<PAGE> 1
EXECUTION VERSION 1
EXHIBIT 10.24
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Confidential Materials are omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
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MASTER MANUFACTURING AND PURCHASE AGREEMENT
BULL HN INFORMATION SYSTEMS INC.
AND
CASTLE NETWORKS, INC
Agreement entered into this 22nd day of September, 1999, by and between BULL HN
INFORMATION SYSTEMS INC., ACTING THROUGH ITS BULL ELECTRONICS UNIT, a Delaware
corporation, with offices at 1001 Pawtucket Boulevard, Lowell Massachusetts,
01854, hereinafter referred to as "BULL", and CASTLE NETWORKS, INC., a Delaware
corporation, with principal offices at 1 Executive Drive, Chelmsford, MA, 01824,
hereinafter referred to as "CNI".
Whereas, BULL agrees to manufacture and provide warranty and post warranty
repair support for the products described on attached Schedule 1 ("Products")
and sell the finished Products exclusively to CNI. CNI agrees to purchase the
finished Products and post warranty repair services for such finished Products
from BULL. The manufacture, sale, purchase, warranty and post warranty repair of
the finished Products will be governed by the terms and conditions of this
Agreement. Additional products as agreed to by the parties in a written
amendment signed by duly authorized representatives of each party may be added
to this Agreement from time to time, whereupon they shall be treated as
"Products" under the terms of this Agreement such that the terms of this
Agreement will cover any and all product manufactured by BULL for CNI.
Now, therefore, the parties hereby agree as follows:
This Agreement consists of the attached following GENERAL TERMS AND CONDITIONS
and the following Schedules (as applicable):
Schedule 1 - Product Specifications and Product Pricing
Schedule 2 - Quality Requirements
Schedule 3 - Approved Vendor List
Schedule 4 - Test Programs and Fixtures
1. PRODUCT PURCHASE PRICES
1.1 Purchase prices ("Purchase Prices") for the Products are set forth on
Schedule 2 and are assumed to provide the basis as the "not to exceed" purchase
price for the term of the agreement. Prices shall be adjusted in accordance with
the provision below, entitled Continuous Improvement. Purchase Prices are FOB
common carrier at BULL's plant of manufacture and are net of all taxes, duties,
and all other charges. Freight costs shall be separately invoiced to CNI based
on BULL's actual costs.
CASTLE NETWORKS, INC. COMPANY CONFIDENTIAL
<PAGE> 2
EXECUTION VERSION 2
Confidential Materials are omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote omissions.
1.2 Price decreases based upon the pricing formula in 1.4 below, shall be
passed on to CNI as they occur, except as otherwise specifically set forth
herein. All Product Purchase Prices will be reviewed by CNI and BULL on a
quarterly basis to commence on or about the 90th day following the initial
agreement's effective date. CNI will be given thirty (30) days notice of any
price change which apply only to orders scheduled after the effective date of
the price change as agreed to by the parties. Only in the event of any
Industry-wide or sole source "custom component" shortage of components affecting
price or delivery schedules, will CNI agree to negotiate with BULL equitable
upward adjustments to the Purchase Prices and delivery schedules, otherwise
prices are not to increase for the following one year term.
CNI recognizes that as prices on components decline, BULL may have long lead and
custom component Inventory on hand in excess of 30 days supply. Only for long
lead time and custom parts for which CNI has approved BULL to purchase will
price reductions be delayed until CNI's attributable share of the higher cost
components are consumed.
1.3 Subject to adjustments under this Agreement the Purchase Price for Products
shall be set forth in Schedule 1 attached hereto, as amended from time to time
by mutual written agreement of the parties.
1.4 Purchase Prices for Products shall be based upon component and
manufacturing cost plus an agreed to gross profit margin of [**] percent
([**]%). Purchase Prices shall be adjusted for the following factors:
* verified increases, beyond the reasonable control of BULL due to broad
shortages of standard components or shortages of custom components as
specified by Castle, in the actual costs for such custom components;
* decreases in Material Components costs or manufacturing overhead;
* Continuous Improvement adjustments; or
* increases in overall manufacturing volumes and run volumes.
2. QUALITY IMPROVEMENT
2.1 BULL shall have a documented plan for continuously assessing and improving
the quality and reliability of Products. BULL's Quality Improvement Plan (QIP)
shall incorporate a well-defined set of metrics, in a form mutually agreed to by
the parties, that will assess BULL's internal manufacturing, procurement and
logistics efficiency in order to improve BULL's performance for Products sold to
CNI. Metric Collection, analysis and reporting should be conducted on a
continual basis. Both field performance and in-process data shall be utilized.
All information in BULL's QIP shall be made available for review by CNI,
including, but not limited to, plans, procedures and results, provided that such
information shall be considered BULL
CASTLE NETWORKS, INC. COMPANY CONFIDENTIAL
<PAGE> 3
EXECUTION VERSION 3
Confidential Materials are omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote omissions.
Confidential and Proprietary and treated in accordance with the provisions of
this Agreement governing the use of Confidential and Proprietary Information.
3. CONTINUOUS IMPROVEMENT
3.1 CNI and BULL agree that the parties shall identify areas for BULL's
continuous improvement in cost, ("Continuous Improvement") over the term of this
Agreement with regard to board level assemblies. CNI and BULL agree that BULL
will use its commercially reasonable best efforts to achieve at a minimum [**]
percent ([**]%) Continuous Improvement in efficiency and cost Improvements, to
CNI at the commencement of Year two (2) of this Agreement Year two (2) shall be
defined as commencing precisely one (1) year after the date on which this
Agreement shall take effect. CNI and BULL further agree that, should this
Agreement be extended, at the commencement of Year three (3) of this Agreement
BULL will use its commercially reasonable best efforts to achieve at a minimum
[**] percent ([**]%) Continuous Improvement over and above those Continuous
Improvement savings achieved at the commencement of Year two (2). Year three (3)
shall be defined as commencing precisely two (2) years after the date on which
this Agreement shall take effect. However, should BULL have the ability to offer
Continuous Improvement savings prior to the commencement of Year two (2) of this
Agreement, CNI shall receive such savings when such savings may feasibly be
offered, subject to the limitations on passing on such savings as are set forth
in Section 1.2.
3.2 For the purpose of this section, the term "Continuous Improvement" shall
mean improved cost measured by one or more dearly measurable parameters, taken
together, on a year over year basis. The Continuous Improvement shall be
measured over the Products purchased.
3.3 If BULL fails to meet Continuous Improvement commitments based upon the
identified parameters within the time frames set forth, then BULL must present
to CNI a detailed competitive analysis by component for each board level item
purchased. The competitive analysis will show component, quantity purchased,
vendor costs from the vendor(s) on the AVL during the past 12 months and cost
BULL paid for components. For lost savings (Continuous Improvements)
opportunities of a material nature involving the "Category A" Material
Components, BULL will present a plan to recapture savings over like time frame's
future purchases. For the purposes of this Agreement "Category A Components" are
those components identified as such on the mutually agreed to costed bills of
Materials, which components are specified by CNI and are either typically
unique, high cost and/or custom.
In CNI's sole discretion, failure by BULL to demonstrate the ability to deliver
competitive priced product will result in termination of this Contract.
