------
(PRINT) (PRINT)
TITLE: Senior Vice President TITLE: Contracts Manager
and General Manager -----------------------
---------------------
DATE: May 24, 1999 DATE: May 24, 1999
---------------------- ------------------------
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<PAGE> 16
SECTION II
GENERAL PROVISIONS OF THE
OEM CONTRACT
ASSIGNMENT-SUPPLIER shall not assign any right or interest under this Agreement
(excepting solely for moneys due or to become due) or delegate any obligation
under this Agreement without the prior written consent of COMPANY. SUPPLIER
shall be responsible to COMPANY for all Work performed by SUPPLIER's
subcontractor(s) at any tier.
BANKRUPTCY AND TERMINATION FOR FINANCIAL INSECURITY- Either party may terminate
this Agreement by notice in writing:
1) if the other party makes an assignment for the benefit of creditors
(other than solely an assignment of moneys due); or
2) if the other party evidences an inability to pay debts as they
become due, unless adequate assurance of such ability to pay is
provided within thirty (30) days of such notice.
If a proceeding is commenced under any provision of the United States
Bankruptcy Code, voluntary or involuntary, by or against either party, and this
Agreement has not been terminated, the non-debtor party may file a request with
the bankruptcy court to have the court set a date within sixty (60) days after
the commencement of the case, by which the debtor party will assume or reject
this Agreement, and the debtor party shall cooperate and take whatever steps
necessary to assume or reject the Agreement by such date.
BAR CODE SHIPPING AND RECEIVING LABELS - SUPPLIER shall at its sole expense
place COMPANY's specified bar code labels on all shipping packages and
containers for the material shipped under this Agreement. Such bar code labels
and the placement thereof shall meet the [*] Issue 3 (a copy of which SUPPLIER
has in its possession). COMPANY may change such specification upon written
notice to SUPPLIER and SUPPLIER shall comply with such changes.
[*]
CLAUSE HEADINGS - The headings of the clauses in this Agreement are inserted
for convenience only and are not intended to affect the meaning or
interpretation of this Agreement.
CHOICE OF LAW-This Agreement and all transactions under it shall be governed by
the laws of the State of New Jersey excluding its choice of laws rules and
excluding the Convention for the International Sale of Goods. SUPPLIER agrees
to submit to the jurisdiction of any court wherein an action is commenced
against COMPANY based on a claim for which SUPPLIER has agreed to indemnify
COMPANY under this Agreement. In all disputes between the parties arising under
this Agreement, SUPPLIER agrees to submit to the jurisdiction of the New Jersey
state and federal courts.
* Confidential treatment requested for redacted portion.
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<PAGE> 17
COMPLIANCE WITH LAWS-SUPPLIER and all persons furnished by SUPPLIER shall
comply at their own expense with all applicable laws, ordinances, regulations
and codes, including the identification and procurement of required permits,
certificates, licenses, insurance, approvals and inspections in performance
under this Agreement.
DEFAULT-If SUPPLIER shall be in breach or default of any of the terms,
conditions or covenants of this Agreement or of any purchase order, and if such
breach or default shall continue for a period of [*] after the giving of
written notice to SUPPLIER thereof by COMPANY, then, in addition to all other
rights and remedies which COMPANY may have at law or equity or otherwise,
COMPANY shall have the right to cancel this Agreement and/or any purchase
orders placed by COMPANY without any charge to or obligation or liability of
COMPANY.
ELECTRONIC DATA INTERCHANGE - SUPPLIER agrees, if requested by COMPANY, to
implement "Electronic Data Interchange" (EDI) as an electronic means of trading
business document with COMPANY. The electronic business documents include
purchase orders, acknowledgements, purchase order changes, ship notices,
invoices, remittance advice, electronic funds transfer (EFT) or such purchasing
communications as may be requested by COMPANY for transactions under this
Agreement. SUPPLIER shall, at its sole expense, obtain, make fully operational
and maintain all equipment, software and other materials set forth in COMPANY's
EDI Planning Guide. SUPPLIER shall also execute an Electronic Purchasing
Agreement with COMPANY at the time of COMPANY's request to initiate EDI as
described in this clause.
