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EXHIBIT 10.20
SUPPLY AGREEMENT
BETWEEN
ENDWAVE CORPORATION
AND
TRW INC.
[*] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
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TABLE OF CONTENTS
1. DEFINITIONS.......................................................3
2. WARRANTIES OF OWNERSHIP...........................................5
3. SCOPE AND GRANT OF RIGHTS FROM SELLER TO NT.......................5
4. ORDERING AND DELIVERY.............................................5
5 PRICE PAYMENT AND RISK OF LOSS....................................6
6. WARRANTY..........................................................6
7. LIMITATION OF WARRANTY............................................7
8. ACCEPTANCE........................................................7
9. INTELLECTUAL PROPERTY INFRINGEMENT INDEMNITY......................7
10. REGULATORY COMPLIANCE.............................................8
11. LIMITATION OF LIABILITY AND DAMAGES...............................8
12. DEFAULT AND TERMINATION...........................................8
13. CHANGES...........................................................9
14. FORCE MAJEURE.....................................................9
15. REPORTS..........................................................10
16. OUT OF WARRANTY PRODUCT REPAIRS AND PRODUCT DISCONTINUATION.....10
17. CONFIDENTIALITY..................................................10
18. LAWS AND REGULATIONS.............................................11
19. INDEMNIFICATION AND INSURANCE....................................11
20. EXPORT AUTHORIZATION.............................................12
21. CONTRACTUAL RELATIONSHIP.........................................12
22. NOTICES AND REQUESTS.............................................13
23. GENERAL..........................................................13
24. DISPUTES AND GOVERNING LAW.......................................13
25. YEAR 2000 COMPLIANCE.............................................13
APPENDIX A PRODUCTS AND PRICES............................................15
APPENDIX B SHIPPING AND DELIVERY..........................................17
APPENDIX C QUALITY AND CONFORMANCE........................................18
APPENDIX D AFFILIATES.....................................................20
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THIS SUPPLY AGREEMENT ("Agreement") effective March 31, 2000 ("Effective Date")
between Endwave Corporation, a Delaware corporation, having an office at 321
Soquel Way, Sunnyvale, CA 94086 ("Seller"), and TRW Inc., acting through its
Space and Electronics Group, with offices at One Space Park, Bldg. E2/5085,
Redondo Beach, CA 90278 ("TRW").
RECITALS
WHEREAS, effective July 31, 1998, TRW and Nortel Networks Inc. ("NTI") entered
into OEM Supply Agreement WSSM1111 (the "NTI Contract"), whereby TRW agreed to
provide to NTI the Products set forth in this Agreement; and
WHEREAS, TRW entered into intercompany purchase orders (the "MW Orders") with
its then wholly-owned subsidiary, TRW Milliwave Inc. ("MW"), whereby MW would
perform the work under the NTI Contract; and
WHEREAS, on the date hereof, Seller acquired MW; and
WHEREAS, the parties hereto desire to terminate the MW Orders and enter into
this Agreement, which is intended to mimic the NTI Contract and permit Seller to
perform the work under the NTI Contract.
In consideration of the mutual promises and obligations herein contained, and
other good and valuable consideration the receipt and sufficiency of which is
hereby acknowledged, the parties hereto agree as follows:
1. DEFINITIONS
"Affiliate" shall mean, except for NTI, any direct or indirect
subsidiary of NTI's parent company, Nortel Networks Limited.
(See Appendix D)
"Authorized Distributor" shall mean any company which has signed a
Distributorship Agreement (or the equivalent) with NTI, granting
such company the right to distribute one or more of the product
lines from NTI or Affiliate.
"Blanket Order" shall mean an Order which does not set forth a
Delivery Date.
"Cancellation Period(s)" shall mean the period(s) of time so
designated in Appendix B prior to the Shipping Date, by which
point TRW and/or TRW's designee, NTI, may notify Seller to cancel
a scheduled shipment of Product, which shall end on the Delivery
Date.
"Class A Changes" shall mean any changes to a Product required to
rectify one of the following conditions: (i) a hazardous
electrical or mechanical condition; or (ii) a condition causing a
significant loss of service to end-users or inoperability. "Class
A Change" shall specifically exclude inoperability resulting from
evolution of standards or standards adaptation on the part of the
network operator or service provider, unless incorporation of such
evolution or adaptation has been agreed between TRW and the Seller
prior to initial delivery.
"Customer" shall mean NTI's Customer.
"Confidential Information" shall mean any technical or business
information relating to the Product, or to Seller's products,
services or business, including but not limited to,
specifications, drawings, marketing information, computer
programs, technical or business information or other data in
whatever form furnished by either party to the other, whether in
writing, orally or visually, under this Agreement or to which
either party has access as a result of performance hereunder, and
which is designated or marked as being confidential and as further
defined in Section 17.
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"Consigned Material" shall mean materials or equipment provided at
no cost by NTI to Seller and used in designing, developing or
manufacturing the Product.
"Defect(s) or Defective" shall mean nonconformance to product
specifications noted in Appendix A and/or common workmanship and
quality standards.
"Delivery Date" shall mean the date the Product was delivered to
the Delivery Location.
"Delivery Location" shall mean the NTI dock.
"EDI" shall mean electronic data interchange of information
related to Orders and Releases.
"Hardware" shall mean any production items set forth in Appendix A
and any additional products/enhancements offered for sale by
Seller as may from time to time be added to Appendix A.
"Long Lead Material" shall mean material requiring an order lead
time or commitment of greater than four (4) weeks.
"Late Delivery" shall mean any delivery date which is beyond the
contractual shipping requirements.
"Maximum Delivery Period" shall mean the shorter of (a) the
Maximum Delivery Period so designated in Appendix B which shall
commence on the date that Seller receives an Order or a Release or
(b) Seller's then-current scheduled delivery date(s) for a Product
at the time of Seller's receipt of an Order or a Release.
"Minimum Order Amount" shall mean $1000.00
"NTI" shall mean Nortel Networks Inc.
"NTI Contract" shall mean that OEM Supply Agreement, dated as of
July 31, 1998, between TRW and NTI.
"Option Period" shall mean a period of three (3) months.
"Order" shall mean either the physical document, facsimile, or
electronic transmission ("EDI") used by TRW to order Product under
this Agreement.
"Product" shall mean any integrated Hardware set forth in Appendix
A, which together form a Product.
"Reconfiguration" shall mean any Product variation or change to a
previously agreed to Product configuration requested by TRW.
"Release" shall mean the document issued by TRW pursuant to a
Blanket Order by which the Delivery Date for Products covered by
such Blanket Order is established.
"Rescheduling Period(s)" shall mean the period(s) of time so
designated in Appendix B prior to the Shipping Date, by which
point TRW may notify Seller to postpone a scheduled shipment of
Product.
"Serious Problem" or "Serious Problems" shall mean problems caused
by defective Products characterized by (i) Customer system is
down, or (ii) Customer's day to day business function is
significantly affected by a defective Product.
