<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 18, 1999
REGISTRATION STATEMENT NO. 333-85821
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 5
TO
FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
------------------------
MCK COMMUNICATIONS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 3661 06-1555163
(STATE OR OTHER JURISDICTION (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
</TABLE>
------------------------
313 WASHINGTON STREET
NEWTON, MASSACHUSETTS 02458
(617) 454-6100
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICE)
------------------------
STEVEN J. BENSON
PRESIDENT AND CHIEF EXECUTIVE OFFICER
MCK COMMUNICATIONS, INC.
313 WASHINGTON STREET
NEWTON, MASSACHUSETTS 02458
(617) 454-6100
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
------------------------
COPIES TO:
<TABLE>
<S> <C>
JOHN J. EGAN III, P.C. MICHAEL A. CONZA, ESQ.
JOHN B. STEELE, ESQ. TESTA, HURWITZ & THIBEAULT LLP
MCDERMOTT, WILL & EMERY 125 HIGH STREET
28 STATE STREET BOSTON, MASSACHUSETTS 02110
BOSTON, MASSACHUSETTS 02109-1775 (617) 248-7000
(617) 535-4000
</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, 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, 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 this Form is a post-effective amendment filed pursuant to Rule 462(d)
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 WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SEC, ACTING PURSUANT TO SECTION 8(a), MAY
DETERMINE.
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<PAGE> 2
EXPLANATORY NOTE
This Amendment No. 5 to the Registration Statement on Form S-1 is being
filed solely for the purpose of amending certain exhibits.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the estimated expenses payable by us in
connection with the offering (excluding underwriting discounts and commissions):
<TABLE>
<CAPTION>
NATURE OF EXPENSE AMOUNT
- ----------------- ----------
<S> <C>
SEC Registration Fee........................................ $ 17,392
NASD Filing Fee............................................. 6,756
Nasdaq National Market Listing Fee.......................... 90,000
Accounting Fees and Expenses................................ 250,000
Legal Fees and Expenses..................................... 400,000
Printing Expenses........................................... 100,000
Blue Sky Qualification Fees and Expenses.................... 15,000
Transfer Agent's Fee........................................ 10,000
Miscellaneous............................................... 210,852
----------
Total....................................................... $1,100,000
</TABLE>
- ---------------
The amounts set forth above, except for the Securities and Exchange
Commission, National Association of Securities Dealers, Inc. and Nasdaq National
Market fees, are in each case estimated.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
In accordance with Section 145 of the Delaware General Corporation Law,
Article VII of our amended and restated certificate of incorporation provides
that no director of MCK Communications be personally liable to MCK
Communications, its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (1) for any breach of the director's
duty of loyalty to MCK Communications or its stockholders, (2) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (3) in respect of unlawful dividend payments or stock
redemptions or repurchases, or (4) for any transaction from which the director
derived an improper personal benefit. In addition, the first amended and
restated certificate of incorporation provides that if the Delaware General
Corporation Law is amended to authorize the further elimination or limitation of
the liability of directors, then the liability of a director of the corporation
shall be eliminated or limited to the fullest extent permitted by the Delaware
General Corporation Law, as so amended.
Article V of our amended and restated by-laws provides for indemnification
by MCK Communications of its officers and certain non-officer employees under
certain circumstances against expenses, including attorneys fees, judgments,
fines and amounts paid in settlement, reasonably incurred in connection with the
defense or settlement of any threatened, pending or completed legal proceeding
in which any such person is involved by reason of the fact that such person is
or was an officer or employee of the registrant if such person acted in good
faith and in a manner he or she reasonably believed to be in or not opposed to
the best interests of MCK Communications, and, with respect to criminal actions
or proceedings, if such person had no reasonable cause to believe his or her
conduct was unlawful.
Under Section 7 of the underwriting agreement to be filed as Exhibit 1.1
hereto, the underwriters have agreed to indemnify, under certain conditions, MCK
Communications, its directors, certain officers and persons who control MCK
Communications within the meaning of the Securities Act against certain
liabilities.
II-1
<PAGE> 3
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
Set forth in chronological order below is information regarding the number
of shares of capital stock issued by the Registrant during the past three years.
Further included is the consideration, if any, received by the Registrant for
such shares, and information relating to the section of the Securities Act or
rule of the Securities and Exchange Commission under which exemption from
registration was claimed.
1. An aggregate of 1,652,400 shares of Series A preferred stock (which are
subject to redemption, and will be redeemed, upon the completion of this
initial public offering) were issued in a private placement in July 1998
to investment funds associated with Summit Partners. The consideration
received for such shares was $1,652,400.
2. An aggregate of 28,505 shares of Series C preferred stock (which are
subject to redemption, and will be redeemed, upon the completion of this
initial public offering) was issued in a private placement in July 1998
to investment funds associated with Lazard Freres, and certain other
purchasers, pursuant to a Stock Purchase Agreement. The consideration
received for such shares was $2,500,000.
3. An aggregate of 1,672,354 shares of Series D preferred stock (which are
convertible into 2,558,702 shares of common stock) was issued in a
private placement in July 1998 to investment funds associated with
Lazard Freres, and certain other purchasers, pursuant to a Stock
Purchase Agreement. The consideration received for such shares was
$2,500,000.
4. From January 1998 to September 1999, an aggregate of 2,081,328 shares of
common stock was sold to certain directors and key executives of MCK
Communications pursuant to Stock Restriction Agreements and a Stock
Purchase Agreement for prices ranging from $.098 to $8.17 per share. The
aggregate consideration received for such shares was $1,099,551.75.
5. From June 1996 to September 1999, MCK Communications granted stock
options to purchase an aggregate of 2,137,913 shares of common stock to
directors, employees and consultants with exercise prices ranging from
$.001 to $2.50 per share pursuant to MCK Communications 1996 Stock
Option Plan. As of September 30, 1999, 630,446 shares of common stock
have been issued upon exercise of options.
6. Prior to August 1996, we sold several series of preferred stock to
investment funds associated with Summit Partners and certain entities
associated with Wilson, Sonsini, Goodrich and Rosati, P.C. For
additional information regarding the sale of preferred stock to the
Summit Partners Group, see "Certain Transactions with Related Parties."
No underwriters were used in connection with these sales and issuances. The
sales and issuances of these securities were exempt from registration under the
Securities Act pursuant to Rule 701 promulgated thereunder on the basis that
these securities were offered and sold either pursuant to a written compensatory
benefit plan or pursuant to written contracts relating to compensation, as
provided by Rule 701, or pursuant to Section 4(2) of the Securities Act on the
basis that the transactions did not involve a public offering.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
<TABLE>
<C> <S>
**1.1 Form of Underwriting Agreement.
**2.1 Stock and Note Purchase Agreement, dated as of June 27,
1996, by and among MCK Communications, Inc., MCK
Telecommunications, Inc., Cal Manz, Manz Developments, Inc.
and the Investors named therein (excluding schedules, which
the Registrant agrees to furnish supplementally to the
Commission upon request).
</TABLE>
II-2
<PAGE> 4
<TABLE>
<C> <S>
**2.2 Stock Purchase Agreement, dated as of July 16, 1998, by and among MCK Communications, Inc. and the
Purchasers named therein (excluding schedules, which the Registrant agrees to furnish supplementally to
the Commission upon request).
**3.1 Certificate of Incorporation of the Registrant.
**3.2 Form of First Amended and Restated Certificate of Incorporation of the Registrant (to be filed prior to
the effectiveness of the offering).
**3.3 Form of Second Amended and Restated Certificate of Incorporation of the Registrant (to be filed
following the consummation of this offering).
**3.4 By-laws of the Registrant.
**3.5 Form of First Amended and Restated By-laws of the Registrant (to be effective upon consummation of the
offering).
**4.1 Specimen certificate for shares of common stock, $.001 par value, of the Registrant.
**5.1 Opinion of McDermott, Will & Emery as to the validity of the securities being offered.
**10.1 Amended and Restated Stockholders' Agreement, dated July 16, 1998, between the Registrant and the
Stockholders named therein.
**10.2 Amended and Restated Registration Rights Agreement, dated July 16, 1998, between the Registrant and the
Stockholders named therein.
**10.3 Amended and Restated 1996 Stock Option Plan of the Registrant.
**10.4 1999 Stock Option and Grant Plan of the Registrant.
**10.5 Class A Subordinated Promissory Note issued by MCK Communications, Inc. to WS Investment Company 96A in
the amount of $8,750 dated June 27, 1996.
**10.6 Class A Subordinated Promissory Note issued by MCK Communications, Inc. to Trustee, WSGR Retirement
Plan FBO Jeffery D. Saper in the amount of $16,250 dated June 27, 1996.
**10.7 Class A Subordinated Promissory Note issued by MCK Communications, Inc. to Summit Subordinated Debt
Fund, L.P. in the amount of $4,875,500 dated June 27, 1996.
**10.8 Class A Subordinated Promissory Note issued by MCK Communications, Inc. to Summit Investors III in the
amount of $99,500 dated June 27, 1996.
**10.9 Form of Stock Restriction Agreement for sale of restricted stock to executive officers.
**10.10 Form of Promissory Note for purchase of restricted stock by executive officers.
**10.11 Form of Pledge Agreement.
**10.12 Form of Bonus Agreement.
**10.13 Lease Agreement between Manz Developments, Inc. and MCK Telecommunications, Inc. dated January 1, 1996.
**10.14 Office Lease between MCK Communications, Inc. and 313 Washington Street, LLC dated June 2, 1997, as
amended April 22, 1998 and June 30, 1998.
+10.15 Agreement between MCK Communications, Inc. and Lucent Technologies, Inc. effective as of April 30,
1999.
+10.16 Master Support Agreement between MCK Communications, Inc. and Vital Networks, Inc. dated June 28, 1999.
**10.17 Amended and Restated Loan and Security Agreement between MCK Communications, Inc. and BankBoston, N.A.
dated July 1, 1999.
**16.1 Letter regarding change in certifying accountants
**23.1 Consent of McDermott, Will & Emery (included in Exhibit 5.1 hereto).
**23.2 Consent of Ernst & Young LLP.
**23.3 Consent of PricewaterhouseCoopers LLP
</TABLE>
II-3
<PAGE> 5
<TABLE>
<C> <S>
**24.1 Powers of Attorney (included on page II-5).
**27.1 Financial Data Schedule.
</TABLE>
- ---------------
** Previously filed.
+ Confidential treatment requested as to portions of this exhibit. The
confidential information has been filed separately with the Securities and
Exchange Commission.
(b) Consolidated Financial Statement Schedules
All schedules have been omitted because they are not required or because
the required information is given in the Consolidated Financial Statements or
Notes to those statements.
ITEM 17. UNDERTAKINGS
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.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, 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 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 whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this 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 this
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, 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.
II-4
<PAGE> 6
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 5 to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Newton, Commonwealth of Massachusetts, on October 18, 1999.
MCK COMMUNICATIONS, INC.
By: /s/ STEVEN J. BENSON
------------------------------------
Steven J. Benson
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 5 to the Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ STEVEN J. BENSON President, Chief Executive October 18, 1999
- --------------------------------------------------- Officer and Director
Steven J. Benson (Principal Executive Officer)
* Chief Financial Officer October 18, 1999
- --------------------------------------------------- (Principal Financial Officer
Paul K. Zurlo and Principal Accounting
Officer)
* Director October 18, 1999
- ---------------------------------------------------
Calvin K. Manz
* Director October 18, 1999
- ---------------------------------------------------
John B. Landry
* Director October 18, 1999
- ---------------------------------------------------
Gregory M. Avis
* Director October 18, 1999
- ---------------------------------------------------
Michael H. Balmuth
* Director October 18, 1999
- ---------------------------------------------------
Paul Severino
* By: /s/ STEVEN J. BENSON
--------------------------------------------
Attorney-in-fact
</TABLE>
II-5
<PAGE> 7
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
- -------- -------------------
<C> <S>
**1.1 Form of Underwriting Agreement.
**2.1 Stock and Note Purchase Agreement, dated as of June 27,
1996, by and among MCK Communications, Inc., MCK
Telecommunications, Inc., Cal Manz, Manz Developments, Inc.
and the Investors named therein (excluding schedules, which
the Registrant agrees to furnish supplementally to the
Commission upon request).
**2.2 Stock Purchase Agreement, dated as of July 16, 1998, by and
among MCK Communications, Inc. and the Purchasers named
therein (excluding schedules, which the Registrant agrees to
furnish supplementally to the Commission upon request).
**3.1 Certificate of Incorporation of the Registrant.
**3.2 Form of First Amended and Restated Certificate of
Incorporation of the Registrant (to be filed prior to
effectiveness of the offering).
**3.3 Form of Second Amended and Restated Certificate of
Incorporation of the Registrant (to be filed following the
consummation of this offering).
**3.4 By-laws of the Registrant.
**3.5 Form of First Amended and Restated By-laws of the Registrant
(to be effective upon consummation of the offering).
**4.1 Specimen certificate for shares of common stock, $.001 par
value, of the Registrant.
**5.1 Opinion of McDermott, Will & Emery as to the validity of the
securities being offered.
**10.1 Amended and Restated Stockholders' Agreement, dated July 16,
1998, between the Registrant and the Stockholders named
therein.
**10.2 Amended and Restated Registration Rights Agreement, dated
July 16, 1998, between the Registrant and the Stockholders
named therein.
**10.3 Amended and Restated 1996 Stock Option Plan of the
Registrant.
**10.4 1999 Stock Option and Grant Plan of the Registrant.
**10.5 Class A Subordinated Promissory Note issued by MCK
Communications, Inc. to WS Investment Company 96A in the
amount of $8,750 dated June 27, 1996.
**10.6 Class A Subordinated Promissory Note issued by MCK
Communications, Inc. to Trustee, WSGR Retirement Plan FBO
Jeffery D. Saper in the amount of $16,250 dated June 27,
1996.
**10.7 Class A Subordinated Promissory Note issued by MCK
Communications, Inc. to Summit Subordinated Debt Fund, L.P.
in the amount of $4,875,500 dated June 27, 1996.
**10.8 Class A Subordinated Promissory Note issued by MCK
Communications, Inc. to Summit Investors III in the amount
of $99,500 dated June 27, 1996.
**10.9 Form of Stock Restriction Agreement for sale of restricted
stock to executive officers.
**10.10 Form of Promissory Note for purchase of restricted stock by
executive officers.
**10.11 Form of Pledge Agreement.
**10.12 Form of Bonus Agreement.
**10.13 Lease Agreement between Manz Developments, Inc. and MCK
Telecommunications, Inc. dated January 1, 1996.
**10.14 Office Lease between MCK Communications, Inc. and 313
Washington Street, LLC dated June 2, 1997, as amended April
22, 1998 and June 30, 1998.
+10.15 Agreement between MCK Communications, Inc. and Lucent
Technologies, Inc. effective as of April 30, 1999.
+10.16 Master Support Agreement between MCK Communications, Inc.
and Vital Networks, Inc. dated June 28, 1999.
</TABLE>
<PAGE> 8
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
- -------- -------------------
<C> <S>
**10.17 Amended and Restated Loan and Security Agreement between MCK
Communications, Inc. and BankBoston, N.A. dated July 1,
1999.