3.4 BULL and CNI shall meet once every three months to assess BULL's progress
towards implementation of Continuous Improvement commitments. These quarterly
meetings shall also serve as the appropriate forum for CNI and BULL to discuss
all issues related to Continuous Improvement goals.
CASTLE NETWORKS, INC. COMPANY CONFIDENTIAL
<PAGE> 4
EXECUTION VERSION 4
4. CNI PURCHASE ORDERS
4.1 Material Components will be purchased and Products will be manufactured and
shipped according to a mutually agreed schedule and consistent with applicable
Product Lead-Times of no longer than ninety (90) days, unless otherwise agreed
in writing by the parties. Once agreed to, purchase of Material Components as
well as manufacture and shipment of Products will be in accordance with CNI's
Purchase Orders ("Purchase Orders").
Purchase Orders may be issued in hard copy or electronically ("EDI"), subject to
the parties having entered into a mutually acceptable EDI Agreement, and will be
issued at intervals as mutually agreed. Purchase Orders are firm and will cover
a minimum of ninety (90) days or the stated lead times. Purchase Orders will
state the item(s) to be purchased, the number of Products to be manufactured and
shipped during the period covered by the Purchase Order, as well as CNI's
required delivery date, (which required delivery date shall be consistent with
then current Product Lead Times unless otherwise agreed in writing by the
parties) and agreed to unit price consistent with the terms of this Agreement.
Purchase Orders will be accepted or rejected in writing by BULL within three (3)
business days of receipt for forecasted quantities, but in no event more than
five (5) business days. Orders not so rejected are deemed accepted. BULL shall
have the right to reject only those Purchase Orders for Product that are not
issued in accordance with the terms of this Agreement. In the event that CNI
suffers a material adverse change in its credit or financial situation or
payment history which in BULL's reasonable judgment puts BULL at substantially
greater credit risk, BULL may require acceptable security or guarantees for
payment or pre-payment of orders, subject to a reasonable pre-payment discount,
if such prepayment discount is appropriate, until such time as CNI's
creditworthiness is restored.
Any Purchase Order shall otherwise automatically be deemed to include, without
the necessity of reference, all the other terms and conditions of this
Agreement. The preprinted terms and conditions on the face and reverse side of
each Purchase Order or order acknowledgement shall automatically be deemed
deleted and inapplicable without the necessity of a statement to that effect on
the face of the Purchase Order.
4.2 Delivery F.O.B. common carrier at BULL's plant of manufacture of any
Product subject to an accepted Purchase Order shall be made in accordance with
the confirmed date of delivery set forth in BULL's acceptance of the Purchase
Order, where such confirmed date shall be the requested delivery date if such
requested delivery date is either (a) consistent with BULL's then quoted Product
Lead-Times or (b) consistent with BULL's written agreement to delivery earlier
than the then quoted Product Lead-Times, provided that in either event, BULL has
received all CNI supplied Documentation and Tooling, if any are required. BULL
shall have the right to deliver Product F.O.B. BULL's plant of manufacture
either on the confirmed delivery date or up the five (5) business days earlier
than the confirmed delivery date for the delivery to be considered "On-Time".
BULL will provide CNI with monthly reports of its On-Time delivery record and
shall review with CNI on a quarterly basis such reports. If BULL fails to
deliver a Product On-Time due to causes within BULL's control, CNI's sole and
exclusive remedy and BULL's entire liability shall be for CNI to terminate this
Agreement upon written notice to BULL, subject to CNI's obligation to pay for
Product covered by Purchase Order accepted by BULL prior to the date of CNI's
notice of termination and CNI's obligation to pay BULL for
CASTLE NETWORKS, INC. COMPANY CONFIDENTIAL
<PAGE> 5
EXECUTION VERSION 5
Material Components procured by BULL as of the date of CNI's notice of
termination based on CNI's Purchase Orders and the first ninety (90) days of
CNI's then current Product Forecast
4.3 CNI shall provide BULL on a monthly basis with a twelve (12) month rolling
forecast of Product purchases broken down by calendar month (the "Forecast").
The Forecast beyond ninety (90) days (or some other mutually agreed period) are
for planning purposes only, are not firm.
4.4 BULL will purchase only the Material Components required to manufacture
Products according to the quantity and delivery schedules set forth in Purchase
Orders issued by CNI during the term of this Agreement. BULL will purchase
Material Components for the Products according to CNI's Approved Vendor List
("AVL"). With CNIs prior written consent which my be evidenced through CNI
Purchase Orders for Material Components, BULL may purchase Material Components
in excess of the requirements set forth for Products subject to CNI issued,
non-cancellable, nonreschedulable Purchase Orders such as Long Lead Time
Material Components or Minimum Buy Material Components. These instances will be
discussed and agreed to in writing by the parties prior to any actual purchase.
For purposes of this Agreement, the term "Long Lead Time Material Component" is
defined as those Material Components either identified on the BOM or which
cannot be delivered to BULL's factory within the then current Product Lead-Time,
as quoted by BULL to CNI for a particular Product. A Product's "Lead-Time" is
defined as the amount of time following BULL's acceptance of CNI's Purchase
Order for a Product that is required for BULL, in the exercise of its reasonable
commercial efforts to (a) receive all Material Components, Documentation and
Tooling, (b) manufacture and assemble, if applicable, the Product to CNI's
Specifications and (c) deliver the Products F.O.B. BULL's factory. BULL shall
provide CNI with an update to the list of Long Lead Time Material Components on
a quarterly basis. If BULL provides no update, CNI may rely upon the previously
provided list of Long Lead Time Material Components.
For purposes of this Agreement the term "Minimum Buy Material Component" is
defined as those Material Components which BULL must procure for CNI in a
quantity that exceeds the quantity that BULL needs to complete the build out of
the quantity of Products subject to accepted Purchase Orders but which, when
procured in such quantity, may allow CNI to benefit from a reduced material cost
and lower Product Purchase Price. BULL shall provide CNI with an update to the
list of any Minimum Buy Material Components on a quarterly basis. If BULL
provides no update, CNI may rely upon the previously provided list of Minimum
Buy Material Components.
5. PAYMENT TERMS
5.1 Payment terms are the following: net thirty (30) days from invoice date in
United States dollars. The invoice date for Product shall be no earlier than the
ship date. Acceptance of a partial payment will not be a waiver of the right to
be paid the remainder due.
In addition, if CNI fails to pay any sums by their due date, BULL shall have the
right to invoice an annual amount of interest on past due amounts equal to the
then current annual prime rate of interest plus three percentage points. BULL
shall have the right to reject Purchase Orders and/or withhold shipment of
Products subject to accepted Purchase Orders if CNI no longer satisfies
CASTLE NETWORKS, INC. COMPANY CONFIDENTIAL
<PAGE> 6
EXECUTION VERSION 6
BULL's reasonable credit requirements until such time as CNI comes into
compliance with such requirements and/or provides BULL with acceptable security
or guarantees for payment. Notwithstanding the above, BULL's right to invoice
interest for Products delivered late due to factors within Bull's reasonable
control shall arise only after that number of days that the Product was late
following the due date, with interest accruing as of the original due date.
