UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 2, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______ to _______.
Commission File No. 0-13576
ENCORE COMPUTER CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 04-2789167
- - ------------------------- ------------------------------------
(State of Incorporation) (I.R.S. Employer Identification No.)
6901 West Sunrise Blvd.
Fort Lauderdale, Florida 33313
- - ---------------------------------------- ----------
(Address of Principal Executive Offices) (Zip Code)
Telephone: 305-587-2900
Securities registered pursuant to Section 12(g) of the Act:
Title of each class
Common Stock, par value $.01 per share
Indicate by check mark whether the registrant (1) has
filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90
days. X Yes No
The number of shares outstanding of the registrant's only
class of Common Stock as of November 10, 1994 was
33,815,916.
A list of all exhibits contained in this Form 10-Q is included on page 19.
<PAGE>
Encore Computer Corporation
Index
Page
Part I FINANCIAL INFORMATION
Item 1 Condensed Consolidated Financial Statements 3
Notes to Condensed Consolidated
Financial Statements 8
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations 14
Part II OTHER INFORMATION 18
Signature Page 19
Exhibit 10* Reseller Agreement for Encore Storage Products
between Amdahl Corporation and Encore Computer
Corporation and Amendment #1 to Reseller
Agreement for Encore Storage Products between
Amdahl Corporation and Encore Computer
Corporation 20
Exhibit 11 Computation of Loss Per Share 178
Exhibit 27 Financial Data Schedule 179
*Confidential treatment requested as to certain portions of
the exhibit.
<PAGE>
<TABLE>
<S> <C> <S> <C>
ENCORE COMPUTER CORPORATION
Condensed Consolidated Statements of Operations
(Unaudited)
(in thousands except per share data)
Three Months Ended Nine Months Ended
October 2, October 3, October 2, October 3,
1994 1993 1994 1993
--------- --------- --------- ---------
Net sales:
Equipment $ 7,229 $ 9,464 $ 28,992 $ 33,291
Service 9,329 11,967 29,391 38,900
--------- --------- --------- ---------
Total 16,558 21,431 58,383 72,191
Costs and expenses:
Cost of equipment sales 3,925 6,505 19,061 20,728
Cost of service sales 6,435 7,589 19,668 28,309
Research and development 7,512 5,646 21,804 16,791
Sales, general and administrative 8,565 10,868 26,612 32,552
Amortization of goodwill - - - 691
Restructuring costs - - - 12,843
--------- --------- --------- ---------
Total 26,437 30,608 87,145 111,914
--------- --------- --------- ---------
Operating loss (9,879) (9,177) (28,762) (39,723)
Interest expense (722) (1,718) (1,940) (4,436)
Interest income 24 75 58 113
Other (expense)/income, net 16 (83) 230 (764)
--------- --------- --------- ---------
Loss before income taxes (10,561) (10,903) (30,414) (44,810)
Provision for income taxes 200 - 200 420
--------- --------- --------- ---------
Net loss $ (10,761) $ (10,903) $ (30,614) $ (45,230)
============ ========== ========== ==========
Net loss attributable to common
shareholders $ (14,734) $ (13,216) $ (40,568) $ (52,067)
============ ========== ========== ==========
Net loss per common share $ (0.36) $ (0.33) $ (1.00) $ (1.33)
============ ========== ========== ==========
Weighted average shares of
of common stock 41,148 39,636 40,585 39,051
============ ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of the condensed consolidated
financial statements.
<PAGE>
<TABLE>
<S> <C> <S> <C>
ENCORE COMPUTER CORPORATION
Condensed Consolidated Balance Sheets
(Unaudited)
(in thousands except share data)
October2, December 31,
1994 1993
----------- -----------
ASSETS
Current assets:
Cash and cash equivalents $ 6,535 $ 3,751
Accounts receivable, less allowances 18,517 16,555
Inventories (Note B) 24,854 17,764
Prepaid expenses and other current assets 2,757 3,047
----------- -----------
Total current assets 52,663 41,117
Property and equipment, net 40,532 37,603
Capitalized software, net 5,141 4,403
Other assets 1,020 947
----------- -----------
Total assets $ 99,356 $ 84,070
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY (CAPITAL DEFICIENCY)
Current liabilities:
Current portion of long term debt (Note D) $ 211 $ 197
Current portion of long term debt, related parties (Note D) 59,480 -
Accounts payable and accrued liabilities (Note C) 37,530 37,421
---------- ----------
Total current liabilities 97,221 37,618
Long term debt, related parties (Note D) - 111,924
Long term debt (Note D) 857 995
Other liabilities - 93
----------- -----------
Total liabilities 98,078 150,630
----------- -----------
Shareholders' equity (capital deficiency)(Note E):
Preferred stock, $.01 par value;
authorized 10,000,000 shares:
Series A Convertible Participating Preferred,
issued 73,641 shares in 1994 and 1993 1 1
6% Cumulative Series B Convertible Preferred,
issued 656,605 and 591,625 in 1994 and 1993,
respectively, with an aggregate liquidation
preference of $65,660,500 and $59,162,500
in 1994 and 1993, respectively 7 6
6% Cumulative Series D Convertible Preferred,
issued 1,004,717 and 905,283 in 1994 and 1993,
respectively, with an aggregate liquidation
preference of $100,471,700 and $90,528,300
in 1994 and 1993, respectively 10 9
6% Cumulative Series E Convertible Preferred,
issued 1,026,977 in 1994 with with an aggregate
liquidation preference of $102,697,700 10 -
Common stock, $.01 par value;
authorized 150,000,000 shares; issued 33,815,916
and 32,726,391 in 1994 and 1993, respectively 338 327
Additional paid-in capital 306,380 207,951
Accumulated deficit (305,468) (274,854)
----------- -----------
Total shareholders' equity (capital deficiency) 1,278 (66,560)
----------- -----------
Total liabilities and shareholders' equity (capital deficiency) $ 99,356 $ 84,070
=========== ===========
</TABLE>
The accompanying notes are an integral part of the condensed consolidated
financial statements.
<PAGE>
<TABLE>
<S> <C> <S> <C> <S> <C>
ENCORE COMPUTER CORPORATION
Condensed Consolidated Statements of Cash Flows
(unaudited)
(in thousands)
Nine Months Nine Months
Ended Ended
October 2, October 3,
1994 1993
------------ ----------
Cash flows from operating activities:
Net loss $ (30,614) $ (45,230)
Adjustments to arrive at net cash
used in operating activities:
Depreciation and amortization 7,844 9,344
Writedown of equipment - 6,119
Writedown of intangible assets - 2,628
Net changes in operating assets and liabilities:
Accounts receivable (1,962) 8,444
Inventories (7,093) (4,817)
Other current assets 290 133
Other assets (73) 127
Accounts payable and accrued liabilities (1,339) (3,654)
Other liabilities (93) (432)
------------ ----------
Cash used in operating activities (33,040) (27,338)
------------ ----------
Cash flows from investing activities:
Additions to property and equipment (9,181) (7,049)
Capitalization of software costs (2,327) (1,591)
------------ ----------
Cash used in investing activities (11,508) (8,640)
------------ ----------
Cash flows from financing activities:
Net borrowings under revolving loan agreements 45,912 34,215
Principal payments of long term debt (124) (153)
Preferred stock dividends paid (2) -
Issuance of common stock 1,546 1,289
------------ ----------
Cash provided by financing activities 47,332 35,351
------------ ----------
Net increase (decrease) in cash and cash equivalents 2,784 (627)
Cash and cash equivalents, beginning 3,751 4,806
------------ ----------
Cash and cash equivalents, ending $ 6,535 $ 4,179
=========== ==========
</TABLE>
The accompanying notes are an integral part of the condensed consolidated
financial statements.
<PAGE>
ENCORE COMPUTER CORPORATION
Condensed Consolidated Statements of Cash Flows
Supplemental disclosure of cash flow information (in thousands):
Nine Months Nine Months
Ended Ended
October 2, October3,
1994 1993
--------- ---------
Cash paid during the period for interest $ 3,451 $ 7,320
Cash paid during the period for taxes - 821
[S] [C]
Supplemental schedule of non-cash investing and financing activities:
A. On February 4, 1994, the Company exchanged $100,000,000 of indebtedness,for
preferred stock. Refer to Note E of Notes to Condensed Consolidated
Financial Statements.
B. As part of a 1992 refinancing with Gould Electronics Inc. ('Gould"), the
Company released Gould from certain liabilities and claims associated
with or related to the Company's acquisition of the Computer Systems
Division of Gould. In recording the transaction, the Company
established reserves for the estimated costs of the aforementioned
claims thereby reducing the amount credited to Additional Paid-in
Capital. During the quarter ended October 2, 1994, all
claims and liabilities were deemed to have been settled.
Accordingly, the remaining reserves of $625,000 which were in excess
of actual cost were closed out and credited to Additional Paid-in
Capital.
<PAGE>
<TABLE>
<S> <C>
ENCORE COMPUTER CORPORATION
Condensed Statement of Shareholders' Equity (Capital Deficiency)
Nine Months Ended October 2, 1994
(in thousands except share data)
(Unaudited)
Preferred Stock
----------------------------------------------------------------------------
Series A Series B Series D Series E
----------------- --------------- -------------- ----------- ----
Par Par Par Par
Shares Value Shares Value Shares Value Shares Value
------ ----- ------- ----- ------- --- --------- -----
Balance December 31, 1993 73,641 $ 1 591,625 $ 6 905,283 $ 9 - $ -
Common stock options
exercised, $.625 to $2.00 per share
Issuance of Series E Convertible Preferred Stock 1,000,000 10
Dividends issued to Preferred Stockholders
in shares of Series B 64,980 1
Dividends issued to Preferred Stockholders
in shares of Series E 26,977 -
Dividends issued to Preferred Stockholders
in shares of Series D 99,434 1
Shares issued through employee stock purchase plan,
at an average price of $2.3375 per share
Contribution to capital by related parties
Net loss
------ ----- ------- ----- --------- --- --------- -----
Balance October 2, 1994 73,641 1 656,605 7 1,004,717 10 1,026,977 10
====== ===== ======= ===== ========= === ========= =====
(Continued below)
</TABLE>
The accompanying notes are an intergral part of the condensed
consolidated financial statements.
<TABLE>
<S> <C> <C>
(Continued from above)
ENCORE COMPUTER CORPORATION
Condensed Statement of Shareholders' Equity (Capital Deficiency)
Nine Months Ended October 2, 1994
(in thousands except share data)
(Unaudited)
Common Stock Shareholders'
Additional Equity
Par Paid-in Accumulated (Capital
Shares Value Capital Deficit Deficiency)
---------- ------ ---------- ------------ -----------
Balance December 31, 1993 32,726,391 $ 327 $ 207,951 $ (274,854) $ (66,560)
Common stock options exercised,
$.625 to $2.00 per share 886,552 9 1,062 1,071
Issuance of Series E Convertible Preferred Stock 96,273 96,283
Dividends issued to Preferred Stockholders
in shares of Series B - 1
Dividends issued to Preferred Stockholders
in shares of Series E - -
Dividends issued to Preferred Stockholders
in shares of Series D (3) (2)
Shares issued through employee stock purchase plan,
at an average price of $2.3375 per share 202,973 2 472 474
Contribution to capital by related parties 625 625
Net loss (30,614) (30,614)
---------- ------ ---------- ------------ -----------
Balance October 2, 1994 33,815,916 338 306,380 (305,468) 1,278
========== ====== ========== ============ ===========
</TABLE>
The accompanying notes are an intergral part of the condensed
consolidated financial statements.
<PAGE>
Encore Computer Corporation
Notes to Condensed Consolidated Financial Statements
A. Summary of Significant Accounting Policies
Basis of Presentation and Other Matters
The accompanying condensed consolidated financial statements are
unaudited and have been prepared by Encore Computer Corporation
("Encore" or the "Company") in accordance with generally accepted
accounting principles. Certain information and footnote
disclosures normally included in the Company's annual
consolidated financial statements have been condensed or omitted.
It is suggested that these condensed consolidated financial
statements be read in conjunction with the audited consolidated
financial statements for the year ended December 31, 1993.
The condensed consolidated financial statements, in the opinion
of the Company, reflect all adjustments (including normal
recurring accruals) necessary for a fair statement of the results
for the interim periods. All adjustments made during the interim
periods are normal recurring adjustments except for a one time
charge recorded in the three month period ended July 4, 1993
associated with the restructuring of operations. The nature of
the restructuring charge recorded is discussed in more detail in
Note C below. The year-end condensed balance sheet data is
derived from audited financial statements but does not include
all disclosures required by generally accepted accounting
principles.
The results of operations for the interim periods are not
necessarily indicative of the results of operations for the
fiscal years.
Per Share Data
Per share data is calculated based upon the weighted average
number of shares of common stock and common stock equivalents
outstanding. In fiscal periods which report net losses, the
calculation does not include the effect of common stock
equivalents such as stock options since the effect on the amounts
reported would be antidilutive. Series A Convertible
Participating Preferred Stock has been considered common stock
(on an assumed converted basis) for purposes of both income
(loss) per share calculations. The Series B Convertible
Preferred Stock ("Series B"), Series D Convertible Preferred
Stock ("Series D") and Series E Convertible Preferred Stock
("Series E") have been determined to be common stock equivalents
but are not included in the weighted average number of shares of
common stock and equivalents or in the calculation of net loss
per share for the periods presented because the effect would be
antidilutive.
For the three and nine month periods ended October 2, 1994, the
Company paid dividends in additional shares of preferred stock on
the Series B, Series D and Series E of $3,972,700 and $9,954,400,
respectively. For the three and nine month periods ended October
3, 1993, because it reported a capital deficiency, the Company
accumulated dividends on the Series B and Series D of $2,313,000
and $6,837,000, respectively. In computing the loss per common
share, these dividends increased the loss for the periods as
reported for the per common share calculation shown in Exhibit
11.
On October 15, 1994, dividends of $4,032,200 payable on the
Series B, Series D and Series E for the period of July 16, 1994
to October 15, 1994 were paid by the Company in additional shares
of preferred stock.
B. Inventories
Inventories consist of the following (in thousands):
October 2, December 31,
1994 1993
---------- ----------
Purchased parts $ 4,563 $ 4,660
Work in process 13,097 9,618
Finished goods 6,488 1,065
Loaned computer equipment
and consignment inventory 706 2,421
--------- -----------
$ 24,854 $ 17,764
========= ==========
C. Accounts Payable and Accrued Liabilities;
Accounts payable and accrued liabilities consist of the following
(in thousands):
October 2, December 31,
1994 1993
---------- ---------
Accounts payable $ 12,354 $ 10,805
Accrued salaries and benefits 6,066 5,357
Accrued restructuring costs 5,937 10,974
Accrued interest 2,141 682
Accrued taxes 1,953 3,545
Deferred income,
principally maintenance contracts 2,369 1,563
Other accrued expenses 6,710 4,495
---------- ---------
$ 37,530 $ 37,421
========== =========
During the nine month period ended October 3, 1993 and as
discussed in more detail in Management's Discussion and Analysis
of Financial Condition and Results of Operations, the Company
initiated plans to restructure operations and provided for such
estimated costs at that time. As shown above, certain of those
costs remain accrued at October 2, 1994.
D. Debt
Debt consists of the following (in thousands):;
October 2, December 31,
1994 1993
-------- ----------
Debt to unrelated parties:
Mortgages payable and capital
lease obligations $ 1,068 $ 1,192
Less:
Current portion 211 197
-------- ----------
Total long term debt to
unrelated parties $ 857 $ 995
======== =========
Long-term debt to related parties:
Revolving loan agreement with
Gould Electronics Inc. $ 59,480 $ 61,924
Term Loan with Gould
Electronics Inc. - 50,000
-------- ----------
Less:
Current portion 59,480 -
-------- ----------
Total long-term debt to
related parties $ - $ 111,924
======== =========
Related Party Transactions
The Company, Japan Energy Corporation ("Japan Energy") and its
subsidiaries Gould Electronics Inc. ("Gould") and EFI
International Limited ("EFI") are related parties due to the
significant financial interests of Gould and EFI in the Company.
As discussed in more detail in Note E of the Notes to Condensed
Consolidated Financial Statements, on February 4, 1994, the
Company and Gould completed an exchange of indebtedness for
preferred stock. Upon completion of the transaction and assuming
full conversion of their holdings into common stock, Gould and
EFI beneficially owned 50.2% and 20.9%, respectively.
Additionally as described below, during 1994 and 1993, the
Company has had various debt agreements with Gould.
Total interest expense on indebtedness to Gould for the three and
nine month periods ended October 2, 1994 amounted to $677,000 and
$1,772,000, respectively. Interest expense on indebtedness to
Gould for the three and nine month periods ended October 3, 1993
amounted to $1,625,000 and $4,239,000, respectively.
In addition to the loans described above, amounts currently due
to Gould at October 2, 1994 and December 31, 1993, consisted
principally of accrued interest and amounted to $29,000 and
$677,000 respectively. In connection with the February 4, 1994
exchange of indebtedness for preferred stock discussed below and
in Note E, the Company accrued interest on the then outstanding
balance of the revolving loan agreement through its maturity in
the amount of $3,017,000. This amount was classified as an other
accrued expense. At October 2, 1994 $2,110,000 remained accrued.
Revolving Loan Agreement
Since 1989, Gould has provided the Company with its revolving
credit facility. Borrowings under the revolving loan agreement
are collateralized by substantially all of Encore's tangible and
intangible assets and the agreement contains various covenants
including maintenance of cash flow, leverage and tangible net
worth ratios and limitations on capital expenditures, dividend
payments and additional indebtedness. Interest is equal to the
prime rate plus 1% (8.75% at October 2, 1994) and is payable
monthly in arrears.
Due to the operating losses incurred during 1993, the Company
exceeded the $35,000,000 maximum borrowing amount of its
revolving line of credit. Gould, however, allowed the Company
to borrow funds in excess of the agreement's maximum limit to
fund its daily operations. At December 31, 1993, borrowings
under the agreement were $61,924,000.
On February 4, 1994, the Company and Gould agreed to exchange
$100,000,000 of indebtedness owed to Gould by the Company for
Series E convertible preferred stock with a liquidation
preference of $100,000,000. $50,000,000 of the debt exchanged
was indebtedness under the revolving loan agreement. Upon
completion of the exchange, borrowings under the revolving loan
agreement on February 4, 1994 were $19,134,000. Then, on April
11, 1994, the Company and Gould agreed to increase the maximum
borrowing limit of the revolving credit facility from $35,000,000
to $50,000,000 and to extend its maturity date to April 16, 1996.
All other terms and conditions of the revolving loan agreement
were essentially unchanged except certain financial covenants
contained in the agreement were modified to more closely reflect
the Company's then current financial position. Because of the
1994 refinancing, the revolving loan agreement is classified as a
long-term obligation at December 31, 1993.
Due to continued operating losses since the refinancing and the
need to increase its investment in working capital to meet
customer demand for its new storage product (as discussed further
in Management's Discussion and Analysis of Financial Condition
and Results of Operations), the Company exceeded the revolving
credit facility's $50,000,000 maximum borrowing amount on
September 6, 1994. Since then, Gould has continued to allow the
Company to borrow additional funds in excess of the agreement's
maximum limit. At October 2, 1994, borrowings under the
agreement were $59,480,000. As of November 10, 1994, borrowings
under the revolving loan agreement increased to $71,860,000 or
$21,860,000 above the maximum allowed under the terms of the
revolving credit facility.
Given recent demand for the Company's Infinity SP(TRADEMARK) and product
delivery schedules requested by Amdahl under its distribution
agreement with the Company, Encore will have to continue to
increase its investment in working capital, particularly in the
areas of inventory and accounts receivable. While some of this
increase may be offset by increased accounts payable, on a short
term basis a significant portion of the investment will need to
be provided through financing activities. There is no assurance
that Gould will continue to allow additional borrowings or that
it will allow the Company to remain in excess of the maximum
borrowing limit. Should Gould require the Company to return to
compliance with the agreement's maximum borrowing limit, the
Company would be unable to do so.
The Company has begun discussions with the Japan Energy Group
regarding its need for additional financing. Over the short
term, and until the time the Company returns to a state of
continued profitability, Encore will be unable to generate the
levels of cash through operations necessary to meet the on-going
needs of the business or to remain in compliance with certain
financial covenants contained in the revolving loan agreement
which become effective on December 31, 1994. It is unlikely the
Company will be able to secure sufficient financing from sources
other than the Japan Energy Group. Should the Japan Energy Group
be unwilling to provide the Company with additional financing as
it is required, the Company could experience a severe liquidity
crisis and its ability to meet its customers ordering
requirements on a timely basis may be jeopardized.
Term Loan
In 1992, the Company and Gould agreed to convert $50,000,000 of
indebtedness incurred under the revolving loan agreement into a
two year Term Loan with a maturity date of March 31, 1994. The
Term Loan due to Gould provided for interest at a rate equal to
the prime lending rate plus 1% (7.0% at December 31, 1993). The
terms and conditions of the loan were similar to those of the
revolving loan agreement described above. The loan was
collateralized by substantially all of Encore's tangible and
intangible assets and contains various covenants, including
maintenance of cash flow, leverage, and tangible net worth ratios
and limitations on capital expenditures, dividend payments and
additional indebtedness.
On April 12, 1993, the Company and Gould agreed to extend the
maturity date of the loan to April 2, 1995. Additionally, Gould
agreed to provide the Company with waivers of compliance with the
covenants contained in the agreement through the end of the first
fiscal quarter of 1994.
On February 4, 1994, the Company and Gould agreed to cancel the
indebtedness owed by the Company to Gould under the Term Loan
agreement in exchange for Series E convertible preferred stock.
In light of this transaction, the term loan was classified as a
long term obligation at December 31, 1993.
E. Shareholders Equity
On February 4, 1994, Gould exchanged its $50,000,000 term loan
and $50,000,000 of its revolving credit loan for 1,000,000
shares of the Company's Series E Convertible Preferred Stock
with a liquidation preference of $100,000,000 (See Note D).
The principal terms of the Series E are:
(i) the Series E is senior in liquidation priority to all other
classes of the Company's preferred and common stock;
(ii) includes a 6% cumulative annual dividend which the Company
can elect to (a) pay in additional shares of Series E valued at
its liquidation preference until shareholders' equity exceeds
$50,000,000; or (b) accumulate and pay in cash when shareholders'
equity exceeds $50,000,000;
(iii) has a liquidation preference of $100 per share;
(iv) is convertible, at the holder's option, into the Company's
common stock at the liquidation preference divided by $3.25 per
share (subject to potential adjustments for splits, etc.) only
(a) if the shareholder is a United States citizen or corporation
or other entity owned in the majority by United States citizens
or (b) in connection with an underwritten public offering;
(v) is convertible, at the Company's option in accordance with
the conversion methodology described in (iv) above if the price
of the common stock exceeds $3.90 per share for twenty
consecutive days and (a) a buyer is contractually committed to
purchase for at least $3.90 per share at least 50% of the shares
into which all outstanding Series E would be converted; or (b) a
buyer is contractually committed to purchase for at least $3.50
per share at least 75% of the shares into which all outstanding
Series E would be converted;
(vi) is non-voting, except for the right to approve actions
adversely affecting the Series E.
Because of the related party nature of the transaction, the
difference between the carrying amount of the indebtedness
exchanged and the fair value of the securities issued and other
consideration granted has been credited to additional paid-in
capital. A summary of the financial effects of the transaction
are as follows (in thousands):
Reduction of debt $100,000
Less:
Par value of shares issued
(1,000,000 shares at $.01 par value) (10)
Accrued transaction costs (700)
Accrued interest on the remaining
indebtedness under the revolving loan
agreement for the remaining term of
the agreement (3,017)
---------
Increase in additional paid-in capital $ 96,273
========
Upon completion of the refinancing, the Company reported a
capital surplus and was able to pay all dividends accumulated
since January 15, 1993 which it did immediately in additional
shares of the appropriate classes of preferred stock.
Prior to the transaction, Japan Energy and its wholly owned
subsidiaries beneficially owned 62.0% of the Company's
outstanding common stock assuming the full conversion of all
outstanding shares of its preferred stock. Upon completion of
the transaction, their beneficial ownership increased to 71.1%.
<PAGE>
Item 2.
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Results of Operations:
Three and Nine months ended October 2, 1994
Compared to
Three and Nine Months ended October 3, 1993
Total net sales for the three and nine month periods of 1994 were
$16,558,000 and $58,383,000, respectively compared to those for
the three and nine month periods of 1993 of $21,431,000 and
$72,191,000, respectively. Equipment sales decreased by
$2,235,000 or 24% and $4,299,000 or 13% from the comparable three
and nine month periods of 1993 while service sales declined by
$2,638,000 or 22% and $9,509,000 or 24% from the same periods.
Domestic sales decreased by $1,646,000 or 15% and $7,358,000 or
17%, respectively during the three and nine month periods ended
October 2, 1994 when compared to the same periods of 1993 and
international sales declined by $3,227,000 or 32% and $6,450,000
or 22% respectively for the same periods. For the nine months of
1994, domestic sales represent 61% of total sales compared to 59%
for the nine month period of 1993.
With regard to 1994 equipment sales, the Company continues to be
adversely impacted by declining real-time product sales. New
product sales through October 2, 1994 have been insufficient to
offset sales declines experienced in the older real-time product
lines. Although the sales of new product offerings have
increased in the nine month period of 1994, such improvements
have been offset by steeper declines in traditional real-time
product sales. Declining real-time product line sales reflect
the fact that certain products have reached the end of their
life cycles. The computer industry is very competitive and
strongly influenced by changes in technology. Customers tend to
purchase those products offering leading edge implementations of
the most currently available technology. In recent years,
product demand has begun to migrate from proprietary to open
system architectures. Prior to 1992, the Company's principal
product offerings were proprietary architectures whose core
technology was developed in the early 1980's. While product
enhancements have been made, the Company's older products have
lost some of their technological edge. Accordingly, the Company
has been increasingly less competitive selling into new, long
term programs in its traditional real-time markets. Today, new
real-time products based on a state of the art open systems
architecture are available for volume shipments. However, during
the first nine months of 1994, increases in the sale of such new
products have been insufficient to offset the declines
experienced in other, older real-time product offerings. Current
availability of these new products could enable the Company to
benefit from the industry's continued migration from proprietary
to open system architectures.
During the three month period ended October 2, 1994, the Company
and Amdahl Corporation ("Amdahl") amended its March 1994 five
year OEM reseller agreement which allows Amdahl the right to
distribute the Company's Infinity SP(TRADEMARK) under the Amdahl brand.
The amendment gives Amdahl exclusive marketing and distribution
rights to the product, except for sales to the U.S. government,
certain Encore distributors and in Japan, China, and Malaysia,
where Encore retains the right to market the products on a non-
exclusive basis. The amendment also establishes committed
procurement schedules, which if product requirements are met,
will require Amdahl's purchase of a significant amount of
products from Encore. It is possible that shipments from Encore
to Amdahl could grow to an annualized rate in excess of $200
million.
During the quarter the Company delivered additional Infinity SP(TRADEMARK)
systems to Amdahl under the multi-year agreement. However,
because the systems are early production systems, the Company has
deferred revenue on these shipments. As Amdahl sales efforts
ramp up and generate sales in future periods, the Company should
begin to realize significantly increased levels of equipment
sales.
Additionally included in 1994 equipment sales, the Company has
begun deliveries of the Infinity 90(TRADEMARK) product to the Department of
Defense as part of a program to consolidate and upgrade certain
large data processing centers.
With regard to the decline in service revenues, the decrease
reflects the continued competition in the service marketplace as
well as the prolonged effect of the Company's declining system
sales. Since 1990, annual equipment sales have declined at an
approximate compounded annual rate of 28% thereby limiting the
Company's new service business potential. This decrease in
equipment sales combined with the cancellation of certain other
service contracts on older installed systems decommissioned by
the user has contributed to the overall service sales decline.
It is expected that service sales will continue to decline until
such time as equipment sales begin a sustained trend upward
generating new business opportunities for the Company's service
business. However, the Company does not expect significant
levels of new service business as a result of the Amdahl
agreement.