ENTIRE AGREEMENT-This Agreement shall incorporate the typed or written
provisions on COMPANY's orders issued pursuant to this Agreement and shall
constitute the entire agreement between the parties with respect to the subject
matter of this Agreement and the order(s) and shall not be modified or
rescinded, except by a writing signed by SUPPLIER and COMPANY. Printed
provisions on the reverse side of COMPANY's orders (except as specified
otherwise in this Agreement) and all provisions on SUPPLIER's forms shall be
deemed deleted. Estimates or forecasts furnished by COMPANY shall not
constitute commitments. The provisions of this Agreement supersede all
contemporaneous oral agreements and all prior oral and written communications
and understandings of the parties with respect to the subject matter of this
Agreement.
FORCE MAJEURE-Neither party shall be held responsible for any delay or failure
in performance of any part of this Agreement to the extent such delay or
failure is caused by fire, flood, strike, civil, governmental or military
authority, act of God, or other similar causes beyond its control and without
the fault or negligence of the delayed or nonperforming party or its
subcontractors. SUPPLIER's liability for loss or damage to COMPANY's PRODUCT in
SUPPLIER's possession or control shall not be modified by this clause. When a
party's delay or nonperformance continues for a period of at least fifteen (15)
days, the other party may terminate, at no charge, this Agreement or an order
under the Agreement.
* Confidential treatment requested for redacted portion.
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FUTURE IMPROVEMENTS AND BENEFITS - As SUPPLIER announces improvements,
upgrades, field modifications and the like, ("enhancements"), SUPPLIER shall
advise COMPANY of their features and advantages. [*]
HEAVY METALS AND/OR CFC IN PACKAGING-SUPPLIER warrants to COMPANY that no lead,
cadmium, mercury or hexavalent chromium have been intentionally added to any
packaging or packaging component (as defined under applicable laws) to be
provided to COMPANY under this Agreement and that packaging PRODUCTs were not
manufactured using and do not contain chlorofluorocarbons. SUPPLIER further
warrants to COMPANY that the sum of the concentration levels of lead, cadmium,
mercury and hexavalent chromium in the package or packaging component provided
to COMPANY under this Agreement does not exceed 100 parts per million. Upon
request, SUPPLIER shall provide to COMPANY Certificates of Compliance
certifying that the packaging and/or packaging components provided under this
Agreement are in compliance with the requirements set forth above in this
clause
IDENTIFICATION-SUPPLIER shall not, without COMPANY's prior written consent,
engage in publicity related to this Agreement, or make public use of any
Identification in any circumstances related to this Agreement. "Identification"
means any semblance of any trade name, trademark, service mark, insignia,
symbol, logo, or any other designation or drawing of Lucent Technologies or its
affiliates. SUPPLIER shall remove or obliterate any Identification prior to any
use or disposition of any PRODUCT rejected or not purchased by COMPANY.
IMPLEADER-SUPPLIER shall not implead or bring an action against COMPANY based
on any claim by any person for personal injury or death to an employee of
COMPANY for which COMPANY has previously paid or is obligated to pay worker's
compensation benefits to such employee or claimant and for which such employee
or claimant could not otherwise bring legal action against COMPANY.
INDEMNITY-At COMPANY's request, SUPPLIER agrees to indemnify, defend and hold
harmless COMPANY, its affiliates, customers, employees, successors and assigns
(all referred to as "COMPANY") from and against any losses, damages, claims,
fines, penalties and expenses (including reasonable attorney's fees) that arise
out of or result from: (1) injuries or death to persons or damage to property,
including theft, in any way arising out of or caused or alleged to have been
caused by the Work or services performed by, or PRODUCT provided by SUPPLIER or
persons furnished by SUPPLIER; (2) assertions under Workers' Compensation or
similar acts made by persons furnished by SUPPLIER; or (3) any failure of
SUPPLIER to perform its obligations under this Agreement.