Authorized Credit Limit Process: As of the Effective Date, BULL shall reasonably
determine CNI's maximum credit limit based on a review of applicable financial
information from CNI (the "'Authorized Credit Limit"). If, at any time during
the Term of this Agreement the aggregate dollar value of (a) BULL's issued but
unpaid invoices for Products and other Material Components or services under
this Agreement, (b) CNI's issued Purchase Orders that have been accepted by BULL
and (c) the material and material handling cost of Material Components procured
by BULL for CNI that are Long Lead Time Components and/or Minimum Buy Components
(collectively, the "CNI's Current Account") is equal to or exceeds the
Authorized Credit Limit, BULL shall provide immediate notice of such
circumstance to CNI and if CNI has not remedied the situation within 5 business
days, BULL shall have the right to withhold delivery of any Product subject to
an accepted Purchase Order and/or refuse to accept any new Purchase Orders
unless and until CNI either pays down the CNI's Current Account so that it is
sufficiently below its Authorized Credit Limit to permit BULL to deliver
Products subject to accepted CNI Orders and/or accept new Purchase Orders or
provides BULL with alternative security and/or guarantees reasonably acceptable
to BULL.
At any time during the Term of the Agreement the Authorized Credit Limit may be
reviewed and adjusted upward, downward or maintained the same by BULL based on
material changes in the financial condition of CNI and/or the volume of Products
that CNI is likely to order from BULL. If and to the extent that BULL makes a
change to the Authorized Credit Limit, it shall do so in writing to CNI and the
new Authorized Credit Limit shall be considered the then current Authorized
Credit Limit until BULL provides advance notice to CNI to the contrary.
6. WARRANTIES, REMEDIES, LIMITATION OF LIABILITY
6.1 BULL warrants that its contracted services, including but not limited to,
fabrication, testing, and handling shall be carried out in a workmanlike manner,
in conformity with Bull's quotes and the agreed upon specifications as set forth
in this Agreement and all schedules and appendices hereto and further shall
result in Products that are free from defects proximately resulting from Bull's
work and services or failure to correctly carry out or complete such work and
services for twelve (12) months from the Product ship date (the "Product
Warranty"),
6.2 In addition, BULL shall use its commercially reasonable best efforts to
obtain from its suppliers any warranties with regard to quality, workmanship and
intellectual property rights indemnification that are transferable to CNI, and
BULL shall so transfer those benefits to CNI so that they are enforceable by
CNI.
6.3 The Product Warranty shall not apply to any defect or nonconformity that is
caused by (i) defect in any Material Components or any related items provided by
CNI, (ii) Product that is abused, damaged, altered or misused other than by
BULL, (iii) Product damaged by external causes not directly contributed to by
BULL, (iv) any defect in a Product' s functionality not
CASTLE NETWORKS, INC. COMPANY CONFIDENTIAL
<PAGE> 7
EXECUTION VERSION 7
covered by the mutually approved test procedures to be used by BULL, (v) normal
wear and tear, (vi) shipping or transportation after delivery F.O.B. BULL's
factory or (vii) any attempted repair or repair done by any third party not
authorized by BULL.
Notwithstanding anything to the contrary set forth in the immediately preceding
sentence, if BULL purchases Material Components from CNI's designated suppliers
and the Material Components delivered to BULL (a) do not conform to the Material
Components ordered by BULL in terms of manufacturer, manufacturer part number,
BULL part number, quantity or packaging based on BULL's visual inspection or (b)
are discovered by BULL not to be as warranted by the supplier or manufacturer
either by visual inspection or through any testing that BULL has agreed to
perform for the Products as part of the Purchase Price to be paid by CNI for
such Products prior to the shipment of Products from BULL's facility that
includes such Material Components, subject to confirmation by the manufacturer
that the Material Components are not as warranted, BULL shall be responsible for
returning the non-conforming or defective Material Components to CNI's
designated supplier for repair or replacement in accordance with the supplier's
and/or manufactures return and/or warranty procedures, including, without
limitation, warranty exclusions, all at no charge to CNI. Upon receipt by BULL
of repaired or replacement Material Components, BULL shall use the repaired or
replacement Material Components in Products to be built for CNI. BULL shall
notify CNI of any delay in the delivery of Product caused by the receipt of
non-conforming or defective Material Components and shall be relieved of any
liability associated with the delay in delivering Product to CNI that has
non-conforming or defective Material Components.
If CNI discovers Products shipped by BULL to CNI have Material Components that
are not as warranted by the manufacturer within the applicable manufacturer
warranty period, subject to reasonable confirmation by the manufacturer that the
Material Components are not as warranted during the applicable warranty period,
BULL shall assist CNI in the return of any such Material Components to the
supplier or manufacturer and shall work with the supplier or manufacturer to
obtain repaired or replacement Material Components for use by BULL in the
manufacture of replacement Products. Notwithstanding the foregoing, the presence
of Material Components that are not as warranted by the manufacturer in Product
shipped to CNI shall not relieve CNI from its obligation to pay for such
Products if, in conducting the agreed upon incoming inspection, component
assembly and Product tests for which BULL has quoted CNI the Product Purchase
Price, BULL could not have reasonably discovered that the Material Components
were not as warranted nor shall BULL have any liability for any costs incurred
by CNI in the discovery of such Material Components or in the removal of such
Material Components from Product shipped by BULL to CNI. If and to the extent
that CNI elects to have BULL manufacture additional Product using repaired or
replacement Material Components obtained from the supplier or manufacturer, CNI
shall also pay for such additional Products.
The foregoing two paragraphs sets forth BULL's entire liability and CNI's sole
and exclusive remedy in connection with non-conforming Material Components or
Material Components found and confirmed not to be as warranted.
6.4 Completion of Product Acceptance Tests or incoming inspection shall not
void BULL's other warranties hereunder. CNI may perform acceptance testing which
measures a different array of performance criteria but the parties agree that
the mutually agreed upon Product
CASTLE NETWORKS, INC. COMPANY CONFIDENTIAL
<PAGE> 8
EXECUTION VERSION 8
Acceptance Test Will be the measurement standard to determine if the Product
meets specifications.
6.5 ALL CLAIMS FOR BREACH OF WARRANTY MUST BE RECEIVED BY BULL WITHIN ONE (1)
YEAR AFTER PRODUCT IS SHIPPED TO CNI OR AT CNI'S INSTRUCTION, TO A CNI CUSTOMER.
6.6 EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, BULL MAKES, AND CNI
RECEIVES, NO OTHER WARRANTY, EXPRESS OR IMPLIED. ALL WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE OR USE ARE EXPRESSLY
DISCLAIMED.
6.7 Except as expressly set forth herein, or otherwise agreed to in writing,
BULL makes no warranty that the Products will (i) meet any specification not
made known to and agreed to by BULL, or (ii) receive the approval of or be
certified by underwriters laboratory, any federal, state, local or foreign
government agency (including without limitation The Federal Communications
Commission) or any other person or entity. BULL assumes no responsibility for
obtaining such approvals or certifications, or meeting such specifications.
6.8 As part of the warranty provided by BULL to CNI with respect to the
workmanship of its Products, BULL further warrants that all Product shall be
manufactured in accordance with the following standards:
Workmanship: J-STD-001
Solder: IPC-A-610, Class 2
ESD: MIL-STD-1686
In addition, BULL shall provide written documentation of the Year 2000 (Y2K)
compliance of its production machinery, systems and testing or if not yet
compliant present in writing the plan to achieve Y2K compliance with quarterly
status reviews presented to CNI.