**16.1 Letter regarding change in certifying accountants
**23.1 Consent of McDermott, Will & Emery (included in Exhibit 5.1
hereto).
**23.2 Consent of Ernst & Young LLP.
**23.3 Consent of PricewaterhouseCoopers LLP
**24.1 Powers of Attorney (included on page II-5).
**27.1 Financial Data Schedule.
</TABLE>
- ---------------
** Previously filed.
+ Confidential treatment requested as to portions of this exhibit. The
confidential information has been filed separately with the Securities and
Exchange Commission.
<PAGE> 1
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN REDACTED PROVISIONS OF
THIS AGREEMENT. THE REDACTED PROVISIONS ARE IDENTIFIED BY THREE ASTERISKS AND
ENCLOSED BY BRACKETS. THE CONFIDENTIAL PORTION HAS BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.
EXHIBIT 10.15
Agreement No. WR71980064
Sheet 1 of 32
MCK Communications, Inc.
313 Washington Street
Newton, MA 02158
This Agreement is made by and between Lucent Technologies Inc. ("Company")
having an office at 211 Mt. Airy Road, Basking Ridge, NJ 07920 and MCK
Communications, Inc. ("Supplier") having an office at 313 Washington Street,
Newton, MA 02158. Company agrees to purchase and Supplier agrees to sell in
accordance with the terms and conditions stated in this Agreement and any
attachments to this Agreement.
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
1. AGREEMENT EFFECTIVE PERIOD
The term of this Agreement shall commence on April 30, 1999 and shall, except as
otherwise provided in this Agreement, continue in effect thereafter until April
30, 2002.
<PAGE> 2
Agreement No. WR71980064
Sheet 2 of 31
2. MATERIAL
"MATERIAL" as used in this Agreement shall mean Supplier's DCP-based
Extender product line as listed in APPENDIX A, attached and made a part of
this Agreement. Such MATERIAL 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.
3. OPTION TO EXTEND
Company shall have the right to extend the period specified in the
section "AGREEMENT EFFECTIVE" for up to twelve (12) months by giving
Supplier at least thirty (30) business days prior written notice.
Within ten (10) business days 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 twenty (20) business
days 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.
4. PRICE
Prices and discounts shall be as shown in APPENDIX A. Prices as listed
in APPENDIX A shall remain in effect during the term of this Agreement.
5. COST REDUCTION
Both parties shall endeavor to reduce the costs of products furnished
under this Agreement. If design, labor or material cost reductions result
from Company initiated changes or the sharing by Supplier of other Company
supplier agreements, [***] of the cost reduction(s) shall be passed onto
Company in the form of reduced prices, except that if the cost reduction
results from Supplier initiated changes, Supplier shall furnish to Company
a complete list of expenses that Supplier incurred in effecting said cost
reduction, if any. Supplier shall be entitled to receive the benefits of
the cost reduction for the time period required to recover its
implementation expenses.
6. BEST PRICE
If, at any time during the term of this Agreement Supplier should sell
to any customer other than to affiliates or subsidiaries of Supplier,
material at least equal or similar quality (and volume] at a price lower
than that in effect under this Agreement, Company shall pay the lower price
on all deliveries of
[***] Confidential treatment has been requested for the bracketed portions.
The confidential redacted portion has been filed separately with the
Securities and Exchange Commission.
<PAGE> 3
MATERIAL which are made during the period when such lower price is in
effect. Upon ten (10) days written notice, Company, or Company's authorized
representatives, may audit Supplier's applicable books and records for the
purpose of verifying Supplier's compliance with this provision.
7. TERMS OF PAYMENT
Net thirty (30) business days from the date of delivery of the
MATERIAL to Company or receipt of the applicable invoice therefor by
Company whichever occurs later.
8. FORECASTS
Company shall provide Supplier with a twelve (12) month non-binding
forecast submitted to Supplier by the fifth (5th) business day of each
calendar month. Such forecast shall be used by Supplier for planning
purposes only and shall not be deemed a commitment by Company to purchase
the MATERIAL shown in the forecast.
9. FOB
The MATERIAL shall be shipped FOB Supplier's location (or such other
Supplier's location as may be designated by Supplier). Supplier shall
notify Company's transportation representative on (303) 538-8278 or (303)
538-2907 when MATERIAL is ready for shipment. Company shall select the
carrier and arrange at Company's expense for the transportation of the
MATERIAL.
10. FREIGHT CLASSIFICATION
MATERIAL purchased under this Agreement shall be shipped to Company
subject to freight charges appropriate for goods classified as DCP-based
Extenders and D/A Converters. Supplier shall indicate on the bill of lading
that Company's contract rates apply.
11. NON-EXCLUSIVE MARKET RIGHTS
This Agreement neither grants to Supplier an exclusive right or
privilege to sell to Company any or all products of the type described in
the MATERIAL section which Company may require, nor requires the purchase
of any MATERIAL 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 MATERIAL.
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.
[***] Confidential treatment has been requested for the bracketed portions.
The confidential redacted portion has been filed separately with the
Securities and Exchange Commission.
<PAGE> 4
Agreement No. WR71980064
Sheet 4 of 31
12. SPECIFICATIONS OR DRAWINGS
Supplier's standard commercial Technical Specifications are included
by reference and further described in APPENDIX B attached hereto and made a
part of this Agreement.
In accordance with the notification requirements outlined in Section
"PRODUCT CHANGE NOTICES", Supplier shall provide Company with at least
[***] business days prior written notice of any change proposed to be made
by Supplier in the MATERIAL furnished pursuant to said Technical
Specification under 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 MATERIAL affected
by such change.
Supplier shall continue to supply MATERIAL to Company pursuant to the
Technical Specification for the term of the Agreement. If Supplier is
unable to continue to thus supply or discontinues manufacture of MATERIAL,
Company shall be entitled to [***] advance notice.
13. ASSIGNMENT
Supplier shall not assign any right or interest under this Agreement
(excepting solely for moneys due or to become due) 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.
14. BANKRUPTCY AND TERMINATION FOR FINANCIAL INSECURITY
Either party may terminate this Agreement by notice in writing:
(i) if the other party makes an assignment for the benefit of
creditors (other than solely an assignment of monies due); or:
(ii) 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
[***] Confidential treatment has been requested for the bracketed portions. The
confidential redacted portion has been filed separately with the
Securities and Exchange Commission.
<PAGE> 5
Agreement No. WR71980064
Sheet 5 of 31
take whatever steps necessary to assume or reject the Agreement by such
date.
15. CFC PACKAGING
Supplier warrants that all packaging materials furnished under this
Agreement and all packaging associated with MATERIAL furnished under this
Agreement were not manufactured using and do not contain
chlorofluorocarbons. "Packaging" means all bags, wrapping, boxes, cartons
and any other packing materials used for packaging. Supplier shall
indemnify and hold Company harmless for any liability, fine or penalty
incurred by Company to any third party or governmental agency arising out
of Company's good faith reliance upon said warranty.
16. 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.
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.
18. CONTINUING AVAILABILITY
Supplier shall offer for sale to Company, during the term of this Agreement
and for at least one (1) year after the expiration of this Agreement,
MATERIAL conforming to the Technical Specifications and other
Specifications set forth in this Agreement. Supplier further shall offer
for sale to Company, during the term of this Agreement and until five (5)
years after the expiration of this Agreement, maintenance, replacement, and
repair parts ("Parts") which are functionally equivalent and identical in
form and fit for the MATERIAL covered by this Agreement. The price for the
MATERIAL and Parts shall be the price set forth in Supplier's then current
agreement with Company for said MATERIAL 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 MATERIAL or Parts at the time for delivery. The MATERIAL and Parts
shall be warranted as set forth in the "WARRANTY" section of this
Agreement. The term "Parts" is included in the term "MATERIAL."
<PAGE> 6
Agreement No. WR71980064
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In the event Supplier fails to supply such MATERIAL 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
section and Supplier shall, without obligation of or charge to Company,
provide Company with the technical information or any other rights required
so that Company can provide technical support and maintenance to its
customers.
The technical information includes, by example; and not by way of
limitation: (a) manufacturing drawings and specifications of raw materials
and components comprising such MATERIAL or Parts, (b) manufacturing
drawings and specifications covering special tooling and the operation
thereof (c) a detailed list of all commercially available MATERIAL or Parts
and components purchased by Supplier on the open market disclosing the
MATERIAL or Part number, name and location of the Supplier and price lists
for the purchase thereof, and (d) one complete copy of the executable code
used in the preparation of any software licensed or otherwise acquired by
Company from Supplier under this Agreement.
19. DEFAULT
If either party 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 ten (10) business
days after the giving of written notice to other party thereof, then, in
addition to all other rights and remedies which the non-defaulting party
may have at law or equity or otherwise, the non-defaulting party shall have
the right to cancel this Agreement and/or any purchase orders placed
without any charge to or obligation or liability of non-defaulting party.
20. ELECTRONIC DATA INTERCHANGE
Supplier agrees, if requested by Company, to implement Electronic Data
Interchange (EDI) ordering and payment arrangements as an electronic means
of trading business document with Company. The electronic business
documents include purchase orders, acknowledgments, purchase order changes,
ship notices, invoices, remittance advice, electronic funds transfer (EFT)
or such purchasing communications as may be requested by Company for
transaction 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
execution of this Agreement.
21. EPIDEMIC CONDITION
If during the term of this Agreement and for one (1) year after the
last shipment date of MATERIAL under this Agreement Company notifies
Supplier that MATERIAL shows evidence of an "Epidemic Condition,"
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Supplier shall prepare and propose a Corrective Action Plan ("CAP") with
respect to such MATERIAL within five (5) working days of such notification,
addressing implementation and procedure milestones for remedying such
Epidemic Condition(s). An extension of this time-frame is permissible upon
mutual written agreement of the parties.
Upon notification of the Epidemic Condition to Supplier, Company shall
have the right to postpone all or part of the shipments of unshipped
MATERIAL, by giving written notice of such postponement to Supplier,
pending correction of the Epidemic Condition. Such postponement shall
temporarily relieve Supplier of its shipment liability and Company of its
shipment acceptance liability. Should Supplier not agree to the existence
of an Epidemic Condition or should Company not agree to the CAP, then
Company shall have the right to suspend all or part of its unshipped orders
without liability to Company until such time as a mutually acceptable
solution is reached.
An Epidemic Condition will be considered to exist when one or more of
the following conditions occur:
(1) Failure reports or statistical samplings show that MATERIAL
shipped contain a potential safety hazard (such as personal injury or
death, fire, explosion, toxic emissions, etc.), or exhibit a highly
objectionable symptom (such as emissions of smoke, loud noises, deformation
of housing) or other disconcerting symptoms of this type.
(2) Reliability plots of relevant data indicate that the MATERIAL has
actual Mean Time Between Failures (MTBF) of less than 80% of the MTBF
stipulated in the Technical Specification. The MTBF parameter of MATERIAL
is defined as the total operating or power-on time of any population under
observation ("T"), in hours, divided by the total number of critical
failures ("n") that have occurred during the observed period. A critical
failure is defined as a failure to operate per the requirements of the
Technical Specification. The total operating time of a population is the
summation of operating time of individual units in that population. MTBF is
expressed as MTBF = T/n. An Epidemic Condition shall exist when data
derived from populations being tracked confirms the condition with 80%
confidence. (3) MATERIAL Dead on Arrival (DOA) failures exceed the Epidemic
DOA failure rate which is defined as 1.2 x DOA specified in the section of
this Agreement entitled PRODUCT CONFORMANCE REVIEW.
Only major functional and visual/mechanical/appearance defects are
considered for determining Epidemic Condition. MATERIAL could be either
sampled or, a Company's option, 100% audited at Company warehouses,
<PAGE> 8
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Sheet 8 of 31
factories or Company's customers' locations. If MATERIAL is sampled, the
data must have 80% or better statistical confidence.
For the purpose of this Agreement, functional DOA shall be defined as
any MATERIAL that during the test, installation or upon its first use fails
to operate as expected or specified. Visual/mechanical/appearance DOA is
defined as any MATERIAL containing one or more major defects that would
make the MATERIAL unfit for use or installation.
An Epidemic Condition shall not include failures due to customer
misapplication, utilization of parts not approved by Supplier, or chain
failures induced by internally or externally integrated subassemblies.
In the event that Supplier develops a remedy for the defect(s) that
caused the Epidemic Condition and Company agrees in writing that the remedy
is acceptable Supplier shall:
(a) Incorporate the remedy in the affected MATERIAL in accordance with
Company's instructions.
(b) Ship all subsequent MATERIAL incorporating the required modification
correcting the defect(s) at no additional charge to Company; and
(c) Repair and/or replace MATERIAL that caused the Epidemic Condition. In
the event that Company incurs costs due to such repair and/or replacement,
including but not limited to labor and shipping costs, Supplier shall
reimburse Company for such costs. Supplier shall bear risk of in transit
loss and damage for such repaired and/or replaced MATERIAL.
Supplier and Company shall mutually agree in writing as to the
remedy's implementation schedule. Supplier shall use its best efforts to
implement the remedy in accordance with the agreed-upon schedule.
If Supplier is unable to develop a mutually agreeable remedy, or does
not adequately take into account the business interests of Company, as
reasonably agreed by the parties, Company may (1) develop and implement
such remedy and, in such case, implementation costs and risk of in-transit
loss and damage shall be allocated between the parties as set forth in this
section, and/or (2) cancel postponed orders without liability and return
all MATERIAL affected by such Epidemic Condition for full refund, payable
by Supplier within thirty (30) business days after receipt of returned
MATERIAL (with risk of loss or in-transit damage borne by Supplier) and/or
(3) terminate this Agreement without further liability.
<PAGE> 9
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22. EXPORT CONTROL
Supplier will not use, distribute, transfer or transmit any products,
software or technical information (even if incorporated into other
products) provided under this Agreement except in compliance with U.S.
export laws and regulations (the "Export Laws"). Supplier will not,
directly or indirectly, export or re-export the following items to any
country which is in the then current list of prohibited countries specified
in the applicable Export Laws: (a) software or technical data disclosed or
provided to Supplier by Company or Company's subsidiaries or affiliates; or
(b) the direct product of such software or technical data. Supplier agrees
to promptly inform Company in writing of any written authorization issued
by the U.S. Department of Commerce office of export licensing to export or
re-export any such items referenced in (a) or (b). The obligations stated
above in this clause will survive the expiration, cancellation or
termination of this Agreement or any other related agreement.
23. 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 non performing party or
its subcontractors. Supplier's liability for loss or damage to Company's
MATERIAL in Supplier's possession or control shall not be modified by this
section. 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.
24. GOVERNMENT CONTRACT PROVISIONS
The following provisions regarding equal opportunity, and all
applicable laws, rules, regulations and executive orders specifically
related thereto, including applicable provisions and sections from the
Federal Acquisition Regulation and all supplements thereto are incorporated
in this Agreement as they apply to work performed under specific U.S.