"Shipping Date" shall mean the day the Product is due at the
Shipping Location and which shall be defined as five (5) business
days prior to the Delivery Date as specified in each order.
"Shipping Location(s)" shall mean the location(s) so designated in
Appendix B, from where the Product shall be shipped by Seller.
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"Specifications" shall mean the documents set forth in Appendix A
to be amended from time to time through mutual agreement.
"Term" shall mean a period beginning on the Effective Date of the
Agreement and ending on July 31, 2000, unless the Option is
exercised.
"User Manual" shall mean Seller's copyrighted user information
about a particular "Product", and as revised from time to time by
Seller.
"Warranty Period" shall mean the period of thirty six (36) months
commencing on the date of shipment.
"Warranty Repair Period" shall mean a period of ten (10) days
which shall commence on the date that Seller receives any of the
following from TRW, NTI or Affiliate: (i) Hardware which does not
conform to the warranty set forth in Section 6.1 if the repair or
replacement is to be performed at a location of Seller, or (ii)
notice that Hardware does not conform to the warranty set forth in
Section 6.1 if the repair or replacement is to be performed at a
location of TRW, NTI, Affiliate, or Customer.
2. WARRANTIES OF OWNERSHIP
2.1 Seller warrants that it is either the owner, or is otherwise in
possession of sufficient licensed rights pertaining to any portion
owned by third parties, of all proprietary and intellectual
property rights in and to all Products. Seller further warrants
that title to all Products shipped to TRW, NTI or Affiliates or
drop shipped directly to end-user customers of the foregoing shall
pass to TRW, NTI or Affiliates or an end-user customer, as the
case may be, free and clear of any liens, charges, encumbrances,
restrictions or rights against the Products or against Seller.
3. SCOPE AND GRANT OF RIGHTS FROM SELLER TO TRW
3.1 Subject to the terms and conditions set forth herein, Seller
agrees to sell and TRW shall have the right to purchase Product
from Seller at the prices set forth in Appendix A during the Term
of this Agreement. Seller authorizes TRW and NTI to integrate
Products purchased under this agreement into NTI products for
resale to customers.
3.2 During the Term, TRW shall buy from Seller the quantities of
Products set forth in Appendix A (provided, however, that TRW's
liability to Seller for failure to purchase the quantities set
forth in Appendix A shall be limited to the liability NTI paid to
TRW pursuant to the NTI Contract for failure to purchase the
minimum quantities thereunder), and Seller agrees to sell TRW the
quantities of products set forth in such Appendix.
4. ORDERING AND DELIVERY
4.1 TRW shall only be obligated to issue orders during the Term for
the contract quantities referenced in Appendix A . In the event
that TRW provides Seller with a forecast or estimate of the
quantity that may be ordered, Seller acknowledges that TRW shall
not be obligated to submit an Order for any portion of such
forecast other than as defined by the demand pull requirements, or
as may be required by Appendix A.
4.2 TRW will price orders in accordance with the schedule in Appendix
A. Appendix A is valid for the Term unless modified by mutual
agreement.
4.3 TRW may elect to order Products in accordance with a demand-pull
system as agreed by TRW.
4.4 Seller shall accept any Order issued consistent with any forecast
provided by TRW (on behalf of NTI or Affliates) provided such
Order is in accordance with this Agreement. This Agreement shall
continue to apply to an Order issued during the Term until all
obligations herein are performed. Notwithstanding that an Order
does not refer to this Agreement, any Order issued by TRW for the
Products referenced in Appendix A during the
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Term shall be deemed to have been issued pursuant to this
Agreement unless the parties expressly agree to the contrary.
4.5 An Order shall set forth a description of the following: (a)
Product, (b) price, (c) Delivery Location, (d) the location where
the invoice shall be rendered for payment, (e) method of shipment,
(f) quantity and (g) Delivery Date. The quantity and delivery date
will be in accordance with the forecast. An Order or a Release
shall not be issued for less than the Minimum Order Amount unless
the parties expressly agree to a lower amount.
4.6 Seller shall have three (3) business days following receipt of an
Order or a Release to acknowledge to TRW Seller's receipt of the
Order or Release. The acknowledgment shall either confirm the
Delivery Date or propose an alternate Delivery Date. If Seller
recommends an alternate Delivery Date, then TRW shall within ten
(10) days of its receipt of the alternate Delivery Date notify
Seller that either the alternate Delivery Date is acceptable or
that the Order or Release is canceled.
4.7 An Order or a Release shall be delivered complete unless notified
in writing 3 days prior to shipment. Seller will attempt to ship
every order complete . In the event that Seller fails to deliver a
Product by the Delivery Date, TRW may, in addition to any other
right available to it under this agreement and the law, cancel,
without charge, the Order or applicable portion thereof.
4.8 Upon providing Seller at least thirty (30) days notice prior to
the end of the Term, TRW shall have the right to extend the Term
for the Option Period, in which event TRW and Seller shall have
the rights and obligations in this Agreement during the Option
Period, including, TRW's right to purchase at the prices set forth
in Appendix A.
4.9 TRW may use Electronic Data Interchange "EDI" to issue an Order or
a Release as agreed by TRW with Seller.
4.10 All preprinted terms and conditions contained in any Order are
superseded by the terms and conditions of this Agreement.
5 PRICE PAYMENT AND RISK OF LOSS
5.1 Prices set forth in this Agreement (See Appendix A) are (a) in U.
S. Dollars (b) exclusive of any applicable Product taxes now
existing or hereinafter imposed by any applicable taxing
authority, (c) exclusive of the transportation charges and duty
applicable between the Shipping Location and the Delivery
Location. Such taxes, transportation charges and duty for which
TRW is liable shall be separately stated on the invoice. Seller
agrees not to assess any avoidable excise or sales tax where TRW
(on behalf of NTI or Affiliate) furnishes Seller a tax exemption
certificate, a certificate of authority, a direct pay permit
and/or any equivalent acceptable to applicable taxing authority.
Payment shall be net forty-five (45) days from the date of the
invoice or the date of shipment, whichever is later.
5.2 Title and risk of loss or damage to Products shall pass to TRW
when delivered at the Shipping Location to the carrier designated
by TRW or if TRW does not designate a carrier, a carrier selected
by Seller. If TRW returns Products , risk of loss or damage for
such Products shall pass to Seller when TRW delivers the Products
to Seller.
5.3 Seller agrees to offer [*] under similar circumstances and
quantities.
6. WARRANTY
6.1 Seller warrants that Products manufactured by Seller and sold to
TRW under this Agreement shall be free from defects in
workmanship and material for a period of [*] from the date of
shipment. Further,
[*] CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.
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Products delivered, except for those repaired under warranty,
shall contain all new material and shall conform to the
Specification in all material respects.