6.9 CNI's remedy for breach of the Product Warranty shall be, at BULL's option,
repair or replacement by BULL of defective Products returned to BULL at a
facility of its choice in Massachusetts. Prior to returning any Product that CNI
claims to be not as warranted by BULL, CNI shall follow Bull's reasonable Return
Material Authorization ("RMA") Procedures. BULL shall promptly provide and shall
not unreasonably withhold or delay the issuance of a RMA number. In addition,
BULL's obligation to repair or replace any returned Product after having issued
a RMA number is conditioned on BULL's verification that all of BULL's reasonable
Valid Warranty Claim Requirements have been met. BULL shall be responsible for
all warranty expenses including the costs of incoming and outgoing shipment for
warranty repair, unless the returned Product is found by BULL not to have met
all of BULL's then current Valid Warranty Claim Requirements, in which event CNI
shall pay BULL for the standard rate costs incurred prior to the determination
that such requirements have not been met. All repairs and replacements will be
made and Product will be returned to CNI, or delivered to destination as
directed by CNI, within fifteen (15) days of receipt by BULL. Products requiring
repair more than 2 times shall be replaced by BULL. BULL recognizes that as the
contract manufacturer of CNI Product that CNI does not possess all the test
equipment necessary for in-depth testing prior to
CASTLE NETWORKS, INC. COMPANY CONFIDENTIAL
<PAGE> 9
EXECUTION VERSION 9
Confidential Materials are omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote omissions.
return to BULL. CNI shall work with BULL to coordinate and support the fifteen
(15) day cycle. In any instance where BULL fails to deliver repaired or replaced
Product within fifteen (15) days of receipt of defective Product (subject to
material component availability at the time BULL receives the defective
Product), then CNI shall be entitled to a credit of the purchase price of the
defective Product as its sole and exclusive remedy and BULL's entire liability
for single instances of such failure. Should BULL fail, on a continuing basis,
to meet the requirements for repairs set forth herein after notice by CNI and
BULL's failure to cure within a reasonable time, CNI shall have its full rights
and remedies at law or in equity for redress, subject to the limitation of
damages as set forth in Section 6.15.
6.10 BULL's warranty obligations will cease upon the earlier of the agreed upon
warranty period or, in the case of particular Products requiring BULL to have
test equipment on site, then upon BULL's fulfillment of CNI's request to return
any CNI owned applicable test equipment and test fixtures required to fulfill
the warranty repair process.
6.11 BULL shall not be responsible for defects resulting from CNI's failure to
provide accurate and complete manufacturing documentation, unless BULL fails to
advise CNI of errors or omissions which BULL either recognizes or, in the
exercise of due care as a manufacturing sub-contractor, should have recognized.
6.12 BULL will repair and/or upgrade Products which are outside the warranty
period at mutually agreed prices and terms and conditions to be negotiated by
the parties on a per product basis.
6.13 If at least [**] percent ([**]%) of the same type of tested Products by
BULL over at least [**] ([**]) shipments are confirmed by BULL to have the same
or substantially the same defend not resulting from Bull's services failure to
conform to the warranty as provided herein and as a result of CNI's design of
the Product and/or applicable Specifications or where the parties are unable to
reasonably determine the cause of the defect, such defect shall be deemed to be
an epidemic design failure ("Epidemic Design Failure") for purposes of this
Agreement. BULL shall notify CNI of any Epidemic Design Failure and CNI shall
promptly take appropriate corrective action to remedy the Epidemic Design
Failure at its expense, including, without limitation, through appropriate
modifications to the Specification. BULL's obligation with respect to any
Epidemic Design Failure shall be limited to providing CNI with reasonable
technical support and assistance in allowing CNI to diagnose the Epidemic Design
Failure and implement appropriate corrective action, provided that CNI shall
remain liable to BULL for the Product notwithstanding the defect discovered. In
the event that such [**]% level of failures results solely from BULL's services
failure to conform to the warranty as provided herein BULL shall reimburse CNI
for all the costs of any reasonable program to upgrade or replace all such
products at risk of such failure in the field, subject to the limitation of
damages as contained in Section 6.15.
6.14 BULL warrants that it shall maintain all finished goods or consigned
materials which have been purchased by CNI and are on BULL's or BULL's
subcontractor's sites shall be separately stored, labeled as CNI property and
shall be kept free of all liens and attachments.
CASTLE NETWORKS, INC. COMPANY CONFIDENTIAL
<PAGE> 10
EXECUTION VERSION 10
6.15 In no event shall either party be liable to the other for any indirect,
incidental or consequential damages, Including, without limitation, any lost
profits, provided that the damages that are otherwise covered by indemnities set
forth in this Agreement shall not be excluded by the foregoing sentence. In no
event shall either party's liability for any damages arising out of this
Agreement exceed $2,000,000.
7. INSPECTION
7.1 CNI will have the right to perform random inspection of Products to be
shipped by BULL and give BULL written notice of any defects or other
discrepancies within two (2) days of inspection. Inspection shall not relieve
BULL of warranty responsibility.
7.2 CNI shall have the right to conduct due diligence inspection and testing
at BULL's, and any of its subcontractors, facilities at any point(s) or on a
continuing basis as CNI may deem appropriate. CNI will provide BULL a reasonable
(usually 2 business days) notice prior to inspection unless the nature of the
inspection results from a direct and immediate impact to CNI Product and
business, in which case, inspection will be immediate. Source Inspection applies
to all Products, sub-assemblies and components. Source Inspection will be
permitted upon Products, sub-assemblies and components by a CNI representative.
When requested, BULL will furnish CNI with full access to its facilities and
those of its subcontractors and the appropriate documentation (i) proving that
the PRODUCT does conform to all contractual specifications, and (ii) showing
BULL's projected failure rate, along with the test data that substantiates the
conformance Products, sub-assemblies and components prior to shipment. CNI
reserves the right to perform testing to confirm the supplied data at BULL's
facility.
7.3 Where CNI Quality Management finds received PRODUCTS do not meet
contractual requirements, the cost of inspection and testing, replacement and
shipping shall be incurred by BULL in accordance with BULL's Warranty for such
PRODUCTS set forth in this Agreement.
7.4 CNI reserves the right to have BULL inspect 100% of any Product that does
not meet contractual Specifications in accordance with BULL's Warranty for such
PRODUCTS set forth in this Agreement at BULL's cost.
7.5 On no less frequently than a quarterly basis, CNI shall share with Bull its
failure analysis of Products at the burn-in and functional test levels to the
extent performed by CNI.
8. OWNERSHIP OF PRODUCT
8.1 CNI shall retain sole and exclusive Ownership rights to the Product(s)
manufactured by BULL and shall have the exclusive right to market and
manufacture, or have the Product manufactured by third parties at its
discretion, provided that BULL shall have no warranty Obligation with respect to
such third party manufactured Product.
9. PRIMARY CONTACT PERSON
9.1 Each Party shall assign one individual to act as Primary contact person
for business and one person to act as primary contact person for technical
interactions between CNI and BULL.
CASTLE NETWORKS, INC. COMPANY CONFIDENTIAL
<PAGE> 11
EXECUTION VERSION 11
Confidential Materials are omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote omissions.