Government contracts: 41 CFR 60-1.4, Equal Opportunity; 41 CFR 60-1.7,
Reports and Other Required Information; 41 CFR 60-1.8, Segregated
Facilities; 41 CFR 60-250.4, Affirmative Action For Disabled Veterans and
Veterans of the Vietnam Era (if in excess of $10,000); and 41 CFR 60-741.4,
Affirmative Action for Disabled Workers (if in excess of $2,500), wherein
the terms "contractor" and "subcontractor" shall mean "Supplier". In
addition, orders placed under this Agreement containing a notation that the
material or services are intended for use under Government contracts shall
be subject to such other Government provisions printed, typed or written
thereon, or on the reverse side thereof, or in attachments thereto.
<PAGE> 10
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25. HEAVY METALS 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 materials 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 section.
26. 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
Company or its affiliates. Supplier shall remove or obliterate any
Identification prior to any use or disposition of any MATERIAL rejected or
not purchased by Company.
27. 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.
28. 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: (i) 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 material provided by Supplier or persons furnished by Supplier; (ii)
assertions under Workers' Compensation or similar acts made by persons
furnished by Supplier; or (iii) any failure of Supplier to perform its
obligations under this Agreement.
<PAGE> 11
Agreement No. WR71980064
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29. INFRINGEMENT
Supplier shall indemnify and save harmless Company, its affiliates and
their customers, officers, directors, employees (all referred to in this
section 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 (i) of 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 (ii) 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 (i)
commercial items available on the open market or the same as such items, or
(ii) 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 or any Infringement Claim and shall cooperate in good faith with the
other to facilitate the defense of any such Claim.
30. 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 MATERIAL furnished or its packaging. Such
Insignia will not be affixed, used or otherwise displayed on the MATERIAL
furnished or in connection therewith without written approval by Company.
The manner in 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
section does not reduce or modify Supplier's obligations under the
"IDENTIFICATION" and "USE OF INFORMATION" section.
31. INSURANCE
Supplier shall maintain and cause Supplier's subcontractors to
maintain during the term of this Agreement: (i) Workers' Compensation
insurance as prescribed by the law of the state or nation in which the Work
is performed; (ii) employer's liability insurance with limits of at least
$500,000 for each occurrence; (iii) 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 for each
occurrence; (iv) Commercial General Liability ("CGL") insurance, ISO 1988
or later occurrence form of insurance including Blanket Contractual
Liability and Broad Form Property
<PAGE> 12
Agreement No. WR71980064
Sheet 12 of 31
Damage, with limits of at least $1,000,000 combined single limit for bodily
injury and property damage for each occurrence; and (v) if the furnishing
to Company (by sale or otherwise) of products or material is involved, CGL
insurance endorsed to include products liability and completed operations
coverage in the amount of $2,000,000 per occurrence. All CGL and automobile
liability insurance shall designate Company, 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 insurance 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.
32. INVOICING FOR GOODS
Supplier shall: (i) render original invoice, or as otherwise specified
in this Agreement, showing Agreement and order number, through routing and
weight, (ii) render separate invoices for each shipment within twenty-four
(24) hours after shipment, and (iii) mail invoices with copies of bills of
lading and shipping notices to the address shown on this Agreement or
order. If prepayment of transportation charges is authorized, Supplier
shall include the transportation charges from the F.O.B. point to the
destination as a separate item on the invoice stating the name of the
carrier used.
33. INVOICING FOR STOCKS
If Company requests for reasons other than covered by Section "FORCE
MAJEURE", that shipment be postponed beyond the date shown on a purchase
order, Supplier may invoice Company as of the original scheduled delivery
date for MATERIAL manufactured under this Agreement, if it has been
inspected and approved by Company's designated quality organization
(provided inspection has been specified in this Agreement or in an order
issued under this Agreement).
34. JURISDICTION
Subject to the section "MEDIATION", Supplier agrees that any action or
legal proceeding arising out of this Agreement shall be brought only in a
court of competent jurisdiction in the United States of America and
Supplier
<PAGE> 13
Agreement No. WR71980064
Sheet 13 of 31
expressly submits to, and accepts the jurisdiction of, any such court in
connection with such action or proceeding and Supplier further consents to
the enforcement of any judgment against it arising therefrom in any
jurisdiction in which it has or shall have any assets.
35. LICENSES
No Licenses, express or implied, under any patents are granted by
Company to Supplier under this Agreement or order.
36. MARKING
All MATERIAL 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.
(c) with Company's Comcode
In addition, Supplier shall add any other identification which might
be requested by Company such as but not limited to indicia conforming to
the Company's Serialization Plan (KS-23490) and is included by reference, a
copy being in the possession of the Supplier. Charges, if any, for such
additional identification marking shall be as agreed upon by Supplier and
Company. This section does not reduce or modify Supplier's obligations
under the "IDENTIFICATION" section.
37. 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 shall 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 section shall be construed to preclude any party
from seeking injunctive relief in order to protect its rights pending
mediation.
38. MONTHLY ORDER AND SHIPMENT REPORTS
Supplier shall render monthly order and shipment reports on or before
the fifth (5th) working day of the succeeding month containing the
information agreed to by Company and Supplier.
<PAGE> 14
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39. NEW AND CHANGED METHODS, PROCESSES AND EQUIPMENT
Supplier shall use reasonable efforts to keep abreast of major
developments in Supplier's industry and to promptly advise Company of any
developments that might affect the production of any MATERIAL under this
Agreement.
40. NON WAIVER
The failure of either party at any time to enforce any right or remedy
available to it under this Agreement or otherwise with respect to any
breach or failure by the other party shall not be construed to be a waiver
of such right or remedy with respect to any other breach or failure by the
other party.
41. NOTICES
Any notice given 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
To Company: Lucent Technologies Inc.
Global Procurement Organization
211 Mt. Airy Road
Room 3W222
Basking Ridge, NJ 07920
Attn.: Sourcing Manager
-OR-
To Supplier: MCK Communications, Inc.
313 Washington Street
Newton, MA 02158
Attn.: Chief Executive Officer
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.
The above addresses may be changed at any time by giving prior written
notice as above provided.
<PAGE> 15
Agreement No. WR71980064
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42. OPERATING SYSTEM SOFTWARE
The term MATERIAL includes any software (operating program in machine
readable form and related documentation) and storage media therefor
normally furnished with or embedded in the MATERIAL. Title to the software,
including copyright, shall remain in Supplier. The party having title to
the MATERIAL shall have title to the software storage media. For the life
of the MATERIAL listed in this Agreement, Supplier grants to Company and
any subsequent purchaser, lessee or other end user (referred to
collectively in this section as "end user") a non-exclusive license to use
said software on the MATERIAL on which it was delivered. Company and any
subsequent end user may copy the software for use on such MATERIAL with
which it was originally delivered and for archival purposes, but shall not
knowingly reproduce either the original software for distribution to
others. Company and any subsequent end user may add to, delete from or
modify the software in any manner, but no changes, however extensive, shall
alter Supplier's title to such original software. Title to any such
modification or addition to the software shall remain in the entity which
creates the modification or addition.
43. 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
chlorofluorocarbons, halons and certain chlorinated solvents. Supplier
hereby warrants that the MATERIAL furnished to Company will conform to all
applicable requirements established pursuant to such agreements,
legislation and regulations, and the MATERIAL 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 section) under all such agreements, legislation and requirements.
Supplier also warrants that it is currently reducing, or if Supplier is not
the manufacturer of the MATERIAL, 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 MATERIAL.
If the MATERIAL 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 MATERIAL 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
<PAGE> 16
Agreement No. WR71980064
Sheet 16 of 31
MATERIAL. This includes all ODCs used in the manufacturing and assembly
operations for the MATERIAL plus all ODCs used by Supplier's vendors and
any other vendors in producing components or other products incorporated
into the MATERIAL sold to Company.
Supplier is responsible to obtain information on the ODC content of
all components and other products acquired to manufacture the MATERIAL 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 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 section 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 section. Supplier
shall cooperate with Company in responding to any inquiry concerning the
use of ODCs to manufacture the MATERIAL 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 MATERIAL or
components thereof.
44. OZONE DEPLETING SUBSTANCES LABELING
Supplier warrants and certifies that all MATERIAL and other 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."
45. PACKING, LABELING AND SERIALIZATION
MATERIAL purchased, repaired, replaced or refurbished under this
Agreement shall be packed, labeled and serialized by Supplier at no
additional charge in accordance with specifications OEMPS No. 101 "Packing
and Shipping Requirements," X-20587 "Specification Requirements for Package
Content Identification Label," and KS-23490 "Product Bar Code, Serial and
Comcode Label," is included by reference, a copy being in the possession of
the Supplier and as changed from time to time with Supplier's written
approval.
<PAGE> 17
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46. PRODUCT CHANGES
Supplier shall notify Company in advance, in writing of any change
proposed to be made in accordance with this Agreement, or in the
Specification and documentation covered by this Agreement that would impact
upon: (i) reliability, (ii) requirements of the Specification, or (iii)
form, fit or function (as defined below).
In order for Company to review these proposed changes, at least thirty
(30) business days advance notice will be required except for those cases
where an extremely unsatisfactory condition requires immediate action. In
that instance, verbal notification to Company shall be used, followed by
Supplier's immediate written confirmation.
"Form" shall mean changes in appearance visible to the user (customer,
repair personnel, developer) of the MATERIAL.
"Fit" shall mean changes in parts to components that are not
physically interchangeable.
"Function" shall mean changes that affect operational characteristics
of the MATERIAL or require the operator to change the method of operation.
Supplier shall submit a proposal to Company, specifically documenting
all cost factors, implementation schedules, and repair changes.
The change notice shall be sent to the following address:
Lucent Technologies Inc.
211 Mt. Airy Road
Room 3W222
Basking Ridge, NJ 07920
Attn.: Sourcing Manager:
The format of Supplier's notification document shall be the
responsibility of Supplier but said notification document shall contain at
least the following information.
1. Supplier's name.
2. Agreement number.
3. MATERIAL description.
4. Change number.
5. MATERIAL affected.
6. Reason for change.
<PAGE> 18
Agreement No. WR71980064
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7. Description of change (including the impact upon: (i) reliability,
(ii) requirements of the Specification and (iii) form, fit or
function.)
8. [***]
9. Marking method of identifying changed units.
10. Documentation
a. Marked up documents shall be provided until the document or
drawing is re-issued.
b. Listing of documents and drawings to be changed.
c. Field repair or modification kit documentation (if
applicable).
11. Unit in process, in stock and installed affected by change.
12. Date changes are proposed to be implemented.
13. All necessary and relevant temporary changes affected by this
notice.
14. All necessary and relevant attachments.
15. Additional comments.
If, as mutually agreed by Company and Supplier, sufficient changes
have been made to warrant a MATERIAL re-qualification, such
re-qualification will be performed at no cost to Company unless otherwise
agreed.
MATERIAL shall be in accordance with the latest information stated or
referenced in the Specification.
The quality of MATERIAL used and the method of manufacturing, handling
and shipping, shall be such that the finished MATERIAL meets the properties
and requirements shown in the Specification and in the other sections of
this Agreement.
If Company, in its sole discretion, does not agree to the change(s)
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 orders for MATERIAL affected by such
change.
47. PRODUCT CONFORMANCE REVIEWS
Supplier shall, utilizing documented procedures specified herein, make
such tests and inspections as are necessary to insure that MATERIAL meets
all technical requirements of the MATERIAL specification. Supplier shall
provide, without charge, any production testing facilities and personnel
required to inspect the MATERIAL under Quality Program Specification (QPS)
Nos. 40.002 and 40.030, included by reference, a copy being in possession
of the Supplier as changed from time to time with Supplier's written
approval. Company reserves the right to inspect MATERIAL prior to shipment
from Supplier or Supplier's subcontractor(s). Such inspection shall
[***] Confidential treatment has been requested for the bracketed portions. The
confidential redacted portion has been filed separately with the
Securities and Exchange Commission.
<PAGE> 19
Agreement No. WR71980064
Sheet 19 of 31
be conducted by Company's Engineering and Environmental Technologies (EE&T)
organization utilizing a 0.65% Acceptability Level (AQL) sampling plan as
described in QPS 40.030. If MATERIAL fails inspection, Supplier agrees to
pay for all re-inspection costs. Inspection requirements may be waived only
by written notification from Company's Engineering and Environmental
Technologies (EE&T) organization. In the event that any or all work under
this Agreement is subcontracted to another Supplier, Company reserves the
right to conduct the aforementioned inspections at the subcontractors
facilities.
48. PRODUCT DOCUMENTATION
Supplier shall furnish, at no charge, product documentation, and any
succeeding changes thereto, as described in the Technical Specification.
Company may use, reproduce, reformat, modify and distribute such product
documentation.
Company shall 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.
49. PURCHASE ORDERS
Purchase orders issued under this Agreement shall be sent to the
following address:
MCK Communications, Inc.
313 Washington Street
Newton, MA 02158
Attn.: Vice President Sales
Purchase orders shall specify: (i) description of MATERIAL, inclusive
of any numerical/alphabetical identification referenced in the price list
in this Agreement, (ii) delivery date, (iii) applicable price, (iv)
location to which the MATERIAL is to be shipped and (v) location to which
invoices shall be sent for payment.
50. REGISTRATION AND RADIATION STANDARDS
When MATERIAL 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
<PAGE> 20
Agreement No. WR71980064
Sheet 20 of 31
"FCC Rules"), Supplier warrants that such MATERIAL 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 by Company, to
assure that MATERIAL shipped complies with the applicable FCC Rules.
Supplier shall indemnify and save Company harmless from any liability,
fines, penalties, 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. Supplier shall
defend Company, at Company's request, against such liability, claim or
demand.
In addition, should MATERIAL which is subject to Part 15 of the FCC
Rules, during use generate harmful interference to radio communications,
Supplier shall provide the Company information relating to methods of
suppressing such interference and pay the cost of suppressing such
interference or, at the option of Company, accept the return of the
MATERIAL and refund to Company the price paid for the MATERIAL less a
reasonable amount for depreciation, if applicable.
To the extent that MATERIAL furnished under this Agreement is also
subject to FCC Rules governing the use of the MATERIAL as a component in a
system, 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 MATERIAL to enable Company to ensure ongoing
compliance with the FCC Rules. Company shall pay any increase in Supplier's
costs and/or expenses resulting from Company's request to modify MATERIAL
to enable Company to comply with the FCC Rules.
Nothing in this section shall be deemed to diminish or otherwise limit
Supplier's obligations under the "WARRANTY" section or any other section of
this Agreement.
51. REJECTIONS
If Company rejects any or all of the MATERIAL, 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 MATERIAL 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) have rejected MATERIAL replaced by Supplier at the
purchase price stipulated in this Agreement.
<PAGE> 21
Agreement No. WR71980064
Sheet 21 of 31
52. RELEASES VOID
Neither party shall require (i) waivers or releases of any personal
rights or (ii) execution of documents which conflict with the terms of this
Agreement, from employees, representatives or customers of the other in
connection with visits to its premises and both parties agree that no such
releases, waivers or documents shall be pleaded by them or third persons in
any action or proceeding.