INFRINGEMENT-SUPPLIER shall indemnify and save harmless COMPANY, its affiliates
and their customers, officers, directors, and employees (all referred to in
this clause as "COMPANY") from and against any losses, damages, liabilities,
fines, penalties, and expenses (including reasonable attorneys' fees) that
arise out of or result from any and all claims (1) of
* Confidential treatment requested for redacted portion.
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infringement of any patent, copyright, trademark or trade secret right, or
other intellectual property right, private right, or any other proprietary or
personal interest, and (2) related by circumstances to the existence of this
Agreement or performance under or in contemplation of it (an Infringement
Claim). If the Infringement Claim arises solely from SUPPLIER's adherence to
COMPANY's written instructions regarding services or tangible or intangible
goods provided by SUPPLIER (Items) and if the Items are not (1) commercial
items available on the open market or the same as such items, or (2) items of
SUPPLIER's designated origin, design or selection, COMPANY shall indemnify
SUPPLIER. COMPANY or SUPPLIER (at COMPANY's request) shall defend or settle, at
its own expense any demand, action or suit on any Infringement Claim for which
it is indemnitor under the preceding provisions and each shall timely notify
the other of any assertion against it of any Infringement Claim and shall
cooperate in good faith with the other to facilitate the defense of any such
Claim.
INSURANCE-SUPPLIER shall maintain and cause SUPPLIER's subcontractors to
maintain during the term of this Agreement: (1) Workers' Compensation insurance
as prescribed by the law of the state or nation in which the Work is performed;
(2) employer's liability insurance with limits of at least $500,000 for each
occurrence; (3) automobile liability insurance if the use of motor vehicles is
required, with limits of at least $1,000,000 combined single limit for bodily
injury and property damage per occurrence; (4) Commercial General Liability
("CGL") insurance, ISO 1988 or later occurrence form of insurance, including
Blanket Contractual Liability and Broad Form Property Damage, with limits of at
least $1,000,000 combined single limit for bodily injury and property damage
per occurrence; and (5) if the furnishing to COMPANY (by sale or otherwise) of
PRODUCT or construction services is involved, CGL insurance endorsed to include
products liability and completed operations coverage in the amount of
$5,000,000 per occurrence;(6) Errors and Omissions or Professional Liability
insurance in the amount of at least $1,000,000 per claim with an aggregate of
at least $3,000,000 inclusive of legal defense costs, to be maintained for a
period of at least one (1) year after completion of the Agreement. All CGL and
automobile liability insurance shall designate COMPANY Technologies Inc., its
affiliates, and its directors, officers and employees (all referred to as
"COMPANY") as additional insured. All such insurance must be primary and
non-contributory and required to respond and pay prior to any other insurance
or self-insurance available. Any other coverage available to COMPANY shall
apply on an excess basis. SUPPLIER agrees that SUPPLIER, SUPPLIER's insurer(s)
and anyone claiming by, through, under or in SUPPLIER's behalf shall have no
claim, right of action or right of subrogation against COMPANY and its
customers based on any loss or liability insured against under the foregoing
insurance. SUPPLIER and SUPPLIER's subcontractors shall furnish prior to the
start of Work certificates or adequate proof of the foregoing insurance,
including if specifically requested by COMPANY, endorsements and policies.
COMPANY shall be notified in writing at least thirty (30) days prior to
cancellation of or any change in the policy. Insurance companies providing
coverage under this Agreement must be rated by A-M Best with at least an A-
rating.
INVOICING FOR GOODS-SUPPLIER shall: (1) render original invoice, or as
otherwise specified in this Agreement, showing Agreement and order number,
through routing and weight; (2) render separate invoices for each shipment
within twenty-four (24) hours after shipment; and (3) mail invoices with copies
of bills of lading and shipping notices to the address shown on this
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<PAGE> 20
Agreement or order. If prepayment of transportation charges is authorized,
SUPPLIER shall include the transportation charges from the FOB point to the
destination as a separate item on the invoice stating the name of the carrier
used.