10. RESCHEDULING AND CANCELLATION
10.1 CNI may reschedule products previously released for production at no
charge, for a Period of no more than ninety (90) days from the original
scheduled date, for the listed quantities and upon the following terms:
DAYS' NOTICE IN ADVANCE OF
ORIGINAL SCHEDULED DELIVERY
DATE THAT RESCHEDULING NOTICE
IS RECEIVED BY BULL % OF PRODUCT ON ORDER
------------------- ---------------------
0 - 30 [**]%
31 - 60 [**]%
61 - 90 [**]%
CNI may cancel product at any time subject to the terms of Clause 13.0 Inventory
Indemnification as agreed to by the parties.
Any schedule acceleration or volume increases requested by CNI will be subject
to Material Component availability.
If CNI reschedules any Products subject to accepted Purchase Orders in
accordance with the terms of this Section and if, as a result of such
rescheduling, BULL must hold in its inventory for more than ninety (90) days (i)
Category A Components procured by BULL to complete the manufacture of Products
subject to accepted Purchase Orders that have now been rescheduled and/or (ii)
Work in Process ("WIP") made by BULL to complete the manufacture of Products
subject to accepted Purchase Orders that have now been rescheduled, then BULL
reserves the right to invoice CNI an amount equal to [**] percent ([**]%) of
BULL's Material Component cost for all Category A components so held and WIP
that Bull must hold in its inventory for more than ninety (90) days as a result
of CNI's reschedule request. CNI shall pay the amount invoiced by BULL under the
preceding sentence thirty (30) days from the date of BULL's invoice.
11. NON-RECURRING ENGINEERING CHARGES
11.1 CNI and BULL will mutually agree on BULL provided non-recurring
engineering, set up and tooling charges ("NRE") required to manufacture the
Products. NRE, set-up, and tooling charges will be paid in full (via an invoice
from BULL) within thirty (30) days after BULL's completion of the NRE item. All
work product (such as: Genrad test fixtures; Unicam programming, Flying probe
test program, etc.) from NRE carried out by BULL under the terms hereof,
including any ideas or concepts either patentable or otherwise shall be owned by
CNI and BULL shall have a right to use such work product solely in the conduct
of this Agreement for the benefit of CNI.
12. CHANGES TO THE PRODUCTS
CASTLE NETWORKS, INC. COMPANY CONFIDENTIAL
<PAGE> 12
EXECUTION VERSION 12
Confidential Materials are omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote omissions.
12.1 BULL will not make any changes to the Products without CNI's prior written
authorization. BULL will make CNI requested engineering changes ("EC") to the
Products as required by the CNI EC. An EC request will include sufficient
information for evaluation of its feasibility and cost impact. BULL will respond
to EC requests in writing and provide cost and other relevant data within ten
(10) business days after receipt of the EC.
12.2 CNI may from time to time change the Specifications for the Products or
the work required of BULL hereunder and BULL agrees to implement the change per
CNI's request and schedule. If changes result in a change in BULL's costs or in
the time for performance an equitable adjustment will be made. Any adjustment
must be in writing and BULL shall not be required to implement such change until
the Parties have mutually agreed upon the price. In the event of a change
necessitated by safety requirements, or law, BULL agrees to implement said
change in a time frame that correlates to the nature of, and timeframe
requirement associated with the event.
12.3 BULL agrees not to make any changes in its processes or manufacturing
standards which would affect form, fit or function of the Product reliability,
maintainability, interchangeability, cosmetic change, without first obtaining
written agreement from CNI. BULL will notify CNI at least ninety (90) days in
advance of any such changes.
12.4 BULL agrees to provide CNI with [**] days' notice in the event they will
no longer be able or willing to produce Product for CNI, and will allow CNI the
opportunity to place a last time buy of Product
For purposes of this Agreement, there shall be "Insufficient Product Demand" for
a Product if there are no quantities of such Product on an accepted Purchase
Order with a scheduled delivery date for at least [**] days. For any Product for
which there is Insufficient Product Demand, BULL shall notify CNI and shortly
thereafter, BULL shall provide CNI with a detailed listing of any Long Lead Time
Components, Minimum Buy Components and other procured but unused Material
Components that were procured by BULL to cover CNI's Purchase Orders (the
"Unused Material List").
BULL and CNI shall negotiate a mutually acceptable disposition of the materials
on the Unused Material List. If the parties fail to mutually agree upon an
acceptable disposition of all of the materials on the Unused Material List
within sixty (60) days following the date that there is Insufficient Product
Demand for the Product(s) that would otherwise require the material on the
Unused Material List, then, BULL shall have the right to invoice and CNI shall
pay BULL within thirty (30) days of the invoice date for BULL's material costs
and material handling costs applicable to the Material Components on the Unused
Material List for which there is no mutual agreement on an acceptable
disposition. BULL shall deliver all Material Components for which BULL invoices
such costs to CNI F.O.B. common carrier at BULL's plant of manufacture, with
delivery occurring on the date BULL issues such invoice.
13. INVENTORY INDEMNIFICATION
CASTLE NETWORKS, INC. COMPANY CONFIDENTIAL
<PAGE> 13
EXECUTION VERSION 13
13.1 Upon cancellation of a Purchase Order, or upon expiration of this
Agreement or termination of this Agreement for any reason, CNI shall be
responsible for:
(i) all finished Products scheduled for shipment within thirty (30) days
immediately following BULL's receipt of the cancellation or termination
notice (the "Notice"); and all additional finished goods as mutually
agreed to in writing, including finished goods that were rescheduled for
no more than a period of ninety (90) days per Section 10 of this
Agreement, and
(ii) all work-in-process at receipt of the Notice; and
(iii) all components, subassemblies and other Material Components purchased to
fill a Purchase Order or authorized to be purchased by CNI which are on
hand or on order at receipt of the Notice. Without limitation this
includes Piece Part Inventory made obsolete or excessive due to changes to
the Specifications or Products, minimum buy quantities, and reel
quantities.
Item (i)-(iii) are referred to as the "Termination Inventory". In calculating
the quantity of finished Products under (i) above, Products rescheduled for
manufacture and shipment during the thirty (30) days immediately prior to
receipt of the Notice may be counted by BULL.
13.2 BULL will make every reasonable effort to use and take all steps to
minimize the cost of the Termination Inventory on other current programs at the
Plant where the Products are manufactured, will make every reasonable effort to
cancel all outstanding Material Component orders with vendors, and will attempt
to return piece parts to vendors. CNI will be responsible for costs, charges and
fees actually incurred by BULL to cancel or return any portion of the
Termination Inventory to vendors and, upon mutual agreement, the cost to modify
the Products for other programs.
13.3 Upon sixty (60) days from termination or cancellation, BULL has the right
to invoice CNI for the Termination Inventory remaining after vendor
cancellations and returns and after other program use, as follows: (i) for Piece
Part Inventory and all other items described in Section 13.1 (iii) above, at
BULL's material cost and material acquisition cost. BULL will provide CNI with
evidence of its material cost upon request. (ii) for WIP, at a reasonable pro
rata percentage of the finished Product purchase price; and (iii) for finished
Product, at the Purchase Price, in effect at termination or cancellation. CNI
will be responsible for any negative price differentials between the price BULL
paid for the items described in Section 13.1(iii) and the price at which BULL
was able to return and/or utilize the items on other programs. BULL will credit
CNI for any positive price differentials.