53. REPAIRS NOT COVERED UNDER WARRANTY
In addition to repairs provided for in the "WARRANTY" section Supplier
shall provide repair service on all MATERIAL ordered under this Agreement
during the term of this Agreement and until five (5) years after the
expiration of this Agreement. MATERIAL to be repaired under this section
will be returned to a location designated by Supplier, and unless otherwise
agreed upon by Supplier and Company, Supplier shall ship the repaired
MATERIAL which meets the Specifications set forth in the "SPECIFICATIONS OR
DRAWINGS" section and all other Specifications within ten (10) business
days of receipt of the defective or non-conforming MATERIAL. With the
concurrence and scheduling of Company, repair may be made by Supplier on
site.
If MATERIAL is returned to Supplier for repair as provided for in this
section 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 Supplier's then current agreement
with Company for said MATERIAL 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 MATERIAL
at the time for delivery. Further, if requested by Company, Supplier shall
take the necessary steps to dispose of the unrepairable MATERIAL and pay to
Company the salvage value, if any. Replacement and repaired MATERIAL shall
be warranted as set forth in the "WARRANTY" section.
This Agreement does not grant Supplier an exclusive privilege to
repair any or all of the MATERIAL 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 MATERIAL purchased under this Agreement.
All transportation costs of and in transit risk of loss and damage to
MATERIAL returned to Supplier for repair under this section will be borne
by Company and all transportation costs of and in transit risk of loss and
damage to such repaired or replacement MATERIAL returned to Company will be
borne by Company.
<PAGE> 22
Agreement No. WR71980064
Sheet 22 of 31
Price schedules for repairs under this section are listed in APPENDIX
A.
54. REPAIR PROCEDURES
Company shall furnish the following information with MATERIAL 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 MATERIAL to be repaired; (c) ship-to address
for return of repaired MATERIAL if different than (a); (d) a complete list
of MATERIAL returned; (e) the nature of the defect or failure if known; and
(f) whether or not returned MATERIAL 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 MATERIAL
which might be necessary to provide adequate in-transit protection from
transportation damage.
MATERIAL repaired by Supplier shall have the repair completion date
stenciled or otherwise identified in a permanent manner at a readily
visible location on the MATERIAL and the repaired MATERIAL 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: (i) a reference to Company's
purchase order for these repair services, (ii) a detailed description of
repairs made by Supplier and the need therefor, and (iii) 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" sections, other than
provisions relating to transportation charges with respect to MATERIAL
repaired under warranty, shall apply to Supplier's return to Company of
repaired MATERIAL.
55. RIGHT OF ENTRY
Each party shall have the right to enter the premises of the other
party during standard 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. No charge shall be made for such visits. It is
agreed that prior notification will be given when access is required.
<PAGE> 23
Agreement No. WR71980064
Sheet 23 of 31
56. SAFETY CERTIFICATION
All MATERIAL purchased under this Agreement shall be designed to be in
compliance with the applicable Underwriters Laboratories (UL) and Canadian
Standards Association (CSA) rules and regulations. It is agreed that
Supplier shall be responsible for filing the required documents to obtain
compliance with said Underwriters Laboratories Standards and Canadian
Standards. Supplier shall be responsible for making the MATERIAL available
for testing.
57. SECTION HEADINGS
The headings of the sections in this Agreement are inserted for
convenience only and are not intended to affect the meaning or
interpretation of this Agreement.
58. SERVICES
Visits by Supplier's representatives or its suppliers' representatives
for inspection, adjustment or other similar purposes in connection with
MATERIAL 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.
59. SEVERABILITY
If any of the provisions of this Agreement shall be invalid or
unenforceable, such invalidity or unenforceability shall not invalidate or
render unenforceable the entire Agreement, but rather the entire Agreement
shall be construed as if not containing the particular invalid or
unenforceable provision or provisions, and the rights and obligations of
Supplier and Company shall be construed and enforced accordingly.
60. SHIPPING
Supplier shall: (i) ship the MATERIAL covered by this Agreement or
order complete unless instructed otherwise, (ii) ship to the destination
designated in the Agreement or order, (iii) ship according to routing
instructions given by Company, (iv) place the Agreement and order number on
all subordinate documents, (v) enclose a packing memorandum with each
shipment and, when more than one package is shipped, identify the package
containing the memorandum; and (vi) mark the 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 section of the Agreement or order or with Company's
shipping or routing instructions, Supplier authorizes Company to deduct
from any invoice of Supplier (or to charge back to Supplier), any increased
cost incurred by Company as a result of Supplier's noncompliance.
<PAGE> 24
Agreement No. WR71980064
Sheet 24 of 31
61. SHIPPING INTERVAL
The delivery schedule applicable to each purchase order will be agreed
upon by Supplier and Company and set forth in the purchase order. (Note:
Supplier has indicated that MATERIAL can usually be shipped an average of
twenty (20) business days after receipt of Company's purchase order;
however, in no event shall the delivery interval exceed thirty (35)
business days after receipt of purchase order.)
If 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 shall 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 MATERIAL
received by or paid for by Company under such purchase order. Within
fifteen (15) business days of Supplier's receipt of returned MATERIAL,
Supplier shall reimburse Company for the costs of shipping the MATERIAL
returned to Supplier and for any amounts, including shipping costs,
previously paid by Company for the MATERIAL. Company shall pay for any
MATERIAL if retains at the prices set forth in APPENDIX A, 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
section.
62. SHIPPING LOCATION
The material shall be shipped FOB Supplier's location 313 Washington
Street, Newton, MA 02158 or 130 Bowness Centre, Calgary, ALB T3B 5M5. The
1990 INCOTERM manual shall govern interpretation of shipment terms under
this Agreement.
63. STORAGE OF PAID FOR STOCK
Subject to the section "OPERATING SYSTEM SOFTWARE", Company has and
shall have at all times all right, title and interest in all
<PAGE> 25
Agreement No. WR71980064
Sheet 25 of 31
MATERIAL invoiced to Company in accordance with the section "INVOICING FOR
STOCKS". Such MATERIAL shall be referred to in this section as "Company
Property." Supplier shall store such Company Property without cost to
Company at Supplier's, 313 Washington Street, Newton, MA, facility and ship
such Company Property as ordered by Company. In addition, Supplier shall:
(i) Be responsible for the safekeeping of the Company Property,
assume all risks of loss or damage to the same and be liable for the full
actual value of such Company Property. In case of removal of all or any
part of the Company Property from one building to another, Supplier's
responsibility for loss or damage shall continue and Supplier shall give
Company at least ten (10) days advance notice in writing of the removal,
except when the removal is required to comply with Company's shipping
orders or to protect the Company Property from loss or damage.
(ii) Permanently mark or if impracticable to do so then affix labeling
stating that the Company Property is the "PROPERTY OF LUCENT TECHNOLOGIES
INC." For purposes of this section, the term "LUCENT TECHNOLOGIES INC."
shall be deemed to mean Company or the Company affiliated or associated
company which owns the tooling, as applicable.
(iii) Store the Company Property safely, indoors in protected areas
approved by Company. Store the Company Property segregated from other
property in sections of Supplier's plant marked Property of Company.
(iv) Deliver the Company property only to Company or Company's
designated customers in accordance with Company's orders or upon Company's
demand, FOB Supplier's plant without additional charge for removal,
packing, or crating.
(v) Supplier shall not allow an security interest, lien, tax lien or
other encumbrance (collectively referred to as "encumbrance") to be placed
on any Company Property. Supplier shall give Company immediate written
notice should any third party attempt to place or place an encumbrance on
such Company Property. Supplier shall indemnify and hold Company harmless
from any such encumbrance. Supplier shall, at Company's request, promptly
execute a "protective notice" UCC-1 form and all other documents reasonably
necessary to enable Company to protect its interest in such Company
Property. This Agreement shall constitute the security agreement required
by the UCC of the appropriate state.
(vi) Company may inspect, inventory, and authenticate the account of
the Company Property during Supplier's normal business hours. Supplier
<PAGE> 26
Agreement No. WR71980064
Sheet 26 of 31
shall provide Company access to the premises where all such Company
Property is located.
The obligations assumed by Supplier with respect to the Company
Property are for the protection of Company's property. If Supplier defaults
in carrying out Supplier's obligations under this Agreement, then, at no
cost to Company and upon twenty-four (24) hours notice to Supplier, Company
may cancel this Agreement in whole or in part or withdraw all or any part
of the Company Property, or both. Supplier shall, at Company's option,
return to Company or hold for Company's disposition any or all of such
Company Property in Supplier's possession.
64. 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,
disc, semiconductor memory or other information-conveying tangible article,
unless Supplier has the right to do so, and 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 Company's rights and obligations with respect hereto.
65. 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.
66. TAXES
Company shall reimburse Supplier only for the following tax payments
with respect to transactions under this Agreement unless Company advises
Supplier than 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.
67. TECHNICAL SUPPORT
Company shall be entitled to ongoing technical support including field
service and assistance, provided, however, that the availability or
performance of this technical support service shall not be construed as
<PAGE> 27
Agreement No. WR71980064
Sheet 27 of 31
altering or affecting Supplier's obligations as set forth in the "WARRANTY"
section or elsewhere provided for in this Agreement.
Ongoing technical support via telephone will be at no charge to
Company from Monday to Friday between hours of 8:00AM and 5:00PM.
68. TERMINATION OF PURCHASE ORDER
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 (i)
Supplier's purchase price of all components for the MATERIAL (not usable in
Supplier's other operations or salable to Supplier's other customers), plus
(ii) the actual costs incurred by Supplier in procuring and manufacturing
MATERIAL (not usable in Supplier's other operations or salable to
Supplier's other customers) in process as of the date of giving notice of
termination, less (iii) any salvage value thereof. However, no such
termination charges will be invoiced if, within [***] days of notice of
termination, MATERIAL 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.
69. 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.
70. TITLE AND RISK OF LOSS
Title (other than software) and risk of loss and damage to MATERIAL
including software purchased by Company under this Agreement or an order
issued pursuant to this Agreement shall vest in Company when the MATERIAL
has been delivered at the FOB point. If this Agreement or an order issued
pursuant to this Agreement calls for additional services including, but not
limited to, unloading, installation, or testing to be performed after
delivery, Supplier shall retain title and risk loss and damage to the
MATERIAL until the additional services have been performed. If Supplier is
authorized to invoice Company for MATERIAL prior to shipment or prior to
the performance of additional services, title to MATERIAL (other than
software) 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.
71. TOXIC SUBSTANCES AND PRODUCT HAZARDS
Supplier hereby warrants to Company that, except as expressly stated
elsewhere in this Agreement, all MATERIAL furnished by Supplier as
[***] Confidential treatment has been requested for the bracketed portions.
The confidential redacted portion has been filed separately with the
Securities and Exchange Commission.
<PAGE> 28
Agreement No. WR71980064
Sheet 28 of 31
described in this Agreement is safe for its foreseeable use, is not defined
as a hazardous or toxic substance or material 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 MATERIAL as normal refuse without special precautions
except as expressly stated elsewhere in this Agreement. Supplier also
warrants that where required by law, all MATERIAL 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 MATERIAL 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
MATERIAL, a Material 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 material,
less accumulated depreciation) that Company may incur by reason of the
recall or prohibition against continued use or disposal of MATERIAL
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 MATERIAL
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 MATERIAL furnished by Supplier under this Agreement.
72. TRAINING
If requested by Company, Supplier will, without charge to Company:
<PAGE> 29
Agreement No. WR71980064
Sheet 29 of 31
(a) provide instructors and the necessary instructional material of
Supplier's standard format to train Company's personnel in the
installation, planning and practices, operation, maintenance and repair of
MATERIAL 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
section, sufficient in detail, format and quantity to allow Company to
develop and conduct a training program.
73. 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.
74. VARIATION IN QUANTITY
Company assumes no liability for MATERIAL produced, processed or
shipped in excess of the amount specified in this Agreement or in an order
issued pursuant to this Agreement.
75. WARRANTY
Supplier warrants to Company and Customer, as defined in this section,
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 set forth in this
Agreement. These warranties extend to the future performance of the
MATERIAL and shall continue for a period of twelve (12) months from the
date of delivery to an end user customer (hereinafter "Customer") or, for
MATERIAL installed by Company or its re-sellers, for a period of twelve
(12) months from the completion of installation.
Supplier also warrants to Company and Customers that services will be
performed in a first class, workmanlike manner. In addition, if MATERIAL
<PAGE> 30
Agreement No. WR71980064
Sheet 30 of 31
furnished contains one or more manufacturer's warranties, Supplier hereby
assigns such warranties to Company and Customers. Supplier warrants that at
the time of delivery to Company such MATERIAL shall be free of any security
interest or any other lien or any other encumbrance whatsoever. All
warranties shall survive inspection, acceptance and payment.
Defective or non-conforming MATERIAL will, at Company's option, either
be returned to Supplier for repair or replacement, at no cost to Company,
with risk of in-transit loss and damage borne by Supplier and freight paid
by Supplier, or be repaired or replaced by Supplier on Customer's site or
another site designated by Company at no cost to Company. Unless otherwise
agreed upon by Supplier and Company, Supplier shall complete repairs and
ship the repaired MATERIAL within ten (10) business days of receipt of
defective or non- conforming MATERIAL, or at Company's option, ship
replacement MATERIAL within ten (10) business days after verbal
notification is given Supplier by Company. Supplier shall bear the risk of
in-transit loss and damage and shall prepay and bear that cost of freight
for shipments to Company of repaired or replaced MATERIAL. If requested by
Company, Supplier shall begin on-site repairs within ten (10) business days
after verbal notification is given Supplier by Company.
If MATERIAL returned to Supplier or made available to Supplier on site
for repair as provided for in this section is determined to be beyond
repair, Supplier shall promptly so notify Company and, unless otherwise
agreed to in writing by Supplier and Company, Supplier shall ship
replacement MATERIAL without charge within ten (10) business days of such
notification.
Replacement MATERIAL shall be warranted as set forth above in this
"WARRANTY" section. Any MATERIAL which is repaired, modified, or otherwise
serviced by Supplier shall be warranted as provided in this "WARRANTY"
section for the remainder of the warranty period (based upon the date
repair, modification or other service is completed and accepted by Company)
or ninety (90) business days after the MATERIAL is returned to a Customer,
whichever is later.
Supplier also warrants that software will record, store, process and
present calendar dates falling on or after January 1, 2000, in the same
manner and with the same functionality as it performed before January 1,
2000. This maintenance will be considered part of and covered under the
maintenance provisions of the Agreement at no additional charge to Company.
<PAGE> 31
Agreement No. WR71980064
Sheet 31 of 31
76. 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.
Accepted (Date) 4-29 19 99
---------- ---
<TABLE>
MCK COMMUNICATIONS, INC. LUCENT TECHNOLOGIES INC.