Cost of equipment sales for the three and nine month periods of
1994 decreased from the comparable periods of 1993 by $2,580,000
or 40% and $1,667,000 or 8%, respectively. As a percentage of
net sales, 1994 cost of equipment sales in the three and nine
month periods were 54.4% and 65.8% compared to 68.7% and 62.3% in
the three and nine month periods of 1993, respectively. For the
three month period of 1994 the decrease in cost of equipment
sales is due to lower equipment sales ($1,315,000), lower
inventory obsolescence charges ($270,000), lower warranty costs
($125,000) and other lower manufacturing costs ($870,000). For
the nine months ended October 2, 1994, the decrease in cost of
equipment sales is due to lower equipment sales volumes
($1,510,000), lower inventory obsolescence costs ($1,040,000),
lower warranty costs ($665,000) and other lower manufacturing
costs ($655,000) which were partially offset by a shift in sales
mix to lower margin products ($2,203,000).
Cost of service sales for the three and nine month periods ended
October 2, 1994 decreased from the comparable periods of 1993 by
$1,154,000 or 15% and $8,641,000 or 31%, respectively. The 1994
decrease in both the three and nine month periods is due
principally to actions taken during 1993 to reduce costs to
levels more consistent with the projected levels of future
business. Throughout both the 1994 and 1993 periods, management
has taken a series of actions to minimize its worldwide customer
service workforce and to eliminate or consolidate marginally
profitable field service locations. Among the most significant
of these actions occurred during the fourth quarter of 1993 when
the Company entered into an agreement with Halifax Corporation
("Halifax"). The agreement, which took full effect during the
three month period ended April 3, 1994, provides for Halifax to
supply a large portion of the manpower necessary to service
equipment under domestic maintenance contracts with the Company.
Accordingly, service operations has been able to significantly
reduce its workforce during both the fourth quarter of 1993 and
the first quarter of 1994.
Research and development costs for the three and nine month
periods ended October 2, 1994 increased $1,866,000 and
$5,013,000, respectively over the comparable periods of 1993.
The increases are due principally to the acceleration of efforts
to finalize the development of certain new product offerings
including the Infinity SP(TRADEMARK) product line. Among the significant
expense increases during the respective three and nine month
periods of 1994 are: (i) higher salaries and contract labor
expenses of $804,000 and $1,935,000, respectively as both the
permanent and temporary research and development workforce has
increased, (ii) development material and supplies expenses
increased by $643,000 and $2,318,000, respectively in support of
the finalization of new product prototypes and (iii) other
miscellaneous costs rose by $419,000 and $760,000, respectively.
As a result of both the year's lower net sales and higher expense
levels, 1994 research and development expenses as a percentage of
net sales increased during the three and nine month periods to
45% and 37%, respectively from 26% and 23% for the corresponding
period of 1993. To remain competitive in the marketplace, the
Company must continue relatively high levels of research and
development expenditures. While the aggregate amount invested by
the Company in research and development may not decrease
significantly during the next several quarters, it is expected
that as sales increase research and development spending as a
percentage of net sales will return to lower levels.
Selling, general and administrative expense decreased by
$2,303,000 and $5,940,000, respectively for the three and nine
month periods of 1994 when compared to 1993. Since 1993, actions
have been taken to reduce the workforce to levels more consistent
with planned business conditions. As a result, labor and
employee related expenses decreased by approximately $1,800,000
and $5,000,000 during the three and nine month periods of 1994
when compared to those of the prior year. Additionally, other
significant reductions have been realized during 1994, primarily
in the area of advertising and promotional expenses . As a
percentage of net sales, selling, general and administrative
costs were 52% and 46%, respectively, for the three and nine
months ended October 2, 1994 compared to 51% and 45%,
respectively for the comparable periods of 1993.
During the period ended July 4, 1993, management evaluated its
then latest financial forecasts of the business. In light of
lower than previously expected sales volumes, management
initiated actions to restructure its operations including: (i)
reductions in the workforce to levels consistent with planned
future sales and (ii) the reassessment of carrying values of
certain long lived assets including property and equipment and
goodwill.
In this connection, in June 1993, the Company reduced its
workforce by approximately 10% with significant reductions made
in manufacturing, customer services and international sales
operations. Additionally, because of the decline in traditional
real-time product line profits, the Company evaluated its
investment in the property and equipment employed to support
future real-time product sales. As a result of this analysis,
management recognized the permanent impairment in value of
certain of these assets by writing off their carrying values.
Finally, in light of the continuing revenue decline and the
erosion of the earnings premium of the real-time business which
the Company acquired from Gould Electronics Inc. in 1989,
management determined any excess value associated with the
acquired business was fully amortized. In this regard, the
Company wrote off the remaining carrying value of goodwill which
it had originally recorded in connection with the 1989
acquisition. Accordingly, for the nine months ended October 3,
1993, operating expenses included restructuring costs of
$12,843,000 relating to these actions.
Interest expense for the three and nine month periods of 1994
decreased from 1993 levels by $996,000 and $2,496,000
respectively, due principally to lower 1994 debt levels. In this
connection as discussed in Notes D and E of Notes to Condensed
Consolidated Financial Statements, on February 4, 1994 the
Company exchanged $100,000,000 of indebtedness for preferred
stock with Gould.
Other expense for the three and nine month periods of 1994
improved from 1993 by $99,000 and $994,000, respectively due
primarily to improved foreign exchange gains results during 1994.
During the three month period ended October 2, 1994 , the Company
recorded a provision for income taxes for profits earned by
certain foreign subsidiaries. Income taxes for 1993 also relate
to taxes payable by foreign subsidiaries of the Company.
LIQUIDITY AND CAPITAL RESOURCES:
Since 1989, the primary source of financing for the Company has
been provided by Japan Energy and its wholly owned subsidiaries,
Gould and EFI (or referred to collectively as the "Japan Energy
Group"). The Japan Energy Group has provided the Company with
its revolving credit facility and certain loan guarantees,
refinanced subordinated debentures and entered into various
exchanges of indebtedness for the Company's preferred stock. As
discussed in more detail in Note D of Notes to Condensed
Consolidated Financial Statements, as of February 4, 1994,
assuming full conversion of their holdings in the Company's
preferred stock, Gould and EFI beneficially own 50.2% and 20.9%,
respectively of the Company's common stock.
Because of operating losses incurred in 1993, the Company
reported a capital deficiency throughout the year and exceeded
the maximum borrowing limit of the revolving loan agreement
during the year. At December 31, 1993 the Company had borrowed
$61,924,000 or $26,924,000 in excess of the agreement's maximum
borrowing amount.
In this regard, during the fourth quarter of 1993 the Company
initiated discussions with Gould to significantly recapitalize
the Company. On February 4, 1994, the Company and Gould agreed
to exchange the existing $50,000,000 term loan and $50,000,000 of
borrowings under the revolving loan agreement for Series E
Convertible Preferred Stock. Terms of the Series E are discussed
in detail in Note E of the Notes to Condensed Consolidated
Financial Statements. Additionally, on April 11, 1994, the terms
of the revolving loan agreement were amended and restated to
increase the amount available under the agreement to $50,000,000
and to extend the agreement's maturity date to April 16, 1996.
All other terms and conditions of the agreement were essentially
unchanged except certain financial covenants contained in the
agreement were modified to more closely reflect the Company's
then current financial position.
Due to continued operating losses throughout 1994 and the need to
increase its investment in working capital to meet customer
demand for its new storage product, the Company exceeded the
credit facility's $50,000,000 maximum borrowing amount on
September 6, 1994. Since then, Gould has continued to allow the
Company to borrow additional funds in excess of the agreement's
maximum limit. At October 2, 1994, borrowings under the
agreement were $59,480,000. As of November 10, 1994, borrowings
under the revolving loan agreement increased to $71,860,000 or
$21,860,000 above the maximum allowed under the terms of the
revolving credit facility.
During the nine month period ended October 2, 1994, the Company
used cash in operating activities of $33,040,000 compared to
$27,338,000 used in the comparable period of 1993. Among the
significant uses of cash in 1994 are: (i) the net loss for the
nine month period (net of amortization and depreciation) of
$22,770,000, (ii) the settlement of $5,037,000 of restructuring
costs accrued at December 31, 1993 and, (iii) an increase in
accounts receivable and inventory of $9,055,000 principally in
support of the Amdahl contract discussed above. These uses of
cash were partially offset by $3,822,000 of other working capital
improvements, primarily in increased accounts payable.
During the nine month periods ended October 2, 1994 and October
3, 1993, expenditures for property and equipment were $9,181,000
and $7,049,000, respectively while expenditures for capitalized
software were $2,327,000 and $1,591,000, respectively.
Cash provided through financing activities for the nine month
periods ended October 2, 1994 and October 3, 1993 were
$47,332,000 and $35,351,000, respectively. The principal source
of financing has been through various loan agreements provided by
Gould or Japan Energy.
As of November 10,1994, borrowings under the revolving loan
agreement were $71,860,000 or $21,860,000 above the maximum
allowed under the terms of the credit facility. In consideration
of the anticipated demand for the Company's Infinity SP(TRADEMARK)
and product delivery schedules requested by Amdahl under its
distribution agreement with the Company, Encore will have to
continue to increase its investment in working capital,
particularly in the areas of inventory and accounts receivable.
While some of this increase may be offset by further increases in
accounts payable, on a short term basis, it is likely that a
significant portion of the investment will need to be provided
through financing activities. The current revolving loan
agreement is not sufficient to meet this need. Accordingly, the
Company has begun discussions with the Japan Energy Group
regarding its need for additional financing.
Over the short term, and until the time the Company returns to a
state of continued profitability, Encore will be unable to
generate the levels of cash through operations necessary to meet
the on-going needs of the business. It is unlikely the Company
will be able to secure sufficient financing from sources other
than the Japan Energy Group. Should the Japan Energy Group be
unwilling to provide the Company with additional financing as it
is required or require payment of the amount borrowed in excess
of the revolving loan agreement's maximum, the Company would
experience a severe liquidity crisis and its ability to meet its
customers ordering requirements on a timely basis may be
jeopardized.
The Company maintains cash on hand at various international
subsidiaries. With minor exceptions, all cash is freely
remittable to the United States.
<PAGE>
Part II - Other Information
Item 6. Exhibits and Reports on Form 8K
(a) Exhibits required by Item 601 of Regulation S-K
Exhibit No. 10* - Reseller Agreement for Encore
Storage Products between Amdahl Corporation
and Encore Computer Corporation and Amendment #1
to Reseller Agreement for Encore Storage Products
between Amdahl Corporation and Encore Computer
Corporation. See page 20.
Exhibit No. 11 - Statement re: computation of
per share earnings. See page 178.
Exhibit No. 27 - Financial Data Schedule. See page 179.
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Company
during the quarter ended October 2, 1994.
*Confidential treatment requested as to certain portions of the exhibit.
Signatures
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned as the chief
accounting officer and an officer of the registrant
thereunto duly authorized.
Encore Computer Corporation
T. MARK MORLEY
Date: November 21, 1994 T. Mark Morley
Vice President Finance
Chief Financial Officer
<TABLE>
<S> <C> <S> <C> <C>
Exhibit No. 11
ENCORE COMPUTER CORPORATION
Computation of Loss per Share
(unaudited)
(in thousands except per share data)
Three Months Ended Nine Months Ended
October 2, October 3, October 2, October 3,
1994 1993 1994 1993
----------- ----------- ----------- -----------
Net loss $ (10,761) $ (10,903) $(30,614) $ (45,230)
Accumulated Series B and D
Preferred Stock Dividends - (2,313) - (6,837)
Series B, D and E Preferred
Stock Dividends (3,973) - (9,954) -
----------- ----------- ----------- -----------
Net loss attributable to
common shareholders $ (14,734) $ (13,216) $ (40,568) $ (52,067)
=========== =========== =========== ===========
Weighted average common
shares outstanding 33,784 32,272 33,221 31,687
Series A assumed converted 7,364 7,364 7,364 7,364
----------- ----------- ----------- -----------
Weighted average shares
outstanding 41,148 39,636 40,585 39,051
Net loss per share $ (0.36) $ (0.33) $(1.00) $ (1.33)
========= ========= ========= =========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> OCT-02-1994
<CASH> 6275
<SECURITIES> 260
<RECEIVABLES> 20176
<ALLOWANCES> (1659)
<INVENTORY> 24854
<CURRENT-ASSETS> 52663
<PP&E> 91295
<DEPRECIATION> (50763)
<TOTAL-ASSETS> 99356
<CURRENT-LIABILITIES> 97221
<BONDS> 857
<COMMON> 338
0
28
<OTHER-SE> 912
<TOTAL-LIABILITY-AND-EQUITY> 99356
<SALES> 58383
<TOTAL-REVENUES> 58383
<CGS> 38729
<TOTAL-COSTS> 87145
<OTHER-EXPENSES> (230)
<LOSS-PROVISION> (477)
<INTEREST-EXPENSE> 1882
<INCOME-PRETAX> (30414)
<INCOME-TAX> 200
<INCOME-CONTINUING> (30614)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (30614)
<EPS-PRIMARY> (1.00)
<EPS-DILUTED> 0
</TABLE>
"CONFIDENTIAL MATERIAL DELETED (DENOTED BY [*CONFIDENTIAL
MATERIAL
DELETED*]) AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION TOGETHER WITH CONFIDENTIAL TREATMENT REQUEST REGARDING
DELETIONS.
AMENDMENT #1
TO
RESELLER AGREEMENT
FOR
STORAGE PRODUCTS
BETWEEN
AMDAHL CORPORATION
AND
ENCORE COMPUTER CORPORATION
TABLE OF CONTENTS
PARAGRAPH
1 Model 0 And Subassembly Pricing Added
2 Model 0 Specification Added
3 Model 0 and Subassembly Excepted Paragraphs
4 Section 1 References Amended and Definitions Added:
Product"," Order"," Owner"," Territory"," General
Availability"," Storage Product"," System","
Manufacturing License"," Technology Escrow Agreement
5 Section 2A Grant Replaced By Exclusive Grant
6 Section 2B Amended to Replace Feature/Function
Exclusivity
7 Sections G"," H"," I"," J"," K"," L"," and M Added to
Section 2 to Add Exclusivity with Encore
Reservations"," Market Change Adjustments"," Amdahl
Sales Force Provisions"," Large Bid Opportunities","
Continuing Product Development"," Purchase Commitment
Reduction/Market Changes"," Product Testing",
" Product Competitiveness
8 Section 3 Amended to Extend Term
9 Section 4C Amended to Add Amdahl Purchase Commitment of
[*CONFIDENTIAL MATERIAL DELETED*] TB
10 Subsection E Added to Section 4 to Add Amdahl Option to
Renew Exclusivity Provisions
11 Section 6 Amended to add Mod 0 Specification
12 Section 7A Initial Prices Amended to Add Mod 0 and
Subassembly Prices
13 Subsection c.) of Section 7B Amended to Clarify Product
Discontinuance
14 Subsection g.) Added to Section 7B to Address Failure
to Agree Pricing for Remaining Period
15 Subsection h.) and i.) Added to Section 7B to Add
Subassembly Pricing and Provisions for Pricing for
Products Delivered Late
16 Section 14 Amended to Add Mod 0 Spec to Warranty
17 Subsection F of Section 18 Amended to Preserve Licenses
Purchased by Amdahl
18 Section 18 and Section 30 Amended to Add References to
Exhibit A/Mod 0 and Exhibit A/SubA
19 Exhibit D Amended to Reflect Proper Exhibit References
20 Section 25 D Amended to Add Additional Remedies
21 Exhibit H Amended to Add Beta"," LG/A and G/A Criteria
22 Exhibit K Added [*CONFIDENTIAL MATERIAL DELETED*]
23 Subsection b.) Added to Section 6 to Add Performance Criteria
24 Section 15 B Amended to Change Dollar Amount And Add
Exceptions
25 Section 25B Modified to Delete Current Two Events and
Add Failure to Deliver
26 Modifies Section 15F to Extend to New Commitment
27 Adds Section 4F Regarding Operational Flexibility
28 Adds Sections 7D"," Feature/Function Pricing"," and 7E","
Credit for Returned Systems
29 Adds Rights to Section 27a.) to Permit Development
Under Manufacturing License and Provisions Regarding
Encore Execution of the License and Escrow Agreement
and [*CONFIDENTIAL MATERIAL DELETED*] Agreements
Regarding Escrow
30 Section 6 Amended to Provide G/A Not Affected by Early
Purchase
EXHIBITS
EXHIBIT A/MOD 0---MODEL 0 PRODUCTS AND PRICES
EXHIBIT A/SUBA----SUBASSEMBLY PRODUCTS AND PRICING
EXHIBIT K---------ENCORE [*CONFIDENTIAL MATERIAL DELETED*]
EXHIBIT L---------MANUFACTURING LICENSE
EXHIBIT M---------TECHNOLOGY ESCROW AGREEMENT
EXHIBIT N---------LICENSE AGREEMENTS
ATTACHMENTS
ATTACHMENT 1 TO EXHIBIT H----G/A CRITERIA
AMENDMENT #1
TO
RESELLER AGREEMENT
FOR
STORAGE PRODUCTS
BETWEEN
AMDAHL CORPORATION
AND
ENCORE COMPUTER CORPORATION
WHEREAS ENCORE COMPUTER CORPORATION"," hereinafter Encore and
AMDAHL CORPORATION"," hereinafter Amdahl"," are parties to a
Reseller Agreement executed between them on March 24","
1994","hereinafter the Agreement;and
WHEREAS the parties wish to amend said Agreement in certain
material respects:
NOW THEREFORE the parties hereby agree to amend said Agreement as
follows:
1.) a.) The Model 0 Storage Product and its Options are hereby
added by the inclusion into the Agreement of Exhibit A/Mod 0
which is appended hereto and incorporated in said Agreement by
reference.
b.) Subassembly Products are hereby added by the inclusion
into the Agreement of Exhibit A/SubA which is appended hereto and
incorporated in said Agreement by reference.
2.) The Specification for the Model 0 Storage Product is hereby
added by the inclusion into the Agreement of Exhibit B-1 which is
appended hereto and incorporated in said Agreement by reference.
3.) The following Sections of the Agreement shall not apply to
the Model 0 Storage Product listed in Exhibit A/Mod 0"," or to
the Subassembly Products listed in Exhibit A/SubA: the schedule
in subsection a.) of Section 2 D"," and Section 2E.
4.) Section 1 is hereby amended by the following changes:
a.) All references to the words Exhibit A in the
definitions of Order"," Owner and Product shall be replaced by
the words Exhibit A, Exhibit A/Mod 0 and Exhibit A/SubA "," as
each may be amended from time to time.
b.) The definition of Territory is replaced in its
entirety by the following:
Territory: The world with the exclusion of Japan","
China","and Malaysia.
c.) The definition for General Availability contained in
subsection 4 b.) 3 of Section 2 D is moved to Section 1"," which
shall apply to all Storage Products"," and amended as follows:
General Availability(G/A): Encore produces Product"," or the
features/functions described in Section 2 B. c.) or 2 E
(collectively the Features) of the Agreement"," which has
successfully passed the requirements set forth in Exhibit H and
which is ready for shipment in volume to Amdahl's customers.
d.) The following definitions are added to Section 1:
Storage Product: A Product consisting of a subsystem whose
primary function is to store data and deliver data in the form of
responses to Input/Output requests from a central processing
unit.
System: A computer"," which may include some Exhibit A/SubA
Products (i.e. subassemblies)"," whose primary function is to
run an application program"," such as a database; the computer
may also have storage capacity used in support of the
application
function.
e.) Manufacturing License: The agreement in the form
attached hereto as Exhibit L.
f.) Technology License Agreement: The Agreement in the form
attached hereto as Exhibit M.
5.) Section 2 A is replaced by the following:
A. SUPPLY
Encore will produce and supply the Products in accordance
with the terms set forth in this Agreement. The exclusivity
granted pursuant to Section 2G will continue for a period or
periods of time equal to the period or periods of time of each
purchase commitment period"," or extended commitment period per
Section 4E"," and will not be affected by any permitted purchase-
commitment
reductions. It is the intent of the parties that the
Products will evolve in feature and function and will be enhanced
over the term of this Agreement.
6.) Subsections a.) and e.) of Section 2B"," the introductory
paragraph to subsection c.) of Section 2B"," and paragraph (iii)
of Section 2F are replaced in their entirety by the new
subsections set forth below"," and subsections b.) and d.) and
the last paragraph of subsection c.) of Section 2B are deleted in
their entirety:
B. BRANDED PRODUCT
a.) Encore Storage Products listed in Exhibit A"," Exhibit
A/Mod 0 and Exhibit A/SubA which are supplied to Amdahl hereunder
will bear the Amdahl Mark in accordance with the provisions of
Section 8 and Exhibit E; Storage Products which are branded for
Amdahl will be available for exclusive sale to Amdahl only.
Encore agrees that it will not produce a look-alike product
which is equivalent to a Storage Product defined in Exhibit A
","Exhibit A/Mod 0 or Exhibit A/SubA in contravention of the
terms
of this subsection a.). Storage Products listed in Exhibit A will
also include certain functionality listed in accordance with the
schedule provided below. Certain parts of this functionality
appropriate to the Storage Products listed on Exhibit A/Mod 0 and
Exhibit A/SubA will also be made available to Amdahl.
c.) Encore is developing the following features for
inclusion with the Storage Products to be provided to Amdahl as
set forth above:
e.) Encore acknowledges that future revenue growth for both
companies is dependent upon continuing development in the area of
Client/Server"," Open Systems storage products for the market-
place. All
Storage Products"," unless otherwise agreed"," shall have
the ability to act as servers (in Client/Server environments) to
standard versions of the [*CONFIDENTIAL MATERIAL DELETED*] and
[*CONFIDENTIAL MATERIAL DELETED*] environments by [*CONFIDENTIAL
MATERIAL DELETED*] and within the [*CONFIDENTIAL MATERIAL
DELETED*] environment by [*CONFIDENTIAL MATERIAL DELETED*].
(iii) it has full right and authority to grant the
rights specified in Section 2G and the manufacturing rights
specified in the Manufacturing License;
7.) The following Sections G"," H"," I"," J"," K"," L"," and M
are added to Section 2:
G. AMDAHL EXCLUSIVITY
a.) In consideration of Amdahl's agreement to purchase
[*CONFIDENTIAL
MATERIAL DELETED*] terabytes of Storage Products in calendar year
as set forth in Section 4C below"," Encore hereby grants to
Amdahl the sole and exclusive right to sell all Encore Storage
Products in the Territory through the end of calendar year
[*CONFIDENTIAL MATERIAL DELETED*]"," and any subsequent purchase
commitment period. Amdahl is also hereby granted a
non-exclusive right to sell the Encore Storage Products in
Japan"," China and Malaysia.
b.) Notwithstanding anything to the contrary contained in
subsection a.) of Section 2G above"," Encore shall retain the
following rights regarding the sale of Products:
1.) Encore shall retain the non-exclusive right to sell
the Storage Products in Japan"," China and Malaysia.
2.) Encore shall retain the non-exclusive right to
market and sell the unbranded Storage Products within and
outside the Territory to the U.S. Federal Government and its
agencies"," and to System Integrators who are responding to
solicitations from the U.S. Federal Government or its
agencies.
3.) [*CONFIDENTIAL MATERIAL DELETED*]
4.) Encore shall retain the right to sell Systems to
any Encore customers or potential Encore customers anywhere
in the world during the term of this Agreement or any
extensions hereof so long as these sales are not made with
the intent of participating in Amdahl's exclusive Storage
Product market. It is not Encore's intent to participate in
the Storage Product marketplace by selling Systems.
c.) The exclusivity granted to Amdahl in subsection a.) of
Section 2G extends to all new Storage Products and enhancements
","features and functions which fall into the range of systems
where
the low end is a [*CONFIDENTIAL MATERIAL DELETED*] Gigabyte
server and the top end is a [*CONFIDENTIAL MATERIAL DELETED*]
","whether or not Amdahl accepts them for resale during the
exclusivity period. New storage products developed by Encore are
excepted from this automatic grant if they fall either above or
below the range described above.
d.) An extension of the exclusivity granted to Amdahl in
Section 2A and subsection a.) of Section 2G above beyond calendar
year [*CONFIDENTIAL MATERIAL DELETED*] shall occur only in
accordance with the provisions of sub-section a.) of Section 4E
below.
e.) Unless expressly stated otherwise"," the provisions of
the additional remedies contained in Section 25 hereof does not
affect Amdahl's grant of exclusivity contained in this Section
2G.
f.) Encore will not enter into any agreements after the date
of this Amendment 1 to license its technology to any other person
to manufacture any Storage Product subsystems during Amdahl's
exclusivity period. A list of persons with whom Encore has any
such agreements"," with a summary of the nature of the agreement
is included in Exhibit N.
H. AMDAHL SALES FORCE
a.) Amdahl will hire additional sales personnel to staff its
Direct Storage Sales Program"," which will result in increasing
staffing of sales personnel for this program by a substantial
number of dedicated sales representatives as soon as possible.
Amdahl's commitment of this sales staffing level is a key
inducement for Encore's agreement to enter into this Amendment 1.
b.) Encore agrees to pay Amdahl [*CONFIDENTIAL MATERIAL
DELETED*] percent [*CONFIDENTIAL MATERIAL DELETED*] (%) of the
Storage Product revenue derived by Encore from Amdahl from
Amdahl's [*CONFIDENTIAL MATERIAL DELETED*] TB commitment and from
future Amdahl commitments"," such sums to be used by Amdahl in
funding
Amdahl's direct sales expense for the sale and marketing of the
Encore
Storage Products. The amount due from Encore will be calculated
by
Amdahl within thirty days after the end of each quarter and will
be invoiced to Encore for payment.
I. LARGE BID OPPORTUNITIES
Encore agrees to discuss with Amdahl in good faith"," on a
case-by-case basis"," margin-sharing for [*CONFIDENTIAL MATERIAL
DELETED*] single decision opportunities of [*CONFIDENTIAL
MATERIAL DELETED*] ([*CONFIDENTIAL MATERIAL DELETED*]) terabytes
or more which arise for the sale of Encore Storage Products by
Amdahl to Amdahl's customers.
J. CONTINUING PRODUCT DEVELOPMENT
Encore agrees to develop and make available to Amdahl"," on
the terms of exclusivity set forth in Sections 2G above"," new
features"," functions and enhancements sufficient to enable the
Storage Products to retain significant competitive advantage in
all markets. For purposes hereof"," significant competitive
advantage is as defined in Section 2M below under Product
Competitiveness. All such features"," functions and enhancements
accepted for resale by Amdahl will be added by amendment to and
be deemed a part of Exhibit A"," Exhibit A/Mod 0"," and Exhibit
A/SubA as appropriate.
K. PURCHASE COMMITMENT REDUCTION/ MARKET CHANGES
1.) CURRENT YEAR [*CONFIDENTIAL MATERIAL DELETED*]
a.) If during calendar year [*CONFIDENTIAL MATERIAL
DELETED*]"," when published data is available from [*CONFIDENTIAL
MATERIAL DELETED*]"," the System 390 market for storage products
decreases by [*CONFIDENTIAL MATERIAL DELETED*]% or more","
measured from the base for the current forecast at contract
signing (hereinafter Current Base) of [*CONFIDENTIAL MATERIAL
DELETED*] ([*CONFIDENTIAL MATERIAL DELETED*]) Terabytes"," Amdahl
can reduce its annual purchase commitment of [*CONFIDENTIAL
MATERIAL
DELETED*] Terabytes by the same percentage decrease upon 90 days
notice.
b.) The Amount of Reduction will be calculated in accordance
with the following formula:
(Amount of Market Decline) X (Commitment Remaining on Date
of Notice) = Amount of Reduction
c.) The Amount of Reduction may only be applied to the
unordered portion of the commitment remaining for that year
calculated from the date of notice through the end of the year.
2.) FUTURE YEARS
a.) For the calendar years [*CONFIDENTIAL MATERIAL
DELETED*] through 1999"," forecast numbers establishing the
Current Base will be calculated in December of each prior year by
using the weighted average of the [*CONFIDENTIAL MATERIAL
DELETED*] forecasts for both the IBM System 390 compatible market
and the Open Systems market (based upon Amdahl's actual market
share of the previous year) to arrive at a new Current Base.
b.) The formula for calculating the Current Base for each
succeeding year as described in 2a.) above is as follows:
[*CONFIDENTIAL MATERIAL DELETED*]
c.) In the event that the forecasted average base number
decreases by [*CONFIDENTIAL MATERIAL DELETED*]% or more from the
new Current Base number calculated for that year"," Amdahl may
reduce its annual purchase commitment by the percentage decrease
upon 90 days written notice"," using the method set forth in 1b.)
above. The provisions of 1c.) above will apply to the
application of any reduction permitted.
L. PRODUCT TESTING
Encore agrees to do Storage Product development testing for
additional development projects as agreed by the parties after
[*CONFIDENTIAL MATERIAL DELETED*].