MEDIATION-If a dispute relates to this Agreement, or its breach, and the
parties have not been successful in resolving such dispute through negotiation,
the parties agree to attempt to resolve the dispute through mediation by
submitting the dispute to a sole mediator selected by the parties or, at any
time at the option of a party, to mediation by the American Arbitration
Association ("AAA"). Each party shall bear its own expenses and an equal share
of the expenses of the mediator and the fees of the AAA. All defenses based on
passage of time shall be suspended pending the termination of the mediation.
Nothing in this clause shall be construed to preclude any party from seeking
injunctive relief in order to protect its rights pending mediation.
NOTICES-Any notice or demand which under the terms of this Agreement or under
any statute must or may be given or made by SUPPLIER or COMPANY shall be in
writing and shall be given or made by confirmed facsimile, or similar
communication or by certified or registered mail addressed to the respective
parties as follows:
COMPANY:
Lucent Technologies Inc.
101 Crawfords Corner Road, Room 3M-229
Holmdel, NJ 07733
Attention: Gustin DeCapua
Phone: (732) 949-6547
Fax: (732) 949-4025
Email: [email protected]
SUPPLIER:
Digital Lighwave
155550 Lightwave Drive
Clearwater, FL 33760
Attention: Eric Mitchell
Phone: (813) 442-6677
Fax: (813) 442-5660
Email: [email protected]
Such notice or demand shall be deemed to have been given or made when sent by
facsimile, or other communication or when deposited, postage prepaid in the
U.S. mail. The above addresses may be changed at any time by giving prior
written notice as above provided.
OPERATING SYSTEM SOFTWARE - PRODUCT includes any software (operating program in
machine readable form and related documentation) and storage media therefor
normally furnished with or embedded in the PRODUCT. Title to the software
pre-existing and not created under or in contemplation of this Agreement
(referred to in this clause as "Pre-existing software") including copyright,
shall remain in SUPPLIER. The party having title to the
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<PAGE> 21
PRODUCT shall have title to the software storage media. With respect to
Pre-existing software, for the life of the PRODUCT listed in this Agreement,
SUPPLIER grants to COMPANY and any subsequent purchaser, lessee or other end
user (referred to collectively in this clause as "end user") a non-exclusive
license to use said Pre-existing software on the PRODUCT on which it was
delivered. COMPANY and any subsequent end user may copy the Pre-existing
software for use on such PRODUCT with which it was originally delivered and for
archival purposes, but shall not knowingly reproduce the Pre-existing software
for distribution to others. COMPANY and any subsequent end user may add to,
delete from or modify the Pre-existing software in any manner, but no changes,
however extensive, shall alter SUPPLIER's title to the Pre-existing software.
OZONE DEPLETING CHEMICALS-SUPPLIER hereby warrants that it is aware of
international agreements and pending legislation in several nations, including
the United States, which would limit, ban and/or tax importation of any product
containing, or produced using ozone depleting chemicals ("ODCs"), including
chloroflurocarbons, halons and certain chlorinated solvents. SUPPLIER hereby
warrants that the PRODUCT furnished to COMPANY will conform to all applicable
requirements established pursuant to such agreements, legislation and
regulations, and the PRODUCT furnished to COMPANY will be able to be imported
and used lawfully (and without additional taxes associated with ODCs not
reported to COMPANY by SUPPLIER as set forth in this clause) under all such
agreements, legislation and requirements. SUPPLIER also warrants that it is
currently reducing, or if SUPPLIER is not the manufacturer of the PRODUCT, is
currently causing the manufacturing vendor to reduce and will, in an
expeditious manner, eliminate, or, as applicable, have its manufacturing vendor
eliminate the use of ODCs in the manufacture of the PRODUCT.