<S> <C>
------------------------------------------------- ------------------------------------------------
By: /s/ Paul Zurlo By: /s/ R. A. Murphy
------------------------------------------------- ------------------------------------------------
Name (Print) Paul Zurlo Name (Print) R. A. Murphy
------------------------------------------------- ------------------------------------------------
Title CFO Title Purchasing Manager
------------------------------------------------- ------------------------------------------------
</TABLE>
ATTACHMENTS - The following Attachments are hereby made part of the Agreement:
Appendix A, Price Schedule
Appendix B, Specifications
<PAGE> 32
Agreement No. WR71980064
Appendix A
1 of 4
DEFINITY EXTENDER PRODUCT MATRIX
<TABLE>
<CAPTION>
COMCODE DESCRIPTION MODEL PEC PRICE
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40733931 Analog DEFINITY Extender - Switch Module 845 2174-PSB [***]
This PEC will drive out 1 box, containing the stand-alone
Switch Module, a stand-alone power supply, a D8W cord (7'
long), a D2R cord (25' long), and a System Administrator's
Guide.
407389907 Analog DEFINITY Extender - Remote Module 846 2174-RSM [***]
This PEC will drive out 1 box, containing the Remote Module,
a stand-alone power supply, a seven foot/two conductor
mounting cord, and a User's Guide.
407444934 POWER, MTCE. STND ALONE - 120V PS120 2174-MSP [***]
This PEC can be used to order a maintenance spare, or
replacement stand alone power supply for stand alone switch
modules, and/or stand-alone remote modules.
407445733 MOUNTING BRACKET - SINGLE UNIT WB102 2174-MTG [***]
This PEC will drive out one metal mounting bracket. This
bracket may be used to mount either one stand alone switch,
or one stand alone remote module, to a wall, desk, or other
suitable vertical surface.
407564905 EXTENDER-PBX-PLUG IN UNIT 855L1 2174-PCB [***]
This PEC is used to order one rack mountable DEFINITY
Extender Switch Module. This rack mountable module can not
be used on a stand-alone basis. A DEFINITY Extender
multi-mount (PEC #2174-BMM or #2174-48V), listed above, is
required for use with this unit.
407564921 EXTENDER MULTI-MOUNT - 120V AC 855L1 2174-BMM [***]
This PEC will provide one box containing one DEFINITY
Extender Multi-Mount Card Frame, and one 120 Volt/60 Hz
power supply. This multi-mount will hold up to twelve (12)
rack mountable DEFINITY Extenders (Analog Version). In
addition to providing a nesting place and power for the
plug- in DEFINITY Extender Modules, the multi-mount also
provides a means to connect the analog circuits and DCP
ports to the modules, A twenty five pair connecting cable,
of proper length for the particular installation, and the
appropriate connecting block(s) for the wall field must be
sourced locally.
407564939 EXTENDER MULTI-MOUNT - 48V DC 855L3 2174-48V [***]
This DC to DC converter should be ordered only for those
applications where input voltage will be 48 Volts Direct
Current. This product is not stocked, and is offered with an
eight week interval. This PEC will provide one box
containing one DEFINITYa Extender Multi-Mount Card Frame,
and one 48 volt DC to DC converter. This multi-mount will
hold up to twelve (12)
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<PAGE> 33
Agreement No. WR71980064
Appendix A
2 of 4
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rack mountable DEFINITY Extenders (Analog Version). In
addition to providing a nesting place and power for the
plug-in DEFINITYa Extender Modules, the multi-mount also
provides a means to connect the analog circuits and DCP
ports to the modules. A twenty five pair connecting cable,
of proper length for the particular installation, and, the
appropriate connecting block(s) for the wall field must be
sourced locally.
407564897 PASSWORD ADMIN SOFTWARE 855L4 2174-PSA [***]
This PEC will drive out one Windows based, 3.5" floppy disk,
which is required to administer passwords for the rack
mountable DEFINITYa Extenders (Analog Version).
407578392 POWER SUPPLY SHELF 2174-PSS 2174-PSS [***]
This PEC is used to order a metal shelf, which can be used
as a flat surface on which to mount up to three Multi-mount
power supplies. It can be used with either the 120 volt AC
power supply, or the 48 volt DC to DC converter.
407578368 MTCE BULK POWER - 120V AC PSF110- 2174-PAC [***]
120VAC
This PEC can be used to order a maintenance spare, or a
replacement bulk stand alone power supply for maintenance
purposes.
407578384 MTCE BULK POWER - 48V DC 2174-PDC 2174-PDC [***]
This PEC ran be used to order a maintenance spare, or a
replacement bulk stand alone power supply (DC to DC
converter) for maintenance purposes.
407582899 EXTENDER MULTI-MOUNT - without power P855L2 2174-CFO [***]
407802966 ISDN DEFINITY Extender - Remote Module 876 2174-R2D [***]
This PEC will drive out 1 box, containing the Remote Module,
a stand-alone power supply, a seven foot/two conductor
mounting cord, and a User's Guide. Does not include TA.
407802958 ISDN DEFINITY Extender - Switch Module 875 2174-P2D [***]
This PEC will drive out 1 box, containing the standalone
Switch Module, a stand-alone power supply, a D8W cord (7'
long), a D2R cord (25' long), and a System Administrator's
Guide. Does not include TA.
407802982 ISDN DEFINITY Extender for Western Europe-- Remote 876WE 2174-RWE [***]
Module
This PEC will drive out I box, containing the Remote Module,
a stand-alone power supply, a seven foot/two conductor
mounting cord, and a User's Guide. Does not include TA.
407802974 ISDN DEFINITY Extender for Western Europe- Switch Module 875WE 2174-PWE [***]
This PEC will drive out 1 box, containing the stand alone
Switch Module, a stand-alone power supply, a D8W cord (7'
long), a D2R cord (25' long), and a
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<PAGE> 34
Agreement No. WR71980064
Appendix A
3 of 4
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System Administrator's Guide. Does not include TA.
407809433 ISDN DEFINITY Extender for the UK- Remote Module 876UK 2174-RUK [***]
This PEC will drive out 1 box, containing the Remote Module,
a stand-alone power supply, a seven foot/two conductor
mounting cord, and a User's Guide. Does not include TA.
407809425 ISDN DEFINITY Extender for the UK- Switch Module 875UK 2174-PUK [***]
This PEC will drive out 1 box, containing the stand-alone
Switch Module, a stand-alone power supply, a D8W cord (7'
long), a D2R cord (25'long), and a System Administrator's
Guide. Does not include TA.
New
407924653 ISDN DEFINITY Extender - Switch Module 2100 2174-P1D [***]
This PEC will drive out 1 box. containing the stand-alone
Switch Module, a stand-alone power supply, a D8W cord (7'
long), a D2R cord (25' long), and a System Administrator's
Guide. Includes integrated TA.
407924661 ISDN DEFINITY Extender - Remote Module 2101 2174-R1D [***]
This PEC will drive out 1 box, containing the Remote
Module, a stand-alone power supply, a seven foot/two
conductor mounting cord, and a User's Guide. Includes
integrated TA.
New
407975051 Analog DEFINITY Extender - Remote Module 1101 2174-RSP [***]
This PEC will drive out 1 box, containing the Remote Module,
a stand-alone power supply, a seven foot/two conductor
mounting cord, and a User's Guide.
407974831 Analog DEFINITY Extender - Switch Module 1100 2174-PSP [***]
This PEC will drive out 1 box, containing the stand-alone
Switch Module, a stand-alone power supply, a D8W cord (7'
long), a D2R cord (25' long), and a System Administrators
Guide.
407995489 Trade-In Analog DEFINITY Extender - Switch Module 1100T 2174-TI [***]
This PEC will drive out 1 box, containing the standalone
Switch Module, a stand-alone power supply, and a System
Administrators Guide.
407995497 Trade-In Analog DEFINITY Extender - Remote Module 1101T 2174-TIP [***]
This PEC will drive out 1 box, containing the Remote Module,
a stand-alone power supply, and a Users Guide.
============================================================================================================================
408039996 DEFINITY EXTENDER Rack System 3000 2174-RAK [***]
This PEC will provide one box containing one DEFINITY
Extender Rack System. This rack will hold up to twelve (12)
cards, either analog or ISDN. The rack includes a built-in
power supply and fan.
The rack also provides a means to connect the analog and
ISDN circuits and DCP ports to the modules. A
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Agreement No. WR71980064
Appendix A
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twenty five pair connecting cable, of proper length for the
particular installation, and the appropriate connecting
block(s) for the wall field must be sourced locally.
406040020 Switch Management Interface SOFTWARE SMI 2174-RAK [***]
This PEC will drive out two Windows based, 3.5" floppy disk,
used for simultaneous configuration, status,
troubleshooting, monitoring, and software upgrades for all
12 Switch Cards. The Switch Management Interface software is
year 2000 compliant. and requires Windows 95, or Windows NT
4.0 or higher to operate properly.
408039980 Analog DEFINITY Extender Rack Card 3100 2174-ACD [***]
This PEC will drive out one analog rack card that will
extend one remote user per card for a-total of 12 users per
rack.
408088714 ISDN DEFINITY Extender Rack Card 3200 2174-ICD [***]
This PEC will drive out one ISDN rack card that will extend
two remote users per card for a total of 24 users per rack.
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[***] Confidential treatment has been requested for the bracketed portions.
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<PAGE> 36
Agreement No. WR71980064
Appendix B
1 of 2
DEFINITY EXTENDER PRODUCT DESCRIPTIONS
ANALOG DEFINITY EXTENDER - MODEL 845/846
The Lucent Technologies DEFINITY(R) Extenders (Analog Version), one at the
switch location and one at a remote site, will allow customers to use
proprietary Lucent Technologies DCP Telephone Sets at locations other than where
the DEFINITY(R) ECS is located. The full function digital DCP terminal at the
remote site will look and perform exactly as it would if it were connected
directly to the DEFINITY(R) ECS.
This will be accomplished through the use of two (2) DEFINITY(R) Extenders
(Analog Version), and either a dial-up analog line, or a dedicated circuit.
Prior to the introduction-of this product, users were required to be co-located
with their DEFINITY(R) System in order to use a digital DCP telephone set.
The introduction of the DEFINITY(R) Extenders (Analog Version) provides a much
requested solution for our customers, who are experiencing ever increasing
pressure to provide remote office solutions for their employees.
ANALOG CENTRAL SITE RACK DEFINITY EXTENDER - MODEL 855
The Lucent Technologies DEFINITY(R) Extenders Central Site Rack System (Analog
Version) one at the switch location, will allow customers to use proprietary
Lucent Technologies DCP Telephone Sets at locations other than where the
DEFINITY(R) ECS is located. The full function digital DCP terminal at the remote
site will look and perform exactly as it would if it were connected directly to
the DEFINITY(R) ECS.
This will be accomplished by packaging analog switch module cards into a rack
system. Each rack has 12 slots across. This allows for reduced footprint, for
multiple installs and a reduction in the per port cost.
ISDN DEFINITY EXTENDER - MODEL 875/876
The ISDN DEFINITY Extender* system adjunct allows users to make and receive
calls from a remote location via an ISDN circuit while appearing to be in the
office. The ISDN DEFINITY Extender has two modules- the DEFINITY Extender Switch
Module and the DEFINITY Extender Remote Module.
Using an 8410D, 8410DR, 8411D, 8434, or a Callmaster(R) III (603E) voice
terminal, the Extender allows remote users to access system features such as
display, multiple call appearance, transfer, voice mail, message light and
conference. Outgoing calls can be made by the remote user using the DEFINITY
Enterprise Communications Server (ECS) network facilities. A terminal adapter is
required at both ends of an ISDN circuit to make an ISDN connection.
<PAGE> 37
Agreement No. WR71980064
Appendix B
2 of 2
The introduction of this product permits users to enter a Call-On-Demand (COD)
Mode which automatically drops the dial-up connection to the central site after
a predetermined period of time.
With the analog version of this product, users can also connect a remote digital
telephone set to their DEFINITY ECS. Because standard analog call connections
take much longer than the two seconds it takes to establish an ISDN call, users
must usually remain logged-on for the duration of their work tour.
NEW ISDN DEFINITY EXTENDER - MODEL 2100/2101
The (SDN DEFINITY Extender central site (model 2100) and remote site (model
2101) data modules improve upon the first generation of ISDN DEFINITY Extender
units (PEC 2174-R2D and 2174-P2D). The new units include an integrated terminal
adapter, support 56 Kbps or 64 Kbps of data on one B-channel, and deliver
improved voice quality on the second B-channel for the same price as the first
generation product.
NEW ANALOG DEFINITY EXTENDER - MODEL 1100/1101
The Analog DEFINITY Extender central site module (model 1100) and remote site
module (model 1101) data modules improve upon the first generation of Analog
DEFINITY Extender units (PEC 2174-PSB and 2174-RSM). The new units include an
advanced V.34 modem, which enhances voice quality and reduces retrains. The data
transmission rate supports up to 20 Kbps with voice traffic. In addition two new
features have been added: Call On Demand and Dial Back.
<PAGE> 1
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN REDACTED PROVISIONS OF
THIS AGREEMENT. THE REDACTED PROVISIONS ARE IDENTIFIED BY THREE ASTERISKS AND
ENCLOSED BY BRACKETS. THE CONFIDENTIAL PORTION HAS BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.
EXHIBIT 10.16
MASTER SUPPORT AGREEMENT
This Master Support Agreement is made this 28th day of June, 1999, (the
"Effective Date"), by and between MCK Communications, Inc. ("MCK"), located at
313 Washington Street, Newton, MA 02458 and VITAL NETWORK SERVICES, L.L.C.
("VITAL") 6 Rubber Avenue, Naugatuck, CT 06770.
WHEREAS, MCK markets certain equipment and services to Customers worldwide, and
in connection therewith offers on-site installation, maintenance and value-add
services to such Customers;
WHEREAS, VITAL provides on-site installation, maintenance and value-add
servicing of communications equipment worldwide;
WHEREAS, VITAL has a worldwide infrastructure to perform on-site installation,
maintenance and value-add services and desires to provide such services for MCK;
and
WHEREAS, MCK desires to engage VITAL as an independent contractor in performing
global on-site installation, maintenance and value-add services;
NOW, THEREFORE, in consideration of the mutual promise and covenants set forth
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, MCK and VITAL hereby agree as
follows:
1. DEFINITIONS.
1.1 "Affiliate" shall mean any entity worldwide, which directly or
indirectly controls, is controlled by or under common control with
VITAL.
1.2 "Advance Replacement" means a process to ship replacement Product
components in advance of receipt of failed/defective Product
components.
1.3 "Authorized Service Area" means an area within one hundred (100)
miles of a VITAL Service City.
1.4 "Customer" means the final end-user, purchaser or licensee who has
acquired Product(s) for their own internal use and not for resale,
remarketing, or redistribution, whether directly from MCK or through
other sources, and of whom MCK has received notification of and who is
entitled to support and maintenance services for such Products.
1.5 "First Level Support" means the ability to provide general Product
information and configuration support; collect relevant technical
problem identification information; perform base problem
determination; provide basic support on the standard protocols and
features; go on-site at Customer location to obtain information if
situation requires.
1.6 "Response" means the time period commencing upon MCK's or a
Customer's request for service hereunder and ending when the VITAL
Field Engineer is on-site.
1.7 "Hardware" means tangible Product made available to VITAL.
1.8 "Maintenance Release" or "Patch" means an incremental release of
MCK Software that provides maintenance fixes.
1.9 "Parts Depot" means MCK Parts Depot which provides support
required for this program.