M. PRODUCT COMPETITIVENESS
a.) If any Storage Product ceases to be best of breed in any
market"," Amdahl's purchase commitment will be adjusted to
reflect the resulting loss of market opportunity.
b.) Factors to determine whether a Product is best of breed
include: System 390 functional compatibility","
features","function"," performance (including the agreed upon
performance
criteria specified in section 6b)"," reliability and price.
c.) If Amdahl believes a Storage Product has ceased to be
best of breed"," it will so notify Encore and Amdahl and Encore
will attempt to reach agreement on the matter. If agreement
cannot be reached"," Amdahl and Encore will jointly confer with
[*CONFIDENTIAL MATERIAL DELETED*] ( the Analysts).
If"," based upon the above criteria at least two of the
Analysts determine that the Product has ceased to be best of
breed"," Amdahl and Encore will reach agreement on the amount of
the purchase commitment reduction. Amdahl and Encore will share
the cost of the Analysts.
8.) The second reference to Agreement in the first sentence of
Section 3 shall be replaced by the word Amendment 1"," and the
second reference to this in the first sentence is deleted.
9.) The following paragraphs are added to Section 4 C paragraph
a.)"," and subsection b.)"," c.)"," and d.) are also added:
The total amount of terabytes shipped on
[*CONFIDENTIAL MATERIAL DELETED*] (referred to as the
Credit)"," will be credited against Amdahl's
[*CONFIDENTIAL MATERIAL DELETED*] commitment of
[*CONFIDENTIAL MATERIAL DELETED*] terabytes as
follows:
- If the [*CONFIDENTIAL MATERIAL DELETED*] Product
deliverables in the G/A document attached hereto as
Attachment 1 to Exhibit H occur in [*CONFIDENTIAL
MATERIAL DELETED*]"," then the Credit will be divided by
three and applied in three equal credits over Quarters
One"," Two and Three of [*CONFIDENTIAL MATERIAL
DELETED*]; it will be applied pro-rata to the planned
commitment in each of these quarters.
- If the [*CONFIDENTIAL MATERIAL DELETED*] Product
deliverables in said G/A document are delivered late by
Encore"," then the total Credit will be applied in
Quarter One of [*CONFIDENTIAL MATERIAL DELETED*].
All Products shipped to Amdahl prior to G/A from the
[*CONFIDENTIAL MATERIAL DELETED*] TB [*CONFIDENTIAL
MATERIAL DELETED*] commitment"," with the exception of
the three Prototype and Alpha systems previously
shipped"," will be bought up to current revisions at G/A
by Encore [*CONFIDENTIAL MATERIAL DELETED*].
b.) In addition to the commitment to purchase
[*CONFIDENTIAL MATERIAL DELETED*] terabytes of Products set forth
in subsection a.) above"," and subject to the provisions of
section 7 A. b.)"," Amdahl commits to place firm Orders with
Encore for the purchase of a total quantity of [*CONFIDENTIAL
MATERIAL DELETED*] terabytes (less any Credit or permitted
reductions) of Storage Products listed on Exhibit A "," Exhibit
A/Mod 0 and Exhibit A/SubA and new Products; these Orders will
provide for delivery of such Storage Products by Encore to Amdahl
during calendar year [*CONFIDENTIAL MATERIAL DELETED*].
c.) The [*CONFIDENTIAL MATERIAL DELETED*] terabytes of
Storage Products referenced in subsection b.) above will be
purchased by Amdahl in the following minimum quarterly amounts:
Quarter Minimum Purchase Amount
Quarter 1 [*CONFIDENTIAL MATERIAL DELETED*] of total
commitment [*CONFIDENTIAL MATERIAL DELETED*] TB)
Quarter 2 [*CONFIDENTIAL MATERIAL DELETED*] of total
commitment [*CONFIDENTIAL MATERIAL DELETED*] TB)
Quarter Planned Purchase Amount
Quarter 3 [*CONFIDENTIAL MATERIAL DELETED*] of total
commitment [*CONFIDENTIAL MATERIAL DELETED*] TB)
Quarter 4 [*CONFIDENTIAL MATERIAL DELETED*] of total
commitment [*CONFIDENTIAL MATERIAL DELETED*] TB)
The minimum purchase amounts set forth above shall not be
construed to increase the Amdahl purchase commitment of
[*CONFIDENTIAL MATERIAL DELETED*] terabytes set forth in
subsection b.) above"," and each remaining quarter shall be
adjusted by the amount of any credit or permitted reduction. The
Quarter 3 and Quarter 4 planning amounts stated above are subject
to the provisions of Section 7 A b.
d.) Until the G/A date for the Model 0 Storage Product of
[*CONFIDENTIAL MATERIAL DELETED*] occurs"," the provisions
contained in the following paragraphs shall not apply to Model 0:
Sections 2K"," 2M"," 4C a"," paragraphs 2 through 4 of Section 7
B. c","Section 25B"," and Section 25D.
e.) Notwithstanding any other provision of this Agreement
","[*CONFIDENTIAL MATERIAL DELETED*] Amdahl shall have no
obligation to order"," take delivery of"," or pay for any Product
until it has achieved G.A. Amdahl's failure to order"," take
delivery of"," or pay for any Product pursuant to this Section 4
C. e. shall not affect any of its other rights under this
Agreement.
10.) Section 4 is amended by the addition of subsection E as
follows:
E. AMDAHL OPTION TO RENEW
a.) In order for the provisions of Section 2G regarding the
grant to Amdahl of exclusivity to remain in effect after the end
of calendar year [*CONFIDENTIAL MATERIAL DELETED*]"," Amdahl must
elect to make a dollar amount purchase commitment (henceforth
DAPC) of Products from Encore for the next year equal to
[*CONFIDENTIAL MATERIAL DELETED*] of the prior year's DAPC
adjusted for any reductions or Credit permitted pursuant to this
Agreement as amended or otherwise permitted by Encore. Each such
year will be a purchase commitment period.
Such DAPC must be made no later than August 31 of each year
for the following calendar year. For the purpose of making this
calculation"," the DAPC for calendar year [*CONFIDENTIAL MATERIAL
DELETED*] is [*CONFIDENTIAL MATERIAL DELETED*] Dollars
($[*CONFIDENTIAL MATERIAL DELETED*])"," less any such reductions
or Credits. This process will be repeated for each remaining
calendar year through the end of calendar year [*CONFIDENTIAL
MATERIAL DELETED*].
b.) If Amdahl notifies Encore that it does not choose to
make a new commitment"," or if it does not make the election
described in subsection a.) above"," its purchase commitment will
extend [*CONFIDENTIAL MATERIAL DELETED*] months from the earlier
of [*CONFIDENTIAL MATERIAL DELETED*]"," or the date it notifies
Encore
that it does not choose to make a new commitment"," (which
[*CONFIDENTIAL MATERIAL DELETED*] period shall be a purchase
commitment period). In that case:
Amdahl's DAPC for the remainder of the then current
year will be as previously agreed by the parties.
The DAPC for any quarter of the next year will be based
upon the DAPC for the quarter in which notice was
given"," or if none was given"," the 3rd quarter"," prorated
in each case for partial quarters.
At the end of this [*CONFIDENTIAL MATERIAL DELETED*] month
period"," Amdahl's exclusive right to sell Storage Products under
this Agreement granted in Section 2 shall cease and Amdahl's
right to purchase hereunder will become a non-exclusive right
only"," for the remaining term.
c.) With the exception of those customers to whom Encore is
permitted to sell as provided in subsection b.) of Section 2 G
","Encore will restrict any distributor who does not have a then
current right to sell Encore storage products from advertising
the future availability of any current or new Encore storage
product or features at any time prior to [*CONFIDENTIAL MATERIAL
DELETED*] months before the termination of the last purchase
commitment period.
11.) All references in Section 6 to the words Exhibit B shall be
replaced by the words Exhibit B and Exhibit B-1.
12.) Section 7 A is replaced in its entirety by the following:
A. INITIAL PRICES
a.) Prices that pertain to Orders for those Products which
are listed in Exhibit A which are placed under this Agreement
shall be the prices set forth in Exhibit A for said Products.
These prices are firm fixed until [*CONFIDENTIAL MATERIAL
DELETED*] and are offered to Amdahl in consideration of Amdahl's
agreement to place firm Orders with Encore for [*CONFIDENTIAL
MATERIAL DELETED*] terabytes of Products listed in Exhibit A
under the terms of this Agreement for delivery to Amdahl no later
than [*CONFIDENTIAL MATERIAL DELETED*].
These prices are"," however"," subject to the future pricing
negotiations contemplated in Section 7B below. These prices are
also subject to the provisions of subsection a.) of Section 4C
with regard to Orders shipped on [*CONFIDENTIAL MATERIAL
DELETED*] and to subsection i.) of Section 7B.
b.) Prices that pertain to Orders for those Products which
are listed in Exhibit A/Mod 0 and Exhibit A/SubA which are placed
under this Agreement shall be the prices set forth for said
Products in Exhibit A/Mod 0 and Exhibit A/SubA attached hereto.
Exhibit A/Mod 0 provides prices which are firm fixed until
[*CONFIDENTIAL MATERIAL DELETED*] subject to the provisions of
subsection a.) of Section 4C with regard to Orders shipped on
[*CONFIDENTIAL MATERIAL DELETED*]. Exhibit A/SubA provides
prices which are firm fixed from [*CONFIDENTIAL MATERIAL
DELETED*] until [*CONFIDENTIAL MATERIAL DELETED*]"," as well as
planning prices applicable to the second half of [*CONFIDENTIAL
MATERIAL DELETED*].
If Encore agrees"," as a minimum"," to accept these planning
prices (based on [*CONFIDENTIAL MATERIAL DELETED*]
$[*CONFIDENTIAL
MATERIAL DELETED*] per GB for a subsystem with [*CONFIDENTIAL
MATERIAL DELETED*] MB cache"," [*CONFIDENTIAL MATERIAL DELETED*]
channels and [*CONFIDENTIAL MATERIAL DELETED*] nodes) for the
second
half of [*CONFIDENTIAL MATERIAL DELETED*] at the [*CONFIDENTIAL
MATERIAL DELETED*] pricing review"," then the Amdahl purchase
commitment
in Section 4.C.b.) shall remain firm for the entire calendar year
[*CONFIDENTIAL MATERIAL DELETED*]. The [*CONFIDENTIAL MATERIAL
DELETED*] review shall set pricing for the period from
[*CONFIDENTIAL MATERIAL DELETED*] through [*CONFIDENTIAL MATERIAL
DELETED*]. If Encore cannot provide the planning pricing or
better for the second half of [*CONFIDENTIAL MATERIAL DELETED*]
","then the current Amdahl terabyte commitment for the second
half
of [*CONFIDENTIAL MATERIAL DELETED*] of [*CONFIDENTIAL MATERIAL
DELETED*] terabytes (as may be reduced by any credit or permitted
reduction) will be subject to renegotiation along with the
renegotiation of the second half pricing.
13.) Subsection c.) of Section 7 B is replaced in its
entirety by the following:
c.) Exhibit A and Exhibit A/Mod 0 and Exhibit A/SubA will be
amended to reflect any changes agreed by the parties during the
review sessions described above.
Encore may discontinue a Product upon six (6) months prior
written notice"," provided it makes available to Amdahl"," upon
essentially the same terms and conditions as are contained in
this Agreement"," a follow-on or replacement product (including
the Features and Functions specified in Section 2.E) with
substantially the same form"," fit"," function and performance
characteristics of the discontinued Product.
Encore may also discontinue a Product if an Encore supplier
discontinues supply of a Product part or component"," and Encore
is unable to find a substitute upon reasonable commercial terms.
Encore will give notice of such discontinuance promptly upon
receipt of such notice from the supplier.
In the event that a substitute Product"," or Product part or
component"," cannot be obtained by Encore on reasonable
commercial terms"," then an equitable adjustment will be made to
Amdahl's remaining volume commitment.
14.) The following sentence is added at the end of subsection g.)
of Section 7B:
As to the Remaining Period"," in the event that the parties
cannot agree on the prices for Products which shall apply to
purchases made during the remaining six (6) month period"," then
the parties agree to refer the matter to a third party arbitrator
for resolution of the issue.
15.) Section 7B is further amended by the addition of subsections
h.) and i.) as follows:
h.) Encore is providing subassembly pricing as requested by
Amdahl by the addition of Exhibit A/SubA .
i.) Prices for Products which were ordered by Amdahl on
Orders properly submitted to Encore in accordance with the
provisions of Section 4 and Exhibit J hereof"," or accepted in
writing by Encore"," and which are delivered late by Encore","
will be the prices in effect at the date of delivery of such
Products.
16.) Section 14 is amended by replacing each occurrence of the
words Exhibit B with the words Exhibit B and Exhibit B-1.
Section 14 A and Section 14 B are also amended by adding the
following words to the parenthetical phrases in the first lines
of Section 14.A and 14.B: and, unless otherwise specifically
agreed in writing by the parties, any other Product shipped
before General Availability.
17.) The following sentence shall be added at the end of
subsection F of Section 18:
In addition"," licenses bought to inventory by
Amdahl","licenses which have been purchased by Amdahl"," and
internal
license purchased by Amdahl shall not be affected by such
termination.
18.) All references to the words Exhibit A in Section 18 and
Section 30 are replaced by the words Exhibit A, Exhibit A/Mod 0
and Exhibit A/SubA.
19.) Exhibit D is hereby amended by replacing all references to
Exhibit E in Section 8 by the words Exhibit A, Exhibit A/Mod 0,
Exhibit A/SubA, or Exhibit C.
20.) Section 25D is replaced in its entirety by the following:
a.) In the event that Encore intentionally or materially
breaches the grant to Amdahl in Section 2G of exclusivity and
Encore does not correct this breach to Amdahl's satisfaction
within thirty (30) days after the earlier of receipt of written
notice from Amdahl to do so or actual knowledge of any such
breach is attained at Encore's corporate management level"," then
Amdahl may reduce its purchase commitment by an amount equal to
double the amount sold by Encore in contravention of the
exclusivity.
For the purposes of this subsection a.)"," a material breach
of the exclusivity commitment in section 2G shall be defined to
be sales of a total of [*CONFIDENTIAL MATERIAL DELETED*]
terabytes (cumulative) or more in any one calendar year made by
Encore in violation of Encore's grant of exclusivity in Section
2G hereof.
b.) In the event that Encore delays the schedule for
General Availability for future products or features which are
added to this Agreement"," then Amdahl's commitment to purchase
[*CONFIDENTIAL MATERIAL DELETED*] TB of Product in [*CONFIDENTIAL
MATERIAL DELETED*]"," or any other then current purchase
commitment"," shall be reduced by an amount equivalent to
[*CONFIDENTIAL MATERIAL DELETED*] percent for each week of the
delay. As to the Features with schedules set forth in Attachment
1 to Exhibit H"," if the schedule for any one or more of such
Features is delayed beyond the dates set forth in Attachment 1 to
Exhibit H"," then the total reduction for delay of one or more
features which may be taken by Amdahl will be [*CONFIDENTIAL
MATERIAL DELETED*] percent for each week of the delay without
double counting for overlap periods.
c.) If the [*CONFIDENTIAL MATERIAL DELETED*] requirements in
the G/A document attached hereto as Attachment 1 to Exhibit H
","are not met by that date"," then Amdahl's commitment to
purchase
[*CONFIDENTIAL MATERIAL DELETED*] TB of Product in [*CONFIDENTIAL
MATERIAL DELETED*] contained in Section 4C shall be reduced pro-
rata after
[*CONFIDENTIAL MATERIAL DELETED*] by an amount
equivalent to [*CONFIDENTIAL MATERIAL DELETED*] percent of the
total
commitment for each week of the delay.
d.) If"," after G/A has occurred"," Encore fails to deliver
a material quantity of Products for a period of ninety (90) days
after written notice of such failure has been given by Amdahl to
Encore and the Products were ordered by Amdahl on Orders properly
submitted to Encore in accordance with the provisions of Section
4 and Exhibit J hereof"," or such Orders were accepted in writing
by Encore then Amdahl shall be entitled to reduce its total
Storage Product purchase commitment contained in Section 4C or
any other then current purchase commitment by an amount
equivalent to the quantity of Products which Encore failed to
deliver.
If Encore's failure to deliver as set forth above is not due
to an excusable delay"," or to a permitted Product
discontinuance","then Amdahl will have the right to substitute
components or
subassemblies.
e.) If Encore's Successor at Interest
1.) wrongfully terminates this Agreement; or
2.) fails to deliver a material quantity of Products after
G/A has occurred for a period of ninety (90) days after written
notice of such failure has been given by Amdahl to Encore"," or
the Products were ordered by Amdahl on Orders properly submitted
to Encore in accordance with the provisions of Section 4 and
Exhibit J hereof"," and such Orders were accepted in writing by
Encore"," and such failure to deliver is not due to an excusable
delay"," or to a permitted Product discontinuance"," then Amdahl
will have the right to receive Consequential Damages from
Encore's Successor at Interest in an amount equal to twice the
Termination Fee defined in subsection g.) below.
f.) If"," after General Availability has occurred"," Encore
fails to ship a material quantity of Product which was properly
ordered by Amdahl on Orders properly submitted to Encore in
accordance with the provisions of Section 4 and Exhibit J hereof
","or such Orders were accepted in writing by Encore"," for a
period
of sixty (60) days after the original contracted date for such
shipment and such failure is not due to
a.) an excusable delay or
b.) a permitted Product discontinuance
and Encore continues to fail to ship such material quantity of
Product for a period of sixty (60) days after written notice of
such failure has been given by Amdahl to Encore"," then such
failure will constitute a Release Condition pursuant to Section
10 of the Technology Escrow Agreement.
g.) Amdahl may terminate its then current purchase
commitment without cause upon one hundred and eighty (180) days
prior written notice to Encore and the payment of a termination
fee equal to [*CONFIDENTIAL MATERIAL DELETED*] percent
[*CONFIDENTIAL MATERIAL DELETED*] (%) of the then current
purchase commitment (less any Credit or permitted reduction)
remaining after 180 days (referred to herein as the Termination
Fee). This provision for termination at will by Amdahl is
effective only for calendar year [*CONFIDENTIAL MATERIAL
DELETED*] and thereafter. In this event"," Amdahl's exclusive
rights granted in Section 2G will terminate 180 days after the
giving of such notice.
h.) If [*CONFIDENTIAL MATERIAL DELETED*] G/A occurs after
[*CONFIDENTIAL MATERIAL DELETED*] then Storage Product inventory
that Amdahl has on hand as of [*CONFIDENTIAL MATERIAL DELETED*]
shall count as a credit against Amdahl's purchase commitment for
[*CONFIDENTIAL MATERIAL DELETED*].
21.) Exhibit H is amended by the parties by the addition of
Exhibit H/Attachment 1"," which is attached hereto and
incorporated herein by reference. Attachment 1 describes the
criteria which shall apply for achieving G/A"," and contains G/A
dates for the Products and Features.
22.) Exhibit K"," which is attached hereto and incorporated
herein by reference"," is added to this Agreement and the index
is amended accordingly.
23.) The current Section 6 language is hereby made subsection a.)
and the following subsection b.) is added as follows:
b.) The parties hereby agree that the language regarding
performance targets criteria set forth in the second paragraph
of the first page of Appendix E of Exhibit B is replaced in its
entirety by the following:
Performance Criteria
Performance Criteria
Encore agrees to meet the following performance criteria for
a configuration of Exhibit A Products as set forth below:
The [*CONFIDENTIAL MATERIAL DELETED*] is used as the
benchmark for comparison.
The throughput as measured in the [*CONFIDENTIAL MATERIAL
DELETED*] is used as the comparison metric.
1.) An Encore Storage Product comparable configuration
(i.e."," [*CONFIDENTIAL MATERIAL DELETED*] Gigabytes) will yield
a throughput level which is a [*CONFIDENTIAL MATERIAL DELETED*] %
performance improvement beyond the above [*CONFIDENTIAL MATERIAL
DELETED*] benchmark configuration by [*CONFIDENTIAL MATERIAL
DELETED*].
Encore undertakes that the price of the Encore configuration
will not exceed the current transfer price for the configuration
in the example below.
An example mix of components for an $[*CONFIDENTIAL MATERIAL
DELETED*] configuration is shown below. The mix and number of
components is subject to change by Encore"," but at no additional
cost to Amdahl:
[*CONFIDENTIAL MATERIAL DELETED*]
2.) An Encore Storage Product comparable configuration (i.e.
[*CONFIDENTIAL MATERIAL DELETED*] Gigabytes) will yield a
throughput level which is a [*CONFIDENTIAL MATERIAL DELETED*]%
performance improvement beyond the above [*CONFIDENTIAL MATERIAL
DELETED*] benchmark configuration by [*CONFIDENTIAL MATERIAL
DELETED*].
Encore undertakes that the price of the Encore configuration
will not exceed the current transfer price of the configuration
in the example below.
An example mix of components for a $[*CONFIDENTIAL MATERIAL
DELETED*] configuration is shown below. The mix and number of
components is subject to change by Encore"," but at no additional
cost to Amdahl.
[*CONFIDENTIAL MATERIAL DELETED*]
3.) Encore reserves the right to meet these performance
requirements set forth above using alternative or additional
components without exceeding the dollar price to Amdahl set forth
above for each configuration.
Note: The prices for the two example configurations shown
above are subject to change with any pricing changes negotiated
by the parties to the subassembly prices which make up these
configurations.
24.) Section 15 B is amended by replacing the words
[*CONFIDENTIAL MATERIAL DELETED*] DOLLARS ($[*CONFIDENTIAL
MATERIAL DELETED*]) with the words [*CONFIDENTIAL MATERIAL
DELETED*] DOLLARS ($[*CONFIDENTIAL MATERIAL DELETED*])"," and by
adding the following sentence to the end of Section 15B: THIS
SECTION 15B SHALL NOT APPLY WITH REGARD TO THE PROVISIONS OF
SUBSECTION e.) OF SECTION 25 D.
Section 15 B is further amended by addition of the
following: Consequential Damages"," as the term is used in this
Agreement"," will not be deemed to included Amdahl's cost of
procuring"," developing or modifying substitute products"," costs
of transportation"," storage and other incidental costs and
expenses.
25.) Subsections 1.) and 2.) of Section 25 B containing a list of
the two specific events which shall be considered material breach
by Encore are deleted and replaced in their entirety by the
following:
Encore is unable for any reason"," other than an excusable
delay or a Product discontinuance in accordance with Section 7B
","to materially deliver Product for a period of more than ninety
(90) days after the original shipment date for Orders accepted by
Encore.
There is also added to Section 25 B a new subsection c.) as
follows:
c.) If the General Availability date set forth in
Attachment 1 to Exhibit H is delayed past [*CONFIDENTIAL MATERIAL
DELETED*]. In the event of such delay past [*CONFIDENTIAL
MATERIAL DELETED*]"," Amdahl shall have until [*CONFIDENTIAL
MATERIAL DELETED*]to exercise its rights with regard to this
provision. This provision is not subject to a cure period.
26.) Section 15 F is amended by replacing the words obligation
under 4C by the words purchase commitment obligations under
subsections a.) and b.) of Section 4C, as well as under any
extended exclusivity period pursuant to Section 4E"," and is also
further amended by replacing the words for delivery during
[*CONFIDENTIAL MATERIAL DELETED*] by the words for delivery
during [*CONFIDENTIAL MATERIAL DELETED*], and any period of
extension of Amdahl's exclusivity pursuant to Section 4E.
Section 15 C is amended by adding the words Except as
provided in section 25 D. e.) at the beginning of the Section.
Section 15 E is amended by adding the words or C after B.
There is added a new Subsection 15 F. 1.) as follows:
1.) Anything to the contrary in this section 15 F or any
other Section"," Encore's sole remedy and Amdahl's sole liability
for the failure to pay for any Product or Feature that it accepts
for delivery before it has achieved General Availability shall
be the purchase price of the Product(s). The foregoing
limitation of liability does not constitute an acknowledgment of
liability by Amdahl.
27.) The following Section 4F is added as follows:
F. AGREEMENT REGARDING OPERATIONAL FLEXIBILITY
Operational procedures for the first half of [*CONFIDENTIAL
MATERIAL DELETED*] will remain as currently agreed. The parties
agree to develop new operating procedures for the second half of
[*CONFIDENTIAL MATERIAL DELETED*] with the following goals:
Ordering
Amdahl will use monthly rolling ordering increments
and monthly forecasts with a [*CONFIDENTIAL MATERIAL
DELETED*]month horizon. Product lead time will be
months.
Quarterly spread-
a) Q1 - [*CONFIDENTIAL MATERIAL DELETED*]%; Q2 -
[*CONFIDENTIAL MATERIAL DELETED*]%; Q3 - [*CONFIDENTIAL MATERIAL
DELETED*]%; Q4 - [*CONFIDENTIAL MATERIAL DELETED*]%
b) any quarter can vary by +/- [*CONFIDENTIAL MATERIAL
DELETED*]%. The total commitment to remain as previously
agreed.
28.) Section 7D and 7E are added as follows:
D. FEATURE/FUNCTION PRICING
The following pricing principle will apply for new features
and functions which may be added to the Product during the term
hereof:
If Amdahl's storage competitors in the marketplace generally
charge an extra fee for any new feature or function which Encore
develops for Amdahl in addition to the price charged for a
storage system"," then (and only then) Encore will charge Amdahl
an extra fee for such feature or function.
E. CREDIT FOR RETURN OF ALPHA AND ENGINEERING PROTOTYPE
SYSTEMS
If Amdahl elects to return any one or all of the Alpha
systems or Engineering Prototype Systems which it has purchased
from Encore" then Encore agrees to grant full credit to Amdahl
respectively for the purchase of each such system against the
cost of the new system which Amdahl purchases to replace it.
29.) Section 27 is amended as follows:
a.) The first sentence of Section 27 a.) is replaced with
the following sentence:
Each of the following events will constitute a Release
Condition pursuant to Section 10 of the Technology Escrow
Agreement.
b.) Section 27 b.) is replaced in its entirety by the
following:
The fees payable by Amdahl to Encore for the escrow
contemplated by the Technology Escrow Agreement shall be
calculated to cover Encore's reasonable costs to initiate and
maintain the escrow, and shall be no greater than:
Initial Deposit and first year's semiannual update---
$[*CONFIDENTIAL
MATERIAL DELETED*]
Semi-annual updates during each succeeding year--
$[*CONFIDENTIAL
MATERIAL DELETED*]
Encore acknowledges that the Technology Escrow Agreement and
the Manufacturing License, and the ability of Amdahl to have
access to the [*CONFIDENTIAL MATERIAL DELETED*] technology are
important
to Amdahl. Therefore, Encore agrees that Amdahl may terminate
this
Agreement if either the Technology Escrow Agreement or the
Manufacturing License is not executed by Encore within ninety
(90) days after the date of execution of this Amendment 1, or if,
[*CONFIDENTIAL MATERIAL DELETED*] as a Third Party Supplier under
the Technology Escrow Agreement, has not within the same ninety
(90) day period agreed in writing to grant Amdahl the license
agreement referred to in Section 10 of the Technology Escrow
Agreement upon reasonable commercial terms.
30.) The following paragraph is added as Section 2 N:
N. EARLY PURCHASES
Amdahl's election to purchase a product for customer resale
before Product meets the G/A criteria in Exhibit H shall not
waive the G/A requirements nor affect the remedies available for
failure to meet G/A in accordance with the requirements as set
forth herein.
The parties hereby ratify and affirm said Agreement in all
other particular respects.
In witness whereof the parties have executed this
Amendment 1 this 30 day of September, 1994.
ENCORE COMPUTER CORPORATION AMDAHL CORPORATION
By: T. Mark Morley By: Ericka Williams (GM)
TITLE: V.P.