6.2 Seller shall, at its sole option and expense repair or replace,
within ten (10) working days for a Serious Problem in the US and
within ten (10) working days for a Serious Problem outside the US
and thirty (30) working days for Defects other than Serious
Problems, of receipt of TRW's written notice to Seller, any
defective Product which defects TRW gives Seller written notice
during the warranty period. Any repair, modification or other such
service performed by Seller shall be warranted for the remainder
of the unexpired period of the warranty or for a period of ninety
(90) days, whichever is longer. If TRW chooses to repair, with
Seller's agreement, the Product, due to time or expense, Seller
will reimburse TRW at a mutually agreed price.
6.2.1 No Product shall be returned to Seller without Seller's
authorization. Seller shall upon mutual agreement replace the
defective Product at TRW, NTI or Affiliate's end-user customer
site.
6.3 Any products manufactured by companies other than Seller and
consigned to the Seller which are included in the Products
pursuant to this Agreement are warranted by their respective
manufacturers. Such warranties shall be consistent with the
Warranty terms and conditions stated herein.
6.4 The warranties set forth herein do not apply to Products that have
been (i) subjected to misuse, neglect or mishandling other than by
Seller; (ii) repaired or altered by anyone other than Seller
without Seller's approval; or (iii) improperly installed.
7. LIMITATION OF WARRANTY
THE WARRANTIES IN THIS AGREEMENT ARE GIVEN EXPRESSLY IN LIEU OF
ALL OTHER WARRANTIES. SELLER MAKES NO OTHER WARRANTIES, EXCEPT AS
STATED IN THIS AGREEMENT, EXPRESS OR IMPLIED, INCLUDING WITHOUT
LIMITATION, ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE. SELLER'S WARRANTY OBLIGATIONS AND BUYER'S
REMEDIES ARE SOLELY AS SET FORTH IN SECTION 6.
8. ACCEPTANCE
All Products are subject to inspection at the Delivery Location.
Acceptance shall be deemed to occur thirty (30) days after receipt
of the Product at the Delivery Location unless TRW shall have
provided Seller with notice of non-acceptance within such period.
If a Product does not conform to the requirements of an Order or
to the warranty set forth in Section 6, as the case may be, the
entire nonconforming quantity of Product delivered must be
corrected by Seller at Seller's expense. Payment shall neither be
deemed to constitute acceptance nor be a waiver of TRW's rights,
in accordance with the terms of this Agreement.
9. INTELLECTUAL PROPERTY INFRINGEMENT INDEMNITY
9.1 Seller shall indemnify, defend and hold TRW, NTI or Affiliate and
its Customers harmless from and against any losses, damages,
liabilities, expenses, judgements, and costs (including reasonable
attorneys' fees and costs), resulting from any claim alleging that
any Products infringe any patent or trademark right (Solely with
respect to Seller's trademarks) of any third party ("IPR"), so
long as TRW promptly notifies in writing Seller of such claim;
permits Seller at its sole option, to defend and/or settle such
claim; delegates to Seller all responsibility and authority for
the defense and/or settlement thereof and provided further that
TRW will not incur any liability, cost or expense hereunder
without Seller's prior written approval. TRW will reasonably
cooperate and assist in the defense and/or settlement of same at
Seller's expense. In the event that any Products delivered by
Seller hereunder are determined to infringe any IPR, Seller shall,
in addition to its other obligations under this Section 9 and at
Seller's option, either (i) obtain from such third party, at
Seller's sole expense, the right for TRW, NTI or Affiliate and NTI
or Affiliate's customers to continue using the infringing
Products; (ii) modify or replace the infringing Products at
Seller's sole expense so as to render them non-infringing, while
maintaining fit, form and function acceptable to TRW and NTI or
Affiliate; or (iii) only if neither (i) nor (ii) is reasonably
available, accept
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return of all infringing Products purchased by TRW and refund to
TRW the aggregate purchase price paid for all infringing Products.
In addition, TRW reserves the right at any time to independently
defend and/or settle such claim at its own expense.
9.2 Seller shall not have any liability to TRW, NTI, its Affiliates or
their Customers under Section 9.1 for infringement, or claims
thereof, that are based upon (1) the use of Products in
combination with hardware, and/or software furnished by a third
party if such infringement, or claim thereof, would have been
avoided by the use of Products in combination with different
hardware and/or software; (2) designs or special requirements
provided by TRW, NTI or Affiliate to the extent that any such
claims would have been avoided had not such designs or special
requirements been implemented by Seller pursuant to TRW's, NTI's
or Affiliate's requesT; or (3) the application or use of such
Products unless such application or use was in a manner intended
by Seller as reflected in Seller's applicable documentation.
9.3 The indemnity obligations under Section 9.1 of this Agreement, as
qualified by Section 9.2, shall survive the termination or
expiration of this Agreement.
10. REGULATORY COMPLIANCE
10.1 TRW and Seller shall negotiate, in good faith, any requirements
for regulatory approval for Products.
10.2 To the extent applicable, all user manuals or other operator
manuals and/or written material supplied with the Products shall
contain any warning notices required by any of the regulatory or
testing bodies referenced in Section 10.1.
11. LIMITATION OF LIABILITY AND DAMAGES
11.1 Neither party shall be liable for the respective portion of any
loss, claim, expense, or damage determined to be caused by,
contributed by, or arising out of, the acts or omissions of the
other party or third parties, whether negligent or otherwise. The
total liability of Seller on all claims whether in contract, tort
(including sole or concurrent negligence), or otherwise, arising
out of, connected with or resulting from the manufacture, sale,
delivery, resale, repair, replacement, or use of Products, or this
Agreement shall not exceed the value of the Product line or part
thereof giving rise to the claim in each case, and [*] in the
aggregate for all claims under this agreement.
11.2 EXCEPT AS MAY BE EXPRESSLY PROVIDED IN SECTIONS 2, 9, 17, AND 19
IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR ANY SPECIAL,
INCIDENTAL, CONSEQUENTIAL OR OTHER SUCH INDIRECT DAMAGES
(INCLUDING, WITHOUT LIMITATION, LOSS OF REVENUES OR PROFITS),
WHETHER ARISING OUT OF OR AS A RESULT OF BREACH OF CONTRACT,
WARRANTY, TORT (INCLUDING NEGLIGENCE), STRICT LIABILITY OR
OTHERWISE.
12. DEFAULT AND TERMINATION
12.1 Any of the following shall constitute an act of default hereunder:
a) The material breach of either party to perform to any term,
condition or covenant of this Agreement and such failure has
not been corrected within sixty (60) days of the date of
receipt of written notice of such breach from the
non-defaulting party;
b) Either party is or becomes insolvent, or a party to any
bankruptcy or receivership proceeding or any similar action
affecting the financial condition of the party, or seeks to
make a compromise, arrangement or assignment for the benefit
of its creditors, or ceases doing business in the normal
course; or
[*] CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.