<PAGE> 2
1.10 "Product" means both Hardware and/or Software listed in Appendix
A, which VITAL may support under the terms of this Agreement. Products
include Service Parts.
1.11 "RMA" means Return Material Authorization.
1.12 "Second Level Support" means First Level Support plus the ability
to support problem isolation and Product specification defect
determination; provide lab simulation and interoperability testing;
define an action plan; analyze traces; provide support on all
protocols and features; reproduce problems in a lab, diagnose problems
remotely and provide MCK with complete steps to reproduce a problem.
1.13 "Service(s)" means support provided by VITAL that includes but is
not limited to installation, maintenance and value-add programs.
1.14 "Service Part" means a component or sub-assembly of a Product,
excluding cables and/or all software, and is also referred to as Field
Replaceable Unit (FRU).
1.15 "Site" means and includes the premises where the Product is to be
installed or is located.
1.16 "Software" means the machine-readable object code software
programs licensed by MCK.
1.17 "Standard Business Hours" means 8:00 AM to 5:00 PM Local Standard
Time, Monday through Friday, excluding VITAL observed holidays.
1.18 "Third Level Support" means fixing or generating workarounds for
Hardware and Software bugs and troubleshooting bugs that were not
diagnosed during Second Level Support.
1.19 "Unrelated Services" means any other Service, in addition to the
Services authorized by MCK and provided by VITAL to a Customer.
1.20 "Update" means Maintenance Releases, Version Releases and/or
Major Releases which contain the same configuration as originally
acquired.
1.21 "Primary Provider" means MCK will promote VITAL internally and to
its Customers for worldwide service deliveries.
1.22 Valued- Added Services means Help Desk and telephone support
services.
2. SCOPE, SERVICE ORDERS AND TERM.
2.1 Authorization. MCK hereby appoints VITAL as a non-exclusive,
primary provider of on-site services to MCK's Customers located
throughout the world.
2.2 Support Services. MCK support services specified below at Section
4 are provided to VITAL as backup to the support staff of VITAL. VITAL
is primarily responsible for providing on-site support and telephone
support Services to MCK's Customers for whom VITAL receives a purchase
order hereunder.
2.3 MCK shall issue a purchase order to order Services. Such order
requires a Services schedule and/or Statement of Work for the specific
Customer or site location signed by MCK.
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2.4 Obligation to Customers. Other than the Services agreed to in this
document, neither VITAL nor MCK will make any obligation to Customers
on behalf of the other, nor commit the resources of the other to
Customers without the other's consent.
2.5 Implementation. MCK and VITAL will implement the terms of this
Agreement worldwide.
2.6 Term. This Agreement shall be effective as of the Effective Date
and shall remain in full force and effect for an initial term of
twenty-four (24) months, unless sooner terminated pursuant to Section
7. This Agreement shall be automatically renewed for additional
successive twelve (12) month terms unless either party gives the other
party at least ninety (90) days written notice of its intention not to
renew prior to the anniversary date of the Agreement.
2.7 Relationship of Parties. It is understood by the parties hereto
that VITAL is an independent contractor and not an employee or agent
of MCK and MCK is not an agent of VITAL. MCK will not provide fringe
benefits or insurance coverage on behalf of VITAL except for sales tax
payable by MCK as provided in Section 7.2. VITAL shall be responsible
for the withholding and/or payment, as required by law, of all
federal, state and local taxes imposed on VITAL and its employees due
to the performance of Services or any other obligation under this
Agreement.
3. VITAL OBLIGATIONS. VITAL shall provide the following Services to MCK:
3.1 On-site Support.
3.1.1 Services. VITAL shall provide on-site installation,
maintenance and value-add Services to MCK Customers during
contracted local business hours. Available Services, response
times and hours are identified in VITAL supplements provided
under separate cover.
3.1.2 On-site service includes: 1-800 number access,
round-the-clock travel to the Customer site, on-site labor,
problem diagnosis, fault isolation, equipment adjustment,
equipment replacement and on-line testing with VITAL standard
test equipment.
3.1.3 Special test equipment. Special test equipment
requirements identified by MCK will be provided by MCK to VITAL
prior to development of VITAL price calculations.
3.2 Technical Support.
3.2.1 VITAL will provide first and second Level Support.
VITAL shall establish problem priorities with MCK consistent with
problem priority definitions as described below. All problems
reported to VITAL technical support will be prioritized and
escalated to MCK based on such guidelines set forth by MCK.
(Reference Attachment C)
3.2.2 VITAL shall report unresolved cases to MCK within the
following time frames beginning at such time that a problem is
given a priority as defined below:
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<PAGE> 4
Priority 1. No later than four (4) hours from initial
MCK notification to VITAL. Priority 1 calls defined as
responding to MCK / End Users while in a troubleshooting
mode.
Priority 2. No later than eight (8) business hours from
initial MCK notification to VITAL. Priority 2 call defined
as responding to MCK / End User configuration questions
during normal network operation.
Priority 3. No later than three (3) business days from
initial MCK notification to VITAL. Priority 3 calls defined
as responding to MCK / End User general technical questions
during normal network operation.
3.3 Software Distribution Rights. VITAL may distribute, on a
non-exclusive basis, MCK provided Updates and Patches to Customers.
3.4 Service Parts Inventory
3.4.1 MCK will consign local spare parts kits to VITAL
Logistics per VITAL recommendations and/or mutually agreed to
spare ratio. Repair of such consigned Product will be at MCK
expense.
3.4.2 VITAL will use all consigned service parts kits only
for the remedial maintenance of MCK Product. VITAL will not
resell service parts to Customers for upgrades, system expansion
or any other reason outside the scope of remedial maintenance.
3.4.3 A Logistics Management fee will be applied by VITAL to
the Customer only if there is not a contract arrangement in place
that requires VITAL to provide the consigned part. (See
Attachment B).
3.5 Consigned Product Receipt/Return; Notification.
3.5.1 VITAL is responsible for the following when receiving
consigned spare parts and/or Advance Replacements and returning
replaced Product under Section 4.1.3:
3.5.1.1 When receiving consigned spare parts,
Advance Replacements and/or returning replaced product under
Section 4.1.3, VITAL is responsible for the following:
VITAL Logistics will inspect all parts received from MCK to
verify any damage in transit. Damaged and/or mis-shipments
will be reported to MCK immediately but not longer than five
(5) business days of receipt.
3.5.1.2 Returns Coordination.
3.5.1.2.1 VITAL shall return all
defective Product(s) within ten (10) days of the
receipt of the replacement Product.
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<PAGE> 5
3.5.1.2.2 VITAL shall coordinate the
return of all failed Product, freight and insurance
prepaid, to the MCK designated repair center.
3.5.1.2.3 VITAL shall comply with the
following RMA procedure:
i. VITAL will ensure all Products are properly
packaged prior to being shipped, and will include
a description of the failure and written
specification of any changes or alterations made
to the Product. Product returned to MCK will
conform in quantity and to the RMA request.
ii. VITAL shall tag each Product returned with a
transaction number and a brief description of the
problem.
3.5.2 For consigned products utilized during remedial
maintenance service as defined in Section 4.1.3, VITAL will be
responsible for the following:
3.5.2.1 Accountability. VITAL will provide and
retain records for all operational activities for MCK
Customers supported under this Agreement, including the
location(s) and hardware configuration of that
Customer.
3.5.2.2 Technical Assistance. Isolate product
problems to the Service Parts level, including
providing technical assistance to VITAL's field support
engineers which includes, at a minimum, hardware
problem identification and resolution.
3.5.2.3 Repackaging/Return of Service Parts. VITAL
will comply with the following return procedure.
i. VITAL will return defective Service Parts per
MCK's instructions.
ii. VITAL will repackage defective Service parts
and deliver to central pick-up location at the
Customer site.
iii. VITAL will inform MCK of pick-up location and
site contact/focal point for defective Service
Parts retrieval.
3.6 Help Desk Coordination. VITAL will represent MCK in answering and
coordinating a toll free customer service number. (See Attachment E)
3.7 Product Inspection. If required by MCK prior to putting previously
installed product under support, VITAL will visit the Customer to
ensure Product has been maintained in adherence to the maintenance
procedures as detailed in the applicable user information (supplied
with product upon initial sale/resale). Each Site visit will be
charged at current Time and Material rates in effect or pre-agreed to
price schedule.
3.8 Significant New Products. For significant new Products added to
the price list and/or not directly listed in Appendix A of this
Agreement, including Products which become MCK Products as a result of
an acquisition by MCK of another entity, MCK may require certain
certification, installation, or training requirements be completed by
5
<PAGE> 6
VITAL, as MCK would for all other MCK service providers, prior to
allowing VITAL to support such Products from MCK.
3.9 Focal Points. VITAL will identify at least one (1) individual to
manage the implementation of this Agreement, serve as focal point for
MCK's monitoring of support services provided under this Agreement,
and act as the focal point for day-to-day service issues.
3.10 Records. VITAL will maintain electronic records of Product under
coverage at all Customer sites.
3.11 Direct Customer Services Option. VITAL may resell its own brand
of services for Products directly to MCK customers under the following
circumstances: 1) In a multi-vendor environment where the MCK
installation base is less than 50% of the network and 2) if there is
not an existing service agreement directly with MCK in the first
twelve months after the initial installation. It is not the intention
of VITAL to directly solicit existing or potential Customers of MCK
for service of Products without prior approval of MCK. Under every
circumstance, VITAL will not solicit any such business unless MCK
gives prior approval. If VITAL is granted permission by MCK to quote
and support a customer as the prime to the extent permitted by law,
VITAL 1) will resell services at a higher rate than the published
prices in MCK's service offering and 2) guarantee MCK at least
comparable service revenue as detailed in the terms of Schedule B.
3.12 Personnel. VITAL shall select, employ, pay, supervise, direct and
discharge all VITAL personnel providing Services hereunder. VITAL
shall be solely responsible for the payment of all fringe benefits and
any other direct and indirect compensation for VITAL personnel
assigned to perform Services under this Agreement, as well as be
responsible for their worker's compensation insurance, employment
taxes, and other employer liabilities relating to such personnel as
required by law to be provided.
3.13 Staffing of Personnel. VITAL shall be solely responsible for
assigning personnel to perform the Services, which personnel will be
instructed by VITAL to perform the Services in a timely, efficient and
workmanlike manner. MCK shall have the right to request that personnel
not performing Services properly and in accordance with reasonable
technical or general work standards who do not promptly correct such
performance be replaced by VITAL with competent and suitable
personnel.
4. MCK OBLIGATIONS. MCK will provide the following services to VITAL:
4.1 Support for VITAL includes technical support, training, and
software support and hardware/spare support as follows:
4.1.1 Technical Support.
4.1.1.1 MCK shall provide 24-hour 7- day a week
access to MCK Engineering Resources. MCK will respond
to VITAL within one half (1/2) hour to all calls
received during Standard Local Business hours and to
Priority 1 and 2 calls received outside Standard Local
Business Hours. For Priority 3 calls received outside
Standard Local Business Hours, MCK will respond no
later than the next business day. (Reference 3.2.2 for
Priority definitions)
4.1.1.2 MCK will provide Third Level Support to
VITAL.
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<PAGE> 7
4.1.1.3 Once a problem is reported by MCK or a
Customer, MCK and VITAL will work closely together to
resolve the Customer problem. It is VITAL's
responsibility to log the incoming fault report
received by VITAL and to provide the necessary local
on-site and headquarters technical resources to resolve
problems reported by MCK within the scope of this
Agreement.
4.1.1.4 If a problem is escalated back to MCK,
VITAL will assign a local technical support person to
work the resolution of the problem with MCK. MCK will
supply the appropriate level of technical resources,
based on problem priority and elapsed time, to assist
VITAL with problem resolution and to ensure adherence
to MCK's Problem Prioritization and Escalation
Guideline as described in Attachment C. During such
problem escalation, if it is mutually agreed that MCK
on-site technical resources are required for final
resolution, MCK will dispatch the necessary level of
technical support to assist VITAL at no charge. VITAL
will ensure a local technical support person is
available to work with MCK on-site. VITAL, with the
assistance of MCK, will be responsible for providing
the Customer with the necessary updates for resolution
of the problem.
4.1.2 Software and Software Support
4.1.2.1 Software Releases. MCK will provide
Updates and one (1) paper copy of supporting
documentation for Product supported under this
Agreement as identified in Attachment A for VITAL lab
use. For Product noted by an asterisk, only Maintenance
Releases are available. MCK shall also provide
supporting documentation on Disk/CD ROM, upon request,
and if available. Additional paper copies of supporting
documentation may be reproduced by VITAL.
4.1.2.2 Release Support. MCK, in meeting support
obligations, may require VITAL to upgrade its Customer
to a supported release which may be charged at VITAL's
current Time and Material rates or agreed to price
schedule to MCK.
4.1.2.3 Software Patches. When required to fix a
fault, MCK will provide new Software to VITAL to
initiate corrective action or provide a
network-bootable Software image, as VITAL and MCK
agree.
4.1.2.4 Software Updates and/or Patches will be
provided to VITAL for distribution only on Product for
which Customer is licensed to use the Software and
pursuant to a current maintenance agreement for such
Product.
4.1.3 Hardware Support. MCK shall provide the following
hardware replacement service at no charge for Product supported
by VITAL and identified in Appendix A.
4.1.3.1 Product used for replacement may be new or
equivalent to new, at MCK's discretion.
7
<PAGE> 8
4.1.3.2 Product used for replacement will be
repaired by MCK at no charge to VITAL.
4.1.3.3 Product documentation will be provided to
VITAL at no charge.
4.1.3.4 End of Life. For the duration of this
Agreement, MCK agrees to provide Hardware replacement
support for three (3) years following the date of
announced end of life of the Product.
4.2 Training and Education
4.2.1 As part of the initial training, MCK shall train a
minimum of four (4) VITAL central technical support persons with
MCK recommended training course(s). Up to four training course(s)
will be provided by MCK at no cost to VITAL. Training will be
held at VITAL's headquarters in Naugatuck, Connecticut and/or
regional offices throughout the world; dates and locations to be
determined by mutual agreement. Employee expenses will be borne
by VITAL. VITAL agrees to have at least eight (8) trained
regional technical support employees within two (2) months from
the effective date of this Agreement.
4.2.2 MCK shall train additional employees as mutually
agreed necessary to support Customer contract obligations covered
under contracted VITAL support programs. Additional training for
field staff will be the responsibility of VITAL based on
like/same hardware and software.
4.2.3 If requested by VITAL, MCK will provide a
Train-the-Trainer Program at no charge that allows VITAL
instructors to train internal staff on MCK's Products.
4.2.4 Alternative Training. Videos, CD-ROM's or diskettes,
if available by MCK, will be provided to VITAL at no charge to
train field personnel and will be returned to MCK upon completion
of training.
4.3 Alternative Provisioning Purchase of Product to VITAL
4.3.1 MCK will permit purchase of Service Parts for VITAL to
provide support to VITAL direct Customers. MCK will sell to VITAL
Service Parts at MCK's then current published list price, less a
[***] discount.
4.3.2 To assist VITAL in setting up a working laboratory for
network simulation and integration analysis, MCK agrees to
consign VITAL an appropriate number of laboratory units per year.