By: M.C. Master (VP)
Title
DATE: 9/30/94 DATE: 9-30-94
EXHIBIT A/MOD 0
ENCORE MODEL 0 STORAGE PRODUCTS AND PRICING
ENCORE MODEL 0 Price List
Cache OEMI Amdahl
Description Capacity Size Channels Cost
MODEL 0-1 [*CONFIDENTIAL MATERIAL DELETED*]
Including:
[*CONFIDENTIAL MATERIAL DELETED*]
MODEL 0-2 [*CONFIDENTIAL MATERIAL DELETED*]*
Including:
[*CONFIDENTIAL MATERIAL DELETED*]
MODEL 0-3 [*CONFIDENTIAL MATERIAL DELETED*]
Including:
[*CONFIDENTIAL MATERIAL DELETED*]
ENCORE MODEL 0 Price List
Cache OEMI Amdahl
Description Capacity Size Channels Cost
MODEL 0-4 [*CONFIDENTIAL MATERIAL DELETED*]
Including:
[*CONFIDENTIAL MATERIAL DELETED*]
MODEL 0-5 [*CONFIDENTIAL MATERIAL DELETED*]
Including:
[*CONFIDENTIAL MATERIAL DELETED*]
*Configuration is priced at $[*CONFIDENTIAL MATERIAL DELETED*]
per Megabyte
Model 0 Options
# Slots Amdahl
Description Capacity Required Cost
[*CONFIDENTIAL MATERIAL DELETED*]
EXHIBIT A/SUBA
SUBASSEMBLY PRICING
[*CONFIDENTIAL Disk Cache No. OEMI
MATERIAL Transfer
DELETED*] Prices
Qty Description (GB) (MB) Slot No.Ch. Price
[*CONFIDENTIAL MATERIAL DELETED*]
[*CONFIDENTIAL Disk Cache No. OEMI Transfer
Prices
MATERIAL
DELETED*]
Qty Description (GB) (MB) Slot No.Ch. Price
[*CONFIDENTIAL MATERIAL DELETED*]
Q2* Prices Disk Cache No. OEMI Transfer
Qty Description (GB) (MB) Slot No.Ch. Price
[*CONFIDENTIAL MATERIAL DELETED*]
Qty Description (GB) (MB) Slot No.Ch.Price
[*CONFIDENTIAL MATERIAL DELETED*]
H2* Prices (Planning Disk Cache No. OEMI Transfer
Prices)
Qty Description (GB) (MB) Slot No.Ch.Price
[*CONFIDENTIAL MATERIAL DELETED*]
EXHIBIT B-1
SPECIFICATION FOR ENCORE MODEL 0 STORAGE PRODUCT
Encore Storage Product
Model 0
Table of Contents
Specification History . . . . . . . . . . . . . . . . . . . . . .
. . . . .
Product Objectives . . . . . . . . . . . . . . . . . . . . . . .
. . . . .
Architectural Overview . . . . . . . . . . . . . . . . . . . . .
. . . . .
Product Description . . . . . . . . . . . . . . . . . . . . . . .
. . . . .
Product Configurations . . . . . . . . . . . . . . . . . . . . .
. . . . .
Product Pricing . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . .
Compatibility . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . .
Control Unit Image . . . . . . . . . . . . . . . . . . . . . . .
. . . . .
Channel Protocols . . . . . . . . . . . . . . . . . . . . . . . .
. . . . .
Configuration . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . .
Features . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . .
ESCON Compatibility . . . . . . . . . . . . . . . . . . . . . . .
. . . . .
Functional Software . . . . . . . . . . . . . . . . . . . . . . .
. . . . .
Device Image . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . .
DASD Management . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . .
Media Maintenance . . . . . . . . . . . . . . . . . . . . . . . .
. . . . .
Tuning and optimization . . . . . . . . . . . . . . . . . . . . .
. . . . .
Future Connectivity Options . . . . . . . . . . . . . . . . . . .
. . . . .
Manufacturing ISO Certification . . . . . . . . . . . . . . . . .
. . . . .
Environmental . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . .
Clarification of Specification . . . . . . . . . . . . . . . . .
. . . .
Encore Storage Product Specification
[*CONFIDENTIAL MATERIAL DELETED*]
EXHIBIT K
ENCORE STORAGE PRODUCTS
[*CONFIDENTIAL MATERIAL DELETED*]
EXHIBIT L
MANUFACTURING LICENSE
DRAFT
MANUFACTURING LICENSE
BETWEEN
AMDAHL CORPORATION
AND
ENCORE COMPUTER CORPORATION
WHEREAS The parties hereto have entered into a Reseller Agreement
dated March 23, 1994 as amended by Amendment 1 of even date
herewith (as amended, the Reseller Agreement) whereby Amdahl
Corporation (Amdahl) has the right in certain circumstances to a
non-exclusive license to manufacture Products (as such term is
defined in the Reseller Agreement).
NOW, THEREFORE, IT IS AGREED between the parties hereto that the
following terms and conditions shall apply upon the occurrence of
any one of the circumstances (the Events) set forth in Section
25D f.) or Section 27 a.) (1) or (2) of the Reseller Agreement
referred to above, together with delivery of the Deposit pursuant
to Section 10 of the Technology Escrow Agreement of even date
herewith (the Escrow);
1. Definitions and Interpretations
(a) Capitalized terms used herein without definition shall
have the meanings ascribed to them in the Escrow and the
Reseller Agreement.
(b) Proprietary Information means information relating to
any patent, trademark, registered design, copyright or any other
similar right or asset registered or and any know-how and any
confidential information data or process relating to the Product
which is specifically identified in writing as proprietary.
(c) (i) Unless the context otherwise requires the
masculine gender shall be deemed to include the feminine and
neuter and the singular number shall be deemed to include the
plural and vice versa.
(ii) The Section headings are for convenience of
reference only and shall not affect the construction or
interpretation hereof.
2. Grant of Rights
Encore grants to Amdahl in accordance with the following
terms and conditions a current, non-exclusive license to fully
utilize the materials delivered pursuant to Section 10 of the
Escrow to manufacture, or cause to be manufactured, develop, and
support the Product and to make improvements and enhancements
thereto, together with the same rights as granted in the Reseller
Agreement to sell and distribute the Products so manufactured.
Without limiting, qualifying or conditioning this Agreement in
any way, Amdahl agrees that it will not exercise its rights to
the license granted herein until delivery to it of the materials
on Deposit in the Escrow has occurred pursuant to Section 10 b.)
of said Escrow. Amdahl must obtain agreement in writing from all
third party vendors whose Products are included in the Third
Party Product Deposit (the Third Party Vendors) to permit
Amdahl to manufacture or license those Third Party Products
contained in the Third Party Product Deposit. Amdahl shall be
solely responsible for payment of any license fee required by any
such Third Party Vendors in conjunction with their agreement to
grant such license. Such Products owned by Third Party Vendors
(the Third Party Products) will be released by the Escrow
Holder to Amdahl only if the provisions of Section 10 c.) of the
Escrow are satisfied. The non-exclusive license herein granted
shall be limited to a license of and under all intellectual or
industrial property or knowhow which Encore now owns in its sole
right or controls in its sole right, or hereafter shall own in
its sole right or control in its sole right relating to
manufacture of the Encore owned portions of the Product.
Encore represents to Amdahl that the materials deposited in
conjunction with the Escrow will be sufficient to manufacture the
Products. If in order to manufacture the Products additional
materials are required beyond those placed on deposit by Encore,
Encore agrees to deposit such additional materials and related
information with the Escrow Holder upon request from Amdahl.
3. Royalty Obligation
Amdahl agrees to pay Encore a royalty of [*CONFIDENTIAL
MATERIAL DELETED*]per cent [*CONFIDENTIAL MATERIAL DELETED*](%)
of the
direct Product revenues actually received from sales by Amdahl
directly
and/or through its Product distribution channels.
Such royalties shall be initially retained by Amdahl and
applied to
reimburse Amdahl's expenses of preparing for manufacture of the
Products by
Amdahl. After all such reimbursement expenses
have been paid to Amdahl from retained royalties, Amdahl shall
commence
making royalty payments to Encore in the manner set forth below.
4. Payment
(a) Payment for royalties due to Encore pursuant to Section
3 above will be made quarterly by Amdahl within thirty (30) days
of the
close of each calendar quarter for the Products referred to in
Section 3
sold during the previous quarter. A sale shall be deemed to
occur for the
purpose of royalties hereunder when the proceeds of said sale are
received
by Amdahl during said period and will include the total money
amount
received by Amdahl from the sale of a Product referred to in
Section 3
excluding freight, taxes and maintenance charges. Amdahl shall
be solely
responsible for the payment of any royalties due to Third Party
Vendors as
a result of any agreements reached with such Third Party Vendors
for the
manufacturing or licensing of said Third Party Vendor's Products
in
conjunction herewith.
(b) All payments hereunder shall be made in US dollars by
bank electronic transfer to Encore's account.
(c) All payments to be made by Amdahl hereunder shall be
made without deduction or withholding except where Amdahl is
required by law to make any deduction or withholding, in which
event Amdahl
shall furnish Encore with an appropriate certificate of an
executive officer
of Amdahl certifying as to the amount to be deducted or withheld
and the
reason therefore. Amdahl shall remit to Encore such additional
amounts as
may be necessary to ensure that Encore receives an amount equal
to the full
amount which it would have received had no such deduction or
withholding
been made.
5. Accounting
Amdahl shall maintain at its principal place of business
true and accurate records and books of account which shall show
all Products manufactured by it and sold, including returns and
credits. These books of account shall be open to inspection and
audit no more frequently than once annually by Encore's
independent accounting representative during normal business
hours upon reasonable written notice to Amdahl. Upon request by
Amdahl, Encore shall provide Amdahl with copies of all reports,
working papers and other writings prepared in connection with any
such inspection or audit. The amount of any discrepancy shall
promptly be paid to the appropriate party.
6. Necessary Documents/Consultancy
Encore shall render to Amdahl such services in a consulting
capacity as may be reasonable necessary and to the extent that
Encore is reasonably able to provide the same in order to
instruct Amdahl, or its authorized representative, in all
operations pertaining to the manufacture of the portions of the
Product owned by Encore and to establish a manufacturing facility
and Amdahl shall pay Encore for the provision of such consulting
services at such reasonable rate per man hour as may from time to
time be determined by Encore and within thirty (30) days of
invoice.
7. Assignments
Neither party shall assign its rights and benefits under
this Agreement without the prior written consent of the other and
Amdahl shall not sub-license its rights hereunder except for the
purpose of subcontracting the manufacture of the whole or part of
the system under written non-disclosure agreement which protects
the proprietary nature of the Product; provided, however, that a
successor in interest by merger, operation of law, assignation,
purchase or otherwise of the entire business of either party
shall be entitled to acquire all interest of such party hereunder
without the necessity of obtaining prior written consent.
8. Protection of Proprietary Information
Amdahl agrees that the Proprietary Information provided by
Encore under the Escrow for use hereunder is secret and
confidential to Encore and Amdahl undertakes to do all such
things and execute all such documents as shall be necessary for
the purpose of (1) protecting the Proprietary Information
relating to the Product which is the subject of the Reseller
Agreement; and (2) preventing disclosure or divulgence to and use
by unauthorized third parties. Amdahl further undertakes not to
use the Proprietary Information or any part thereof for any
purposes except as set forth above for the manufacture either by
itself or by its duly authorized sub-contractor under written
non-disclosure agreement which protects the proprietary nature of
the Product and sale of those portions of the Product belonging
to Encore and its suppliers or as otherwise permitted by Encore.
The obligations of Amdahl as set forth in this Section shall
survive the termination of this Agreement for a period of five
(5) years after said termination. These obligations of
confidentiality shall cease to apply to any information which
may come into the public domain other than as a result of any
breach by Amdahl of its obligations hereunder, or as a result of
information that is independently developed by Amdahl, or as a
result of information that is received by Amdahl from a source
other than Encore and without restrictions.
9. Responsibility, Proceedings etc.
Encore shall not be responsible for any claims, losses,
damages, costs, expenses, or all other liabilities which may
occur from the manufacture, development, service, use or sale of
Products or any portion thereof made by Amdahl pursuant to the
license granted by this Agreement, or under any license obtained
from a Third Party Vendor related hereto. In the event that
information is brought to the attention of Amdahl indicating that
others without license are unlawfully infringing on the rights
granted by this Agreement, Amdahl shall report the same to Encore
in a timely fashion.
10. Duration
This Agreement shall commence on the date of execution
hereof and shall (subject as herein provided) continue in force
until terminated as provided below in Section 11.
11. Termination
(a) This Agreement shall terminate automatically upon
expiration of the term of the Reseller Agreement or the
termination of the Reseller Agreement pursuant to Section 25
A(a), (b), and (c) or Section 25 B (a).
(b) Encore shall have the right to terminate this
Agreement at any time after its commencement by immediate notice
in writing
to Amdahl upon the happening of any of the following events:
Amdahl shall be in arrears in its payment of royalties, or
any other payment hereunder, or Amdahl shall fail to perform any
of the other terms and conditions of this Agreement, and such
arrearage or failure continues for a period of thirty (30) days
after written notice has been served on Amdahl by Encore
requiring such arrearage or failure to be remedied.
(b) Upon the termination of this Agreement the license
granted herein shall cease, and
(i) Amdahl shall forthwith return to Encore all data
sheets, application notes, literature, technical information and
all other documents, data or things of any nature whatsoever
relating to the Product whether received from Encore or prepared
or produced by Amdahl under the provisions of this Agreement;
and
(ii) Amdahl shall thereafter have the right to sell any
inventory of the Product manufactured by Amdahl (or systems into
which such inventory are integrated) remaining unsold and to
fulfill orders to which it has committed delivery in writing
prior to the termination of this Agreement subject to the payment
to Encore of royalty in respect thereof at the rate and in the
manner herein before provided but shall not otherwise manufacture
or endeavor to manufacture the Product and sell Products
manufactured by it.
12. Governing Law
This Agreement shall be governed by and construed in all
respects in accordance with the laws of the State of Florida.
13. Status of Parties
It is expressly agreed and understood that the relationship
of the parties hereto shall be that of independent contractors
and neither party, nor their agents or employees, shall be deemed
to be the agent of the other; nor shall either party have the
right to bind the other, transact any business in the other's
name, or in its behalf in any manner or form, make any promise or
representation, or incur any liability, direct or indirect,
contingent or fixed, for or on behalf of the other.
14. Notices
All notices and any other communications pertaining to this
Agreement shall be made in writing and shall be given either by
personal delivery or by mail or telecopy, and shall be deemed to
have been given or made when personally delivered or ninety six
(96) hours after mailing; or, if by telecopy, three (3) hours
after transmission. In proving service it shall be sufficient to
prove that the envelope containing such notice or other
communication was properly stamped and put in the mail and
addressed
if to En,"core: Encore Computer Corporation
6901 W. Sunrise Boulevard
P.O. Box 409148
Fort Lauderdale, FL 33340-9148
Attn: General Counsel
if to Amdahl: Amdahl Corporation
1240 East Arques Avenue
Sunnyvale, CA 94088-3470
Attn: General Counsel
Either party may change its address for the purpose of this
Section 15 by giving written notice of such change to the other
party in the manner provided in this Section.
15. Entire Agreement
This Manufacturing License Agreement, together with the
relevant portions of the Reseller Agreement, and the Technology
Escrow Agreement contains the entire understanding and agreement
of the parties with respect to the manufacturing rights granted
herein. The parties hereto may from time to time during the
continuance of this Agreement modify, vary or alter any of the
provisions of this Agreement only by a written instrument duly
executed by both parties hereto.
16. Additional Documents
Each party hereto agrees to execute such additional
documents to bring into effect the terms and provisions of this
Agreement as may reasonably be requested by the other party.
IN WITNESS WHEREOF the parties hereto have executed this
Agreement as follows:
ENCORE COMPUTER CORPORATION AMDAHL CORPORATION
By: T. Mark Morley By: Erika Williams (G.M.)
Title: V. P. Title:
By: M.C. Master (V.P.)
Title:
DATE: 9/30/94 DATE: 9-30-94
EXHIBIT M
TECHNOLOGY ESCROW AGREEMENT
TECHNOLOGY ESCROW AGREEMENT
Account Number_____________
This Technology Escrow Agreement including any Exhibits and
Addenda (the Agreement) is effective this ___day of
________,19__, by and between Data Securities International
(Escrow Holder), Encore Computer Corporation (Encore) and
Amdahl Corporation (Amdahl).
Notices to Encore, Amdahl and Escrow Holder should be sent
to the parties as identified in the attached Exhibit A.
WHEREAS, Encore and Amdahl have entered into a Reseller
Agreement dated March 23, 1994 which is amended by Amendment 1 of
even date herewith (as amended, the Reseller Agreement);
WHEREAS, Encore and Amdahl have entered into a
Manufacturing License (the License) of even date herewith which
licenses the use of the Deposits made hereunder under certain
particular conditions as set forth in the Reseller Agreement;
WHEREAS"," Encore and Amdahl desire this Technology
Escrow Agreement to be supplementary to the License pursuant to
11.U.S.C. Section 365(n);
WHEREAS"," availability of or access to certain
proprietary data relating to the proprietary technology and other
materials is critical to Amdahl in the conduct of its business;
WHEREAS"," Encore has deposited or will deposit with
Escrow Holder the related proprietary data to provide for
retention and controlled access for Amdahl under certain
specified conditions;
NOW THEREFORE"," for good and valuable consideration"," the
receipt of which is hereby acknowledged"," and in consideration
of the promises"," mutual covenants and conditions contained
herein","the parties hereto agree as follows:
1. Encore Deposit Account. Following the execution of
this Agreement and the payment of the set-up and deposit fees to
Escrow Holder"," Escrow Holder shall open a Deposit Account for
Encore. The opening of the account means that Escrow Holder
shall establish an account ledger in the name of Encore and that
Encore shall receive renewal notices as provided in Section 7.
Unless and until Encore makes an Initial Deposit with Escrow
Holder"," Escrow Holder shall have no obligation to Encore except
as defined by this Section.
Encore acknowledges that each of this Agreement and the
License is an agreement supplementary to the License between the
parties as provided in Section 365 (n) of the U.S. Bankruptcy
Code. Encore acknowledges that if Encore as a debtor-in-
possession or a
trustee-in-bankruptcy (collectively Trustee) in
a case under the Bankruptcy Code rejects the License or this
Agreement"," Amdahl may elect to retain its rights under that or
this Agreement as provided in Section 365 (n) of the Bankruptcy
Code. After the commencement of a case under the Bankruptcy Code
by or against Encore"," and unless and until the License is
rejected"," upon written request of Amdahl"," Trustee shall (i)
not interfere with the rights of Amdahl as provided in the
License and this Agreement"," including the right to obtain the
escrowed materials from the Escrow Holder and (ii) provide the
escrowed materials to Amdahl. If Trustee rejects the License or
this Agreement and Amdahl elects to retain its rights"," upon
written request of Amdahl"," Trustee shall provide the escrowed
materials to Amdahl.
2. Initial Deposit. The Initial Deposit will consist of
all material initially supplied by Encore to Escrow Holder as
specified by an accompanying document or documents called
Description of Deposit Materials. The Deposit shall consist of
two parts: Part One shall consist of material wholly owned by
Encore (the Encore Product Deposit)"," hereinafter referred to as
an Exhibit B; Part Two shall consist of material owned by Third
Party Suppliers of Encore (the Third Party Product Deposit)
","hereinafter referred to as an Exhibit Ba. Escrow Holder shall
issue to Encore and Amdahl a copy of the initial Exhibits B and
Ba within ten (10) days of acceptance by Escrow Holder of the
Initial Deposit.
3. Deposit Changes. Encore will update the Deposit with
supplemental or replacement materials (Deposit Changes) every six
months.
a. Supplemental Deposit. A Supplemental Deposit will
include any materials added to the Deposit. Encore will submit
any Supplemental Deposit accompanied by an Exhibit B or Ba.
Within ten (10) days by Escrow Holder of such Supplemental
Deposit"," Escrow Holder shall notify Encore and Amdahl by
issuing a copy of the Exhibit B and Ba.
b. Replacement Deposit. Replacement Materials
replace the existing Deposit defined by Exhibit B(s) or Ba(s).
Encore will submit any Replacement Materials accompanied by an
Exhibit B or Ba(s). Within ten (10) days of acceptance by Escrow
Holder of such Replacement Materials"," Escrow Holder shall
notify Encore and Amdahl by issuing a copy of the replacement
Exhibit B or Ba. Escrow Holder will return to Encore all
materials that are supplanted by the Replacement Materials.
4. Deposit Inspection. Upon the receipt of the Initial
Deposit materials and any Deposit Changes"," Escrow Holder will
visually match the listed items on the Exhibit B or Ba to the
labeling of such materials. Escrow Holder shall not be
responsible for verifying the contents or validating the accuracy
of Encore's labeling. Acceptance of the Deposit will occur only
when Escrow Holder concludes that the Deposit inspection is
complete; which conclusion shall not be unreasonably withheld.
5. License Registration Account. Following the execution
of this Agreement and the payment of the set-up"," deposit and
registration fee to Escrow Holder"," Escrow Holder shall open a
Registration Account for Amdahl. The opening of the
Registration Account means that Escrow Holder shall establish an
account ledger in the name of Amdahl and that Amdahl shall
receive renewal notices as provided in Section 7. Unless and
until Encore makes an Initial Deposit of Materials with Escrow
Holder"," Escrow Holder shall have no obligation to Amdahl except
as defined by this section.
6. Deposit Obligations of Confidentiality. Escrow Holder
agrees to establish a receptacle in which it shall place the
Deposit (meaning the Initial Deposit"," Supplemental Deposits and
Replacement Deposits to the extent then applicable) and shall put
the receptacle under the control of one or more of its officers
","selected by Escrow Holder"," whose identity shall be available
to
Encore and Amdahl at all times. Escrow Holder shall exercise a
professional level of care in carrying out the terms of this
Agreement.
Escrow Holder acknowledges Encore's assertion that the
Deposit shall contain proprietary data of Encore and that Escrow
Holder has an obligation to preserve and protect that
confidentiality.
Escrow Holder may duplicate the Deposit only as necessary to
preserve and safely store the Deposit"," and to provide copies
thereof"," as authorized herein"," to Amdahl. Escrow Holder
shall reproduce on all copies of the Deposit made by Escrow
Holder any proprietary or confidentiality notices contained in
the Deposit originally deposited with it by Encore.
Except as otherwise provided in this Agreement"," Escrow
Holder agrees that it shall not divulge"," disclose"," otherwise
make available to third parties"," or make any use whatsoever of
the Deposit"," or of any information provided to it by Encore in
connection with this Agreement"," without the express prior
written consent of Encore. This obligation will continue
indefinitely notwithstanding termination of this Agreement.
7. Term of Agreement. This Agreement will have an initial
term of one year"," commencing on the effective date of this
Agreement. This Agreement may be renewed for additional one-year
periods upon receipt by Escrow Holder of the renewal fees
specified herein. In the event that the renewal fees are not
received within thirty (30) days prior to the expiration date
","Escrow Holder shall so notify Encore and Amdahl by certified
mail
of the thirty (30) day expiration period. If the renewal fees
are not received within the subsequent thirty (30) days after
such notice"," this Agreement will expire without further notice
and without liability of Escrow Holder to the parties of this
Agreement. Amdahl has the right to pay renewal fees and other
related fees.
8. Expiry. Except as otherwise expressly provided in this
Agreement"," upon non-renewal or other termination of this
Agreement"," all duties and obligations of Escrow Holder to
Encore and Amdahl will terminate. If Encore requests the return
of the Deposit"," Escrow Holder shall return the Deposit to
Encore only after all outstanding invoices and the Deposit return
fees are paid. Subject to Section 7"," if the fee(s) are not
received by the anniversary date of this Agreement"," Escrow
Holder shall"," at its option"," destroy or return the Deposit to
Encore. If Escrow Holder destroys the Deposit"," Escrow Holder
will provided certification in writing to both Encore and Amdahl
that all materials contained in the Deposit have been destroyed.
9. Filing for Release of Deposit by Amdahl. Upon notice
to Escrow Holder by Amdahl (in the form of an affidavit or
declaration by an officer or Amdahl) of the occurrence of a
Release Condition as defined in Section 10"," and payment of the
filing for release fee"," Escrow Holder shall so notify Encore by
certified mail with a copy of the notice from the Amdahl. If
Encore provides contrary instruction within ten (10) working days
of the mailing of the notice to Encore"," Escrow Holder shall not
deliver the Deposit to the Amdahl except as provided below.
Contrary instruction means the filing of an affidavit
or declaration with Escrow Holder by an officer of Encore stating
that a Release Condition has not occurred"," or has been cured.
Escrow Holder will send a copy of the affidavit or declaration by
certified mail to Amdahl who is filing for the release of the
Deposit materials. Upon receipt of contrary instruction","
Escrow Holder shall not deliver a copy of the Deposit and shall
continue to store the Deposit until otherwise directed by Encore
and Amdahl jointly"," or until resolution of the dispute pursuant
to Section 12.
10. Release of Deposit to Amdahl.
a. Release Conditions are those events specified as
Release Conditions in Section 27 a.) and Section 25 D f.) of the
Reseller Agreement.
b. If after following the procedure in Section 9
","Escrow Holder does not receive contrary instruction from
Encore ","Escrow Holder is authorized to release Part One of the
Deposit ","the Encore Product Deposit"," to Amdahl following
receipt of any
fees due to Escrow Holder.
c. This Section 10.c.) shall only apply if a release
of the Encore Product Deposit has occurred. In the event that
such delivery is made by the Escrow Agent"," Amdahl may obtain
release of respective portions of Part Two"," the Third Party
Product Deposit"," for purpose of use under the License only if:
(i) Amdahl obtains a written authorization from the
respective Third Party Vendor or a written license agreement
executed by Amdahl and the respective Third Party Vendor of the
particular item to be released from the Third Party Product
Deposit to Amdahl which authorization authorizes the release of
","or which license grants Amdahl"," among other things"," the
specific right and license to use"," the item in conjunction with
the License referenced above.
(ii) Amdahl"," at its sole expense"," pays any fees
required by the respective Third Party Vendor for such license
grant.
(iii) Amdahl provides the Escrow Agent with a copy of the
license executed by both the respective Third Party Vendor and
Amdahl"," or with an authorization"," for the particular item to
be released"," as required by Section 10 c.)(i) above","
accompanied by a certificate from an officer of Amdahl stating
that all license fees"," if any"," for such respective item
required to be paid by Amdahl to the respective Third Party
Vendor under Section 10 c.) (ii) above have been paid.
Then and only then is the Escrow Agent empowered to
deliver the respective Third Party Product Deposit item to Amdahl
for use in conjunction with the License. Any other Third Party
Product Deposit items shall remain in Escrow with the Escrow
Agent until the license and certification required as to that
particular item is tendered to the Escrow Agent.
11. Conditions for Use Following Release. Following a
release as provided in Section 10"," Amdahl shall have the right
to use the released material as and only as authorized by the
License.
12. Disputes. In the event of a dispute as to which this
Section applies"," Escrow Holder shall so notify Encore in
writing. Such dispute will be settled by arbitration (which
arbitration shall be binding for purposes of this Agreement only)
as follows: (a) the parties shall each select one independent
arbitrator within ten (10) days"," (b) such arbitrators shall
select in good faith a third arbitrator within five (5) days","
(c) each party will have one (1) day to present its case
(presentation shall be made on a date selected by the arbitrators
which shall be at least five (5) and no more than fifteen (15)
days after selection of the third arbitrator"," (d) the
arbitrators shall have ten (10) days from completion of such
presentation to render their
decision (the decision of a majority of arbitrators will be
deemed the decision of the arbitrators)"," (e) if one party fails
to timely appoint an arbitrator"," the arbitration shall be
conducted solely by the other party's arbitrator"," and (f) such
arbitration shall be informal and need not conform to AAA or
other established procedures. Unless otherwise agreed to by
Encore and Amdahl"," arbitration will take place at the offices
of the Escrow Agent in San Francisco"," California.
13. Indemnification. Encore and Amdahl agree to defend and
indemnify Escrow Holder and hold Escrow Holder harmless from and
against all claims"," actions and suits"," whether in contract or
in tort"," and from and against any and all liabilities","
losses","damages"," costs"," changes"," penalties"," counsel
fees"," and other expenses of any nature (including"," without
limitation"," settlement costs) incurred by Escrow Holder as a
result of performance of the Agreement except in the event of a
judgment or arbitration decision which specified that Escrow
Holder acted with gross negligence or willful misconduct.
14. Audit Rights. Escrow Holder agrees to keep records of
the activities undertaken and materials pursuant to this
Agreement. Encore and Amdahl will be entitled at reasonable
time"," during normal business hours and upon reasonable notice
to Escrow Holder"," during the term of this Agreement to inspect
the records of Escrow Holder with respect to this Agreement.
Encore or Amdahl will be entitled"," upon reasonable notice
to Escrow Holder and during normal business hours"," at the
facilities designated by Escrow Holder"," accompanied by a
designated employee of Escrow Holder"," to inspect the physical
status and condition (but not contents) of the Deposit. The
Deposit may not be changed by Encore or Amdahl during the audit.