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c) The termination of the NTI Contract.
12.2 In the event any act of default shall occur, the party
not in default shall have the right to terminate this Agreement,
provided, with regard to subclauses (a) and (b) above only, (1)
the non -defaulting party provides the other party with no less
than thirty (30) days notice of such intent to terminate, and (2)
the default has not been cured within such notice period.
13. CHANGES
13.1 To satisfy its obligations under Section 6 of this Agreement,
Seller will upgrade and/or retrofit all items of Product
requiring Class A Changes due solely to design (for which Seller
is responsible) or manufacturing defects for a period of [*]
following the last shipment of any individual Product. Seller
shall repair or replace Product in such a manner so as to meet
and/or exceed reasonable Class A field upgrade completion
schedules , which shall be dictated by the urgency of the problem
and its affect on end-users.
13.2 TRW shall provide Seller such technical assistance as it
reasonably requires to identify Class A problems and to decide on
an economical way of implementing Class A Changes. Notwithstanding
the foregoing, Seller shall bear the entire cost of redesigning
Product, implementing, and retrofitting the Class A Change.
13.3 Seller shall cooperate with TRW, NTI or Affiliate in implementing
all proposed modifications and changes to the Product as follows:
Seller will advise TRW and NTI of any proposed change to the
Product which would affect (i) form, fit or function of Product or
(ii) backward compatibility of the Product from previous versions
one hundred eighty (180) days prior to proposed implementation and
will obtain TRW agreement thereto prior to implementation. TRW
will have ninety (90) days after notification to order pre-change
product. In the event of change to Product which affects backward
compatibility, the changed Product shall be identified by
specifying a different Product number. All notice shall be sent to
the attention of:
Nortel Networks
5550 Skyline Way N. E.
Calgary, Alberta
Canada T2E 7Z7
TRW Inc.
One Space Park
Redondo Beach, CA 90278
Attention: Judy Hertzberg
13.4 Seller shall cooperate with TRW and NTI or Affiliate in
implementing all proposed modifications and changes to the Product
requested by TRW, NTI or Affiliate. Seller agrees to communicate
to TRW regarding an impact to the price and/or delivery of Product
directly attributed to the requested modification and/or change
within five (5) working days from the date TRW requests same.
14. FORCE MAJEURE
If the performance of this Agreement (including without limitation
any deliveries hereunder, but excluding payment for shipped
Product) is interfered with for any reason or any circumstance
beyond the reasonable control of the performing party affected,
including without limitation, fire, act of God, labor unrest, then
the performing party affected shall be excused from such
performance on a day - for - day basis to the extent of such
interference (and the other party shall likewise be excused from
performance on a day - for - day basis to the extent such party's
obligations relate to the performance so interfered with);
provided that the performing
* CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
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party so affected shall use reasonable efforts to remove such
causes of nonperformance; provided, further, that if any such
interference extends for more than ninety (90) days, the non
affected party shall have the right, without charge, to cancel the
Order or Release affected by such interference.
15. REPORTS
15.1 Seller shall submit to TRW :
A quarterly and/or monthly report showing all Products ordered by
and delivered to TRW during the immediately preceding quarter
and/or month will be provided as agreed upon by the parties.
16. OUT OF WARRANTY PRODUCT REPAIRS AND PRODUCT DISCONTINUATION
16.1 Seller shall notify TRW at least three hundred sixty (360) days
in advance of its intention to discontinue manufacture of any
Products. The minimum information required shall be as follows:
a) specific part number involved and description;
b) final date for acceptance of an Order or a Release relating
to the discontinued Products;
c) future availability of spare parts.
16.2 For a period of 10 years after Seller gives TRW notice of
discontinuance of any Product , Seller shall provide repair
service for all out of warranty Product at Seller's then current
prices and on Seller's then generally prevailing terms and
conditions.
16.3 If any Product is returned to Seller by TRW, NTI or Affiliate for
repair and is subsequently found by Seller to be irreparable,
Seller shall promptly notify TRW and NTI or Affiliate of such
finding. Upon request after the provision of such notice, Seller's
sole obligation shall be to provide TRW and NTI or Affiliate with
an incremental cost proposal to replace the irreparable Product at
Seller's then current prices and on Seller's then generally
prevailing terms and conditions. In the event TRW does not
exercise such proposal option, then Seller shall be deemed to have
satisfied its obligations under this Agreement.
16.4 Seller shall assume all risk of loss or damage to any Products
returned by TRW, NTI or Affiliate to Seller during the time that
such Products are in the care, custody and control of Seller for
the purpose of effecting repairs.
17. CONFIDENTIALITY
17.1 Each of the parties recognizes and agrees that the unauthorized
use or disclosure of Confidential Information would cause
irreparable injury to the disclosing party for which it would have
no adequate remedy at law, and that an actual or threatened breach
of this section shall entitle the disclosing party to obtain
immediate injunctive relief prohibiting such breach, to the extent
it can prove such breach, in addition to any other rights and
remedies available to it. If Confidential Information is disclosed
orally, the disclosing party shall notify the receiving party of
the confidential nature of the Confidential Information at the
time of disclosure and such Confidential Information shall be
reduced to writing, marked as confidential and delivered to the
receiving party within thirty (30) days after oral disclosure.
17.2 For the period during and for five (5) years following the last
day of the TERM all Confidential Information shall be subject to
the following:
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17.2.1 The recipient shall restrict disclosure of the Confidential
Information to recipient's employees with a "need to know" (i.e.
employees that require the Confidential Information to perform
their responsibilities in connection with this Agreement) and
shall not disclose it to any other person or entity without the
prior written consent of the disclosing party. Each party shall
safeguard the Confidential Information of the other party with at
least the same degree of care with which it guards its own
Confidential Information, but in no event exercise less than
reasonable standard of care.
17.2.2 The recipient shall use the Confidential Information only for the
purposes of performing its obligations under this Agreement;
17.2.3 The recipient shall advise those employees who access the
Confidential Information of their obligations with respect thereto
and their limited rights to use such information;
17.2.4 The recipient shall copy the Confidential Information only as
necessary for those employees who are entitled to receive it and
ensure that all confidentiality notices are reproduced in full on
such copies; and
17.2.5 The recipient shall return all copies of such Confidential
Information to the disclosing party at the disclosing party's
request.
17.2.6 If any Confidential Information is required to be disclosed in
response to a valid order of the court or lawful request of a
government agency, the recipient shall first notify the disclosing
party of the order or request and permit the disclosing party to
seek an appropriate protective order.
17.3 The confidentiality obligations set forth in this Section 17 will
not apply to any Confidential Information that:
a) becomes known to the general public without fault or breach
on the part of the receiving party;
b) the receiving party obtains from a third party without breach
of a nondisclosure obligation and without restriction on
disclosure;
c) is furnished to a third party by the disclosing party without a
reasonable restriction on such third party's rights;
d) can by written records be shown to have been known by the
receiving party at the time of disclosure; or
e) is developed independently by the receiving party, and such
independent development has been documented in writing.