14. TERM AND TERMINATION
14.1 The term of this Agreement shall be two (2) years from the Effective Date
and, unless terminated as provided for below, will be automatically renewed for
one (1) year periods for as long as BULL retains manufacturing responsibilities
for the Products.
14.2 This Agreement may be terminated by either party upon the occurrence of
any one or more of the following events:
CASTLE NETWORKS, INC. COMPANY CONFIDENTIAL
<PAGE> 14
EXECUTION VERSION 14
(i) failure by either party to perform any of its material
performance obligations under this Agreement and to cure such failure
within thirty (30) days after receipt of written notice describing the
failure in sufficient detail, or if the failure cannot be completely cured
within thirty (30) days, failure to make substantial progress towards a
cure within the thirty (30) day period; or
(ii) entering into or filing of a petition, arrangement or
proceeding seeking: an order for relief under the bankruptcy laws of the
United States or similar laws of any other jurisdiction; a receivership
for any of its assets; a composition with or assignment for the benefit of
its creditors; a readjustment or debt, or its dissolution or liquidation.
14.3 CNI reserves the right to terminate this Agreement at any time for
convenience upon one hundred and eighty (180) days notice without charge or cost
except for any charges accruing pursuant to the terms of Clause 13.0 Inventory
Indemnification.
15. SPACE ALLOCATION
15.1 BULL agrees to allocate and reserve secured environmentally controlled
space for CNI finished goods inventory, at no charge to CNI. BULL will provide
regular access during working hours as well as access during non-working hours
on an emergency basis.
16. TRADEMARKS AND PUBLIC ANNOUNCEMENTS
16.1 This Agreement shall not include any license or right for either party to
use any trademark or trade name used or claimed by the other (including but not
limited to the name "Castle Networks, INC." or "BULL" or "BULL ELECTRONICS"),
(the "Trademarks") or coined words or combinations containing the name or parts
thereof in the business name of the other or of any Affiliate or the other in
connection with the business of any of them. All uses of Trademarks by each
party in connection with the products or the packaging thereof shall be in
strict compliance with any conventions of the other concerning the same.
16.2 Neither party shall publicly disclose the existence of this Agreement or
use the other's name in any public announcement or literature, without the
written consent of the other party, and neither party shall disclose the
specific terms and conditions of this Agreement except by written agreement
between the parties or as required by law or court order.
17. PROPRIETARY DATA
17.1 Any confidential or proprietary data and/or trade secret information
disclosed by CNI to BULL either orally or in writing shall not be used by BULL
except as may be required to manufacture the products sold hereunder, nor shall
either party disclose any of the other's proprietary or confidential data or
trade secret information to third party without the other's prior written
consent, for a period of three (3) years after the date of its original
disclosure, unless such data or information was already known to the general
public in tangible, demonstrable form or the other already had lawful knowledge
of same in tangible demonstrable form or later lawfully acquires same from
another source in tangible, demonstrable, unrestricted form. All such
confidential or proprietary data shall be so labeled by each party and returned
to the disclosing
CASTLE NETWORKS, INC. COMPANY CONFIDENTIAL
<PAGE> 15
EXECUTION VERSION 15
party upon the earlier of (a) a written request from the disclosing party or (b)
termination of this Agreement.
18. USE OF SUBCONTRACTORS
18.1 BULL agrees that it will not use any third party subcontractors to provide
services with regard to the manufacture of CNI product without CNI's prior
written consent
18.2 BULL agrees to provide CNI with ninety (90) days' written notice in the
event of a change of location of BULL manufacturing site.
19. GENERAL
19.1 All work or SERVICES furnished by BULL or by persons furnished by BULL,
including its subcontractors (if any) pursuant to this Agreement shall be
performed in a proper and workmanlike manner and as an Independent Contractor
and not as the agent of CNI. All persons furnished by BULL and its
subcontractors (if any) shall be considered solely BULL's and its
subcontractors' (if any) employees or agents, and BULL and its subcontractors
(if any) shall be responsible for compliance with all laws, rules, and
regulations including, but not limited to employment of labor, hours of labor,
working conditions, worker's compensation, payment of wages, and payment of
taxes, such as unemployment, social security and offer payroll taxes, including
applicable contributions from such persons when required by law. BULL and its
subcontractors (if any) shall indemnify, hold harmless, and defend CNI from and
against any claim or lawsuits arising out of BULL's and its subcontractors' (if
any) failure to comply with any such law, rules or regulations.
19.2 Each party (the "Indemnifying Party") shall indemnify, hold harmless and
defend the other (the "Indemnified Party") from and against any loss, cost
liabilities, claim or demands (including the costs, expenses and attorney's
fees) that may be made by anyone for injuries including death to persons or
damage to property including the resulting from its acts or omissions of the
Indemnifying Party.
CNI shall indemnify, defend and hold BULL harmless from third party claims
arising out of anything provided by CNI or its agents to BULL in connection with
this Agreement including, without limitation, the Product Specifications or due
to the use or resale of any Products by CNI or others, except and to the extent
those third party claims arise out of Bull's negligent acts or failure to comply
with the terms of this Agreement.
19.3 The Indemnifying Party shall not implead or bring any action against the
Indemnified Party and its Affiliates, their respective directors, officers,
employees, agents in connection with any action by any of the Indemnifying
Party's employees for any personal injury (including death) or property damage
that occurs in the course or scope of employment of such person except to the
extent such personal injury or property damage is directly caused by the
negligence of the Indemnifying Party and/or its Affiliates or their employees or
agents. The Indemnified Party and its AFFILIATES will notify the Indemnifying
Party of any written claims or demands against it for which the Indemnifying
Party is responsible hereunder.
CASTLE NETWORKS, INC. COMPANY CONFIDENTIAL
<PAGE> 16
EXECUTION VERSION 16
19.4 This Agreement and its attachments make up the entire agreement between
the parties regarding the Products. This Agreement supersedes all prior oral and
written agreements and understandings between the parties relating to the
Products, and may only be amended or modified in writing signed by an authorized
representative of each party.
19.5 Unless otherwise agreed, CNI shall be (i) the exporter of record for any
Products and/or Product documentation exported from the United States, and shall
comply with all applicable U.S. export control statutes and regulations, and
(ii) the importer of record for all Products exported from the U.S. and later
imported and returned to CNI or to BULL. BULL will cooperate with CNI in
obtaining any export or import licenses for the Products.
19.6 CNI hereby certifies that it will not knowingly export directly or
indirectly, any U.S. origin technical data or software acquired from BULL or any
direct product of that technical data or software, to any country for which the
United States Government requires an export license or other approval, without
obtaining such approval from the United States Government. BULL will mark any
and all export documentation with the following language when exporting on
behalf of CNI: "These commodities, technology or software were exported from the
United States in accordance with the Export Administration Regulations.
Diversion contrary to U.S. Law is prohibited."
19.7 Except for the Products or portions of the Products which are the other
party's design, each party is responsible for their portion of the design of the
Products. Upon demand, that party will promptly defend, indemnify and hold the
other party, its officers, directors, employees, agents, successors and assigns,
harmless from and against every kind of cost, expense or loss (including
attorneys' fees and legal costs) directly relating to any claim or threatened
claim (a) that any Product or portion of a Product Violates the intellectual
property rights of a third party (foreign or domestic); (b) that the Product has
a design defect; or (c) arising from or related to the distribution, sale or use
of any Product or portion of a Product. The immediately preceding sentence will
apply whether the claim is based upon contract, tort or any other legal theory.