15. Designated Representative. Encore and Amdahl each
agree to designate one individual to receive notices from Escrow
Holder and to act on behalf of Encore and Amdahl respectively
with respect to the performance of their obligations as set forth
in this Agreement and to notify Escrow Holder immediately"," in
the manner stipulated in Exhibit A"," in the event of any change
from one Designated Representative to another.
16. Retention of Existing Deposit. Within ten (10) days of
receipt of a request by Encore to replace any Deposit"," Escrow
Holder will send notice to Amdahl"," including a copy of the
Exhibit B or Ba describing the new materials"," stating that
Encore requests to replace the existing Deposit.
Amdahl has twenty (20) working days from the mailing of such
notice by Escrow Holder to instruct Escrow Holder to retain the
existing Deposit held by Escrow Holder. A retention of existing
Deposit could incur an additional Deposit storage fee as
specified by Escrow Holder's schedule of fees.
If Amdahl does not instruct Escrow Holder to retain the
existing Deposit"," Escrow Holder shall permit such existing
Deposit to be replaced with the Replacement Materials. In this
event"," Escrow Holder shall return the existing Deposit to
Encore.
Permission is hereby given by Encore to Escrow Holder to
retain such Existing Deposit if so requested by Amdahl provided
Amdahl pays any related fees.
17. Updates to Deposit. Encore hereby agrees to update the
Deposit with Escrow Holder with Deposit materials representing
new product releases made pursuant to the Reseller Agreement.
Subject to Section 18"," such deposit activity shall occur at
least every six (6) months or Encore shall certify to Escrow
Holder that the Deposit contains the latest technology release.
18. Demand Updates. Escrow Holder is hereby granted
authority by Encore to notify Encore thirty (30) days prior to
the time of each requirement to update the Deposit with update
materials. If an update is not required"," Encore may certify to
Amdahl that the Deposit contains the proprietary materials
corresponding to the latest release of the products. Escrow
Holder shall submit a report of the update results to Amdahl.
19. Verification Rights. If requested by this Amdahl
","Encore grants to Escrow Holder the right to verify the Deposit
for accuracy"," completeness and sufficiency. Encore hereby also
permits Escrow Holder to verify"," audit"," and inspect the
proprietary materials to be held or held in deposit to confirm
the quality of the proprietary materials for the benefit of the
Amdahl. Upon request by Encore"," Escrow Holder will issue a
copy of the verification results to Encore.
In the event that the Amdahl has separately retained Escrow
Holder to perform verification of the Deposit"," Encore hereby
grants Escrow Holder the right to use the facilities of Encore
upon receipt of reasonable prior notice"," free of charge to
Escrow Holder"," including its computer systems for a reasonable
amount of time sufficient to accomplish such verification.
Encore agrees to make reasonably available any technical and
support personnel necessary for Escrow Holder to perform
verification of the Deposit.
Encore hereby grants Escrow Holder permission to release to
Amdahl information pertaining to directory lists and/or table of
contents of computer media"," manuals"," schematics"," and
manufacturing documents. Encore grants to Escrow Holder the
permission to release to Amdahl copies of any executables or
object code modules prepared by Escrow Holder during its Load and
Compile validation level solely for the purposes of
determining the content and quality of the Deposit.
If requested by Amdahl"," Encore agrees to permit an
employee of Amdahl to be present at Encore's facility and to
observe the compilation or verification of the material to be
deposited by Encore.
20. Transfer of Copy Title. Encore hereby transfers to
Escrow Holder all rights in the title to all copies of the
Deposit deposited hereunder with Escrow Holder"," provided that
Escrow Holder shall hold such Deposit and rights pursuant to the
provisions of this Agreement. In the event that a copy of any
Deposit is delivered to Amdahl pursuant to this Agreement","
Amdahl will have title to such copy.
21. General. Subject to the terms of this
Agreement","Escrow Holder may act in reliance upon any written
instruction ","instrument"," or signature reasonably believed to
be genuine and
may assume that any person giving any written notice","
request","advice or instruction in connection with or relating to
this
Agreement has been duly authorized to do so. Escrow Holder is
not responsible for failure to fulfill its obligations under this
Agreement due to causes beyond its control.
This Agreement is to be governed by"," and construed in
accordance with the laws of the State of California.
Except for relevant provisions contained in the amended
Reseller Agreement and the License"," this Agreement"," including
the Exhibits and Addenda hereto"," constitutes the entire
Agreement between the parties concerning the subject matter
hereof"," and will supersede all previous communications","
representations","understanding and agreements"," either oral or
written"," between the
parties. Encore and Amdahl acknowledge that Escrow Holder has no
knowledge of the terms and conditions contained in the Agreement
and License"," and that Escrow Holder's only obligations shall be
as set forth herein or in any other writing signed by Escrow
Holder"," Encore and Amdahl.
If any provision of this Agreement is held by any court
to be invalid or unenforceable"," that provision will be limited
or severed from this Agreement to the minimum extent necessary so
that this Agreement shall otherwise remain in full force and
effect and enforceable.
22. Fees. All service fees will be due in full at the time
of the request for service. Renewal fees will be due in full
upon the receipt of invoice unless otherwise specified by the
invoice.
For the purpose of annual renewal fees the effective date of
this Agreement will be the anniversary date. Invoiced fees must
be paid within sixty (60) days of receipt of invoice or Escrow
Holder may terminate this Agreement. If payment is not timely
received by Escrow Holder"," Escrow Holder shall have the right
to accrue and collect interest at the rate of one and one-half
percent per month (18% per annum) from the date of invoice for
all later payments"," or"," if lower"," the maximum rate allowed
by law.
All fees will be those specified in Escrow Holder's standard
Schedule of Fees in effect at the time of renewal"," or request
for service"," except as otherwise agreed. For any increase in
Escrow Holders' standard fees"," Escrow Holder shall notify
Encore and Amdahl at least ninety (90) days prior to any renewal
of this Agreement. For any service not listed on the Schedule of
Fees ","Escrow Holder shall provide a quote prior to rendering
such
service.
Agreed by:
ENCORE COMPUTER CORPORATION DATE: 9/30/94
By: T. Mark Morley
Title: V.P.
DATE: 9/30/94
AMDAHL CORPORATION DATE: 9/30/94
By: Erika Williams
Title: (G.M.)
By: M.C. Master DATE: 9-30-94
Title: (V.P.)
DATA SECURITIES INTERNATIONAL
By:
Print Name: ----------------
Title-----------------------
EXHIBIT A
TECHNOLOGY ESCROW AGREEMENT
Account Number __________
Notices to Encore Regarding
Agreement Terms and Conditions
should be addressed to:
Encore:
ENCORE COMPUTER CORPORATION
6901 W. SUNRISE BOULEVARD
PLANTATION"," FLORIDA 33310
Designated
Representative:
ATTENTION: GENERAL COUNSEL
Invoices should be
addressed to:
ATTENTION: GENERAL COUNSEL
Notices to Amdahl Regarding
Agreement Terms and Conditions
should be addressed to:
Amdahl:
Designated Representative:
Attention:
Invoices should be addressed to:
All requests from Encore or Amdahl to change the designated
representative must be given in writing and signed by an officer
of Encore or Amdahl as the case may be.
All Contracts"," Deposit Materials and Official
Notifications to Escrow Holder should be
addressed to:
Invoice Inquiries and Remittance of Fees
to Escrow Holder should be addressed to:
EXHIBIT B
Description of Deposit Materials
Deposit Account Number
Deposit Account Number
Encore"," pursuant to a Deposit Agreement"," hereby deposits the
described materials below into the above-referenced Deposit
Account by providing them to Escrow Holder. The Deposit Type is:
(check as applicable)
Initial Deposit
Supplemental
Replacement
If Replacement then Destroy Deposit_ or Return Deposit_
If no Deposit Type has been checked the materials will be deemed
to be an initial or Supplemental Deposit.
PART ONE: ENCORE PRODUCT DEPOSIT MATERIALS
Name Version
Date CPU/OS Compiler
Application
Utilities needed
Special operating instructions
Item Description
Media
Quantity
I certify that the above described
materials were delivered/sent to
the Escrow Holder: Receipt of the materials acknowledged
By By
Name Name
Title Title
For For
Date Date
EXHIBIT Ba
THIRD PARTY MATERIALS
DESCRIPTION OF DEPOSIT MATERIAL
Deposit Account Number
Depositor Company Name
DEPOSIT TYPE: Initial Supplemental Replacement
If Replacement:_______Destroy Deposit_______Return Deposit
THIRD PARTY RIGHTS:
Licensor"," pursuant to a Technology Deposit Agreement"," hereby
deposits the below described Third Party Materials into the
above-referenced Deposit Account by transferring them to DSI.
Licensor warrants that the proper licenses are in effect for
these Third Party Materials.
THIRD PARTY-DEPOSIT MATERIALS:
Exhibit B Name Version
Item Label Description Media Quantity
For Depositor"," I certify that For DSI"," I
received the above-
the above-described materials described materials
subject to
were sent to DSI: the terms on the
reverse side
of this Exhibit:
By By
Print Name Print Name
Date Date of Acceptance
ISE EX. S#
EXHIBIT N
LICENSE AGREEMENTS
ATTACHMENT 1
TO EXHIBIT H
BETA"," LG/A"," AND G/A CRITERIA
Attachment to
EXHIBIT H
[*CONFIDENTIAL MATERIAL DELETED*] Acceptance Criteria for G/A
Reviewed and Agreed to:
Amdahl Corporation Encore Computer Corporation
By ______________________ By ________________________
Authorized Signature Authorized Signature
______________________ ________________________
Name (Type or Print) Name (Type or Print)
______________________ ________________________
Title Title
______________________ ________________________
Date Date
RESELLER AGREEMENT
FOR
ENCORE STORAGE PRODUCTS
BETWEEN
AMDAHL CORPORATION
AND
ENCORE COMPUTER CORPORATION
TABLE OF CONTENTS
SECTIONS
1. DEFINITIONS
2. SUPPLY OF PRODUCT
3. TERM
4. ORDERING REQUIREMENTS
5. ENCORE RESPONSIBILITY
6. SPECIFICATIONS
7. PRICES
8. PRODUCT BRANDING
9. ACCEPTANCE
10. SHIPMENT"," RISK OF LOSS AND PACKING
11. DOCUMENTATION AND SOFTWARE FOR
STANDARD PRODUCTS
12. INSTALLATION"," MAINTENANCE
AND SUPPORT
13. TERMS OF PAYMENT
14. WARRANTY
15. LIMITATION OF WARRANTY AND LIABILITY
16. INTELLECTUAL PROPERTY REPRESENTATIONS
AND INDEMNIFICATION
17. COMPLIANCE WITH EXPORT REGULATIONS
18. SOFTWARE LICENSE
19. HEADINGS
20. EXCUSABLE DELAYS
21. LAW
22. NON-WAIVER
23. SEVERABILITY
24. SUCCESSORS
25. TERMINATION
26. PUBLICITY AND ANNOUNCEMENTS
27. ESCROW AND MANUFACTURING RIGHTS
28. SURVIVAL OF TERMS
29. DISPUTE RESOLUTION
30. CONFIDENTIALITY
31. INSURANCE
32. GENERAL
EXHIBITS
EXHIBIT A - PRODUCT LIST AND PRODUCT PRICES
EXHIBIT B - ENCORE STORAGE PRODUCT SPECIFICATION FOR AMDAHL
BRANDED PRODUCT
EXHIBIT C - ENCORE CUSTOMER SERVICE PRODUCT OFFERING
EXHIBIT D - ENCORE ORDER REQUIREMENTS
EXHIBIT E - PRODUCT BRANDING PROCEDURES
EXHIBIT F - LICENSE SCHEDULE A
EXHIBIT G - SUBLICENSE AGREEMENT
EXHIBIT H - ACCEPTANCE PROCEDURE
EXHIBIT I - PACKAGING PROCEDURE
EXHIBIT J - ORDERING PROCEDURE
RESELLER AGREEMENT
FOR ENCORE STORAGE PRODUCTS
between
ENCORE COMPUTER CORPORATION"," hereinafter referred to as Encore,
a Delaware Corporation"," located at 6901 West Sunrise
Boulevard","Ft. Lauderdale"," Florida and AMDAHL CORPORATION","
hereinafter referred to as Amdahl, a Delaware corporation","
located at 1250 East Arques Avenue"," P.O. Box 3470","
Sunnyvale"," California 94088- 3470.
WHEREAS"," Encore has developed certain unique computer storage
products; and
WHEREAS"," Amdahl is in the business of marketing and selling
computer storage products; and
WHEREAS"," the Amdahl brand name has significant recognition in
the marketplace; and
WHEREAS"," Encore wishes to supply its storage products to Amdahl
and Amdahl wishes to market and sell such products under the
Amdahl brand name;
NOW"," THEREFORE"," the parties hereby agree as follows:
1. DEFINITION
The following terms used in this Agreement are defined as set
forth below:
Amdahl Marks: The Amdahl name and brand name to be
applied to the Encore storage Products as set forth in
Exhibit E.
Binary: Computer software programs in machine readable
form.
Binary Single System License: A license for a Software
Product which grants a use of the licensed Product on an entire
computer system"," regardless of the number of CPU's within
the system.
Binary Software Product: A computer program in object
code (Binary form) only and any Related Materials provided with
the
program for use in connection with the program where use is
defined to mean the right to load"," store"," copy"," and
execute instructions contained in"," transmit and display
any such Binary
Software Product or portions thereof on the DCS and its
associated
peripheral equipment.
Configuration: A description of a computer system which
defines all hardware"," software"," features and options required
for
that specific computer system.
Custom Product: A Product which must be specially quoted
by Encore and which must be made to special Order by Encore;
such
a Product is not an Encore Standard Product.
Customer Material Return Authorization (CMRA): A CMRA
number is a unique number assigned by an Encore Customer Service
representative to each Amdahl request to return equipment to
Encore.
Customer Service Product Offering: The Customer Service
support services listed in Exhibit C.
Designated Computer System (DCS): A computer system
which is defined by a specific serial number and to which a
Software
Product is licensed.
Forecast: A schedule by month of equipment"," software and
documentation Product expected to be purchased by Amdahl.
Non-current: A status which a Product enters when it is
no longer being manufactured by Encore as a Standard Encore
Product.
Order: Written purchase instructions from Amdahl for the
purchase from Encore of Products listed in Exhibit A under the
terms
and conditions of this Agreement.
Owner: The specific entity which holds title to a
particular Software Product for which licenses are offered
for sale by
Encore in Exhibit A.
Products: The individual computer hardware"," software and
documentation items listed for sale by Encore to Amdahl on
Exhibit A.
Product Bulletin: An Encore marketing publication which
describes the specifications of a particular Encore Product.
Product Specification: Detailed information which describes
various
operating characteristics of a particular Encore Product.
Product License: A license which is granted by Encore
upon purchase by Amdahl which grants a specific usage right for a
particular Encore Software Product.
Quarter: All references to quarters shall mean calendar
quarters unless expressly stated otherwise.
Related Material: Customary documentation which
accompanies a particular Software Product and which may
include such
things as programmer reference manuals and the like.
Restricted Rights in Commercial Technical and Computer
Software: The right to use a particular Licensed Software
Product
only on a specific computer system as is defined and set
forth in the
Federal Acquisition Regulations (FAR) which governs
licensing to the
United States Government and its agencies.
Run-Time Execution License: A license to embed
particular portions of Binary code"," usually accomplished
by means
of compilation of Encore library routines into a customer's
application program for use at the time of execution of the
customer's
application program.
Software Product: A software program in Binary or Source
form for which a license may be purchased by Amdahl.
Source Software Product: Software programs contained in
human readable form which"," when compiled or
assembled","generate Binary code which is readable by a
computer.
Source Single System: A single computer system which is
licensed to run a particular Software Product in Source form.
Standard: A status which defines Products which are
offered to the public for sale by Encore in Encore's
regularly
published price lists.
Territory: The world with the exclusion of Israel and
Malaysia.
2. SUPPLY OF PRODUCT
A. GRANT
Encore hereby grants to Amdahl the non-exclusive right to
purchase from Encore the Products listed in Exhibit A for market
and sale by Amdahl in the Territory in accordance with the terms
of this Agreement. Encore shall have the right to supply or sell
products which are the same or similar to the Products","
provided they do not bear the Amdahl Mark"," to any other persons
or entities within and outside the Territory"," except as set
forth in Section B below. Encore will produce and supply the
Products in accordance with the delivery terms set forth in this
Agreement. It is the intent of the parties that the Encore
storage Products will evolve in feature and function and will be
enhanced over the term of this Agreement. Encore agrees to make
all such
enhancements"," functions"," features which it incorporates into
the Products and follow-on Products available to Amdahl under the
terms of this Agreement.
B. BRANDED AND DIFFERENTIATED PRODUCT
a. Encore Products supplied to Amdahl hereunder will bear the
Amdahl Mark in accordance with the provisions of Section 8 and
Exhibit E; this branded Product will be available for
exclusive sale to Amdahl only. Products supplied to Amdahl will
also be differentiated by Encore from any product that Encore
provides to others by the addition of certain functionality
listed below that will be made solely available to Amdahl until
[*CONFIDENTIAL MATERIAL DELETED*] the Initial Period; Encore
agrees that it will not produce a look-alike product which is
equivalent to the Product defined in Exhibit A and which contains
any one of these feature/function differentiators in
contravention of the terms of this subsection a. This grant is
made in consideration of the agreement by Amdahl to place firm
orders with Encore for [*CONFIDENTIAL MATERIAL DELETED*]
terabytes of storage Products for delivery to Amdahl by no later
than [*CONFIDENTIAL MATERIAL DELETED*]or the date which results
from any extension which occurs under the provisions of
Section 25 D a.
b. This grant of exclusivity to Amdahl for differentiated
Product is made subject to the provision that Encore shall have
the right to market and sell the unbranded Products within and
outside the Territory"," differentiated with the features listed
below as well as with future differentiating features as are
adopted and agreed by the parties"," to the U.S. Federal
Government and its agencies"," and to System Integrators who are
responding to bid solicitations from the U.S. Federal Government
or its
agencies.
c. The following features which Encore is developing for the
Product will be provided to Amdahl in accordance with
subsection a. above"," to be offered as differentiating features
with the Amdahl branded Product until [*CONFIDENTIAL MATERIAL
DELETED*] during the Initial Period"," or the date which results
from any extension which occurs under the provisions of
Section 25 D a:
Feature
[*CONFIDENTIAL MATERIAL DELETED*]
After [*CONFIDENTIAL MATERIAL DELETED*] Encore will be free to
sell the seven (7) features listed above to Encore's other
customers. Amdahl may continue to obtain such features from
Encore on a non-exclusive basis"," to be incorporated with the
branded Product. Encore agrees that it will require"," by
appropriate provisions in a written non-disclosure agreement
","other customers or potential customers of Encore to refrain
until [*CONFIDENTIAL MATERIAL DELETED*] from advertising or
discussing with their own customers or potential customers the
differentiating features or their availability.
d. Future differentiating features which are to be made
available to Amdahl from Encore after the end of the Initial
Period on [*CONFIDENTIAL MATERIAL DELETED*] will be the subject
of good faith negotiations between the parties. Amdahl and
Encore agree to establish a team comprised of designated
individuals from each company. The charter for the team will be
to investigate potential features which may serve as future
Product differentiators. This process will ensure that features
are made available to Amdahl to provide future differentiation
for the Product. Formal reviews will be held by the parties
twice each year"," on September 30 and March 31"," to discuss
future feature differentiation and feature exclusivity for
subsequent periods.
e. Encore highly values its partnership with Amdahl in the
storage system endeavor contemplated herein. Therefore Encore
agrees to negotiate with Amdahl"," upon Amdahl's
request","concerning the extention of the Feature/Function
exclusivity
granted by Encore to Amdahl in Section 2B beyond the Initial
Period.
C. RELIABILITY STANDARDS
Encore agrees that the Product will meet the specifications
","reliability and availability standards set forth in the
Product
Specification"," Exhibit B.
D. SCHEDULE
a. 1. Encore shall provide Products to Amdahl"," which"," for
Beta and General Availability"," will conform to the applicable
Product Specifications"," in accordance with the following
schedule:
PRODUCT CATEGORY NUMBER OF UNITS SHIPPING
DATES
Engineering Prototype
to Amdahl 1 Unit *
Alpha 2 Units *
Beta (First Customer Ship) 4 Units *
2 Units *
2 Units *
General Availability Volume *
*Indicates [*CONFIDENTIAL MATERIAL DELETED*]
Encore will make all reasonable efforts to improve the schedule
for Alpha and Engineering Prototype systems delivery set forth
above to provide for such delivery as close to [*CONFIDENTIAL
MATERIAL DELETED*] as possible.
2. Amdahl will purchase the Engineering Prototype"," Alpha
and Beta systems listed above in subsection a."," at the prices
set forth for such systems in Exhibit A. [*CONFIDENTIAL MATERIAL
DELETED*]
3. In conjunction with the purchase of the Engineering
Prototype and Alpha systems in subsection 2. above"," Encore will
provide three Alpha/Engineering Prototype Spares Kits"," defined
in Exhibit [*CONFIDENTIAL MATERIAL DELETED*] A. In addition","
Encore will loan Amdahl three Board Kits and one On-Loan Ops
Kit","defined in Exhibit A"," which will be returned by Amdahl to
Encore
in as good as new condition"," less reasonable wear and tear","
no later than [*CONFIDENTIAL MATERIAL DELETED*].
4. All General Availability and Beta systems purchased by
Amdahl will be warranted by Encore in accordance with Section 14.
Alpha systems will carry a one year useful life warranty. No
warranty will apply to the Engineering Prototype system.
b. For the purposes of this subsection D"," the terms used
above are defined as follows:
1. Alpha: Pre-production test machine in customer sites
2. Beta: First machine made from production process for
test at customer sites
3. General Availability (G/A): Encore produces Product
in volume which is ready for shipment to Amdahl's customers
c. Full Product branding will be provided by Encore with
General Availability of the Product. Alpha systems and
Engineering prototype systems will not include Product branding;
Beta systems will have minimal branding in the form of the
application of an Amdahl logo to the outside of the system
cabinet; the Amdahl logo to be applied to Beta systems will be
provided to Encore by Amdahl.
d. Fully branded Product as described in Exhibit E shall be
available to Amdahl with General Availability of the Product.
E. FEATURE/FUNCTION AVAILABILITY SCHEDULE
The following Product features and functions"," some of which are
referenced in subsection B above"," will be developed by Encore
and will be added to the Product by Encore. They will be made
available to Amdahl in Beta form and General
Availability","conforming to the applicable Product
Specifications"," in
accordance with the availability schedule set forth below:
ENCORE ENGINEERING AMDAHL
FEATURE/FUNCTION AVAILABILITY AVAILABILITY DATE
[*CONFIDENTIAL MATERIAL DELETED*] Beta
[*CONFIDENTIAL MATERIAL DELETED*] Beta
[*CONFIDENTIAL MATERIAL DELETED*] Beta
[*CONFIDENTIAL MATERIAL DELETED*] Beta
[*CONFIDENTIAL MATERIAL DELETED*] Beta
[*CONFIDENTIAL MATERIAL DELETED*] Beta
[*CONFIDENTIAL MATERIAL DELETED*] Beta
[*CONFIDENTIAL MATERIAL DELETED*] G/A in beta
form
[*CONFIDENTIAL MATERIAL DELETED*] G/A in beta
form
[*CONFIDENTIAL MATERIAL DELETED* G/A in beta
form
[*CONFIDENTIAL MATERIAL DELETED*] G/A in beta
form
For purposes of this subsection beta form shall mean pre-
release status","where the Feature/Function is still being tested
to ensure that
it is ready
for production release.
F. ENCORE REPRESENTATIONS
Encore represents and warrants that: (i) it has and will have
good title to the hardware Products and full authority to license
the Software Products and will transfer the Products free and
clear of all encumbrances; (ii) it has all necessary right and
authority to enter this Agreement and the manufacturing license
","and any escrow or technical data deposit agreement"," referred
to
in Section 27"," which the parties may enter pursuant thereto;
(iii) it has full right and authority to grant the exclusive
rights specified in Section 2B and the manufacturing rights
specified in the manufacturing license; and (iv) it is not a
party to any agreement or understanding with any other party
which interferes with"," or under which such other party has
rights which would interfere with"," any right of Amdahl or
obligation of Encore under this Agreement or the manufacturing
license.
3. TERM
The term of this Agreement shall be for five (5) years from the
date of execution of this Agreement by both parties. The term of
this Agreement shall continue from year to year after the
expiration of the initial term unless terminated by either party
by twelve (12) months prior written notice from one party to the
other.
4. ORDERING REQUIREMENTS
A. ORDERS
Orders issued shall incorporate this Agreement by the inclusion
of the following statement: THIS ORDER IS PLACED UNDER THE TERMS
AND CONDITIONS OF THE ENCORE/AMDAHL RESELLER AGREEMENT DATED
MARCH 24, 1994. The failure of Amdahl to include this statement
in its Order(s) shall not affect the applicability of this
Agreement to such Order(s). Orders for Products placed under
this Agreement must include Configurations and requested delivery
schedules. All Orders placed by Amdahl shall be subject to
written acceptance by Encore in which Encore will establish
schedule and confirm Configuration.
Orders shall be placed in accordance with the procedures set
forth in Exhibit D"," Encore Order Requirements. Encore agrees
to accept all Orders from Amdahl which reflect correct Product
configurations and price"," and which conform to Exhibit D.
Encore standard lead time for Product shipments is ninety (90)
days. Orders received by Encore during the term of this Agreement
must provide for delivery no later than 90 days after expiration
of the term of this Agreement. The terms and conditions of this
Agreement continue to apply to any such Orders. An Order will
not be accepted by Encore for delivery of Products to Amdahl if
the requested delivery date is one year or more from the date of
receipt of the Order by Encore.
B. ORDER PROCEDURE
The following Order procedure"," which will be defined in more
particularity in Exhibit J to be agreed by the parties and
attached hereto"," shall govern the placement of Orders by Amdahl
hereunder:
1. Not later than the first day of each calendar Quarter
"," Amdahl will place a firm Order with Encore for
Products
to be
delivered by Encore to Amdahl in the following calendar
Quarter.
For example"," for deliveries in the fourth Quarter","
an Order must
be placed by July first.
2. Amdahl will provide an annual Forecast to Encore in
writing of Amdahl's anticipated Product requirements for
Orders
expected to be placed for Product to be shipped in the
following
year. The Forecast will be provided by Amdahl to
Encore no later
than September thirtieth of each year for the following
year's
Orders. The Forecast will indicate Product to be
ordered and
shipped to Amdahl for each calendar Quarter of the
following
year.
C. INITIAL ORDER
a. Amdahl commits to place firm Orders with Encore for the
purchase of [*CONFIDENTIAL MATERIAL DELETED*] terabytes of
Products from Encore; these Orders will provide for delivery of
such Products by Encore to Amdahl during [*CONFIDENTIAL MATERIAL
DELETED*].
D. SUPPLIERS
The parties agree to work together cooperatively to negotiate the
most favorable terms and conditions possible from Encore
suppliers and Amdahl suppliers who provide Product subcomponents
","software and/or other parts of the Product to Encore.
5. ENCORE RESPONSIBILITY
Upon shipment of Products from Encore's facility"," Amdahl
acknowledges that Encore shall have no responsibility for
installation and on-site maintenance. Encore is not responsible
for the Product's individual and collective suitability for
Amdahl's or Amdahl's customer's particular application.
6. SPECIFICATIONS
Specifications applicable to the Products purchased under this
Agreement shall be the Encore Product Specification for the
Amdahl Branded Product contained in Exhibit B. The Product
Specification may not be changed by Encore without Amdahl's
consent.
7. PRICES
A. INITIAL PRICES
Prices that pertain to Orders placed under this Agreement shall
be the prices set forth in Exhibit A attached hereto. These
prices are firm fixed until [*CONFIDENTIAL MATERIAL DELETED*] and
are offered to Amdahl in consideration of Amdahl's agreement to
place firm orders with Encore for [*CONFIDENTIAL MATERIAL
DELETED*] terabytes of Products under the terms of this Agreement
for delivery to Amdahl no later than [*CONFIDENTIAL MATERIAL
DELETED*] subject"," however"," to the provisions of Section 25
D.