If the PRODUCT furnished by SUPPLIER under this Agreement is manufactured
outside the United States, SUPPLIER shall, upon execution of this Agreement,
and at any time that new products are added to this Agreement or changes are
made to the PRODUCT furnished under this Agreement, complete, sign and return
to COMPANY the attached ODC Content Certification. The ODC Content
Certification must be signed by SUPPLIER's facility manager, corporate officer
or his delegate.
The term "ODC content" on the ODC Content Certification means the total pounds
of ODC used directly in the manufacture of each unit of PRODUCT. This includes
all ODCs used in the manufacturing and assembly operations for the PRODUCT plus
all ODCs used by SUPPLIER's vendors and any other vendors in producing
components or other products incorporated into the PRODUCT sold to COMPANY.
SUPPLIER is responsible to obtain information on the ODC content of all
components and other products acquired to manufacture the PRODUCT and to
incorporate such information into the total ODC content reported to COMPANY;
provided however, that SUPPLIER should not include in the ODC content those
components or other products which are manufactured in the United States.
SUPPLIER hereby warrants to COMPANY that all information furnished by SUPPLIER
on the ODC Content Certification is complete and accurate and that COMPANY may
rely on such information for any purpose, including but not limited to
providing reports to
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<PAGE> 22
government agencies or otherwise complying with applicable laws. SUPPLIER shall
defend, indemnify and hold COMPANY harmless of and from any claims, demands,
suits, judgments, liabilities, fines, penalties, costs and expenses (including
additional ODC taxes as provided for in paragraph one of this clause and
reasonable attorney's fees) which COMPANY may incur under any applicable
federal, state, or local laws or international agreements, and any and all
amendments thereto by reason of COMPANY's use of reliance on the information
furnished to COMPANY by SUPPLIER on the ODC Content Certification or by reason
of SUPPLIER's breach of this clause. SUPPLIER shall cooperate with COMPANY in
responding to any inquiry concerning the use of ODCs to manufacture the PRODUCT
or components thereof and to execute without additional charge any documents
reasonably required to certify the absence or quantity of ODCs used to
manufacture the PRODUCT or components thereof.
OZONE DEPLETING SUBSTANCES LABELING - SUPPLIER warrants and certifies that all
products, including packaging and packaging components, provided to COMPANY
under this Agreement have been accurately labeled, in accordance with the
requirements of 40 CFR Part 82 entitled "Protection of Stratospheric Ozone,
Subpart E - The Labeling of Products Using Ozone Depleting Substances."
PAYMENT TERMS-Invoices shall be paid in accordance with the terms in this
Agreement, and due dates for payment shall be computed from the date of receipt
of invoices by COMPANY.
PRODUCT DOCUMENTATION - SUPPLIER agrees to furnish, at no charge, product
documentation, and any succeeding changes thereto, as approved by COMPANY.
COMPANY may use, reproduce, reformat, modify and distribute such product
documentation.
COMPANY agrees to reproduce SUPPLIER's copyright notice contained in any
documentation reproduced without change by COMPANY. For documentation which is
reformatted or modified by COMPANY, COMPANY shall have the right to place only
COMPANY's own copyright notice on the reformatted or modified documentation. It
is the intent of the parties that COMPANY's copyright notice shall be
interpreted to protect the underlying copyright rights of SUPPLIER to the
documentation to the extent such underlying rights are owned by SUPPLIER.
SUPPLIER will correct promptly, by providing replacement or updates, any
defects in Documentation which the SUPPLIER becomes aware of and/or about which
the COMPANY notifies the SUPPLIER, that may result in a product service loss or
could result in a safety hazard.