VITAL agrees to use such units solely for support purposes under
the terms of this agreement and not for resale purposes.
4.4 Record Keeping. Product Configuration and Location Change Notice.
MCK will provide Notice of or any change in i) the Hardware or
Software component and ii) the location of any Customer Product. If
notification is not provided to VITAL, VITAL will invoice for
additional charges due to changes in product configuration or
location, calculated from the date of installation.
[***] Confidential treatment has been requested for the bracketed portions.
The confidential redacted portion has been omitted and filed separately
with the Securities and Exchange Commission.
8
<PAGE> 9
5. INTELLECTUAL PROPERTY
5.0 Ownership of Property. Title to and ownership of any and all
intellectual property utilizing Product information (e.g. patents,
copyrights, trademarks)), including but not limited to Hardware,
Software, Updates, Patches, reports, code and data, developed and/or
created by VITAL in connection with this Agreement shall immediately
vest in MCK and VITAL shall have no rights to such property except a
nonexclusive license to use in connection with service of Products.
6. SERVICE EXCLUSIONS
Services provided by VITAL do not include nor shall VITAL be
responsible for any of the services listed below. VITAL shall provide
MCK with a time and materials quotation to perform such services if
requested by MCK.
6.1 Any customization of Software.
6.2 Support or replacement of Product that is altered, modified,
mishandled, destroyed or damaged by natural causes or damaged during
unauthorized use.
6.3 Services to resolve Software or Hardware problems resulting from
third party product or causes beyond MCK's control.
6.4 Services for non-MCK Software installed on any MCK Product.
6.5 Any Hardware upgrade required to run new or updated Software.
6.6 Non-contract related on-site diagnostics and/or remedial services
unless authorized by MCK.
7. CHARGES AND PAYMENTS
7.1 VITAL shall invoice MCK for the Contract Price for Services, as
defined by Appendix B, performed and for any amounts due for Unrelated
Services performed according to the payment schedule described in
Attachment B. Each invoice shall include supporting documentation and
details of the Services and Unrelated Services performed. MCK shall
pay any amounts due within thirty (30) days of receipt thereof.
7.2 The stated charges, prices, fees or other amounts to be invoiced
and paid pursuant to this Agreement, do not include any applicable
Federal, State, County or local sales, use, property, excise taxes
customs, import and export duties, VAT or other tax however
designated, regardless of how or on whom the tax is levied and whether
such tax is based on any charge, price, fee or other amount, (the
Product, or service or their use) pursuant to this Agreement. Any such
taxes and interest on them (except taxes based on VITAL's or MCK' net
income) required to be paid by VITAL shall be added to the invoices.
Any taxes to be paid by MCK, but in fact paid by VITAL, shall be
reimbursed to VITAL. In the event any taxes to be paid by MCK, but
levied on VITAL, are not paid until audit, VITAL may then invoice
Customer. Customer may submit a certificate of Exemption for each
state in which it is registered to do business and exempted from
payment of any tax, and failure to do so does not imply the
responsibility as that of VITAL.
7.3 Unrelated Service. VITAL shall not perform any Unrelated Service
without the prior written or verbal consent of an authorized MCK
representative. MCK will supply a list of authorized individuals under
separate cover. If MCK agrees that such Unrelated
9
<PAGE> 10
Service is necessary for a Customer, VITAL shall supply such Unrelated
Service and invoice MCK therefore at the rates set forth in Attachment
B.
7.4 Invoicing. Invoices for installation and Unrelated Service shall
be rendered monthly. Invoices for maintenance and value-add contract
Services shall be rendered quarterly, in advance subject to the
minimum payments under Section 7.5.
7.5 Minimum Payments. As defined by Appendix B in consideration of
VITAL's entering into this Agreement and commitment to provide
services, MCK owes VITAL minimum quarterly payments that aggregate
$250,000 for Year 1 of the contract and $200,000 for Year 2 of the
contract. Any service revenue generated by VITAL from MCK contracts is
automatically applied against these minimum payments. Any service
revenue generated by MCK in Year 1 that is in excess of $250,000 is
automatically applied against MCK's Year Two minimum payment. If
revenue meets or exceeds the total twenty four (24) month commitment
of $450,000 anytime during the contract term, MCK has met all its
minimum revenue obligations to VITAL.
7.6 In addition to other remedies available to VITAL, overdue invoices
may bear a late payment charge at the rate of one (1) percent
commencing on the 31st day, but in no event in excess of the lawful
maximum. In the event an invoice is more than sixty (60) days past due
and such invoice has not been paid by MCK within sixty (60) days after
the receipt by MCK of written notice that such invoice is more than
sixty (60) days due, VITAL may withhold performance hereunder until
such invoice is paid.
7.7 Books and Records; Audits. VITAL shall maintain full and accurate
books, records and accounts of all Services rendered pursuant to this
Agreement in such a way as to disclose clearly and accurately the
nature and detail thereof, including without limitation such
accounting information as is necessary to support the reasonableness
of charges under this Agreement and such additional information as MCK
may reasonably request for purposes of its internal bookkeeping and
accounting operations. VITAL shall keep such books, records and
accounts insofar as they pertain to the computation of charges
hereunder available at its principal offices for audit, inspection and
copying by MCK and persons authorized by MCK during reasonable
business hours.
MCK shall have the right, on two (2) occasions per each twelve (12)
month period of this Agreement, to conduct an audit of the relevant
books, records and accounts of VITAL upon giving reasonable notice of
its intent to conduct such an audit. In the event of such audit, VITAL
shall give to the party requesting the audit its cooperation and
access to all books, records and accounts reasonably necessary to
audit. If during the course of any such audit it is determined that
the charges actually invoiced to MCK by VITAL are more than [***]
percent greater than the charges which should have been invoiced
according to such audit, then VITAL shall (1) pay to MCK the sum of
(x) the difference between such audited invoice amount and the amount
actually invoiced and (y) interest calculated from the data of the
invoice and (2) reimburse MCK for all costs associated with such audit
not to exceed the amount of the overcharge. If it is determined that
VITAL was underpaid then MCK shall pay to VITAL the amount of the
underpayment.
8. TERMINATION.
8.1 This Agreement may be terminated immediately by either party
through written Notice under any of the following conditions:
8.1.1 By either party if the other party breaches any of the
material provisions of this Agreement and fails to remedy such breach
within thirty (30) days after written notification by the other party
of such breach.
[***] Confidential treatment has been requested for the bracketed portions.
The confidential redacted portion has been omitted and filed separately
with the Securities and Exchange Commission.
10
<PAGE> 11
8.1.2 By VITAL if MCK fails to pay any amount when due and such
failure continues for sixty (60) days after written notification by
VITAL of such past due amount except for quarterly advance payments
under Section 7.4 if such failure continues for sixty (60) days after
the quarterly due date.
8.2 Provisions after Termination of the Agreement.
8.2.1 Upon termination of this Agreement (i) each party shall
immediately return to the other all Confidential Information (as
defined below) of the other party in its possession and (ii) VITAL
shall return to MCK immediately after the effective date of
termination all MCK-owned consigned spare parts
9. SOFTWARE LICENSE AND PROPRIETARY RIGHTS.
VITAL acknowledges that it may receive Software as a result of
services provided under this Agreement. VITAL agrees that it is
licensed to distribute such Software only on Product covered under the
Services. Except as otherwise specified, VITAL shall not: (i) copy, in
whole or in part, Software or documentation; (ii) reverse compile or
reverse assemble all or any portion of the Software; or (iii) rent,
lease, distribute, sell, or create derivative works of the Software.
10. CONFIDENTIAL INFORMATION.
10.1 As used in this Agreement, "Confidential Information" means any
business or technical information disclosed, either written or orally,
by one party to the other under this Agreement provided, that if the
information disclosed is in writing, it must be clearly labeled as
"Confidential", "proprietary" or with a similar legend, and if the
information is disclosed orally, it must be i) identified as
Confidential Information at the time of disclosure by the disclosing
party.
10.2 Confidential Information does not include any information which:
10.2.1 is, or subsequently becomes, legally and publicly
known or readily ascertainable by the public, and through no
wrongful act of the receiving party;
10.2.2 is rightfully obtained and received by receiving
party from a third party without any obligation of
confidentiality;
10.2.3 is independently developed by the receiving party or
for the receiving party without access to or benefit from the
Confidential Information; or
10.2.4 is disclosed to a third party by the disclosing party
without restriction on disclosure.
10.3 Each party agrees to hold the other party's Confidential
Information in strict confidence and not to disclose such Confidential
Information to any third party except as specifically authorized by
this Agreement or by the other party in writing. Each party may
disclose the other's Confidential Information to its employees who are
under confidentiality obligations to it and who have a bona fide need
to know such Confidential Information, but only to the extent
necessary to carry out the purposes of this Agreement.
11
<PAGE> 12
10.4 Both parties acknowledge and agree that both parties list of
employees is confidential and shall prevent the unauthorized
disclosure of this Confidential Information. Each party shall use at
least the same degree of care to protect such information as it uses
to protect its own confidential or proprietary information of a
similar nature but in no event less than reasonable care. Each party
shall use such information solely for the purposes contained in this
Agreement, and shall make no other use of such information.
10.5 All Confidential Information disclosed hereunder is and shall
remain the property of the disclosing party. No right or license is
granted other than as expressly set forth in this Agreement. These
Section 10 obligations shall survive the expiration or termination of
this Agreement.
11. MCK LIABILITY AND INDEMNIFICATION.
11.1 MCK agrees to defend and indemnify VITAL, its officers, employees
and Affiliates from and against all claims, damages, liabilities,
awards, judgments and settlements against them of whatever nature for
damage to tangible personal property and bodily injury (including
death) arising out of or resulting from the authorized use of the
Product as provided to the Customer or VITAL by MCK in accordance with
the terms of this Agreement.
11.2 MCK, at its own expense, shall defend and indemnify VITAL and its
Affiliates against claims that the authorized repair, installation and
possession of a Product by VITAL in accordance with the terms of this
Agreement infringes a U.S. patent or copyright or misappropriates
trade secrets of a third party provided VITAL (i) gives MCK prompt
notice of such claim, (ii) gives MCK sole control of any defense and
settlement of such claims and (iii) provides any and all reasonably
required assistance requested by MCK at MCK's expense.
11.3 MCK's obligations under this Section 11 shall not extend to
liabilities of VITAL, VITAL officers, employees, or VITAL Affiliates
which are caused by VITAL's negligence or intentional misconduct in
performance of its obligations under this Agreement.
11.4 VITAL shall give MCK prompt notice of any suit or other
proceeding against VITAL for which VITAL may wish to seek
indemnification hereunder. In addition, the parties agree not to
settle or compromise any claim or cause of action, which may affect an
interest of the other party, without the prior written approval of the
other party, providing such approval shall not be unreasonably
withheld.
11.5 MCK shall have full control of the defense of any claim or cause
of action for which it is obligated to indemnify VITAL, and for all
negotiations for its settlement or compromise. VITAL shall reasonably
cooperate with MCK, at MCK's expense, in the defense of the action.
11.6 Non-Solicitation. During the term of this Agreement and
for one (1) year thereafter, MCK shall not, without the prior written
consent of VITAL, directly or indirectly solicit, recruit, hire or use
the services of any VITAL employee whose identity is learned hereunder
so long as such employee is employed by VITAL and for sixty (60) days
thereafter. In the event of breach of this obligation MCK shall
promptly pay to VITAL, as liquidated damages and not as a penalty, an
amount equal to two (2) times such employee's total annual
compensation determined as of the date of the breach.
12
<PAGE> 13
11.7 IN NO EVENT SHALL MCK OR ANY MCK AFFILIATE BE LIABLE FOR ANY
SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES, LOST PROFITS, OR LOST
DATA, OR ANY OTHER INDIRECT DAMAGES EVEN IF MCK HAS BEEN INFORMED OF
THE POSSIBILITY THEREOF OR WHETHER SUCH EXPENSES OR DAMAGES ARE
SUFFERED INTERNALLY BY VITAL OR ARE PAID BY VITAL TO A THIRD PARTY.
12. VITAL LIABILITY AND INDEMNIFICATION.
12.1 VITAL agrees to defend and indemnify MCK and its directors,
stockholders, officers and employees from and against all claims,
damages, liabilities, awards, judgments, and settlements against them
of whatever nature for damage to tangible property and bodily injury
(including death) arising out of VITAL's negligence, willful
misconduct or breach with respect to the performance of its or its
obligations under this Agreement.
12.2 IN NO EVENT SHALL VITAL OR ANY VITAL AFFILIATE BE LIABLE FOR ANY
SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES, LOST PROFITS, OR LOST
DATA, OR ANY OTHER INDIRECT DAMAGES EVEN IF VITAL HAS BEEN INFORMED OF
THE POSSIBILITY THEREOF OR WHETHER SUCH EXPENSES OR DAMAGES ARE
SUFFERED INTERNALLY BY MCK OR ARE PAID BY MCK TO A THIRD PARTY.
12.3 VITAL's obligations under this Section shall not extend to
liabilities of MCK and its officers and employees which arise out of
MCK's negligence or intentional misconduct or breach of third party
intellectual property rights in the design, manufacture, distribution,
installation or servicing of the Product.
12.4 MCK shall give VITAL prompt notice of any suit or other
proceeding instituted against MCK for which MCK may wish to seek
indemnification hereunder. The parties agree to cooperate in the
defense of any such action or proceeding. In addition, the parties
agree not to settle or compromise any claim or cause of action, which
may affect an interest of the other party, without the prior written
approval of the other party.
12.5 THE ENTIRE CUMULATIVE LIABILITY OF EITHER PARTY's EXCLUSIVE
REMEDY FOR DAMAGES FROM ANY CAUSE related to or arising out of this
Agreement, its making, performance or interpretation, including claims
of Customers related to performance of Services by VITAL, regardless
of the form of action, whether in contract or tort and including
negligence, shall not exceed the actual amount paid by MCK for
Services directly related to the specific claim, during the twelve
(12) month period immediately prior to MCK's written notice of a
claim.
12.6 Non-Solicitation. During the term of this Agreement and for one
(1) year thereafter, VITAL shall not, without the prior written
consent of MCK, directly or indirectly solicit, recruit, hire or use
the services of any MCK employee whose identity is learned hereunder
so long as such employee is employed by MCK and for sixty (60) days
thereafter. In the event of breach of this obligation VITAL shall
promptly pay to MCK, as liquidated damages and not as a penalty, an
amount equal to two (2) times such employee's total annual
compensation determined as of the date of the breach.
13. INSURANCE
13.1 VITAL shall maintain during the term of this Agreement at VITAL's
expense, commercial general liability insurance including Property
Damage insurance and
13
<PAGE> 14
Personal Injury insurance in such amounts and upon such terms which
are reasonably satisfactory to MCK and with MCK named as an additional
insured for purposes of this Agreement.
13.2. Workers Compensation: VITAL will maintain Workers Compensation
insurance to the statutory amount and Employer's Liability of at least
$1,000,000.