17.4 Neither party shall publicly disclose any information regarding
the terms and conditions contained herein without having received
prior approval, in writing, from the other party.
17.5 The parties shall adhere to any applicable U.S. Government and
foreign export control laws and regulations and shall not export
or re-export any technical data or products received or the direct
product of such technical data except in compliance with the
applicable export control laws and regulations of the U.S.
Government and any foreign country.
18. LAWS AND REGULATIONS
At no additional charge to TRW, Seller shall comply with and
obtain all license and permits required by the Product and a
Product shall be in conformance with all applicable US laws and
governmental orders and regulations in effect at the time of
shipment of the Product.
19. INDEMNIFICATION AND INSURANCE
11
<PAGE>
19.1 Each party (the "Indemnifying Party") shall indemnify and save
harmless the other (the "Indemnified Party") from any liability or
claim (including, without limitation, the costs and reasonable
attorney's fees in connection therewith) that may be made by a
third party for injury, including death, to persons or damage to
property arising directly out of the Indemnifying Party's
negligent acts or omissions in connection with such Party's
performance of its obligations under this Agreement; provided, the
Indemnified Party promptly notifies the Indemnifying Party in
writing of any such liability or claim for which the Indemnifying
Party is responsible hereunder and does not incur any liability,
cost or expense hereunder without the Indemnifying Party's prior
written approval, except in limited emergency circumstances where
time does not allow for such approval, in which case the
Indemnified Party shall give the Indemnifying Party written notice
as much in advance as possible prior to incurring such liability,
cost, or expense .
19.2 Seller shall maintain during its performance under this Agreement
General Liability Insurance, including contractual, products
liability and broad form vendors' property damage endorsement with
the limits of $2,500,000 combined single limit per occurrence for
bodily injury and property damage. Seller must provide property
insurance to cover all consigned NTI material on Seller's premises
during the term of the Agreement.
19.3 Prior to the commencement of the Term, Seller shall furnish to NTI
a certificate of insurance evidencing that such insurance is in
effect. In the event of cancellation or expiration of any
insurance, Seller shall in such event furnish a new certificate.
20. EXPORT AUTHORIZATION
20.1 Unless otherwise agreed to by Seller in writing, TRW shall assume
all responsibility for obtaining any required export
authorizations necessary to export from the United States any
Products purchased hereunder or technical data or documents to be
supplied hereunder by Seller. TRW shall not re-export Products or
technical data or documentation of such data, to any proscribed
countries, for which such prohibitions exist pursuant to sections
of the U.S. Export Administration Regulations unless properly
authorized by the U.S. Government.
20.2 Seller shall perform all administrative actions required by Seller
to qualify each Product for preferential treatment under the rules
of any applicable (current as the date hereof) trade treaty among
Canada, Mexico and the U.S.A., including, without limitation, the
North American Free Trade Agreement ("NAFTA"). If a Product
qualifies under NAFTA, Seller shall prepare and distribute a NAFTA
Certificate of Origin and any other documents required. Seller
shall respond to requests for information regarding any NAFTA
Certificate of Origin and assist TRW and NTI in resolving any
Product eligibility issues. Seller shall be solely responsible for
all penalties and costs resulting from a NAFTA Certificate of
Origin, prepared by Seller, subsequently being determined to be
invalid.
20.3 If a NAFTA Certificate of Origin is prepared for each shipment,
Seller shall: (a) retain the original NAFTA Certificate of Origin
in Seller's files with appropriate backup documentation, (b)
attach a copy of the NAFTA Certificate of Origin to the
customs/shipping documents for the qualifying Product, and (c)
mark the customs/shipping documents with the legend: "Copy of
NAFTA Certificate of Origin attached."
20.4 If a blanket NAFTA Certificate of Origin is prepared, Seller
shall: (a) retain the original NAFTA Certificate of Origin in
Seller's files with appropriate backup documentation, (b) mark the
customs/shipping documents for the qualifying Product with the
legend: "Copy of blanket NAFTA Certificate of Origin on file at
NTI's customs offices in Milton, Ontario (Canada) and in
Tonawanda, NY (U.S.A.)," and (c) mail copies of the NAFTA
Certificate of Origin to the following offices:
12
<PAGE>
<TABLE>
<S><C>
Canada: Nortel Networks Limited U.S.A.: Nortel Networks, Inc. Mexico: Nortel Networks Limited
Dept. 1540 77 Oriskany Drive Dept. 1540
610 Industrial Drive Tonawanda, NY, 610 Industrial Drive
Milton, Ontario, U.S.A. 14150 Milton, Ontario,
Canada L9T 3H5 Canada L9T 3H5
</TABLE>
21. CONTRACTUAL RELATIONSHIP
Seller and TRW are independent contractors in all relationships
and actions under and contemplated by this Agreement. This
Agreement is not to be construed to create, or to authorize the
creation of, any employment, partnership, or agency relation or to
authorize TRW to enter into any commitment or agreement binding on
Seller or to allow one party to accept service of any legal
process addressed to, or intended for, the other party. TRW shall
not make any warranties, guarantees or any other commitments on
behalf of Seller.
22. NOTICES AND REQUESTS
22.1 All legal notices required or otherwise provided under this
Agreement except for certificates or documents under Section 20.4
shall be sent by certified or registered U.S. mail (return receipt
requested), postage prepaid, or by cable, telegram, facsimile,
telex or hand delivery to the other party referencing this
contract, and addressed as follows:
Seller: Endwave Corporation
321 Soquel Way
Sunnyvale, CA 94086
Attention: Vice President--marketing
TRW: TRW Inc.
Telecommunications Products Division
One Space Park
Redondo Beach CA 90278
Attention: Subcontracts Manager
or to such other address as the party to receive the notice so
designates by written notice to the other party.
22.2 All other communications required or otherwise provided hereunder
by one party to the other shall be in writing and shall be mailed
by First Class United States mail, postage prepaid, to the
following addresses or to such changed address as either party
entitled to notice hereunder shall have communicated in writing to
the other party:
Seller: Endwave Corporation
321 Soquel Way
Sunnyvale, CA 94086
Attention: Vice President--Marketing
TRW: TRW Inc.
Telecommunications Products Division
One Space Park Building
Redondo Beach CA 90278
13
<PAGE>
Attention: Subcontracts Manager
23. GENERAL
23.1 The failure of a party to enforce any provision of this Agreement,
shall not constitute a waiver of such provision or the right of
such party to enforce such and every other provision.
23.2 Seller shall not in any advertising, sales promotion materials,
press releases or any other publicity matters, except to the
extent required by law or other regulation, use the name of TRW,
NTI or Affiliate or any variation thereof or language from which
the connection of said names may be implied without TRW or NTI (as
the case may be) prior written approval, such approval not to be
unreasonably withheld.