REGISTRATION AND RADIATION STANDARDS- When PRODUCT furnished under this
Agreement is subject to Part 68, Part 15 or any other part of the Federal
Communication Commission's Rules and Regulations, as may be amended from time
to time (hereinafter "FCC Rules"), SUPPLIER warrants that such PRODUCT complies
with the registration , certification, type-acceptance and/or verification
standards of the FCC Rules including, but not limited to, all labeling,
customer instruction requirements, and the suppression of radiation to
specified levels. SUPPLIER shall also establish periodic on-going compliance
retesting and follow a Quality Control Program, submitted to COMPANY, to assure
that PRODUCT shipped complies with the
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<PAGE> 23
applicable FCC Rules. SUPPLIER agrees to indemnify and save COMPANY harmless
from any liability, claims or demands (including the costs, expenses and
reasonable attorney's fees on account thereof) that may be made because of
SUPPLIER's noncompliance with the applicable FCC Rules as long as SUPPLIERs
maintain design control of PRODUCT. SUPPLIER agrees to defend COMPANY, at
COMPANY's request, against such liability, claim or demand.
To the extent that PRODUCT furnished under this Agreement is also subject to
FCC Rules governing the use of the PRODUCT as a component in a system as
identified in Appendix C, COMPANY shall be responsible for compliance with the
applicable FCC Rules governing the system. SUPPLIER shall fully cooperate with
COMPANY, by providing technical support and information, and, upon written
request from COMPANY, shall modify PRODUCT to enable COMPANY to ensure ongoing
compliance with the FCC Rules. COMPANY agrees to pay any increase in SUPPLIER's
costs and/or expenses resulting from COMPANY's request to modify PRODUCT to
enable COMPANY to comply with the FCC Rules
REPRESENTATIVES
COMPANY's Purchasing Representative under this Agreement shall be Gustin
DeCapua and COMPANY's Product Manager under this Agreement shall be John
Colton. COMPANY's Technical Representative shall be William J. Gartner or such
other person or persons as may be designated by COMPANY's Product Manager.
SUPPLIER's Representative under this Agreement shall be Eric Mitchell.
RIGHT OF ENTRY-Each party shall have the right to enter the premises of the
other party during normal business hours with respect to the performance of
this Agreement including an inspection or a Quality Review, subject to all
plant rules and regulations, clearances, security regulations and procedures as
applicable. Each party shall provide safe and proper facilities for such
purpose.
SERVICES-Visits by SUPPLIER's representatives or its SUPPLIERs' representatives
for inspection, adjustment or other similar purposes in connection with PRODUCT
purchased under this Agreement shall for all purposes be deemed "Work under
this Agreement" and shall be at no charge to COMPANY unless otherwise agreed in
writing between the parties.
SHIPPING-SUPPLIER shall: (1) ship the PRODUCT covered by this Agreement or
order complete unless instructed otherwise; (2) ship to the destination
designated in the Agreement or order; (3) ship according to routing
instructions given by COMPANY; (4) place the Agreement and order number on all
subordinate documents; (5) enclose a packing memorandum with each shipment and,
when more than one package is shipped, identify the package containing the
memorandum; and (6) mark the Agreement and order number on all packages and
shipping papers. Adequate protective packing shall be furnished at no
additional charge. Shipping and routing instructions may be furnished or
altered by COMPANY without a writing. If SUPPLIER does not comply with the
terms of the FOB clause of this Agreement or order or with COMPANY's shipping
or routing instructions, SUPPLIER authorizes COMPANY to deduct
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<PAGE> 24
from any invoice of SUPPLIER (or to charge back to SUPPLIER), any increased
costs incurred by COMPANY as a result of SUPPLIER's noncompliance.
SOFTWARE LICENSE GRANT- With respect to software pre-existing and not created
under or in contemplation of this Agreement, COMPANY shall have a world-wide,
non-exclusive, royalty-free, perpetual, transferable license to use, reproduce
and sublicense all software furnished to COMPANY by SUPPLIER under this
Agreement. COMPANY will not reverse compile or disassemble the software, nor
will COMPANY reproduce the software for the purpose of furnishing it to others.