19.8 This Agreement is intended solely for the benefit of the executing parties
and their permitted successors and assigns. No other person or entity shall have
any rights under or in connection with this Agreement.
19.9 Neither party may sell, transfer or assign any right, duty or obligation
granted or imposed upon it under this Agreement without the prior written
consent of the other party, which consent shall not be unreasonably withhold or
delayed. Notwithstanding anything to the contrary in this Agreement either party
shall have the right to assign this Agreement, in whole or in part to any
affiliate or to any entity who is not a direct competitor of Unisphere Solutions
Inc, where such affiliate or entity purchases or succeeds to substantially all
of the assets of the business to which this Agreement relates, effective upon
written notice to the other party. The assigning party shall provide the other
party with prior, to the maximum extent possible, written notice of such
assignment
19.10 The parties agree that transmission of data by EDI (electronic data
interchange) will not occur until a separate agreement governing such
transmissions is executed. Upon execution, such EDI agreement will become an
attachment to this Agreement
CASTLE NETWORKS, INC. COMPANY CONFIDENTIAL
<PAGE> 17
EXECUTION VERSION 17
19.11 Neither party shall be liable for damages and costs to the other party
arising out of delays or failures to perform under this Agreement if such delays
or failures result from causes beyond the reasonable control of a party, and are
not caused by an act or omission of such party. Notice of any such delays or
failures and explanation of their causes must be given to the other party within
two (2) days of the occurrence. As soon as it is reasonably apparent that the
occurrence will likely cause a delay of more than thirty (30) days, the party
against whom this section is invoked shall have the right to terminate the
affected installments under any Purchase Order. This force majeure provision may
not be invoked for failure or inability to make a payment under this Agreement.
19.12 CNI is the only entity authorized to purchase Product hereunder and BULL
is the only entity authorized to manufacture hereunder. The individuals
executing this Agreement certify they have the legal authority to bind that
entity. Any affiliates, subsidiaries, and permitted assigns ("Assignees") of CNI
which CNI wishes to purchase Product hereunder must execute a copy of this
Agreement and CNI warrants that any and all obligations and debts of the
Assignees will be discharged in a timely fashion.
19.13 This Agreement and performance by BULL and CNI under it shall be governed
by the laws of the Commonwealth of Massachusetts.
19.14 Both parties pledge their full cooperation and good faith to settle any
differences under this Agreement in a reasonable, business-like and commercial
manner. However, in the event any difference can not be so settled, both parties
shall submit the dispute to binding arbitration. The arbitration shall be
conducted in accordance with the commercial dispute rules of the American
Arbitration Association. The Arbitration shall occur in Boston or as otherwise
agreed; provided, however, that the arbitrators may from time to time convene,
carry on hearings, inspect property or documents, and take evidence at any
location which they deem appropriate. The arbitration shall be held before a
panel of three arbitrators, one selected by each party and the third (who shall
preside) selected by the first two. The arbitrators shall be well-versed in any
technology related to the subject matter of the dispute and have sole and
complete discretion to decide the scope of any permitted discovery and to
resolve any other disputes concerning the arbitration but may not limit, expand
or otherwise modify the term of this Agreement and shall be bound by the
limitations on liability contained herein. The arbitrators' award may in
appropriate circumstances (other than in disputes concerning patents or other
Proprietary Rights) provide for injunctive or other equitable relief. Judgment
upon the decision rendered by the arbitrators may be entered in any court having
jurisdiction. The institution and maintenance of an action for Injunction or
other equitable relief or pursuit of a provisional or ancillary remedy shall not
constitute a waiver of the right of any party, including the plaintiff, to
submit the controversy or claim to arbitration if any other party contests such
action for judicial relief. The remedies under this Agreement shall be
cumulative and not exclusive, and election of one remedy shall not preclude
pursuit of other remedies.
CASTLE NETWORKS, INC. COMPANY CONFIDENTIAL
<PAGE> 18
EXECUTION VERSION 18
IN WITNESS WHEREOF, each party represents that it has caused this Agreement to
be executed on its behalf on the date first above written (Effective Date) by a
representative empowered to bind that party with respect to the undertakings and
obligations contained herein.
CASTLE NETWORKS, INC. BULL NH INFORMATION SYSTEMS INC.,
ACTING THROUGH ITS BULL ELECTRONICS
DIVISION
By: /s/ Stephen J. Maffeo By: /s/ Robert J. McCarthy
-------------------------------- -----------------------------------
Printed Name: Stephen J. Maffeo Printed Name: Robert J. McCarthy
---------------------- --------------------------
Title: CFO Title: VP Sales & Marketing
----------------------------- --------------------------------
CASTLE NETWORKS, INC. COMPANY CONFIDENTIAL
<PAGE> 19
EXECUTION VERSION 19
SCHEDULE 1
PRODUCT SPECIFICATION AND PRICING
(SEE ATTACHED)
CASTLE NETWORKS, INC. COMPANY CONFIDENTIAL
<PAGE> 20
EXECUTION VERSION 20
Confidential Materials are omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote omissions.
<TABLE>
<CAPTION>
------------------------------------------------------- ---------------------------------------------------
BULL ELECTRONICS
FY99-00 CASTLE NETWORKS PRICING WORLDWIDE MANUFACTURING SERVICES
---------------------------- -------- ------------- --- -------- ------------- ------------- -------------
Q3 1999 Q4 1999 Q1 2000
Q3 Production Q4 Production FY00 Production
Board No. Description Qty Cost* Qty Cost* Q1 Qty Cost**
---------------------------- -------- ------------- --- -------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
17-00000-00 100 $[**] 100 $[**]
Shelf Cntrlr
Rev. 3.4 Need Forecast
---------------------------- -------- ------------- --- -------- ------------- ------------- -------------
17-00001-00 300 $[**] 300 $[**]
DXM (formerly DS3)
Rev. 3.3 Need Forecast
---------------------------- -------- ------------- --- -------- ------------- ------------- -------------
17-00002-00
Call Processor 100 $[**] 100 $[**]
Rev. 2.7 Need Forecast
---------------------------- -------- ------------- --- -------- ------------- ------------- -------------
17-00004-000
Shelf Cntrlr IO 100 $[**] 100 $[**]
Rev. 2.0 Need Forecast
---------------------------- -------- ------------- --- -------- ------------- ------------- -------------
17-00006-00
DXM IO
(formerly DS3# IO) 300 $[**] 300 $[**]
Rev. 2.2
Multiples of 2 Need Forecast
---------------------------- -------- ------------- --- -------- ------------- ------------- -------------
17-00006-00
DS# Redundant CCA
Rev. 2.0 85 $[**] 85 $[**]
Multiples of 2
Min order of 6 months Need Forecast
---------------------------- -------- ------------- --- -------- ------------- ------------- -------------
17-00007-00 100 $[**] 100 $[**]
Rev. 1.10 Need Forecast
---------------------------- -------- ------------- --- -------- ------------- ------------- -------------
17-00009-00 54 $[**] 54 $[**]
Fan Cntrlr
Rev. 2.0
Multiples of 4
Min order of 6 months Need Forecast
---------------------------- -------- ------------- --- -------- ------------- ------------- -------------
17-00010-00 25 $[**] 180 $[**]
CXM Need Forecast
---------------------------- -------- ------------- --- -------- ------------- ------------- -------------
17-00011-00 25 $[**] 180 $[**]
CXM I/O Need Forecast
---------------------------- -------- ------------- --- -------- ------------- ------------- -------------
17-00012-00
Term. Card L 50 $[**] 50 $[**]
Rev. 1.0 Need Forecast
---------------------------- -------- ------------- --- -------- ------------- ------------- -------------
17-00013-00 50 $[**] 50 $[**]
Term. Card L
Rev. 1.0 Need Forecast
---------------------------- -------- ------------- --- -------- ------------- ------------- -------------
</TABLE>
* If actual quantities shipped to CNI during the applicable calendar quarter
are different than the quantities set forth above, Bull reserves the right to
requote the unit price to CNI based on actual quantities to be shipped.