23.3 Neither party shall assign this Agreement, any Order or any rights
under either without the written consent of the other party, such
consent not to be unreasonably withheld.
23.4 Section headings are inserted for convenience only and shall not
be used to interpret this Agreement.
23.5 This Agreement constitutes the entire agreement between the
parties with respect to the subject matter hereof and supersedes
all prior negotiations, proposals, commitments, writings,
advertisements, agreements and communications of any nature
whatsoever.
23.6 No provision of this Agreement shall be deemed waived, amended or
modified by either party, unless such waiver, amendment or
modification be in writing and signed by the party against whom
enforcement of the waiver, amendment or modification is sought.
24. DISPUTES AND GOVERNING LAW
24.1 This Agreement and any orders concluded under this Agreement shall
be governed and construed in accordance with the laws of the State
of Texas, excluding its rules with respect to the conflict by
laws. TRW and Seller exclude the United Nations Convention on
Contracts for International Sale of Goods from this Agreement or
any supplemental agreement performed to implement this Agreement.
24.2 TRW and Seller agree to attempt to settle any claim or controversy
arising out of this Agreement through consultation and negotiation
in good faith and a spirit of mutual cooperation. Any dispute
between the parties relating to this Agreement will first be
submitted in writing to a panel comprised of a senior executive
from each of TRW and the Seller, who will promptly confer in an
effort to resolve such dispute. Each party's executive will be
identified by notice to the other party and may be changed anytime
thereafter by notice to the other. Any agreed decisions of the
executives will be final and binding on the parties. In the event
the executives are unable to resolve any dispute within thirty
(30) days after submission to them, either party may then submit
the dispute for arbitration to the American Arbitration
Association ("AAA") for final decision, pursuant to the Commercial
Arbitration Rules and Supplementary Procedures for Large Complex
disputes of the AAA with instructions that the arbitration be
conducted in the manner set forth in this Section 24.
24.3 Arbitration shall be conducted by three (3) arbitrators. Seller
shall nominate one (1) arbitrator and TRW shall nominate one (1)
arbitrator. The third arbitrator shall be agreed upon by the
arbitrators nominated by Seller and TRW and the arbitrator
selected by agreement between the arbitrators nominated by Seller
and TRW shall serve as chairman of the panel. In the event either
party fails to properly nominate its arbitrator within thirty (30)
days from the date it receives notice of the request for
arbitration, such arbitrator shall be appointed by AAA.
24.4 The place or arbitration shall be a neutral location selected by
the AAA. The arbitration award shall be final and binding on the
parties, and the parties agree to be bound thereby and to act
accordingly. The costs of arbitration shall be borne by the party
or parties as determined by the arbitration award.
14
<PAGE>
24.5 When any dispute occurs and when any dispute is under arbitration,
except for the matters under dispute, the parties shall continue
to exercise remaining respective rights and fulfill their
remaining respective obligations under this Agreement.
25. YEAR 2000 COMPLIANCE
25.1 Seller represents and warrants that for so long as TRW, NTI or
Affiliates have any right to use any of the Products provided
pursuant to this Agreement, when used in accordance with
appropriate documentation, shall (i) process date and time related
data without causing any processing interruptions, abnormal
terminations, or changes in performance characteristics, and (ii)
shall process and manipulate all date and time related functions
correctly. Without limiting the generality of the foregoing, all
Products shall:
a) correctly handle date and time related data before, during and
after January 1, 2000, including but not limited to accepting date
input, providing date output, and performing ongoing operations on
dates and portions of dates including, but not limited to,
calculating, comparing and sequencing of dates (in both forward
and backward operations spanning century boundaries);
b) correctly handle leap year calculations (including but not
limited to identification of leap years, interval calculations,
day-in-year calculations, day-of-the-week calculations, and
week-of-the-year calculations);
c) correctly handle all two and four digit date and time related
input in a manner that resolves ambiguity as to century in a
disclosed, defined and predetermined manner; and
d) correctly store, retrieve and provide output of all date and
time data in a manner that is unambiguous as to century.
Seller's obligations under this warranty will be limited to
(a) replacing (b) repairing (c) adjusting or (d) modifying the
part or parts, at Seller's sole option, or , at Seller's sole
option, the Products which prove to not so perform during the term
of this warranty, provided that TRW or NTI gives Seller prompt
notice of any defect or failure and satisfactory proof thereof.
Any defective part or parts must be returned to Seller's
facilities for inspection. TRW shall prepay all freight charges to
return any Products to Seller's facilities or any other repair
facility designated by Seller. Seller shall deliver replacement or
repaired Products to NTI freight prepaid to the NTI's facilities.
Products returned to Seller for which Seller provides replacement
under this warranty shall become the property of Seller. Products
not manufactured by Seller are warranted only to the extent of and
by the original manufacturer's warranty. Repaired or replaced
parts or Products shall remain under warranty for the remainder of
the warranty period on the Products. This warranty does not apply
to (a) faulty performance caused by any item that has been
subjected to misuse, neglect, abuse or accident, or (b) to any
item that has been altered or repaired by anyone other than Seller
or Seller's duly authorized representative without Seller's
written approval. Seller's obligations under this warranty will
not apply to any Product which (a) is normally consumed in
operation or (b) has a normal life inherently shorter than the
Y2000 warranty period stated in this Paragraph 25. TRW's sole and
exclusive remedies in connection with a breach of this warranty
are as set forth herein.
26. TERMINATION OF MW ORDERS
26.1 Seller and TRW agree that this Agreement supersedes and terminates
in their entirety the MW Orders. Any work with regard to the NTI
Contract to be performed after the date hereof shall be performed
pursuant to the terms of this Agreement.
IN WITNESS WHEREOF, the parties hereto have, by their duly authorized
representatives, executed this SUPPLY AGREEMENT as of the Effective Date.
TRW INC.
ENDWAVE CORPORATION
15
<PAGE>
BY: /s/ EDWARD A. KEIBLE, JR. BY: /s/ WESLEY G. BUSH
----------------------------------------- ----------------------------
NAME: Edward A. Keible, Jr. NAME: Wesley G. Bush
--------------------------------------- --------------------------
TITLE: President and Chief Executive Officer TITLE: Vice President
-------------------------------------- -------------------------
DATE: March 31, 2000 DATE: March 31, 2000
--------------------------------------- --------------------------
16
<PAGE>
APPENDIX A PRODUCTS AND PRICES
1. PRODUCT DEFINITION
Products currently subject to this Agreement are (i) as described in the
NTI Specifications for 24GHz Transceiver Equipment, Production Phase, Issue
05, Stream 00, dated March 24, 1999 and (ii) as described in the NTI
Specifications for 26 GHz transceiver equipment, production phase, issue
03, stream 00, dated April 13, 1999.