SUPPLIER'S INFORMATION-SUPPLIER shall not provide under, or have provided in
contemplation of, this Agreement any idea, data, program, technical, business
or other intangible information, however conveyed, or any document, print,
tape, disk, semiconductor memory or other information-conveying tangible
article, unless SUPPLIER has the right to do so, and, except for information
furnished or developed by SUPPLIER hereunder and owned by COMPANY, SUPPLIER
shall not view any of the foregoing as confidential or proprietary. If SUPPLIER
must furnish any such information to COMPANY with restrictions, it shall only
be furnished after negotiation and execution on behalf of COMPANY of a separate
written agreement specifically identifying the documents to be furnished and
setting forth the COMPANY's rights and obligations with respect thereto.
Notwithstanding the above, COMPANY will protect software received from SUPPLIER
with the same degree of care that COMPANY uses to protect its own software that
it does not wish to become public knowledge.
SURVIVAL OF OBLIGATIONS-The obligations of the parties under this Agreement,
which by their nature would continue beyond the termination, cancellation or
expiration of this Agreement, shall survive termination, cancellation or
expiration of this Agreement.
TAXES-COMPANY shall reimburse SUPPLIER only for the following tax payments with
respect to transactions under this Agreement unless COMPANY advises SUPPLIER
that an exemption applies: state and local sales and use taxes, as applicable.
Taxes payable by COMPANY shall be billed as separate items on SUPPLIER's
invoices and shall not be included in SUPPLIER's prices. COMPANY shall have the
right to have SUPPLIER contest any such taxes that COMPANY deems improperly
levied at COMPANY's expense and subject to COMPANY's direction and control.
TIMELY PERFORMANCE-If SUPPLIER has knowledge that anything prevents or
threatens to prevent the timely performance of the Work under this Agreement,
SUPPLIER shall immediately notify COMPANY's Representative thereof and include
all relevant information concerning the delay or potential delay.
TOOLS AND EQUIPMENT - Unless otherwise specifically provided in the order,
SUPPLIER shall provide all labor, tools and equipment (the "tools") for
performance under this Agreement. Should SUPPLIER actually use any tools owned
or rented by COMPANY, SUPPLIER agrees to indemnify and hold harmless COMPANY
from and against any and all losses, damages, claims, demands, suits and
liabilities (including reasonable attorneys' fees) of any kind and nature
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<PAGE> 25
whatsoever (including but not limited to claims resulting from injuries or
death to persons or damage to property) in any way arising out of or resulting
from SUPPLIER's maintenance, possession, operation, use, storage or movement of
the tools or any accident in connection therewith. SUPPLIER further
acknowledges that SUPPLIER accepts the tools "where is" and the COMPANY has no
responsibility for the condition or state of repair of the tools. SUPPLIER
agrees not to remove the tools from COMPANY's premises and to return the tools
to COMPANY upon completion of use, or at such earlier time as COMPANY may
request, in the same condition as when received by the SUPPLIER, reasonable
wear and tear excepted. Such use shall be controlled by the clauses entitled
Insurance and Indemnity.
TOXIC SUBSTANCES AND PRODUCT HAZARDS-SUPPLIER hereby warrants to COMPANY that,
except as expressly stated elsewhere in this Agreement, all PRODUCT furnished
by SUPPLIER as described in this Agreement is safe for its foreseeable use, is
not defined as a hazardous or toxic substance or PRODUCT under applicable
federal, state or local law, ordinance, rule, regulation or order (hereinafter
collectively referred to as "law" or "laws"), and presents no abnormal hazards
to persons or the environment. SUPPLIER also warrants that it has no knowledge
of any federal, state or local law, that prohibits the disposal of the PRODUCT
as normal refuse without special precautions except as expressly stated
elsewhere in this Agreement. SUPPLIER also warrants that where required by law,
all PRODUCT furnished by SUPPLIER is either on the EPA Chemical Inventory
compiled under Section 8 (a) of the Toxic Substance Control Act, or is the
subject of an EPA-approved pre manufacture notice under 40 CFR Part 720.
SUPPLIER further warrants that all PRODUCT furnished by SUPPLIER complies with
all use restrictions, labeling requirements and all other health and safety
requirements imposed under federal, state, or local laws. SUPPLIER further
warrants that, where required by law, it shall provide to COMPANY, prior to
delivery of the PRODUCT, a PRODUCT Safety Data Sheet which complies with the
requirements of the Occupational Safety and Health Act of 1970 and all rules
and regulations promulgated thereunder.