B. FUTURE PRICES
The procedure below will be followed by the parties to review and
negotiate in good faith future prices for the Products:
a. By September thirtieth of each year beginning in
[*CONFIDENTIAL MATERIAL DELETED*]"," Encore and Amdahl will
review
and re-negotiate prices for the Products which shall be
applicable for the first half of the following year.
b. By March thirty-first of each year beginning in
[*CONFIDENTIAL MATERIAL DELETED*]"," Encore and Amdahl
will review
and re-negotiate prices for the Products which shall be
applicable for the last half of that year.
c. Exhibit A will be amended to reflect any changes agreed
by the parties during the review sessions described
above. The
parties may also amend Exhibit A to reflect the
addition of new
Products as agreed by the parties.
Encore may discontinue a Product upon six (6) months
prior written notice"," provided it makes available to
Amdahl"," upon
essentially the same terms and conditions as are
contained in
this Agreement"," a follow-on or replacement product
(including the
Features and Functions specified in Section 2.E) with
substantially the same form"," fit"," function and
performance
characteristics of the discontinued Product.
Encore may also discontinue a Product if an Encore
supplier discontinues supply of a Product part or
component"," and
Encore is unable to find a substitute upon reasonable
commercial
terms. Encore will give notice of such discontinuance
promptly
upon receipt of such notice from the supplier.
d. Orders placed by Amdahl will reflect the applicable
price as of the date of the Order.
e. Both parties acknowledge that the potential for rapid
price decline in the storage system marketplace is very
real.
The parties agree to work cooperatively in good faith
to seek to
reduce future Product costs to Amdahl wherever
possible.
f. Encore agrees that future prices for Products sold to
Amdahl shall be at least as favorable as those extended to
any
other Encore customer purchasing similar volumes of
Encore
Products under similar terms and conditions.
g. If at any time the parties cannot reach agreement as to
future prices pursuant to the negotiations contemplated
above"," then Encore agrees to extend the then-current
pricing for
Products for an additional six (6) month period
conditioned upon
receiving at the beginning of the period a firm
purchase
commitment from Amdahl for a quantity of at least
[*CONFIDENTIAL
MATERIAL DELETED*] percent [*CONFIDENTIAL MATERIAL
DELETED*] (%)
of Amdahl's volume commitment during the prior six (6)
month
period.
C. SPECIAL QUOTES
Unless otherwise specified"," any special quotes given by Encore
at the request of Amdahl are valid for sixty (60) days.
8. PRODUCT BRANDING
Encore agrees to attach to the Products the Amdahl Mark as
specified in Exhibit E. Encore will provide Product branding as
set forth in Exhibit E at no charge to Amdahl.
9. ACCEPTANCE
Equipment final acceptance tests will be conducted by Encore's
personnel using the Acceptance Test Procedures"," attached hereto
as Exhibit H"," at Encore's facility. Amdahl has a right to
review the procedure set forth in Exhibit H and to consult on any
future changes proposed thereto by Encore. A certificate
confirming that Products shipped have passed the Acceptance Tests
will accompany the equipment when shipped. Amdahl shall have the
right to inspect Products before shipment at any time upon prior
written notice to Encore. Such acceptance testing and inspection
shall not relieve Encore of its obligation to deliver Products
that conform to applicable Product Specifications.
10. SHIPMENT"," RISK OF LOSS AND PACKING
Items ordered under this Agreement will be shipped F.O.B. point
of origin Encore's facility. Title and risk of loss or damage
shall pass to Amdahl upon shipment by Encore to Amdahl or its
nominee from Encore's dock. Encore will obtain insurance for
each shipment on Amdahl's behalf to protect against any loss or
damage and Encore will bill back such charges to Amdahl on a per-
order
basis. If Products are damaged in shipment"," Amdahl will report
such damage to Encore in a timely fashion. Encore will then
credit back to Amdahl the purchase price of the damaged Product
and proceed to make claim against the insurance policy on
Amdahl's behalf.
Products shall be prepared for shipment by Encore using standard
commercial practice for worldwide shipment in accordance with the
Packaging Procedures attached hereto as Exhibit I. Special
handling or special packing for shipment requested by Amdahl
above and beyond these packing procedures will be subject to an
additional charge. Encore will provide re-packing material to
Amdahl upon request at Encore's cost for such materials.
Encore agrees to make drop shipments to Amdahl's customer if so
requested in Amdahl's purchase Order.
11. DOCUMENTATION AND SOFTWARE FOR STANDARD PRODUCTS
Encore will provide at no additional charge"," one (1) set of
diagnostic software"," hardware documentation for purchased
equipment"," and programming reference documentation for standard
software licenses purchased. Software Product classification
","distribution media"," and documentation content for these
items
will be in accordance with existing Encore media standards and
distribution practice at the time of purchase by Amdahl. Encore
will provide Amdahl with ninety (90) days prior notice before
making any significant changes to Encore's current media
standards and distribution practices.
Amdahl will have the following documentation reproduction rights:
Amdahl may reproduce all Product-related technical manuals which
are wholly owned by Encore at no charge in conjunction with their
use with Products purchased under the terms of this Agreement ","
so long as Amdahl reproduces all Encore copyright and proprietary
notices contained in said documentation. For manuals which
accompany Products obtained by Encore from third party vendors
","reproduction rights will be dealt with on a case by case
basis.
Encore will pass through reproduction rights for all third party
Products for which it has the right to do so"," conditioned upon
Amdahl's agreement to pay to Encore any royalty fees due and
payable by Encore to such third parties by reason of Amdahl's
copying of such documentation.
Amdahl may produce derivative works based on the Encore wholly-
owned","Product-related documentation"," so long as Amdahl agrees
to reproduce Encore copyrights and proprietary notices contained
in said documentation on all such derivative works made by
Amdahl.
In addition"," Encore will provide one set of appropriate media
for those Products which Encore has available in an electronic
format.
In the event that Amdahl requires additional hard copy
replacement documentation"," Encore will accommodate Amdahl's
requests for such replacement documentation at Encore's
reasonable cost.
12. INSTALLATION"," MAINTENANCE AND SUPPORT
A. Encore is not responsible for the installation","
maintenance and support of the Products at Amdahl customer sites
and shall bear none of the expenses for such installation.
B. Encore agrees to provide support services to Amdahl as set
forth in Exhibit C. Encore will provide quotations for
installation"," and for maintenance and support services beyond
those set forth in Exhibit C"," at the request of Amdahl.
C. The service procedure used and/or the level of sparing of
parts shall be agreed to by the parties no later than
[*CONFIDENTIAL MATERIAL DELETED*].
D. Amdahl will provide first level service to Amdahl's
customers for site installation and service. Amdahl will
establish the mechanics for second level service for problem re-
creation
and resolution by Amdahl including the provision of
fixes for system down conditions. Encore will provide
personnel and expertise to assist with this function as agreed by
the parties. Encore will provide third level support to Amdahl
in the form of permanent fixes for hardware and software problems
encountered by Amdahl.
E. Targets for timing"," turnaround"," and other like issues
shall be agreed to by the parties no later than [*CONFIDENTIAL
MATERIAL DELETED*].
13. TERMS OF PAYMENT
A. Products will be invoiced upon shipment. Payment shall be
due from Amdahl within forty-five (45) days from date of receipt
by Amdahl of a correct invoice [*CONFIDENTIAL MATERIAL DELETED*].
All payments shall be made in U.S. dollars. Each invoice shall
","at a minimum"," reference the Amdahl purchase Order number","
part number"," quantity"," unit price and total price for the
Order.
Amdahl shall have the right at any time to set off any amount due
from Encore against any amount payable by Amdahl pursuant to any
Order under this Agreement.
B. Prices do not include charges for taxes or shipping"," which
will be billed to Amdahl on a per-Order basis. Amdahl shall pay
all taxes associated with the sale of Products and licensing of
Software Products hereunder"," exclusive of taxes based on
Encore's income or net worth. Any tax Encore may be required to
collect or pay upon the sale or delivery of Products"," as well
as all shipping charges for shipping of Products by Encore","
shall be due from Amdahl and such sums shall be invoiced by
Encore. If Amdahl wishes to claim a sales tax exemption","
Amdahl must provide Encore with valid tax exemption certificates
not less than thirty (30) days prior to shipment for those states
where tax exempt
deliveries are to be made.
14. WARRANTY
A. HARDWARE WARRANTY
Encore warrants that all hardware Products (including all beta
systems and spares) will conform to their applicable
specifications in Exhibit B and will be free of defects in
material and workmanship. For [*CONFIDENTIAL MATERIAL DELETED*]
from date of shipment"," Encore will either repair or replace","
at its option"," parts which are defective due to non-conformity
to specification or due to faulty workmanship or materials and
which are returned by Amdahl to Encore. If after diligent
efforts Encore is unable to correct the defect or provide a
conforming replacement"," Encore shall refund the purchase price
paid by Amdahl for the non-conforming Product. Each party will
pay its own costs of shipping for any Products shipped under the
provisions of this Section 14A.
Amdahl shall be responsible for performing diagnostic tests on
all failed Products to the extent possible to determine which
modules and/or component assemblies appear defective. Amdahl
shall return only those modules or component assemblies found to
be defective to Encore for warranty service.
Warranty claims must be made by Amdahl in writing"," citing
purchase Order number or Product serial number and date. No
equipment may be returned for warranty service without Encore's
prior authorization. Amdahl agrees to request and receive return
authorization prior to any Product being returned for repair
","which Encore will issue in the form of a Customer Material
Return
Authorization (CMRA).
This warranty does not apply to defects caused by
accident","neglect"," misuse"," normal wear and tear"," or
alteration"," or to
Amdahl's improper integration"," installation"," or
maintenance"," nor does it apply to deterioration or damage to
expendable storage materials such as paper or magnetic tapes","
disc packs"," or punched cards"," nor does it apply to operating
environment failure.
Where Amdahl has purchased a specific maintenance plan"," repairs
and corrective service relating to the warranty may be performed
at Amdahl's site in accordance with the terms and conditions of
the appropriate Encore maintenance agreement.
Except as provided in Section 15 D. below"," the remedies set
forth above in this subsection A are Amdahl's exclusive remedies
under this Hardware Warranty.
B. SOFTWARE WARRANTY
Encore warrants that all Software Products (including all Beta
systems) will conform to their applicable specifications in
Exhibit B and related reference documentation; this warranty
shall not apply to immaterial non-conformities. Encore will
correct all such reported nonconformities in unaltered Software
Products for [*CONFIDENTIAL MATERIAL DELETED*] after date of
shipment to Amdahl"," provided such reports are made in
accordance with Encore standard reporting procedures and that
such
nonconformities are confirmed by Encore. If"," after diligent
efforts"," Encore is unable to make a correction within a
reasonable time"," Encore will"," at its option"," either replace
the Software Products with a functionally similar Software
Product or refund the fees paid by Amdahl for the nonconforming
Software Products.
Without limiting Encore's obligation to supply Products that
conform to applicable Product Specifications"," Encore does not
warrant that the Software Product will meet Amdahl's or Amdahl's
customer's particular requirements"," or that the operation of
the Software Product will be error free.
This Software Warranty does not apply to Non-current Software
Products"," nor does it apply to Run-Time Execution Licenses or
VSP Product Licenses purchased by Amdahl from Encore.
Except as provided in Section 15 D. below"," the remedies set
forth in this subsection B are Amdahl's exclusive remedies under
this Software Warranty.
C. SERVICES WARRANTY
Encore warrants that all services performed pursuant to Exhibit C
of the Agreement shall be performed in a workmanlike manner in
conformity with generally accepted computer industry standards.
15. LIMITATION OF WARRANTY AND LIABILITY
A. EXCEPT FOR THE EXPRESS WARRANTIES STATED HEREIN"," ENCORE
GRANTS NO WARRANTIES"," EITHER EXPRESS OR IMPLIED"," ON ANY
ENCORE PRODUCTS"," INCLUDING ALL IMPLIED WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE"," AND THE
STATED EXPRESS REMEDIES FOR BREACH OF THE WARRANTIES SPECIFIED IN
SECTION 14 ARE IN LIEU OF ALL LIABILITIES OR OBLIGATIONS OF
ENCORE FOR DAMAGES FOR BREACH OF SAID WARRANTIES EXCEPT AS
OTHERWISE EXPRESSLY STATED HEREIN"," INCLUDING BUT NOT LIMITED TO
DIRECT"," INCIDENTAL","INDIRECT"," SPECIAL OR CONSEQUENTIAL
DAMAGES"," SUCH AS INTERRUPTION
OF BUSINESS OR ANY LOSS OF BUSINESS OR PROFITS"," OR ANY EXPENSE
EXPERIENCED BY AMDAHL OR ITS CUSTOMER ARISING OUT OF ANY DEFECT
IN OR FAILURE OR INADEQUACY OF PERFORMANCE OF ANY PRODUCT
FURNISHED BY ENCORE HEREUNDER.
B. EACH PARTY'S LIABILITY TO THE OTHER FOR DAMAGES CONCERNING
PERFORMANCE OR NON-PERFORMANCE BY THE OTHER PARTY OR IN ANY WAY
RELATED TO THE SUBJECT MATTER OF THIS AGREEMENT"," REGARDLESS OF
THE FORM OF ACTION"," SHALL NOT EXCEED THE GREATER OF
[*CONFIDENTIAL MATERIAL DELETED*] DOLLARS ($[*CONFIDENTIAL
MATERIAL DELETED*]) OR ONE AND ONE-HALF TIMES THE PURCHASE PRICE
OF THE PARTICULAR PRODUCTS GIVING RISE TO THE CLAIM.
C. NEITHER PARTY SHALL HAVE ANY LIABILITY HEREUNDER FOR
INDIRECT"," SPECIAL OR CONSEQUENTIAL DAMAGES"," INCLUDING"," BUT
NOT LIMITED TO"," LOST BUSINESS OR LOST PROFITS"," WHETHER
FORESEEABLE OR NOT"," EVEN IF THAT PARTY HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES.
D. EACH PARTY SHALL INDEMNIFY AND HOLD THE OTHER HARMLESS FROM
ANY LOSS OR DAMAGE ARISING FROM PERSONAL INJURY OR TANGIBLE
PROPERTY DAMAGE CAUSED BY THE NEGLIGENCE OF THE OTHER PARTY.
E. NOTHING IN SECTION 15 B SHALL LIMIT EITHER PARTY'S
OBLIGATIONS OR LIABILITY FOR DAMAGES UNDER SECTION 15 D OR
SECTION 16.
F. ANYTHING TO THE CONTRARY IN THIS SECTION 15 NOTWITHSTANDING
","ENCORE'S SOLE REMEDY AND AMDAHL'S SOLE LIABILITY FOR AMDAHL'S
BREACH OF ITS OBLIGATION UNDER SECTION 4C SHALL BE LIMITED TO
[*CONFIDENTIAL MATERIAL DELETED*]. ENCORE AGREES TO USE ITS BEST
EFFORTS TO AVOID ALL SUCH COSTS UPON NOTIFICATION BY AMDAHL THAT
IT WILL NOT FULFILL ITS OBLIGATION UNDER SECTION 4C; SUCH EFFORTS
MAY INCLUDE CANCELLATION OF ORDERS FOR PARTS AND COMPONENTS
","UTILIZATION OF PARTS OR COMPONENTS TO FILL ORDERS FOR OTHER
CUSTOMERS"," SALE OF SURPLUS PARTS OR COMPONENTS"," ETC. ENCORE
WILL CONSULT WITH AMDAHL WITH RESPECT TO ITS PROPOSED COST
AVOIDANCE EFFORTS.
G. Both parties acknowledge and agree that there may be no
adequate remedy at law for any breach of the representations
","warranties and obligations specified herein and therefore","
that
upon such breach or any threat thereof"," each party shall be
entitled to appropriate equitable relief in addition to whatever
remedies it may have at law.
16. INTELLECTUAL PROPERTY REPRESENTATIONS AND INDEMNIFICATION
A. Encore represents and warrants that (i) to the best of
Encore's knowledge and belief"," none of the technology relating
to any of the Products infringes the right of any third party;
(ii) Encore is not aware of any claims or threatened claims
against Encore relating to any such technology; and (iii) Encore
will promptly notify Amdahl if Encore becomes a party to any such
claim.
B. Encore shall"," at its expense"," settle or defend Amdahl
against all claims asserted by any person that a Product
infringes a patent"," copyright or trade secret of a third party
and Encore shall"," without limitation"," pay the costs","
damages and attorneys' fees awarded against Amdahl in any such
action"," or incurred by Amdahl in any such settlement","
provided that Encore shall have the exclusive right to control
and conduct the defense and settlement of all such actions or
claims. Each party agrees to notify the other promptly of any
matters to which the
foregoing indemnity may apply. Amdahl agrees to do all acts ","
at Encore's expense"," that may be reasonably required by Encore
in connection with such defense or settlement.
C. If a preliminary or final judgment shall be obtained against
Amdahl's use or operation of the Product or any part thereof by
reason of any alleged infringement"," or if"," in Encore's
opinion","the Product is likely to become subject to a claim for
infringement"," Encore shall"," at its expense"," and option","
either (a) modify the Product so that it becomes non-infringing;
or (b) procure for Amdahl the right to continue to use the
Product; or (c) substitute for the infringing Product another
Product having a capability equivalent to the Product. In the
event that the foregoing options are not reasonably available","
upon Encore's written request Amdahl agrees to return the Product
to Encore at Encore's expense"," and Encore shall take back such
Product and refund any sums Amdahl has paid Encore for the
Product under this Agreement less a reasonable amount for use","
damage and
obsolescence. Encore shall have no liability for any claim based
upon the combination"," operation"," or use of the Product with
any equipment"," device"," or alteration to the Product not made
by Encore if the Product would not have been infringing but for
the combination. The foregoing states the entire liability of
Encore for patent"," copyright"," and trade secret infringement.
D. The indemnification contained in subsections B and C above
is hereby extended to include indemnification for the combination
which results from coupling the Encore Product with an
[*CONFIDENTIAL MATERIAL DELETED*] which will be used by Amdahl or
its customers to directly connect the Encore Product to other
computer systems or environments.
17. COMPLIANCE WITH EXPORT REGULATIONS
Amdahl agrees that it will not export or re-export the Products
and/or technical data in contravention of the Export
Administration Act of 1979 of the United States of America"," any
amendments thereto"," and any other statute or regulation
promulgated by the United States Government regarding export and
re-export of Products and/or technical data or the laws of any
other country. Amdahl further agrees that it will obtain all
export licenses required by said Act or laws prior to such
export. Amdahl's purchase Order will contain notice of Amdahl's
intention to export or re-export Products ordered hereunder.
Encore agrees to actively participate in multi-listing activities
for regulatory agencies.
18. SOFTWARE LICENSE
A. LICENSE GRANT
Encore warrants that it has the right to grant a license for the
Software Products listed in Exhibit A to this Agreement for which
licenses are offered hereunder.
Amdahl shall not have the right to decompile"," disassemble or
otherwise reverse engineer any Binary Software Product obtained
hereunder.
a. Amdahl Internal Use
Encore grants to Amdahl a personal"," non-exclusive right and
license to use"," modify and enhance Binary Software Products in
accordance with licenses purchased by Amdahl from Encore on
Encore computer systems pursuant to the terms of this Agreement
solely for Amdahl's internal use and not for data processing by
any third party"," so long as Amdahl executes a Schedule A in the
form attached hereto as Exhibit F for each Binary Software
Product license purchased. Amdahl agrees to make all reasonable
efforts to forward each new Schedule A executed by Amdahl for
additional Binary Software Product Licenses purchased hereunder
by Amdahl to Encore's Contracts Department in a package to Encore
at the end of each Quarter for all internal use licenses
purchased during that Quarter. Amdahl agrees that the usage
rights to be granted to Amdahl by Encore hereunder"," pursuant to
Amdahl's purchase Orders for same"," will be governed by the
license type purchased by Amdahl as described below in
Section 18.C.
b. Amdahl Sublicensing
Amdahl may sublicense Binary Software Products in accordance with
the following: Amdahl may provide utilization of Binary Software
Products on the Designated Computer System (DCS) to which it is
licensed"," to its customers or its subcontractors by
sublicensing the Binary Software Products with the appropriate
usage right purchased (as described in Section C below) in
conjunction with the transfer of that DCS to Amdahl's customers
or Amdahl's subcontractors provided: 1) that Amdahl effects
execution by the sublicensee of a sublicense agreement with terms
no less
protective of Encore and its suppliers rights than those terms
contained in Exhibit G of this Agreement (Sublicense
Agreement); and 2) Amdahl makes all reasonable efforts to
forward a copy of such agreement to Encore's Contracts Department
within thirty (30) days of its execution. In cases where
Amdahl's transferee is an agency of the United States government
","licensing of the Binary Software Products may be accomplished
by
utilizing the government Restricted Rights in Commercial
Technical Data and Computer Software as defined in FAR
52.227-7013"," as may be amended from time to time. (Note:
Binary Software Products shall be provided under the FAR with
usage rights per computer ONLY"," not per facility.)
If Amdahl becomes aware of a breach of a sublicense"," then
Amdahl shall take prompt"," corrective action to remedy such
breach and shall"," in addition"," notify Encore of such breach
and the corrective action taken.
B. LICENSE TERM AND FEE
The Binary Software Product Licenses granted hereunder shall be
effective upon either: (i) Amdahl's execution of each Schedule A
in the case of Amdahl's internal use"," or (ii) upon Amdahl's
customer's execution of the Sublicense Agreement in the case that
the Binary Software Product is shipped to Amdahl's customer for
such customer's use; said license shall remain in force unless
sooner terminated under the provisions of this Agreement in the
case of an Amdahl internal license"," or in the case of Amdahl's
customer under the provisions of the Sublicense Agreement. Amdahl
agrees to pay Encore the required license fee for each licensed
Binary Software Product in accordance with the prices for Binary
Software Product Licenses contained in Exhibit A on the payment
terms set forth above. The price paid shall
constitute payment of the license fee required for use on the
basis of one (1) copy only of the licensed Binary Software
Products in accordance with the usage rights purchased as set
forth below in Section 18.C. Additional licenses must be
purchased and the license usage fees must be paid for any
expansion of the initial usage rights purchased by Amdahl or
Amdahl's customer for use of the licensed Binary Software
Products on the DCS to which the license pertains or for licenses
on additional DCSs. Either a Schedule A in the case of an Amdahl
internal license"," or the respective customer's sublicense shall
be amended respectively to reflect such additional usage rights
at the time of purchase.
C. USE OF PRODUCT
a. Encore's Software Licensing Structure
Encore Binary Software Products are licensed by classification
within a given operating environment. The following is a list of
established classifications and operating environments for the
purpose of defining licensing requirements for Binary Software
Products on Encore computer systems. Each Binary Software
Product has an assigned Software License Classification and
Software Licensed Environment which defines the usage rights
which are granted with the particular Binary Software Product.
Software licensing is accomplished as follows:
XX-YYYY where
XX = Software License Classification
YYYY = Software Licensed Environment
Software License Classifications (XX)
1. Concurrent-Use License (CU)
Authorization for a number of simultaneous usage's or
invocations of a Binary Software Product within an Encore
software licensed environment.
2. Unlimited-Use License (UN)
Authorization for unlimited usage's or invocations of a
Binary Software Product within an Encore software licensed
environment.
Software Licensed Environments (YYYY)
1. System (SYST)
A System consists of one or more subsystems that is
administered as a single computing platform.
2. Subsystem (SUBS)
A Subsystem consists of a CPU-Board.
3. Processor (PROC)
A Processor consists of a single processor residing on a
CPU-Board.
4. Controller (CONT)
A Controller is a hardware I/O device (e.g. Model 8523-444
VME Serial Synchronous Controller).
5. Terminal Server (TERM)
(e.g. Model 8519-000"," Terminal Server)
6. Terminal Server Port (PORT)
A Port is one serial channel located on a Terminal Server.
7. Site License (SITE)
A Site License is authorization for unlimited usage or
invocations of a Binary Software Product on all systems sold by
Encore
residing at a single geographic location.
8. Vendor Supported Product License (VSP or VEND)
Licensing is arranged directly between the end user customer
and the third party vendor.
D. PROPRIETARY INFORMATION AND OWNERSHIP
Amdahl acknowledges that Encore represents that the licensed
Binary Software Products and Source Software Products are
considered to be the proprietary information of Encore and/or
Encore's third party suppliers. Amdahl agrees that it will not
reverse compile"," reverse engineer"," or disassemble the Binary
Software Products.
Amdahl acknowledges that it will receive no title or ownership
rights to the licensed Binary Software Products or Source
Software Products furnished by Encore under this Agreement"," or
to any copies thereof made by Amdahl"," including any copies
generated from source code"," which shall remain the property of
Encore and Encore's suppliers. Nothing in this Agreement shall
be
interpreted as (i) transferring any right or title to the
intellectual property in the Binary Software Products"," Source
Software Products"," or any copies made thereof in whole or
part","or (ii) conferring by right"," estoppel or otherwise any
license or right under any patent or trademark owned by Encore or
its suppliers.
Amdahl agrees that it shall not print"," or copy"," in whole or
in part"," any Binary Software Products under this Agreement
except:
a. to enable Amdahl to understand the contents of the Binary
Software Product;
b. to use and modify the Binary Software Product as
contemplated under this Agreement;
c. to combine such with other programs or material for an
updated work"," provided that the updated work shall be deemed a
licensed Binary Software Product subject to the terms and
conditions of this Agreement; or
d. for safekeeping and backup purposes.
The obligations of confidentiality and limitations on use shall
survive the termination of this Agreement.
Amdahl agrees to reproduce the proprietary notices and/or
copyright legends appearing on the original copies on all copies
made by Amdahl under this Agreement.
Amdahl understands and agrees that the existence of any copyright
notice on the Binary Software Products"," packaging"," or on
terminal screens shall not be construed as an admission or
presumption that the Binary Software Produce has been made
publicly
available.
E. SECURITY
Amdahl agrees to treat the licensed Binary Software Products with
the same degree of care with which it treats its own proprietary
information. Amdahl will use all reasonable precautions and take
all necessary steps to prevent the licensed Binary Software
Products from being acquired by unauthorized persons.
Amdahl will take appropriate action"," by instruction","
agreement or otherwise"," with any persons permitted access to
the licensed Binary Software Products by Amdahl so as to enable
Amdahl to satisfy its obligations regarding security of Software
Products under this Agreement.
Amdahl shall not be liable for inadvertent or authorized use
","publication or dissemination of proprietary information
received
hereunder provided that (i) Amdahl uses the same degree of care
in safeguarding such information as it uses for its own
information of like importance"," and (ii) upon discovery of such
inadvertent or unauthorized use"," publication or
dissemination","Amdahl shall endeavor to prevent any further
inadvertent or
unauthorized use"," publication or dissemination.
Encore acknowledges that Amdahl may currently or in the future be
developing proprietary information internally"," or receiving
proprietary information in confidence from third parties that may
be similar to Encore's information. Accordingly"," nothing in
this Agreement shall be construed as a representation or
inference that Amdahl will not develop products"," systems or
methods contemplated by Encore's information. Amdahl expressly
agrees that it will not use Encore's proprietary information in
such development unless specifically and expressly licensed to do
so.
F. RETURN OF SOFTWARE PRODUCTS
Upon termination of this Agreement and any licenses granted
hereunder to Amdahl due to default by Amdahl"," Amdahl shall
immediately return the licensed Binary Software Products to
Encore unencumbered"," certifying in writing by an officer of
Amdahl to Encore that all copies or partial copies have been
returned or destroyed. Amdahl shall also certify in writing to
Encore that all information and data relating to said licensed
Binary Software Products stored in any CPU or other storage
medium or facility which cannot be delivered to Encore has been
purged of same. Sublicenses granted by Amdahl to its customers
shall not be affected by termination of this Agreement so long as
no breach of such sublicenses has occurred.
G. DERIVATIVE WORKS AND COPIES
Amdahl shall have the right to make modifications to the Binary
Software Products and to create derivative works thereof. Amdahl
shall own any such modifications except as to third party
Products where such ownership is not permitted by the third
party"," and subject to Encore's rights in the original work.
Encore and its respective suppliers shall retain title to all
Binary Software Products and all copyrights pertaining thereto
","and to any copies made thereof"," including any portion of the
Binary Software Product contained in a modified"," derivative or
updated work"," and also to the derivative work itself. Amdahl
shall reproduce and include all copyright notices and other
legends contained in the Binary Software Produce on all copies or
partial copies made thereof. Any portion of the Binary Software
Products contained in an undated"," modified"," or derivative
work shall continue to be subject to the terms of this Section
18. Upon termination of any of the licenses granted pursuant to
this Section 18"," Amdahl shall remove any portion of the Binary
Software Product contained in any modified or derivative work for
which said license has been terminated.