14. GENERAL
14.1 Assignments. Neither this Agreement nor any rights under this
Agreement, other than monies due or to become due, shall be assigned
or otherwise transferred by either party (by operation of law or
otherwise) without the prior written consent of the other party. This
Agreement may be transferred or otherwise assigned to any entity which
owns or acquires all or substantially all of the assets of either
party or to any Affiliate with the prior written approval of the other
party, which approval shall not be unreasonably withheld. This
Agreement shall bind and inure to the benefit of the successors and
permitted assigns of the parties.
14.2 Warranty.
14.2.1 VITAL shall not make any warranty commitment, whether
written or oral, on MCK' behalf.
14.2.2 VITAL warrants that the Services provided shall be
performed in a competent manner by qualified, trained maintenance
personnel and shall be free from defects in workmanship for
thirty (30) days following its provision.
14.3 Modifications. This Agreement may not be changed or modified in
any way subsequent to the first date of execution except by an
instrument in writing cosigned by authorized representatives of both
parties. No contract or agreement entered into after the Effective
Date shall amend by implication any provision of this Agreement.
14.4 Severability. If any provision of this Agreement is or becomes
illegal, invalid or void under any applicable state or federal law
under which performance hereunder is required, such provision shall be
considered severable, and the remaining provisions hereof shall not be
impaired, and this Agreement shall be interpreted as far as possible
so as to give effect to its stated purpose.
14.5 Defined Relationship. Other than the services agreed to in this
document, neither party is hereby designated nor appointed an agent to
the other and neither party shall have any authority, either express
or implied, to create or assume any agency or obligation on behalf of
or in the name of the other. The relationship of VITAL and MCK shall
be that of independent contractors and, except as expressly set forth
herein, neither party shall have any responsibility for or obligations
to the employees of the other.
14.6 Disclosure of Agreement. VITAL acknowledges and agrees that in no
event shall any of the information contained in this Agreement be
disclosed to anyone other than VITAL's employees with a need to know.
Neither party shall disclose, advertise, or publish the terms and
conditions of or transactions under this Agreement without the prior
written consent of the other party, which will not be unreasonably
withheld.
14.7 Trademarks. Neither VITAL or MCK will use each other's trademark
or trade name in any manner except as mutually agreed upon. Neither
VITAL or MCK have any right, title or interest in each other's
trademark or trade name. Both parties agree to allow
14
<PAGE> 15
the other party to use their name and logo on the other parties
respective web site upon such terms and conditions as the parties
hereto may agree upon.
14.8 Force Majeure. Neither party shall be deemed to be in default nor
be responsible for delays or failures in performance resulting from
acts beyond the reasonable control of such party. Such acts shall
include, but not be limited to, acts of God, strikes, lockouts, riots,
acts of war, epidemics, governmental action or inaction, trade
embargoes, fire, communication line failures, power failures,
earthquakes, or other disasters.
14.9 Notices. Any Notices required or authorized to be given shall be
deemed to have been given when received via certified or registered
first-class mail, postage prepaid, or via any other public or private
delivery service providing for written acknowledgment of receipt to
the address set forth on the signature page of this Agreement.
14.10 Waiver. No delay, failure or refusal on behalf of either party
to require or demand any performance or obligation hereunder, or to
exercise any right or remedy to which it may be or become entitled,
shall constitute or be deemed a waiver or relinquishment thereof, or
of any other right, demand or obligation, and shall not prejudice
either party's right to demand or insist upon any other prior or
subsequent performance or obligation hereunder.
14.11 Disputes and Governing Law. The rights and obligations of the
parties and all interpretations and performance of this Agreement
shall be governed in all respects by the laws of the Commonwealth of
Massachusetts except for its rules with respect to the conflict of
laws.
14.12 Paragraph Headings. Paragraph headings contained in this
Agreement are for ease of reference only and shall not affect the
interpretation or meaning of this Agreement.
14.13 Integration. This agreement, including the attached Exhibits,
and any amendments as may from time to time be agreed and integrated
is intended to be the sole and complete statement of the obligations
of the parties and supersedes any other negotiation, agreement or
understanding, whether written or oral, that may have been made or
entered into with regard to the subject matter hereof by MCK or VITAL
or by any officer or other representative of either party. This
Agreement and the performance of the parties pursuant to it shall not
affect any other Agreement between them which relates to matters
extraneous hereto.
14.14 Conflicts. In the event that any specific wording of this
Agreement shall conflict with any provision or wording of any printed
terms and conditions contained on Purchase Orders, acceptance forms,
procurement and functional specifications, the wording of this
Agreement shall prevail.
14.15 Survival. Sections 8, 10, 11 and 12, shall survive termination
of this Agreement.
15
<PAGE> 16
MCK COMMUNICATIONS, INC. VITAL NETWORK SERVICES, L.L.C.
By: /s/ Woody Benson By: /s/ Philip John Woods
------------------------------ -------------------------------
Name: Woody Benson Name: Philip John Woods
---------------------------- -------------------------------
Title: CEO Title: President
---------------------------- -------------------------------
Address: 313 Washington Street Address: 6 Rubber Avenue
Newton, Ma 02458 Naugatuck, Ct 06770
Date: 6/28/99 Date: 6/29/99
---------------------------- -------------------------------
16
<PAGE> 17
APPENDIXES
Appendix A: MCK Product List (Accelerated to provide Hard/Soft version)
Appendix B: VITAL Payment Schedule/Minimum Commitments (provided in prior
e-mail)
Appendix C: MCK Escalation/Priority Schedule- TBD
Appendix D: MCK Support Services - TBD
Appendix F: VITAL Installation & Maintenance Service Descriptions
17
<PAGE> 18
APPENDIX A: MCK PRODUCT LIST
<TABLE>
<CAPTION>
SWITCH UNIT REMOTE UNIT
<S> <C> <C>
Branch Office EXTender 6000 E-6000-SLM08 E-6000-RLM08
(Definity Compatible)
Branch Office EXTender 6000 E-6000-SNM08 E-6000-RNM08
(Meridian/Norstar Compatible)
Branch Office EXTender 6000 E-6000-SEM08 E-6000-REM08
(Neax Compatible)
</TABLE>
18
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[VITAL NETWORK LOGO]
APPENDIX B - REVENUE SPLITS & PRICING SCHEDULE
NOTE: VITAL NETWORK SERVICES CHARGES MCK THE PERCENTAGE OF END-USER LIST PRICE
OR FLAT RATE AS INDICATED.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
TOLL FREE/ HELP DESK CHARGE TO MCK
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
I. 8 X 5 HELP DESK [***] (annual)
24 X 7 HELP DESK [***] (annual)
(OPTIONAL - DOES NOT INCLUDE COST OF LINE)
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
SECTION SERVICE DESCRIPTION CHARGE TO MCK
- --------------------------------------------------------------------------------------------------------------------------
I. LOGISTICS MANAGEMENT
NON MAINTENANCE CUSTOMERS
PRICE PER STOCKING LOCATION [***]
- --------------------------------------------------------------------------------------------------------------------------
SECTION SERVICE DESCRIPTION END USER PRICE MCK VITAL
(% OF PRODUCT LIST)
- --------------------------------------------------------------------------------------------------------------------------
II. HARDWARE INSTALLATION SERVICES
(PRICING REFLECTS ZONE A & B ONLY)
BUSINESS DAY (1ST UNIT) TBD [***] [***]
ADDITIONAL UNITS* TBD
NON BUSINESS DAY (1ST UNIT) TBD
ADDITIONAL UNITS* TBD
SITE SURVEY **(PER REQUEST)
*ADDITIONAL UNIT PRICING APPLIES IF
INSTALLED AT THE SAME SITE. MINIMUM
INSTALLATION CHARGE IN $[***].
**FEE IS WAIVED IF INSTALLATION IS [***]
PURCHASED AT TIME OF SITE SURVEY REQUEST
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
III. SOFTWARE INSTALLATION (ON-SITE) SERVICES
LOAD S/W, CONFIGURE & TEST
BUSINESS DAY [***] [***] [***]
NON BUSINESS DAY [***] [***] [***]
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
IV. REMOTE SERVICES
TS/SOFTWARERELEASE (NO LABOR) /ADVANCED [***] [***] [***]
REPLACEMENT
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
V. MAINTENANCE SERVICES
(PRICING REFLECT ZONE A & B ONLY)
BASIC 8 X 5 (M-F) [***] [***] [***]
PREMIUM 7 X 24 (PENDING AVAIL)
ALL MAINTENANCE SERVICES LISTED ABOVE CARRY [***]
FOUR (4) HOUR RESPONSE FROM ZONE A
LOCATIONS TO THE END-USER, LOGISTICS
MANAGEMENT INCLUDED.
MCK IS RESPONSIBLE FOR CONSIGNMENT OF
SPARING.
- --------------------------------------------------------------------------------------------------------------------------
SECTION SERVICE DESCRIPTION END USER MCK VITAL
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
19
[***] Confidential treatment has been requested for the bracketed portions.
The confidential redacted portion has been omitted and filed separately
with the Securities and Exchange Commission.
<PAGE> 20
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
VI. DEDICATED FIELD ENGINEER
ONE (1) YEAR (40 HOURS PER WEEK)* [***] [***] [***]
*PRICE BASED ON LEVEL OF ENGINEER REQUIRED
- --------------------------------------------------------------------------------------------------------------------------
ZONES TO END USER TO END USER
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
VII. TIME AND MATERIAL SERVICES (TO END USER) TRAVEL (FIXED LABOR(PER HOUR)
(CONTRACT CUSTOMERS OUTSIDE SCOPE OF RATE)
CONTRACT)
ZONE A [***]
ZONE B [***]
BUSINESS DAY* ZONE C [***]
[***]
ZONE A [***]
ZONE B [***]
NON BUSINESS DAY ZONE C [***]
[***]
[***]
HOLIDAYS & WEEKENDS
[***]
NON- CONTRACT CUSTOMER RATES
ZONE A [***]
ZONE B [***]
BUSINESS DAY ZONE C [***]
[***]
ZONE A [***]
ZONE B [***]
NON BUSINESS DAY ZONE C [***]
[***]
HOLIDAYS & WEEKENDS [***]
ZONE A = 50 MILE RADIUS OF VITAL SERVICE
CENTER
ZONE B=51-100 MILE RADIUS OF VITAL SERVICE
CENTER
ZONE C=100+ RADIUS OF VITAL SERVICE CENTER
*ALL TYPE CALLS CARRY A [***]
MINIMUM EXCEPT WHERE SPECIFIED
- --------------------------------------------------------------------------------------------------------------------------
DISCOUNT TO MCK LIST PRICES NOTE:
- --------------------------------------------------------------------------------------------------------------------------
VIII. BLOCK OF HOURS (TO MCK)
- TIME & MATERIAL [***] [***] [***]
- PROJECT MANAGEMENT [***] [***]
- PROFESSIONAL SERVICES [***]
- CUSTOMER SERVICE [***] [***]
- OTHER [***]
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
[***] Confidential treatment has been requested for the bracketed portions.
The confidential redacted portion has been omitted and filed separately
with the Securities and Exchange Commission.
20
<PAGE> 21
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
END USER MCK VITAL
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
IX. PROFESSIONAL SERVICES/ PROJECT MANAGEMENT CUSTOM QUOTE REQUIRED [***] [***]
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
[***] Confidential treatment has been requested for the bracketed portions.
The confidential redacted portion has been omitted and filed separately
with the Securities and Exchange Commission.
21
<PAGE> 22
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
SECTION SERVICE DESCRIPTION MCK CHARGE TO MCK
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
X. TECHNOLOGY TRAINING
TRAIN THE TRAINER (PROVIDED BY MCK) [***] [***]
INITIAL CONSULTATION/COURSE INVESTIGATION -----------------> [***]
COURSE DEVELOPMENT* -----------------> [***]
COURSE OFFERING IN NAUGATUCK#
-----------------> [***]
COURSE OFFERING ON CUSTOMER OR MCK PREMISES* [***]
----------------->
*TRAVEL & EXPENSES, SHIPPING WILL BE CHARGED AT ACTUAL
COSTS. SET UP WILL BE BILLED AT [***]
#DEPENDENT ON SUBJECT- PLAN FOR 3-5 DAY COURSE OFFERINGS.
MINIMUM REQUIREMENT, (4) STUDENTS PER CLASS.
(1) BUDGETARY ONLY-EACH PROJECT TO BE REVIEWED ON MERIT.
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
[***] Confidential treatment has been requested for the bracketed portions. The
confidential redacted portion has been omitted and filed separately with
the Securities and Exchange Commission.
22
<PAGE> 23
VITAL NETWORK SERVICES / MCK
START UP FEES, CONDITIONS & PAYMENT SCHEDULES
Contract Commencement is JULY 1, 1999. The initial contract term is TWENTY-FOUR
(24) MONTHS.
PAYMENT SCHEDULE (1999-2001)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
YEAR 1 YEAR 2
(PAYMENT IS QUARTERLY IN ARREARS) (PAYMENT IS QUARTERLY FOR ACTUAL SERVICES RENDERED)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
QTR 1 July, Aug, SEPT 1999 30K QTR 1
- --------------------------------------------------------------------------------------------------------------------------
QTR 2 Oct, Nov, DEC 1999 50K QTR 2
- --------------------------------------------------------------------------------------------------------------------------
QTR 3 Jan, Feb, MAR 2000 75K QTR 3
- --------------------------------------------------------------------------------------------------------------------------
QTR 4 Apr, May, JUN 2000 95K QTR 4
- --------------------------------------------------------------------------------------------------------------------------
July 2000- June 2001
- --------------------------------------------------------------------------------------------------------------------------
Total 250K 12 Month Target 200K
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
CONDITIONS:
1. MCK MINIMUM COMMITMENT TO VITAL NETWORK SERVICES IS 250K IN YEAR 1 AND
200K IN YEAR 2.
2. PRICING WILL BE REVIEWED EVERY SIX (6) MONTHS AND IS SUBJECT TO CHANGE UPON
MUTUAL AGREEMENT.
3. IF ACTUAL REVENUE EXCEEDS QUARTERLY TARGETS IN YEAR 1, THE NEXT QUARTERS
INVOICE WILL BE ADJUSTED ACCORDINGLY. THE GOAL FOR THE FIRST TWELVE (12)
MONTH PERIOD IS TO EQUAL OR EXCEED 250K. IN YEAR 2, PAYMENT WILL BE
QUARTERLY IN ARREARS FOR ACTUAL SERVICES RENDERED. IF THERE IS A SHORTFALL
OF THE TWELVE (12) MONTH TARGET, THE FINAL BILLING WILL INCLUDE THE
SHORTFALL AMOUNT.
4. REVENUE MINIMUM'S ONLY APPLY TOWARDS SERVICES HIGHLIGHTED IN SECTIONS I
(A&B), II, III, IV, VIII AND IX ONLY.
5. IF REVENUE MEETS OR EXCEEDS THE TOTAL TWENTY-FOUR (24) MONTH COMMITMENT OF
450K ANYTIME DURING THE CONTRACT TERM, MCK HAS MET THEIR REVENUE MINIMUMS
TO VITAL NETWORK SERVICES.
[***] Confidential treatment has been requested for the bracketed portions. The
confidential redacted portion has been omitted and filed separately with
the Securities and Exchange Commission.
23