SUPPLIER shall defend, indemnify and hold COMPANY harmless for any
expenses (including, but not limited to, the cost of substitute PRODUCT, less
accumulated depreciation) that COMPANY may incur by reason of the recall or
prohibition against continued use or disposal of PRODUCT furnished by SUPPLIER
as described in its Agreement whether such recall or prohibition is directed by
SUPPLIER or occurs under compulsion of law. COMPANY shall cooperate with
SUPPLIER to facilitate and minimize the expense of any recall or prohibition
against use or disposal of PRODUCT directed by SUPPLIER or under compulsion of
law.
SUPPLIER further shall defend, indemnify and hold COMPANY harmless of
and from any claims, demands, suits, judgments, liabilities, costs and expenses
(including reasonable attorney's fees) which COMPANY may incur under any
applicable federal, state or local laws, and any and all amendments thereto,
including but not limited to the Comprehensive Environmental Response,
Compensation and Liability Act of 1980; the Consumer Product Safety Act of
1972; the Toxic Substance Control Act; Fungicide, Rodenticide Act; the
Occupational Safety and Health Act; and the Atomic Energy Act; and any and all
amendments to all applicable federal, state, or local laws, by reason of
COMPANY's acquisition, use, distribution or disposal of PRODUCT furnished by
SUPPLIER under this Agreement.
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TRAINING-If requested by COMPANY, SUPPLIER will [*]:
(a) provide instructors and the necessary instructional PRODUCT of
SUPPLIER's standard format to train COMPANY's personnel in the installation,
planning and practices, operation, maintenance and repair of PRODUCT furnished
under this Agreement. These classes shall be conducted at reasonable intervals
at locations agreed upon by SUPPLIER and COMPANY.
Or, at the option of COMPANY,
(b) provide to COMPANY training modules or manuals and any necessary
assistance, covering those areas of interest outlined in (a) of this clause,
sufficient in detail, format and quantity to allow COMPANY to develop and
conduct a training program.
USE OF INFORMATION-SUPPLIER shall view as COMPANY's property any idea, data,
program, technical, business or other intangible information, however conveyed,
and any document, print, tape, disc, tool, or other tangible
information-conveying or performance-aiding article owned or controlled by
COMPANY, and provided to, or acquired by, SUPPLIER under or in contemplation of
this Agreement (Information). SUPPLIER shall, at no charge to COMPANY, and as
COMPANY directs, destroy or surrender to COMPANY promptly at its request any
such article or any copy of such Information. SUPPLIER shall keep Information
confidential and use it only in performing under this Agreement and obligate
its employees, subcontractors and others working for it to do so, provided that
the foregoing shall not apply to information previously known to SUPPLIER free
of obligation, or made public through no fault imputable to SUPPLIER.
YEAR 2000 WARRANTY - With respect to all PRODUCT, Equipment, Services and
Software provided to COMPANY under this Agreement, SUPPLIER warrants to COMPANY
and its customers that: (i) the operation of such deliverables on or after
January 1, 2000, without limitation as to date, shall in no way be different
from their operation prior to that date; and (ii) such deliverables will be
able to process, store, record and present data containing dates in the Year
2000, and thereafter without limitation as to date, in the same manner as data
containing dates prior to the Year 2000. SUPPLIER further warrants that to the
extent its internal systems impact its relationship with COMPANY, such systems
also comply with the foregoing warranties. Upon request by COMPANY, SUPPLIER
agrees to: (i) provide written certification of the foregoing warranties to
COMPANY and its customers; and (ii) allow COMPANY to reasonably verify
compliance with these warranties.
* Confidential treatment requested for redacted portion.
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ATTACHMENT B
MILESTONE SCHEDULE FOR PRODUCT DELIVERY
[*]
* Confidential treatment requested for redacted portion.