H. PROCESSOR INOPERABILITY OR CHANGE
In the event that the original DCS to which the Binary Software
Product is licensed becomes inoperable"," Amdahl is authorized to
use the Binary Software Product on a back-up DCS until the
originally licensed DCS is against operational.
Amdahl may change the DCS upon written notice to Encore so long
as Amdahl pays any additional fees due for such change and
executes any additional licensing documents required to reflect
such changed license usage.
I. SOURCE LICENSES
Any Source Software Product licenses which may be offered to
Amdahl for purchase will be offered on the following terms:
Depending on the type of license being purchased"," Amdahl will
obtain the following rights:
a. If UMAX V SOURCE IS SPECIFIED ON EXHIBIT F"," LICENSE
SCHEDULE A"," THE FOLLOWING USAGE RIGHTS APPLY: The UMAX V Source
Software license restricts the use of the Source Software
Products to the DCS only. Encore will not ship a UMAX V Source
Software Product until a copy of the UNIX System Laboratories
(USL) license authorizing use of UNIX Source on the DCS has been
received and verified by the Encore Contracts Department with
USL. The right to use the UMAX V Source Software Product is
personal"," non-exclusive and non-transferable and is restricted
for use on that DCS for which a UNIX Source license designation
has been obtained by Amdahl from USL. The right to use the UMAX
V Source Software Product on the USL approved Source DCS runs for
the life of the system or until such time as the USL UNIX Source
license for that DCS is terminated"," or unless sooner terminated
in accordance herewith.
Amdahl may modify the UMAX V Source Software Product for any
purpose"," provided that any portion thereof included in a
modified work shall remain subject to all terms and conditions of
the license. Amdahl may copy the UMAX V Source Software Product
for backup purposes only. Encore shall not be liable for
warranty or support of software derived from Amdahl's
modifications made to Encore's UMAX V Source Software Product.
Binary derived from the UMAX V Source Software Product is
restricted for use on the systems for which Binary usage rights
have already been acquired; the provisions of Section 18 A above
apply to any Binary code generated by Amdahl from the Source
code. The prerequisite for a UMAX V Source Software Product
License is the appropriate Binary license for that DCS.
The license right granted Amdahl hereunder to use the UMAX V
Source Software Product is restricted solely and exclusively to
Amdahl for its use on the DCS"," in accordance with operating
instructions provided by Encore. The UMAX V Source Software
Products license may not be assigned"," subleased","
sublicensed","sold"," offered for sale"," disposed of","
encumbered"," or mortgaged by Amdahl. Amdahl agrees not to use
the UMAX V Source Software Products at other Amdahl sites or
companies on a service basis.
b. IF SOURCE IS SPECIFIED ON EXHIBIT F"," LICENSE SCHEDULE
A","THE FOLLOWING USAGE RIGHTS APPLY: The Source Single System
license usage restricts the usage of the Source Software Products
to the DCS. The right to use the Source Software Products on the
designated system runs for the life of the system unless sooner
terminated in accordance with the provisions hereof. Amdahl is
granted a personal"," non-exclusive"," non-transferable right to
use the Source Software Products on the DCS.
Amdahl may modify the Source Software Products for any purpose
","provided that any portion thereof included in a modified work
shall remain subject to all terms and conditions of this license.
Amdahl may copy the Source Software Product for backup purposes
only. Encore shall not be responsible for warranty or support of
software derived from Amdahl's modifications made to Encore's
Source Software Products.
Binary derived from the Source Software Product is restricted for
use on the system(s) for which Binary usage rights have already
been acquired; the provisions of Section 18 A above apply to
Binary Software Products generated by Amdahl from Source Software
Products. The prerequisite for a Source Single System license is
the appropriate Binary license for that DCS.
The license right granted Amdahl hereunder to use the Source
Software Products is restricted solely and exclusively to Amdahl
for its use on the DCS"," in accordance with operating
instructions provided by Encore. The Source Software Products
may not be assigned"," subleased"," sublicensed"," sold","
offered for sale","disposed of"," encumbered"," or mortgaged by
Amdahl. Amdahl agrees not to use the Source Software Products at
other Amdahl sites or companies on a service basis.
The following provisions of Section 18 above also apply to Source
Software Product Licenses purchased by Amdahl hereunder:
subsections E"," F"," G"," and H.
19. HEADINGS
Heading used in this Agreement are for reference purposes only
and shall not be deemed a part of this Agreement.
20. EXCUSABLE DELAYS
Encore shall not be held responsible for loss"," damage or delay
from any circumstances beyond its control including but not
limited to the following: strikes"," riots"," fire","
insurrection","war"," the elements"," embargoes"," failure of
carrier"," inability to obtain transportation facilities","
government requirements","changes in Amdahl's requirements","
acts of God or the public
enemy.
21. LAW
The validity"," performance and construction of these terms and
conditions shall be covered by the laws of the State of Florida.
Each party agrees that it will perform its obligations in
accordance with all applicable laws and implementing rules and
regulations.
22. NON-WAIVER
No delay or failure of either party in exercising any right
hereunder"," and no partial or single exercise thereof"," shall
be deemed of itself to constitute a waiver of such right or any
other rights hereunder.
23. SEVERABILITY
If any term or provision of this Agreement shall be found to be
illegal or unenforceable"," then"," notwithstanding"," this
Agreement shall remain in full force and effect and such term or
provision shall be deemed stricken.
24. SUCCESSORS
All covenants"," stipulations and promises in this Agreement
shall be binding upon and inure to the benefit of the parties
hereto and their successors"," assigns and legal representatives.
Neither party shall have the right to assign or otherwise
transfer its rights or obligations under this Agreement except
with the written consent of the other party"," provided","
however"," that a successor at interest by merger"," by operation
of law","
assignment","purchase or otherwise of the entire business of
either party ","shall acquire all interest of such party
hereunder"," without the necessity of obtaining prior written
consent. Any written consent required hereunder shall not be
unreasonably withheld.
25. TERMINATION
A.) TERMINATION BY ENCORE
Encore shall have the right to terminate this Agreement and any
Licenses granted hereunder upon the occurrence of any of the
following events provided"," with respect to a) or b)
below","written notice by Encore is given to Amdahl"," and Amdahl
fails to
remedy the cause of termination stated in such notice within
thirty (30) days after receipt of such notice:
a. Amdahl neglects or fails to make any payment due Encore as
and when due.
b. Amdahl breaches any material obligation imposed upon Amdahl
by this Agreement.
c. Amdahl (i) makes an assignment for the benefit of creditors
"," or a receiver"," trustee in bankruptcy or similar officer
is
appointed to take charge of all or part of its property;
(ii) is
adjudged a bankrupt; or (iii) assigns this Agreement in
contravention
of its terms.
B. TERMINATION BY AMDAHL
Amdahl shall have the right to terminate this Agreement upon the
occurrence of any of the following events provided"," with
respect to a) below"," written notice by Amdahl is given to
Encore"," and Encore fails to remedy the cause of termination
stated in such notice within thirty (30) days after receipt of
such notice:
a. Encore breaches any of the material obligations imposed upon
Encore by this Agreement.
b. Encore (i) makes an assignment for the benefit of creditors
"," or a receiver"," trustee in bankruptcy or similar officer
is
appointed to take charge of all or part of its property; or
(ii) is
adjudged a bankrupt.
For purposes of this subsection B"," each of the following
events","among others"," shall be considered a material breach by
Encore:
1. any of the Beta and/or General Availability Products or
Feature/Functions to be delivered or made available by Encore
to
Amdahl in accordance with the schedules set forth in Section
2D
subsection a.) or Section 2E fails to meet the Product
Specification
for a period of sixty (60) days after the date of its
scheduled
delivery or availability.
2. Encore is unable for any reason to materially deliver
Products for a period of more than ninety (90) days after the
original
shipment date for Orders accepted by Encore.
C. EFFECT ON LICENSES
In the event of termination"," except as otherwise provided in
this Agreement"," Encore may cancel any or all of the licenses
granted to Amdahl hereunder for any Software Product except that
Amdahl shall be entitled to retain sufficient licenses to provide
for the fulfillment of Amdahl's obligations under maintenance and
support agreements"," and the software sublicenses granted by
Amdahl to Amdahl's customers which are in force at the time of
such termination and which are not in default shall survive. Upon
satisfactory completion by Amdahl of all maintenance
obligations in existence at the time of termination"," the
licenses referred to in this subparagraph shall cease.
D. ADDITIONAL AMDAHL REMEDIES
a. In the event that Encore delays the schedule for delivery or
availability of any of the Products or Feature/Functions set
forth in either Section 2D subsection a. or Section 2E"," then
Amdahl's commitment to purchase Product in [*CONFIDENTIAL
MATERIAL DELETED*] contained in Section 4C and its rights and
Encore's obligations under Section 2B shall be extended on a day-
for-day
basis (without double counting) for each day the
scheduled dates are delayed.
b. In the event that Encore licenses the feature and function
differentiation set forth in Section 2B subsection a. to another
party in contravention of the terms of that subsection"," then
Amdahl shall be relieved of its obligations to purchase Product
as set forth in Section 4C.
c. In the event that Encore does not obtain an extension
through December 31"," 1994 of its Revolving Loan Agreement by
May 1"," 1994"," then Amdahl will be entitled to terminate this
Agreement by notice to Encore no later than June 30"," 1994.
26. PUBLICITY AND ANNOUNCEMENTS
A. CONSENT REQUIRED
Prior to publication"," each party agrees to obtain the consent
of the other party as to the content of any press release"," any
advertising or any other external promotion referencing the other
party.
B. NATURE OF AGREEMENT
For purposes of this Section 26"," the parties agree that the
specific terms of this Agreement are proprietary and may not be
disclosed by either party without the written consent of the
other except as may be required by law or in connection with a
corporate transaction including financing or a sale of assets.
Each party is free"," however"," to disclose the general
existence of this Agreement and the relationship between the
parties.
27. ESCROW AND MANUFACTURING RIGHTS
a. Encore agrees to grant Amdahl a non-exclusive license to
manufacture the Product upon the occurrence of either of the
following events:
1. Encore (i) makes an assignment for the benefit of
creditors"," or a receiver"," trustee in bankruptcy or similar
officer is appointed to take charge of all or part of its
property; or (ii) is adjudged a bankrupt;
2. As a result of a catastrophic disaster"," Encore is
unable to deliver Product for Orders placed by Amdahl in
accordance with Section 4 for a period of more than ninety (90)
days after acceptance of such Orders by Encore"," and Encore is
unable to cure such inability to deliver within the ninety (90)
day period.
b. Encore also agrees to place in an escrow deposit"," at the
election of Amdahl"," Product documentation for purposes of
enabling Amdahl to effectively utilize its license to manufacture
the Products. The fees payable by Amdahl to Encore in the event
that Amdahl makes such election for escrow shall be calculated to
cover Encore's reasonable costs to initiate and maintain the
escrow"," and shall be no greater than:
Initial Deposit and first year's semi-annual update------
$[*CONFIDENTIAL
MATERIAL DELETED*]
Semi-annual updates during each succeeding year--$[*CONFIDENTIAL
MATERIAL DELETED*]
Encore agrees that in the event that Encore establishes a similar
escrow deposit for the Product for another Encore
customer","Encore agrees to reduce each of the escrow charges to
Amdahl
stated above by [*CONFIDENTIAL MATERIAL DELETED*] percent
([*CONFIDENTIAL MATERIAL DELETED*]%).
c. The parties agree that the specific terms of the
manufacturing license and escrow agreement shall be mutually
agreed between the parties no later than April 30"," 1994. These
documents will reflect the provisions specified in subsections a)
and b) of this Section 27 and provisions reasonably incident
thereto"," and otherwise will contain standard terms and
conditions. If the parties cannot agree upon the terms and
conditions of these documents"," they will refer the matter to a
mutually agreeable attorney experienced in these matters whose
decision as to the terms and conditions of the documents will be
final. The parties will share the cost of any such attorney.
28. SURVIVAL OF TERMS
Notwithstanding anything to the contrary that may be contained
herein"," in the event of any termination or expiration of this
Agreement"," the payment obligations"," confidentiality
provisions and any other provisions which by their terms are to
be performed or complied with subsequent to the expiration or
other
termination of this Agreement shall survive and continue in full
force and effect. The termination of this Agreement for any
reason shall be without prejudice to"," and shall not effect","
the right of either party to recover from the other any and all
damages to which either may be entitled therefor"," or any other
rights of either in connection therewith"," and all such rights
of both shall survive such termination.
29. DISPUTE RESOLUTION
The parties hereby agree that any disputes which arise between
them which cannot be resolved in the normal course of business
between the parties will be elevated through an escalation
process to be agreed between the parties to the Chief Executive
Officers of each party who will together seek a resolution of the
problem. The Chief Executive Officers will attempt in good faith
to resolve the dispute between them without need for further
process. If the Chief Executive Officers jointly conclude that
such a resolution is not possible"," then each party is free to
pursue its rights and remedies at law.
30. CONFIDENTIALITY
Amdahl understands that the Binary Software Products listed in
Exhibit A as well as any Source Software Products licensed
hereunder"," and any and all corrections and enhancements to the
Binary Software Products and/or Source Software Products made by
Encore or its suppliers include confidential data and expertise
which are claimed as trade secrets or other proprietary
information of Encore and its suppliers. Amdahl agrees to take
adequate precaution to prevent unauthorized disclosure of
information relating to such Software Products which are clearly
marked as Proprietary or Confidential and to maintain the
confidential nature of such information to the same extent that
it protects its own proprietary information. Encore understands
that Amdahl will necessarily disclose to prospective and
existing customers user's manuals. Specifications"," and such
information as is customarily disseminated as may be necessary to
explain the nature and function of the Binary Software Products
","and to allow their effective utilization by customers"," and
hereby authorizes such disclosures"," so long as the disclosure
is made in"," at minimum"," the same manner and under the same
terms as Amdahl utilizes with respect to its own proprietary
information of a similar nature.
Each party hereto understands that the other party may from time
to time furnish information and documentation in addition to the
Binary Software Products and/or Source Software Products and
Related Materials to the other in conjunction with the
implementation of the terms of this Agreement"," which
information may include confidential data and expertise which are
claimed as trade secrets or proprietary information of the
providing party. This information may include"," but is not
limited to"," customer lists"," future product plans"," financial
information and the like. The receiving party agrees not to
disclose such information and to protect said information
consistent with the protection afforded the receiving party's own
proprietary information. The receiving party will have no
liability for inadvertent or
accidental disclosure so long as the receiving party has taken
all reasonable precautions to protect against such disclosure
consistent with the receiving party's protection of its own
confidential and proprietary information of like nature. The
obligations of this Section shall not extend to (a) information
which now or hereafter may be in the public domain by acts not
attributable to the recipient"," (b) information that is
independently developed by the recipient"," (c) information that
is received by either party from a source other than the other
party and without restrictions"," and (d) information furnished
to others by the disclosing party without restriction or
disclosure.
31. INSURANCE
Both parties shall at their sole cost and expense maintain at all
times during the term of this Agreement a policy or policies of
Comprehensive General Liability Insurance"," including broad form
contractual liability and products and completed operations
coverage"," with limits of [*CONFIDENTIAL MATERIAL DELETED*]
Million Dollars ($[*CONFIDENTIAL MATERIAL DELETED*]) bodily
injury/property damage.
These policies shall be placed by each company with an insurance
company rated not less than A(VII) in the A.M. Best Company
Rating Guide. Such policies shall not be canceled or materially
changed without thirty (30) days prior written notice to the
other party. Each party shall deliver to the other
certificate(s) of insurance evidencing that the above policies
are in full force and effect.
32. GENERAL
This Agreement"," together with the Exhibits attached
hereto","constitutes the entire agreement between the parties and
supersedes all prior proposals"," negotiations and
communications","whether oral or written"," relating to the
subject matter of this
Agreement.
This Agreement shall prevail notwithstanding any variations or
additions in any Order or any other document submitted by Amdahl.
No deviation to the terms and conditions of this Agreement shall
be binding upon Encore unless specifically set forth in writing
and signed by an authorized representative of Encore. The
effective date of this Agreement is the date it is accepted and
entered into by Encore.
The parties have read this Agreement"," including any attachments
hereto"," understand it and agree to be bound by all its terms.
This Agreement is accepted by:
AMDAHL CORPORATION ENCORE COMPUTER
CORPORATION
By: /s/ E. Williams By: /s/ T. Mark Morley
Title: V.P. Title: V.P.
Date: 3/24/94 Date: 3/24/94
EXHIBIT A
ENCORE STORAGE PRODUCTS AND PRICES
Infinity SP Price List
Cache
Amdahl
Capacity Size #OEMI Amdhal $/MB
Description (GB) (MB) Channels Cost Cost
Infinity SP Model 1 [*CONFIDENTIAL MATERIAL DELETED*]
[*CONFIDENTIAL
MATERIAL DELETED*]
Infinity SP Model 2 [*CONFIDENTIAL MATERIAL DELETED*]
[*CONFIDENTIAL
MATERIAL DELETED*]
Options
Capacity # Slots Amdahl
Description (MB) Reqiured Cost
[*CONFIDENTIAL MATERIAL DELETED*]
PRICING FOR ALPHA" BETA AND PROTOTYPE SYSTEMS
ALPHA AND ENGINEERING PROTOTYPE SYSTEM PRICING:
The price for each Alpha and Prototype system with the
configurations as set forth below is
[*CONFIDENTIAL MATERIAL DELETED*] Dollars ($[*CONFIDENTIAL
MATERIAL DELETED*]).
ALPHA SYSTEM CONFIGURATION:
[*CONFIDENTIAL MATERIAL DELETED*]
ENGINEERING PROTOTYPE SYSTEM CONFIGURATION:
[*CONFIDENTIAL MATERIAL DELETED*]
BETA SYSTEM PRICING:
The price for each Beta System with the configuration as set
forth below is
[*CONFIDENTIAL MATERIAL DELETED*]Dollars ($[*CONFIDENTIAL
MATERIAL DELETED*]).
BETA SYSTEM CONFIGURATION:
[*CONFIDENTIAL MATERIAL DELETED*]
SPARES KITS FOR ALPHA AND ENGINEERING PROTOTYPE SYSTEMS:
[*CONFIDENTIAL MATERIAL DELETED*] for the Spare Kits and On-Loan
Kits defined below:
Alpha/Engineering Prototype Spare Kit:
Quantity 3)
1 SCSI Controller
1 BMC Controller
1 Software Bundle
1 Boot Disk/Maintenance Tape
1 Barracuda
On-Loan Board Kit for Alpha and Engineering Prototype
Systems:
(Quantity 3)
1 CPU Board
1 Reflective Memory Board
On-Loan Ops Kit:
(Quantity 1)
1 Operator Console
EXHIBIT B
ENCORE STORAGE PRODUCT SPECIFICATION
FOR AMDAHL BRANDED PRODUCT
ENCORE
STORAGE PRODUCT
SPECIFICATION
3/24/94
ENCORE STORAGE PRODUCT
Table of Contents
Specification History . . . . . . . . . . . . . . . . . . . . . .
. . . . 1
Product Objectives . . . . . . . . . . . . . . . . . . . . . . .
. . . . 1
Architectural Overview . . . . . . . . . . . . . . . . . . . . .
. . . . 1
Product Description . . . . . . . . . . . . . . . . . . . . . . .
. . . . 2
Product Configurations . . . . . . . . . . . . . . . . . . . . .
. . . . 3
Model 1
Model 2
Model 3
Product Pricing . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . 5
Infinity SP Model 1
Infinity SP Model 2
Infinity SP Model 3
Engineering Prototype . . . . . . . . . . . . . . . . . . .
. . . . 6
Alpha Systems . . . . . . . . . . . . . . . . . . . . . . .
. . . . 7
Beta Systems . . . . . . . . . . . . . . . . . . . . . . . .
. . . . 7
Availability/Reliability . . . . . . . . . . . . . . . . . . . .
. . . . 7
Serviceability/Maintenance . . . . . . . . . . . . . . . . . . .
. . . . 8
Compatibility . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . 9
Control Unit Image
Channel Protocols
Configuration
Features
ESCON Compatibility
Functional Software
Device Image
DASD Management
Media Maintenance
Performance . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . 11
Tuning and optimization . . . . . . . . . . . . . . . . . . . . .
. . . 11
Future Connectivity Options . . . . . . . . . . . . . . . . . . .
. . . 12
Manufacturing ISO Certification . . . . . . . . . . . . . . . . .
. . . 12
Environmental . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . 12
Clarification of Specification . . . . . . . . . . . . . . . . .
. . . 14
Appendix A - Feature Qualification and Availability
Appendix B - RAID Information
Appendix C - Product Drawings
Appendix D - Architectural Overview Diagrams
Appendix E - Performance Targets
Encore Storage Product Specification
[*CONFIDENTIAL MATERIAL DELETED*]
APPENDIX A
[*CONFIDENTIAL MATERIAL DELETED*]
APPENDIX B
[*CONFIDENTIAL MATERIAL DELETED*]
Appendix C
P,"roduct Drawings Attached
Infinity Storage Product Cabinet Layout
[*CONFIDENTIAL MATERIAL DELETED*]
1 High Density Storage Array
[*CONFIDENTIAL MATERIAL DELETED*]
Figure
Schematic
[*CONFIDENTIAL MATERIAL DELETED*]
Schematic
[*CONFIDENTIAL MATERIAL DELETED*]
Appendix D
Architectural Overview
Support Diagrams
Encore Infinity SP
[*CONFIDENTIAL MATERIAL DELETED*]
Infinity SP Model 1"," 2 or 3
Logical View
[*CONFIDENTIAL MATERIAL DELETED*]
Software Diagram
Infinity SP Software
[*CONFIDENTIAL MATERIAL DELETED*]
Software Diagram
Infinity SP Software
[*CONFIDENTIAL MATERIAL DELETED*]
Software Diagram
Infinity SP Software
[*CONFIDENTIAL MATERIAL DELETED*]
Appendix E
[*CONFIDENTIAL MATERIAL DELETED*]
EXHIBIT C
ENCORE CUSTOMER SERVICE PRODUCT OFFERING
Per Subsection 12 C to be completed by [*CONFIDENTIAL
MATERIAL DELETED*]
FIELD SUPPORT STATEMENT OF WORK
Encore Deliverables:
Perform technical services in support of Amdahl's Technical
Support Group (TSG).
Encore Work Items:
1.1 Encore shall provide Sustaining Engineering"," i.e.","
Encore is responsible for analyzing complex incident reports
and ","where this results from errors in the product","
Encore shall use all reasonable
endeavors to correct or provide advice to circumvent the
incident and
continue business operations.
1.2 Encore personnel shall be available [*CONFIDENTIAL
MATERIAL DELETED*]. Amdahl will endeavor to notify
Encore within [*CONFIDENTIAL MATERIAL DELETED*] of
the escalation to [*CONFIDENTIAL MATERIAL DELETED*]
which may escalate to Encore.
1.3 As requested by Amdahl. Encore shall provide on-site
support. No direct support of Amdahl's customers will be
provided by Encore under the terms of this Agreement unless
requested by Amdahl. Payment for such service shall be made in
accordance with prevailing Encore rates for labor and
Amdahl's travel
and expense policy. Payments to Encore will not be incurred
for
incidents resulting from product design failures.
1.4 Encore will work with Amdahl in recreation of failures
through relevant data made available by Amdahl. Problem
recreation will first be attempted at an Encore facility. If this
fails"," problem recreation will then be attempted"," at
Amdahl's request"," at an Amdahl facility or at customer
location.
1.5 Encore technical personnel shall respond to Amdahl TSG
within [*CONFIDENTIAL MATERIAL DELETED*].
1.6 Encore's target response times and methods of responding to
error reports shall be documented (e.g. severity level and
appropriate actions for each severity; escalation procedure at
all
support levels) and agreed to by Amdahl.
1.7 Encore's target response times and methods of responding to
design problems shall be documented (e.g."," severity level
and
appropriate actions for each severity; escalation procedure
at all
support levels) and agreed to by Amdahl.
1.8 Encore shall designate an Encore employee as liaison to act
as a single point of contact for ongoing technical
communication with
Amdahl Customer Services.
1.9 Encore shall share technical data/databases for problem
tracking and analysis.
1.10 Encore will endeavor to interactively report
problems/problem status using Amdahl's Clarify reporting
system.
1.11 Encore shall provide periodic failure analysis reports on
FRU's returned to Encore for repair.
Amdahl Work Items:
1.12 Amdahl World Wide Customer Support Center (WWCSC) shall
provide first line support and is responsible for an initial
assessment of the nature of an end user reported incident. If the
problem cannot be diagnosed"," the second level support
specialist
within WWCSC will be called upon for assistance. Once
diagnosis is
complete"," first line support in the field is responsible
for applying
the fix and re-certifying the product at the end users site.
1.13 Amdahl Technical Support Group (TSG) shall provide third
level support"," assisting second level support with diagnosis of
complex end user reported incidents usually by means of a
communication link or on site with the assistance of the
Field Area Specialist. Amdahl third level support shall escalate
to Encore Sustaining Services.
1.14 Amdahl technical support shall provide service
administration
support to the field"," logging and supplying reports and
responses"," fixes"," patches"," system fault replication
testing and appropriate
technical information.
1.15 Access to Encore's Technical Support Center shall be limited
to Amdahl's TSG support and management personnel as agreed to
by
Amdahl and Encore.
LOGISTICS SUPPORT
Encore Work Items:
2.1 Encore shall provide list of FRU's and associated
information (e.g."," part number"," description","
quantity"," MTBF"," manufacturing lead time"," repair
status"," repair fee"," repair lead time)
to logistic planning.
2.2 Encore shall make all reasonable endeavors to comply with
lead time for shipment of spares.
2.3 If at any time Encore becomes aware of a potential delay in
the shipment of spares on an accepted order"," Encore will
immediately notify Amdahl Logistics Planning.
2.4 Term of Support - Encore will provide support (parts and
services) for products delivered under this Agreement for a
period of five (5) years after the last Product purchased
hereunder. In the event that certain parts become
commercially
unavailable"," Encore reserves the right to provide a like
part with
similar functionality.
2.5 Encore will provide Amdahl access to full emergency set of
spares under the following criteria:
a) One (1) emergency set in Memphis"," Tennessee when U.S.
installed base is ten (10) or more units.
b) One (1) emergency set in Holland when European
installed base is seven (7) or more units.
c) Amdahl agrees to pay Encore a per/incident Access Fee
TBD.
Amdahl Work Items:
2.6 Amdahl shall provide Encore with a spares forecast following
agreed to policies and practices.
2.7 Amdahl is responsible for all communication with the field
with regard to spares and float.
2.8 All shipping"," duties and usage incurred by Encore in
connection with order fulfillment of spares shall be born by
Amdahl"," excluding warranty or updates which result from Encore
design
or manufacturing defects.
ENGINEERING CHANGE CONTROL PROCEDURES
Encore Deliverables:
3.1 Engineering Changes (EC's) involving hardware will be
supplied to Amdahl with documentation and parts that will allow
Amdahl
to evaluate and test the EC. Engineering changes involving
S/W or
Firmware will be supplied to Amdahl with documentation and
patches
that will allow Amdahl to evaluate and test the EC.
3.2 For a mandatory or limited mandatory EC"," Encore will
provide the necessary float to meet the agreed to quantity
and update schedule
at no cost to Amdahl.
3.3 Spare parts returned to Encore for repair will be updated to
the highest agreed to EC level before being returned to
Amdahl. This
will be done at the expense of Encore for mandatory and
limited
mandatory EC's. Other optional up-date charges will be paid
by
Amdahl.
3.4 The compatibility of an engineering change must be
communicated and tracked by Encore to ensure all hardware
"," firmware and software are functionally compatible. Every
EC submitted will indicate whether the EC is upward of
downward compatible via a compatibility matrix. Encore will
endeavor to make
all EC's downward compatible.
Encore Work Items:
3.5 Submit early notice (time to be agreed to) of engineering
changes that effect the form"," fit"," function","
reliability"," accessibility or serviceability to the
product.
3.6 Engineering changes will be either mandatory"," limited
mandatory"," or optional. The cost for material for
implementing the
changes will be Encore's for mandatory and limited mandatory
changes
and Amdahl's for optional changes.
3.7 Requested changes will be documented and described in a form
to be agreed to and be generated by the requesting party. The
change
order will describe in as much detail as possible"," the
reason for the
change"," expected impact of the change if implemented and
consequences
of not implementing the change.