17
<PAGE>
2. PRICE
2.1 The following pricing shall apply for the [*] GHz transceiver
modules, and is based on NTI specifications set forth above,
covering production for Customer Transceivers (CTR) and
Basestation Transceivers (BTR):
TABLE 1
[*]GHZ PRODUCTION PRICING
UNIT PRICING
Production Pricing CTR BTR
--- ---
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
The per unit pricing above is based on [*]. The maximum order
quantity for [*] GHz modules under this Agreement is [*], also
taking into account [*]. For example, [*].
2.2 The following pricing shall apply for the [*] GHz transceiver
modules, and is based on NTI specifications set forth above,
covering production for Customer Transceivers (CTR) and
Basestation Transceivers (BTR):
Table 2
[*] GHZ PRODUCTION PRICING
Unit Pricing
CTR BTR
--- ---
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
[*] [*] [*]
The per unit pricing above is based on [*]. The minimum order
quantity for [*] GHz modules under this Agreement is [*], also
taking into account [*]. For example, [*].
Both parties agree to negotiate in good faith should production
requirements for [*] GHz Products [*].
TRW agrees to purchase a [*]
[*] CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.
18
<PAGE>
[*] for the Term specified in return for the prices noted above. [*]. To
the extent that TRW [*].
Notes:(a) CTR and BTR pricing is applicable for the frequencies
noted in Table 1 and Table 2; (b) All prices are in US
dollars; (c) FOB Diamond Springs, California
3. COST REDUCTION
Seller agrees to [*]. Seller agrees to [*].
4. ORDER AND DELIVERY PROCESS
TRW agrees to provide a rolling 12 month forecast to Seller covering 24
GHz and 26GHz modules. Based on this rolling 12 month forecast, Seller
and TRW agree to the following terms and conditions for the Modules
noted;
<TABLE>
FORECAST PERIOD TERMS AND CONDITIONS
<S> <C>
--------------------- ----------------------------------------------------------------------------
Week 1 - 6 This period shall be referred to as "firm". During this period the
forecasted Order Quantity and Delivery Date cannot change.
--------------------- ----------------------------------------------------------------------------
Week 7 - 10 This period shall be referred to as "flexible". During this period the
Order Quantity may change by plus or minus 20% of the quantity forecast
but the Delivery Date may not change.
--------------------- ----------------------------------------------------------------------------
Week 11 - 52 This period shall be referred to as "open". During this period the
Delivery Date and Order Quantity may be
totally altered without cost to NTI.
--------------------- ----------------------------------------------------------------------------
</TABLE>
The rolling 12 month forecast provided to Seller by TRW is not a
commitment to buy. This forecast will be provided on a weekly basis,
promptly following TRW's receipt of such parallel forecasts from NTI.
[*] CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.
19
<PAGE>
APPENDIX B SHIPPING AND DELIVERY
Shipping Location: Diamond Springs, CA
Rescheduling Period: Product may be rescheduled up to 4 weeks prior to
scheduled Shipping Date.
Cancellation Period: Product may be canceled up to 6 weeks prior to
scheduled Shipping Date.
Maximum Delivery Period: 8 weeks
Minimum Order Amount: $1,000
20
<PAGE>
APPENDIX C QUALITY CONFORMANCE
GENERAL REQUIREMENTS
Seller shall have in place a CFC free Ozone Depleting Substance
(ODS) manufacturing facility or at a minimum a Corporate plan to
achieve a CFC free process by December 31,1998. Seller's products
or packing materials shall not contain any ODS materials as
outlined in the Montreal Accord (1990).
PRODUCT AND SUPPLIER QUALIFICATION
1. Seller, as part of this agreement shall be required to
collectively meet the requirements of a NTI Qualification Audit.
This shall be part of the business "partnership" process. TRW, NTI
or Affiliate agrees to give Seller a minimum of 10 working days
notice before the audit date.
It is noted by both parties that while supplier audits are a
necessary and beneficial business requirement of TRW, NTI or
Affiliate, it is agreed that the outcome shall not be used to
directly circumvent or diminish the business agreement except in
cases of gross product defects, functional failure or delivery
shortage.
It is agreed that Seller and TRW, NTI or Affiliate technical and
management personnel will cooperate fully to achieve the best
possible results. The report content and frequency shall be agreed
to at the time of the audit. This audit includes the following
sections;
1.1 PRODUCT FUNCTION AND REGULATORY CONFIRMATION
Seller shall be asked to demonstrate the processes, test methods,
criteria, facilities, equipment and documentation records that
have been retained to confirm all the requirements outlined in the
Product Specification have been met.
1.2 MANUFACTURING CAPABILITY AND QUALITY SYSTEM
Seller shall agree to have its processes for design, procurement,
manufacturing, testing, delivery, overall quality system and other
related areas, qualified by TRW/NTI Audit team pursuant to
standards which are mutually agreeable between the parties.
Seller shall provide the team access during normal working hours
to facilities, personnel and records necessary to complete the
audit.
TRW, NTI or Affiliate agrees that the audit team shall be subject
to Seller's normal safety, security and confidentiality
requirements and shall not unreasonably interfere with the daily
operations of the business.
1.3 ONGOING QUALITY AND SERVICE OPERATIONS
Seller agrees to provide NTI or Affiliate with an ongoing quality
commitment to constantly improve the design, manufacturing
process, product reliability and service of the product.
Seller agrees to have implemented and to be able to demonstrate
the following quality systems;
A. SELLER CORRECTIVE ACTION PROCESS
This process provides for an ongoing quality relationship with
Sellers vendors to record, control and resolve quality issues to
prevent sub-standard components being installed in the final
product. The TRW/NT audit team shall review this process and ask
for related documentation and records.
21
<PAGE>
Reports not required, but records shall be retained.
B. NTI OR AFFILIATE CORRECTIVE ACTION PROCESS
This process provides for the joint management of field returns
from NTI or Affiliate and the corrective action required to fix
the problem whether it be caused by design, manufacturing,
testing, packing, distribution, billing etc.
Reports are required at agreed intervals outlining the number of
defective products arranged in accordance to the largest incidence
of defects. Each line item shall have the corrective action plan
with the prime person assigned to it and a completion date.
C. PRODUCT RELIABILITY GROWTH
During the ongoing manufacture and sale to NTI or Affiliate it is
expected that as part of a joint commitment to quality products,
that Seller demonstrate a continual product reliability growth.
This can be accomplished by design improvements (within the Form,
Fit and Function of the Product Spec) manufacturing processes, new
suppliers, or by any means Seller so chooses.
Reports are required at agreed intervals that illustrate the
current reliability level, a six month running history record and
a list of actions that were used to create the growth.
D. DESIGN MATURITY
This provides for the reduction of active design changes
incorporated in products sold to TRW. It is expected that Seller
have a minimal amount of design changes applied to new and
especially mature, products, except those to improve performance
and reduce costs.
E. KEY MANUFACTURING DATA
During the facilities audit, TRW, NTI or Affiliate and Seller
shall agree on the key manufacturing or testing parameters that
directly determine product quality and reliability.