** Q1 200 Production Cost shall depend on actual quantities shopped during Q1
2000. If actual quantities shipped during Q1 2000 are at least equal to the
quantities shown in Q4 above upon which Q4 1999 Production Costs are based,
then Q1 2000 Production Cost shall be at least equal to such Q4 1999
Production Cost.
- Standard assembly lead time is 2-3 weeks. Add 1 additional week for flying
probe test. Any delivers requested inside of these standard lead times will
be quoted based individually base on capacity lead time. Lead times will
have a quick turn surcharge assessed.
- Note -- Bull Electronics to procure materials and assemble quarterly.
Finished shipments will be made monthly in lots designated by Castle
Networks.
PRODUCT SPECIFICATION PRICING ATTACHMENT AS SCHEDULE 1 OF THE CASTLE/BULL
PURCHASE AGREEMENT
CASTLE NETWORKS, INC. COMPANY CONFIDENTIAL
<PAGE> 21
EXECUTION VERSION 21
SCHEDULE 2
SUBCONTRACT QUALITY REQUIREMENTS
BULL shall be responsible for the following quality requirements:
- Successful submission of a Quality Survey.
- Follow CNI Workmanship Standards as they become available.
- Ionic cleanliness testing is required per Bellcore TR-NWT-000078.
- Product is to be built per assembly drawings, BOM's and ECO's. Exceptions
must be approved, in writing.
- Utilization of CNI Approved Vendor Listings, without exception, unless a
documented waiver exists.
- Maintain ISO9001 registration.
- Maintain BABT production quality assurance approval, including critical
component listings and required test processes.
- Maintain all critical component listings and follow test processes as
required for UL/CSA/ETL factory approval and audit.
- BULL is required to provide the following reports to CNI on a monthly
basis:
- Factory Yields, including assembly and test.
- On new product/pilot runs, provide a written report on any design for
manufacturability/testability issues encountered with the build of the
product.
- CNI reserves the right to audit BULL's manufacturing and quality processes
and procedures and to conduct periodic source inspection at BULL's
facility.
CASTLE NETWORKS, INC. COMPANY CONFIDENTIAL
<PAGE> 22
EXECUTION VERSION 22
SCHEDULE 3
APPROVED VENDOR LIST (AVL)
An electronic copy of the AVL will be maintained by CNI and provided to Bull.
CASTLE NETWORKS, INC. COMPANY CONFIDENTIAL
<PAGE> 23
EXECUTION VERSION 23
SCHEDULE 4
TEST PROGRAMS AND FIXTURES
CASTLE NETWORKS TEST NRE 9/15/99
PART NUMBER ETCH REV PROBE ICT FIXT ICT PROG
17-00000-000 3Y Y Y
17-00001-000 3Y Y Y
17-00002-000 2Y Y Y
17-00004-000 2N Y Y
17-00005-000 2N Y Y
17-00006-000 2N N Y
17-00007-000 1N Y Y
17-00008-000 na na na
17-00009-000 2N N Y
17-00010-000 2Y N N
17-00011-000 1Y N N
17-00012-000 1Y Y Y
17-00013-000 1Y Y Y
Note: Some card share same fixture.
CASTLE NETWORKS, INC. COMPANY CONFIDENTIAL
<PAGE> 24
ASSIGNMENT
This Assignment is made effective as of the day of December, 1999 (the
"Effective Date") by and among Unisphere Solutions, Inc., One Executive Drive,
Chelmsford, Massachusetts 01824 ("Unisphere"), Castle Networks, Inc. Agreement,
One Executive Drive, Chelmsford, Massachusetts 01824 ("CNI") and Bull HN
Information Systems Inc., 1001 Pawtucket Blvd., Lowell, Massachusetts 01854
("Bull").
Whereas, CNI and Bull entered into a Master Manufacturing and Purchase
Agreement dated September 22, 1999 (the "Agreement");
Whereas, subsequent to entering into the Agreement, CNI desires to have all
purchase orders issued by, and all invoices issued to, its affiliate Unisphere,
as part of an assignment by CNI of all of CNI's right, title and interest under
the Agreement to Unisphere, and under the terms of the Agreement, in order to
effectuate such an assignment, the written consent of Bull is required;
Whereas, Bull is willing to accept such assignment on the terms and conditions
set forth herein, subject to Unisphere agreeing to the terms and conditions of
such assignment, as set forth herein;
Now therefore, in consideration of the foregoing mutual premises and promises
hereinafter set forth, the parties agree as follows:
1. As of the Effective Date, CNI hereby assigns to Unisphere, and Unisphere
hereby assumes all rights and obligations of CNI in the Agreement, including,
without limitation, that any and all purchase orders and other liabilities
originally issued and/or incurred by CNI under the Agreement as of the
Effective Date shall be assigned to Unisphere.
2. As of the Effective Date, Unisphere accepts the assignment of the Agreement
as set forth in Section 1 and hereby assumes all rights and obligations in the
Agreement, including, without limitation, (a) all rights under any and all
purchase orders outstanding as of the Effective Date and any and all invoices
issued originally to CNI as of the Effective Date, in each case, to the extent
such purchase orders have been issued and invoices sent to CNI under the
Agreement and (b) all rights and obligations that may arise after the Effective
Date to the extent that Unisphere issues purchase orders or otherwise desires
Bull to manufacture Products or provide any of the services described in the
Agreement.
3. Subject to the assignment and as set forth in Section 1 and the acceptance
of such assignment as set forth in Section 2, Bull hereby consents to the
assignment of the Agreement from CNI to Unisphere.
4. Except as expressly amended hereby, all of the terms and conditions of the
Agreement shall remain in full force and effect except that any reference in
the Agreement to CNI shall instead be deemed to be a reference to Unisphere.
IN WITNESS WHEREOF, the parties have caused their duly authorized
representatives to have executed this Assignment of the Effective Date.
UNISPHERE SOLUTIONS, INC. CASTLE NETWORKS, INC.
By: /s/ Stephen J. Maffeo By: /s/ Stephen J. Maffeo
------------------------------ -----------------------------
Printed Name: Printed Name: Stephen J. Maffeo
-------------------- -------------------
Title: Title: CFO Castle Networks
--------------------------- --------------------------
BULL HN INFORMATION SYSTEMS INC.,
ACTING THROUGH ITS BULL ELECTRONICS DIVISION
By: /s/ Robert J. McCarthy
-------------------------------------
Printed Name: Robert J. McCarthy
---------------------------
Title: V.P. Sales & Mktg.
----------------------------------