As part of a good Statistical Process Control (SPC) process,
Seller agrees to monitor, maintain and take whatever corrective
action required to keep these key parameters within the control
limits. Seller shall agree to notify TRW, NTI or Affiliate within
two working days of any out of control situation and the steps
being taken to correct it. Seller shall have in place a system to
ensure products manufactured during an out of control period are
not shipped to TRW, NTI or Affiliate until test results have been
analyzed and permission has been obtained from TRW, NTI or
Affiliate to ship the product.
Reports are required at agreed intervals comprising of copies of
SPC data illustrating the key parameter, it's limits and the
actual results for the month.
F. PRODUCT QUALITY (ONGOING)
SELLER agrees to have in place and to show evidence of use within
their quality system, workmanship standards that fully represent
the limits and expectations of the quality attributes of products
sold to TRW, NTI or Affiliate.
1.4 QUALITY MEASUREMENTS
22
<PAGE>
1. Seller agrees to respond to written quality concerns
communicated to Seller by TRW, NTI or Affiliate, following receipt
from TRW, NTI or Affiliate of appropriate data and suspect
material, in the following manner:
a) verbally within five working days; and
b) in writing within ten working days.
2. All items of Product supplied shall have an annual accumulated
customer return rate equal to or [*], reduced to [*] and further
reduced to [*] after first product shipment.
3. Seller agrees to monitor and report monthly to TRW and NTI or
Affiliate Return Rates and a summary of the reasons for failure.
The parties will cooperate to investigate and resolve quality
issues related to such reports.
[*] CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.
23
<PAGE>
APPENDIX D AFFILIATES
NORTHERN TELECOM INC. COMPANIES
(NTL PLUS ENTITIES IN WHICH NTL POSSESSES, DIRECTLY OR INDIRECTLY, MORE THAN
50% OF THE OUTSTANDING VOTING SECURITIES) (THIS LIST DOES NOT INCLUDE "SHELL
COMPANIES" - THOSE WHICH ARE HOLDING COMPANIES AND HAVE NO EMPLOYEES OR
WHICH ARE ACTUALLY INACTIVE OR SPECIAL PURPOSE FINANCIAL COMPANIES.
OWNERSHIP IS 100% UNLESS OTHERWISE INDICATED.)
<TABLE>
<S> <C> <C>
Percentage Ownership
NORTHERN TELECOM COMPANIES COUNTRY IF NOT 100%
-------------------------- ------- ----------------------
Bell Atlantic Meridian Systems USA 80.0%
Bell-Northern Research Ltd. Canada 70.0%
BNR Europe Limited England
BNR Inc. USA
Brock Telecom Limited Canada
Cook Electric Telecomunicacoes S/A Brazil
Data 100 (Western Pacific) Pty. Limited Australia
Integrated Networks Limited England
Matra Communication S.A.S. France 50.0%
Netas - Northern Electric Telekomunikasyon A.S. Turkey 51.85%
NorTel Australia Pty. Limited Australia
Nortel Communications (Israel) Limited Israel
NORTEL Communications Systems Inc. USA
Nortel Europe S.A. France
Nortel Federal Systems Inc. USA
Nortel Limited England
Nortel Matra Cellular SCA France 66.0%
Nortel New Zealand Limited New Zealand
Nortel Post and Telecommunications Technical Inc. People's Republic of China 60.0%
Nortel/Dasa Network Systems GmbH and Co. KG Germany 50.0%
Northern Telecom (Asia) Limited Hong Kong
Northern Telecom (CALA) Corporation USA
Northern Telecom (Dublin) Limited Ireland
Northern Telecom (Ireland) Limited Ireland
Northern Telecom (Kedah) Sdn. Bhd. Malaysia
Northern Telecom (Luxembourg) S.A. The Netherlands
Northern Telecom (Malaysia) Sendirian Berhad Malaysia
Northern Telecom (Northern Ireland) Ltd. Northern Ireland
Northern Telecom (Penang) Sdn. Bhd. Malaysia
Northern Telecom (Portugal) S.A. Portugal
Northern Telecom (Puerto Rico) Inc. Puerto Rico
Northern Telecom (Thailand) Limited Thailand
Northern Telecom AG Switzerland
Northern Telecom Bulgaria EOOD Bulgaria
Northern Telecom B.V. The Netherlands
Northern Telecom Canada Limited Canada
Northern Telecom Components Sdn. Bhd. Malaysia
Northern Telecom de Argentina, S.A. Argentina
Northern Telecom de Colombia S.A. Colombia
Northern Telecom de Mexico, S.A. de C.V. Mexico
Northern Telecom de Venezeula Compania Anonima Venezeula
Northern Telecom do Brasil Industria e Commercio Ltda. Brazil
Northern Telecom Global Corporation Canada
Northern Telecom GmbH Germany
Northern Telecom Inc. USA
Northern Telecom Industries Sdn. Bhd. Malaysia
</TABLE>
24
<PAGE>
Northern Telecom International Finance B.V. The Netherlands
25
<PAGE>
AFFILIATES (CONT)
NORTHERN TELECOM COMPANIES
(NTL PLUS ENTITIES IN WHICH NTL POSSESSES, DIRECTLY OR INDIRECTLY, MORE THAN
50% OF THE OUTSTANDING VOTING SECURITIES) (THIS LIST DOES NOT INCLUDE "SHELL
COMPANIES" - THOSE WHICH ARE HOLDING COMPANIES AND HAVE NO EMPLOYEES OR
WHICH ARE ACTUALLY INACTIVE OR SPECIAL PURPOSE FINANCIAL COMPANIES.
OWNERSHIP IS 100% UNLESS OTHERWISE INDICATED.)
<TABLE>
<CAPTION>
<S> <C> <C>
Percentage Ownership
NORTHERN TELECOM COMPANIES COUNTRY IF NOT 100%
-------------------------- ------- ----------------------
Northern Telecom International Limited Canada
Northern Telecom Italia S.p.A. Italy
Northern Telecom Japan Inc. Japan
Northern Telecom Korea Limited Korea
Northern Telecom Limited Canada
Northern Telecom Maroc SA Morocco 60.0%
Northern Telecom N.V. Belgium
Northern Telecom Scandinavia AS Norway
Northern Telecom Singapore Pte. Limited Singapore
NT Immobilier S.A. France
NT Meridian S.A. France 82.0%
Prism Systems Inc. Canada
Shanghai Nortel Semiconductor Corporation People's Republic of China
Sociedad Espanola de Distribucion de Equipos de
Telecommunicaciones Northern Telecom, S.A. Spain
Tong Guang - NorTel Limited Liability Company People's Republic of China 55.0%
TTS Meridian Systems Inc. Canada
Ultel Azerbaijan 51.0%
Vesnet Kazakhstan 51.0%
</TABLE>
26