3.8 Encore will respond to Amdahl requested changes promptly
and"," when possible"," offer a plan which makes adequate
resources
available to deliver the requested change within the time
consistent
with the severity of the change request.
3.9 Indicate on each EC change submitted to Amdahl whether there
are related changes. Every engineering change submitted will
indicate
whether the EC is a co-requisite"," prerequisite or
companion change.
3.10 EC's that are originated by Encore will be prioritized as
emergency or normal.
3.11 Provide effectivity information for both Encore and Amdahl
generated EC's.
3.12 Responses to Amdahl's problem reports will be for severity
[*CONFIDENTIAL MATERIAL DELETED*] for severity
[*CONFIDENTIAL MATERIAL
DELETED*].
3.13 Items that are not interchangeable due to an EC must have
different part numbers. If down level items can be reworked or
retrofitted"," the dash number of the part number should be
rolled.
Amdahl Work Items:
3.14 Communicate problems where the product deviates from
specification"," involve logic problems"," field incidence
or documentation by way of an agreed to problem report
process. The
problem severity's used by Amdahl will be 1-3 as defined
below.
3.15 Request engineering changes to the product. Where the
changes to the product effect the functionality or adds features
to
the product"," the cost responsibility shall be mutually
agreed to.
3.16 Indicate on each EC submitted to Encore whether there are
related EC's. Every EC change submitted will indicate whether
the EC
is a co-requisite"," pre-requisite or companion change.
3.17 EC's that are requested by Amdahl will be prioritized as
either emergency or normal.
3.18 Communication of technical issues between Amdahl and Encore
will be between the designated engineering focal points within
each
company.
3.19 Communication of engineering change related matters between
Amdahl and Encore will be between Amdahl's and Encore's Change
Management departments and designated focal points.
3.20 Amdahl will be responsible for installation of all EC's in
the base that falls within the agreed to effectivity range.
3.21 Engineering Change Definitions:
Mandatory EC:
An engineering change that corrects functional defects in
systems and spares that are non complaint with
specifications"," defective safety features"," or data
integrity exposures and
failures.
Limited Mandatory EC:
A mandatory EC as above but which effects the product"," and
spares"," when it is configured in a particular but allowable
manor. It must be agreed to by Amdahl and Encore that
updating only
effected portion of previously shipped product"," features
and spares is required.
Optional EC:
An engineering change that does not need to be implemented
in previously shipped products"," features or spares.
PROBLEM ESCALATION/ENGINEERING SUPPORT
The following Encore escalation policy will be
initiated by Encore upon receiving a telephone
escalation request
for assistance from Reseller.
Elapsed Time Technical Technical Management in
Hours Resource Management Awareness
* CS Technical
Support
* CS Storage
Products Mgr.
* Development CS Director Development
Support BIS Sec. Mgr. *
Development VPs--CS
Support + Development
* Development Exec VPs--CS
Support + Development
* CEO/COO
* indicates [*CONFIDENTIAL TREATMENT DELETED*]
Problem Report Definitions:
Severity 1: A critical system component is non operational or
safety defects and the customer cannot continue to
operate.
Severity 2: The customer has an intermittent problems that
seriously impairs his operations and is willing to
commit
the necessary resources.
Severity 3: The problem does not keep the customers systems
and/or applications from running and are not degrading
but
does not require a solution.
PROBLEM SEVERITY LEVELS AND RESPONSE
1. Software
The following repair times apply to all Encore C released
software Products.
a) Delivery of Temporary Fixes:
Encore shall use best efforts to provide temporary
fixes to Amdahl within the following time frames:
-Sev. 1"," [*CONFIDENTIAL MATERIAL
DELETED*] -Sev 2"," [*CONFIDENTIAL
MATERIAL DELETED*]
b) Delivery of Permanent Fixes:**
Encore shall use reasonable efforts to provide
permanent fixes within the following time frames from
the initial
call from Reseller for Encore Software Products
-Sev 1"," [*CONFIDENTIAL MATERIAL
DELETED*] -Sev 2"," [*CONFIDENTIAL
MATERIAL DELETED*] -Sev 3","
[*CONFIDENTIAL MATERIAL DELETED*]
2. Hardware Severity Response
a) Delivery of Temporary Fixes:
Encore shall use best efforts to provide temporary
fixes to Reseller within the following time frames:
-Sev 1"," [*CONFIDENTIAL MATERIAL
DELETED*] -Sev 2"," [*CONFIDENTIAL
MATERIAL DELETED*]
b) Respond with Permanent Fixes:**
Encore will provide an actin plan to Reseller within
the following time frames from the initial call from
Reseller and
use reasonable efforts to provide permanent design
error fixes.
-Sev 1"," [*CONFIDENTIAL MATERIAL
DELETED*] -Sev 2"," [*CONFIDENTIAL
MATERIAL DELETED*] -Sev 3","
[*CONFIDENTIAL MATERIAL DELETED*]
**The term permanent as used in Section 3 shall not
be construed to mean that all compliance and systems
integration
testing will have been done by Encore when the
permanent fix is
provided"," nor shall the word permanent imply that the
change
provided will be incorporated in the next Encore
production
release.
DOCUMENTATION
Encore Work Items:
4.1 Encore shall supply"," where applicable"," one (1) set of
customer and technical documentation which includes in-line
diagnostics manual containing error code dictionary for all
in-line
Encore diagnostics; install/deinstall processes/procedures;
physical
planning requirements"," including power and cooling
requirements"," floor
loading"," services clearance"," etc."," product
specifications including
theory of operations"," customer operations"," customer
diagnostics
messages/responses; customer/user documentation"," including
command
syntax; and/or other information as described int he
contract or as
Encore information as described in the contract.
4.2 Encore shall provide Amdahl with one (1) set external
specifications"," internal specifications"," design documents","
technical data and drawings (e.g. engineering drawings ","
documentation) for use by Amdahl to assist in the service
and repair
of the products. These documents will be packaged in a
manner that
indicates the content is Encore confidential information.
4.3 Encore grants Amdahl the right to customize and to reproduce
in whole or part and in reasonable quantities any of the
documentation in whatever format and language it desires for the
purpose of marketing and servicing the products during the
life of
this agreement and thereafter"," solely for the purpose of
servicing the
products.
TRAINING
Encore Deliverables:
Develop and conduct technical education
Encore Work Items:
5.1 Encore shall provide Amdahl with one (1) copy per class
participant and (2) training department copies of Encore
education materials (e.g."," presentation materials"," books","
workbooks"," self-paced training course materials"," on-line
training
courses"," etc.)
5.2 Encore grants Amdahl the right to customize and to reproduce
in whole or part and in reasonable quantities any of the
documentation in whatever format and language it desires for the
purpose of marketing and servicing the products during the
life of
this agreement and thereafter"," solely for the purpose of
servicing the
products.
5.3 Encore shall provide Amdahl opportunities to participate in
Encore customer or internal training classes when a major
design
change occurs. Encore will administer customer satisfaction
measurements after each class.
5.4 Encore shall endeavor to provide Amdahl such other education
(e.g."," one-on-one training"," train-the-trainer"," etc.) as
Amdahl may
reasonably request subject to agreement of terms and
conditions.
5.5 Encore shall assist"," at Amdahl request"," to customize
Product education courses and related material to meet the
reasonable
requirements of Amdahl. The costs incurred by both
companies shall be
shares in a manner agreed to in advance. Should Encore
accept"," Encore
shall carry out the work as specified therein and shall
endeavor to
achieve mutually agreed time scales.
5.6 Should Amdahl elect to customize classes as described in 5.5
above"," Encore shall provide a detailed education plan
(e.g."," tasks"," resource requirements"," deliverables","
schedules"," etc.)
5.7 Encore shall endeavor to provide Amdahl with subject matter
experts (SME's) as consultants.
5.8 Encore shall provide Amdahl with opportunities to
participate in product validation test at Encore's site
(i.e."," on-the-
job training for the purpose of train-the-trainer).
Amdahl Work Items:
5.9 Should Amdahl elect to customize classes as described in 5.5
above"," Amdahl shall provide education objectives (e.g.","
deliverables"," schedules"," etc.).
5.10 Should Amdahl elect to customize classes as described in 5.5
above"," Amdahl shall define requirements for education
materials (e.g."," content"," style"," packaging","
reproduction standards"," etc.)
5.11 Should Amdahl elect to customize classes as described in 5.5
above"," Amdahl shall provide tools and resources necessary
to assist Encore in the development of the course curriculum
and delivery
platform. The cost incurred by both companies will be
shared in a
manner agreed to by both companies in advance.
SERVICE PRICING
General Spares Pricing Algorithm
Encore will utilize the following general pricing principle
as the algorithm in finalizing Encore's spare parts pricing:
If a storage Product system is built by Amdahl from spare
parts"," the price of the parts for the resulting system
[*CONFIDENTIAL MATERIAL DELETED*].
Training Pricing
The daily rate for Encore's training classes is
[*CONFIDENTIAL MATERIAL DELETED*] dollars ($[*CONFIDENTIAL
MATERIAL DELETED*]) per day; this price shall apply to classes
comprised of one to six students. The duration of the
training
program will depend on the objectives of the training and
the
prerequisite.
ADDITIONAL AREAS TO WORK
Open Issues:
1. Warranty repair processes.
2. Recondition and refurbishment services.
3. Encore and Amdahl agree to look at opportunity for Amdahl
being 3rd party maintenance provider for [*CONFIDENTIAL MATERIAL
DELETED*] Storage Product.
4. Encore and Amdahl agree to look at opportunities for joint
maintenance tools development.
5. All additional services related pricing.
EXHIBIT D
ENCORE ORDER REQUIREMENTS
EXHIBIT D
ENCORE Purchase Order Requirements
1. Purchase order Number and Date. Order must include valid
signatures.
2. Sold to: complete name and address.
3. Ship to: complete name and address including"," where
applicable"," freight forwarders and/or broker.
4. Invoice to: complete name and address.
5. Power requirements: [*CONFIDENTIAL MATERIAL DELETED*]
6. Add-on Purchase Order number: If Order to be added to
previously shipped configuration please provide this
information.
7. Industry and Application: Please state the type of customer
organization (U.S. Government"," University"," etc.) and
application
(Research & Dev."," etc.)
8. Order Content:
Model Number: As listed in Exhibit
A or Exhibit E
Quantity: Number
Description: As listed in Exhibit
A or Exhibit E
List Price: As listed in Exhibit
A or Exhibit E
Applicable Discount: By line item
Net Price: By line item
9. TOTAL PURCHASE ORDER VALUE: State in US $
10. Payment Terms: Net 45 days.
11. Export Licensing Documentation: As required with Export
Contract Name.
12. Required Ship Date: State requested ship date from factory.
13. Software License Status: If software items are ordered ","
a signed sublicense should be attached to your Order.
Schedule as for
Amdahl internal licenses shall be submitted in a package on
a
monthly basis.
14. Configuration Diagram: Consisting at a minimum of a block
diagram and cabinet layout"," as well as the identification of
the
subsystem where Software will be licensed.
15. Terms and Conditions: Per the terms of this Agreement ","
add the following statement if the Products purchased are
Standard: THIS
ORDER IS PLACED UNDER THE TERMS AND CONDITIONS OF THE
ENCORE/AMDAHL
RESELLER AGREEMENT DATED MARCH 24, 1994. If Products are
specially
quoted"," attach a copy of the Encore quotation evidencing
the prior
approval of the pricing and any special terms and conditions
which
apply to this Order.
16. Comments: Any other pertinent Order information.
EXHIBIT E
ENCORE BRANDING PROCEDURES
PRODUCT BRANDING
Encore will provide the Product branding set forth below for
Products purchased by Amdahl hereunder at no charge to Amdahl.
Any third party Products purchased by Encore from Encore's third
party suppliers which are not branded for Encore will not be
available for branding for Amdahl. Among other items"," external
parts labels on cables will remain as currently produced.
Amdahl will supply artwork for camera ready logos and appropriate
written specifications to Encore for the Amdahl Mark in order for
the branding to be done as set forth below:
Hardware (external branding only):
All cabinets
System consoles
Software and Firmware:
All software packaging"," including media labels"," that
currently carry Encore's identification Screen output messages
and
headers for all Encore-produced Software and Firmware
Products which
currently carry Encore's identification (Encore copyright
notices will
be maintained as well)
Documentation:
All Encore-produced user"," reference"," installation and
hardware manuals which are currently in electronic form "," as
well as
binder covers (Encore copyright and proprietary notices will
also be
maintained)
Shipping Materials:
All shipping containers and boxes"," packing slips and other
Encore produced documentation which carries the Encore label.
Additional Branding
Any additional branding requirements or customization work
will be quoted by Encore on request from Amdahl.
EXHIBIT F
SCHEDULE A
FOR AMDAHL INTERNAL LICENSES
SCHEDULE A
to
RESELLER AGREEMENT FOR ENCORE STORAGE PRODUCTS BETWEEN
ENCORE AND AMDAHL
FOR ENCORE PROPRIETARY SOFTWARE
Dated: ________ between ENCORE and AMDAHL
Control Number _______
LICENSE DESIGNATED PRODUCT AMDAHL
OWNER
TYPE SYSTEM MODEL P.O.
NUMBER NUMBER
This Schedule A represents a shipment of Licensable Software
Products covered by the Terms and Conditions of the above
referenced Agreement. In accordance with Section 18 of that
Agreement"," Amdahl will sign and return the executed Schedule A
to Encore. The signed Schedule A will be mailed to Encore
Computer Corporation"," 6901 West Sunrise Blvd."," Fort
Lauderdale"," Florida 33340-9148"," attention Contracts
Department. This Schedule A will become part of the executed
Agreement with Encore referenced above.
AGREED BY: ACCEPTED BY:
AMDAHL CORPORATION ENCORE COMPUTER
CORPORATION
By: By:
Title: Title:
Date: Date:
EXHIBIT G
SUBLICENSE AGREEMENT
FOR USE BY AMDAHL'S CUSTOMERS
Agreement No.
_________
LICENSE AGREEMENT FOR
AMDAHL PROGRAM PRODUCTS
By and Between
Amdahl Corporation and ________________________
(Amdahl) (Customer)
_________________________ ________________________
_________________________ ________________________
Amdahl Corporation (Amdahl) agrees to grant to Customer
licenses to use Amdahl Software (Software) under terms and
conditions set forth in this Agreement. The Software shall be
described in a schedule (Schedule) executed by Customer and
Amdahl and referencing this Agreement. In the event of a
conflict between the terms of this Agreement and the terms of any
Schedule"," the terms of the Schedule shall control.
SECTION 1. DEFINITIONS
1.1 Software shall mean instructions"," statements and/or
any related materials"," including documentation and listings","
and includes all copies and portions of the Software residing on
or contained in any medium.
1.2 Specified Configuration shall mean the equipment and
programs with which Software is designed to operate"," as
specified in the Specifications for the Software.
1.3 Designated Processor shall mean the processor complex
and/or associated unit identified by machine type"," model","
serial number and location in the Schedule to this Agreement on
which Customer may use the Software.
1.4 Shipment Date shall mean the date specified in the
Schedule for shipment of the Software.
1.5 Subsequent Release shall mean a maintenance release of
the Software that is distributed to Customer at no change.
SECTION 2. LICENSE GRANT
2.1 By execution of a Schedule by Amdahl and Customer
referencing the Software"," Amdahl grants and Customer accepts a
non exclusive"," non transferable license to use the Software in
the United States pursuant to the terms and conditions of this
Agreement and the Schedule. This license shall commence on the
date Customer receives the Software.
2.2 The term Use in this Agreement means (a) with respect
to the machine readable portion of the Software"," the right to
load"," store"," copy"," alter"," compile or assemble"," execute
instructions contained in"," transmit and display such portions
on the Designated Processor and its associated units; and (b)
with respect to all other portions of the Software"," the right
to support the Use authorized in this section.
2.3 The right to alter the Software includes the right to
make modifications and to create derivative works. However ","
no right to reverse assemble or reverse compile any portion of
the Software is authorized hereunder except when necessary to
enable Customer to correct problems"," to make alterations or
modifications permitted hereunder or to make the Software inter-
operable
with other software or units of equipment associated
with the Designated Processor and where Amdahl has not otherwise
made available or offered to make available information
reasonably sufficient for such purposes. No right is granted to
make copies of any non-machine-readable portions of the Software.
2.4 Amdahl shall retain title to the Software and any
copies thereof including any portion of the Software in a
modified"," derivative or updated work. Any portion of the
Software included in a modified"," derivative or updated work
shall continue to be subject to all terms of this Agreement.
2.5 Customer may terminate any license at any time after
the Test Period upon one month's prior written notice.
2.6 Amdahl may terminate any license upon written notice
","effective immediately"," if Customer fails to comply with any
of
the terms and conditions of this Agreement.
SECTION 3. ADDITIONAL LICENSE PROVISIONS
3.1 A separate license is required for each Designated
Processor on which the Software will be used. Each additional
license for Software already licensed by Customer under this
Agreement requires a Schedule signed by the Customer and Amdahl.
Customer may"," upon execution of a Schedule for such additional
license and in lieu of distribution of an additional copy of the
Software from Amdahl"," copy the Software previously distributed
by Amdahl.
3.2 If the Designated Processor becomes temporarily
inoperable or is not in a configuration required for assembly and
compilation of the Software"," Customer is authorized to transfer
to"," and Use the Software on"," a backup machine until the
Designated Processor is operable or the assembly or compilation
is completed.
3.3 Customer may change the Designated Processor upon
written notice to Amdahl. Customer agrees to pay any additional
fees resulting from the change in Designated Processor.
3.4 Customer may Use a previous release of the Software on
the Designated Processor for a period not to exceed ninety (90)
days after commencing Use of a Subsequent Release on the same
Designated Processor.
SECTION 4. TEST PERIOD
4.1 For each license"," Amdahl shall specify in the
Schedule the Test Period"," if any"," during which the Software
shall be made available at no charge in order to permit Customer
to determine whether the Software meets Customer's requirements.
The Test Period shall begin on the date Customer installs and
begins Use of the Software"," or ten (10) calendar days after the
Shipment Date"," whichever is earlier"," and shall end upon
expiration of the specified period.
4.2 Customer may terminate a license upon written notice
effective immediately at any time during the Test Period"," in
which event no charges shall be due.
SECTION 5. FEES
5.1 Customer agrees to pay fees for the Software in the
amounts specified in the applicable Schedule Fees shall commence
upon the latest of (a) the date Customer installs and begins use
of the Software"," (b) the day after the expiration of the Test
Period"," if applicable"," or (c) any other date specifically set
forth in the applicable Schedule. Fees for a partial month's use
shall be prorated based upon a thirty (30) day month. Recurring
charges shall be invoiced in advance.
5.2 Payment of all fees is due thirty (30) days after
receipt of invoice.
5.3 In the event that Customer fails to pay any fees when
due"," Customer agrees to pay a late payment charge of one and
one- half
percent (1.1/2%) per month"," but not in excess of the lawful
maximum"," on the past due balance.
SECTION 6. FEE CHANGES
Amdahl may increase recurring fees upon ninety (90) days
written notice to Customer.
SECTION 7. APPLICABLE TAXES
Customer agrees to pay or reimburse Amdahl amounts equal to
any taxes resulting from this Agreement which are due or may
become due"," exclusive of taxes based upon Amdahl's net income
or net worth.
SECTION 8. PROGRAM SERVICES
8.1 The Schedule shall specify whether Amdahl provides
Program Services for the Software. If Program Services are
provided"," service shall commence on the date Customer installs
and begins use of the Software.
8.2 Program Services for the Software shall be available
until Amdahl discontinues such services upon six (6) months
written notice. If a Subsequent Release becomes
available","Amdahl may discontinue the Program Services for any
or all
previous releases.
8.3 Program Services shall include the designation by
Amdahl of one or more service locations which shall (a) provide
Customer with telephone assistance in problem diagnosis and
resolution for the Software"," (b) accept documentation
indicating that the unaltered portion of a current release of the
Software is causing a problem"," and (c) dispatch on-site support
as required. Amdahl shall respond to the reported problem by
issuing"," as appropriate"," problem connection information"," a
restriction"," or a bypass.
8.4 Amdahl shall respond only to problems that can be
duplicated by operating the Software in a Specified
Configuration. Amdahl does not guarantee service results or that
all program problems will be corrected. Amdahl's sole obligation
under this Section is to provide reasonable"," timely and good
faith efforts to correct problems.
SECTION 9. PROTECTION AND SECURITY
9.1 Customer shall hold the Software in confidence.
Customer shall not disclose"," distribute or make available any
part of the Software"," including a modified or derivative work
prepared by Customer which contains any part of the Software ","
to any third party without Amdahl's prior written consent","
except to third parties who are on Customer's premises or who
Customer has authorized to have remote access solely for purposes
related to Customer's Use of the Software. The Customer shall
ensure that the obligations set forth in this Section 9 are
extended to any third party given access to the Software.
9.2 All Software is copyrighted"," and all copies of the
Software made by Customer including translations","
compilations","and partial copies within modifications and
updated or derivative
works are the property of Amdahl. Customer shall reproduce and
include the copyright notice and any other legend(s) in the
Software on any such copies. Upon termination of the license for
the Software for any reason"," Customer shall remove any portion
of the Software contained in any modified"," updated or
derivative work.
9.3 The obligations of Customer under this Section shall
continue after any termination of any license under the
Agreement. Such obligations shall not extend to any information
or technical data relating to the Software that is now or later
becomes available without restriction to the general public by
acts not attributable to Customer or its employees.
SECTION 10. SPECIFICATIONS
From time to time"," Amdahl shall publish specifications
defining the functional characteristics"," features and the
Specified Configuration within which the Software is designed to
operate (Specifications).
SECTION 11. WARRANTY
11.1 Amdahl warrants that it has the right to license the
Software.
11.2 Amdahl shall specify in the Schedule whether the
Software is warranted. For Software that is warranted"," Amdahl
warrants that the Software on its Shipment Date shall conform to
Specifications if properly used in a Specified Configuration.
Amdahl's sole obligation under this warranty is to provide
Program Services described in Section 8 of this Agreement. Amdahl
does not warrant or represent that (a) the functions contained in
the Software will meet Customer's requirements or (b) the
operation of the Software will be error free. If after repeated
efforts Amdahl is unable to make the Software operate as
warranted"," Customer shall be entitled to recover actual damages
to the limits set forth in Section 14 of this Agreement.
11.3 Software that is not warranted shall be distributed on
an AS IS basis without warranty of any kind either express or
implied.
11.4 THE FOREGOING WARRANTIES ARE IN LIEU OF ALL OTHER
WARRANTIES"," EXPRESS OR IMPLIED"," INCLUDING"," BUT NOT LIMITED
TO","THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE AND THOSE ARISING BY STATUTE OR OTHERWISE IN
LAW OR FROM A COURSE OF DEALING OR USAGE OF TRADE.
SECTION 12. LICENSE TERMINATION PROCESS
Customer shall destroy all copies of the Software upon
termination of any license and shall certify to Amdahl in writing
that all such copies have been destroyed. Customer may","
however","retain a single copy of the Software for archival
purposes only.
SECTION 13. INTELLECTUAL PROPERTY INDEMNIFICATION
13.1 Amdahl shall defend any action brought against
Customer to the extent that it is based on a claim that Software
","used within the scope of the license granted hereunder","
infringes a United States patent or copyright"," or constitutes
misappropriation of a trade secret. Amdahl shall pay costs
","damages and legal fees finally awarded against Customer as a
result of such claim"," provided Customer (1) notifies Amdahl
promptly in writing of the claim and (2) allows Amdahl sole
control of the defense of the claim and all related settlement
negotiations.
13.2 If such a claim is made or appears likely to be made
","Customer shall permit Amdahl at its sole discretion to (a)
secure
for Customer the right to continue using the Software"," or (b)
replace or modify the Software to make it noninfringing. If
neither of these alternatives is reasonably available to Amdahl
","then Customer agrees to return the Software to Amdahl on
written request. Amdahl shall refund any recurring charges that
have been paid by Customer for any period after return of the
Software.
13.3 Amdahl shall have no obligation with respect to any
judgment of infringement based upon (a) Use of other than a
current unaltered release of the Software if such infringement
would have been avoided by the Use of a current unaltered release
of the Software"," (b) use"," operation or combination of the
Software with non-Amdahl programs or data if such infringement
would have been avoided but for such use"," operation or
combination"," or (c) Use of the Software in other than the
Specified Configuration if such infringement would have been
avoided but for such use.
13.4 The foregoing states the entire liability of Amdahl
with respect to infringement or misappropriation of intellectual
property.
SECTION 14. LIMITATION OF LIABILITIES
14.1 Amdahl's entire liability and Customer's exclusive
remedy are set forth in this Section.
14.2 In the event Customer is entitled to recover damages
from Amdahl"," then regardless of the basis upon which such
damage claim is made"," Amdahl shall be liable only for (a)
payments referred to in Section 13"," (b) bodily injury
(including death)","and damage to real property and tangible
personal property"," and
(c) the amount of any other actual loss or damage up to the
greater of $100",000," the One-Time fee paid for the Software of
recurring charges for twelve (12) months Use of the Software.
14.3 In no event shall Amdahl be liable in any way for (a)
any indirect"," special or consequential damages"," including","
but not limited to"," lost business or lost profits"," whether
foreseeable or not"," even if Amdahl has been advised of the
possibility of such damages; (b) loss of"," or damage
to","Customer's records or data; (c) Customer's failure to
perform its
obligations under this Agreement; or (d) the act or omission of
any other party (except as provided in Section 13).
SECTION 15. CUSTOMER RESPONSIBILITIES
Customer shall be exclusively responsible for (a) selection
of the Software to achieve the Customer's intended results"," (b)
installation of the Software"," (c) the results obtained from the
Software"," and (d) the supervision"," management and control of
the Use of the Software.
SECTION 16. GENERAL
16.1 Neither this Agreement nor any license granted
hereunder may be assigned"," sublicensed or transferred by
Customer without prior written consent from Amdahl. Any attempt
to sublicense"," assign or transfer any of the rights"," duties
or obligations under this Agreement in violation of this
provision shall be null and void.
16.2 Nothing in this Agreement shall be interpreted as (a)
transferring any right or title to the intellectual property in
the Software or any copies thereof in whole or in part or"," (b)
conferring by implication"," estoppel or otherwise any license or
right under any patent or trademark.
16.3 This Agreement or any Schedule can only be modified by
a written agreement duly signed by persons authorized to sign
such agreements on behalf of Customer and Amdahl.
16.4 Any notices required or permitted to be given pursuant
to this Agreement shall be in writing sent via certified mail
","return receipt requested"," or delivered by hand"," addressed
as set forth on the cover page hereof or to such other address as
may be specified from time to time by notice in writing to the
other party"," and shall be deemed to have been given when
received.
16.5 No term or provisions of this Agreement shall be
deemed waived by Amdahl"," and no breach excused by Amdahl","
unless such waiver or consent is in writing signed by Amdahl. No
consent by Amdahl to"," or waiver of"," a breach by Customer","
whether express or implied"," shall constitute a consent to","
waiver of"," or excuse for any other different or subsequent
breach by Customer.
16.5 This Agreement shall be governed by and construed in
accordance with the laws of the State of California without
regard to the conflict of laws provisions thereof.
THE PARTIES AGREE THAT THIS AGREEMENT IS THE COMPLETE AND
EXCLUSIVE STATEMENT OF THE AGREEMENT BETWEEN THEM RELATING TO THE
SUBJECT MATTER OF THIS AGREEMENT AND THAT IT SUPERSEDES ALL
PROPOSALS OR PRIOR AGREEMENTS"," ORAL OR WRITTEN"," AND ALL OTHER
COMMUNICATIONS BETWEEN THE PARTIES.
AMDAHL CORPORATION
(Amdahl) (Customer)
By: _________________________ By: ____________________
Authorized Signature Authorized Signature
_________________________ _______________________
Name (Type or Print) Name (Type or Print)
_________________________ _______________________
Title Title
_________________________ _______________________
Date Date
License Agreement No.
Schedule No.
SUPPLEMENT TO LICENSE AGREEMENT FOR
AMDAHL SOFTWARE PRODUCTS FOR USE OF UTS SOFTWARE
This Supplement is an integral part of the License Agreement
for Amdahl Software Products referenced above and is made a party
thereof by this reference. All terms and conditions of the
Agreement shall apply to the license of UTS Software except as
this Supplement modifies the terms and conditions of the
Agreement and adds terms and conditions to it.
1. The following provisions shall be added to Section 1","
DEFINITIONS:
1.6 Prerequisite Software shall mean that software and/or
documentation for which a Prerequisite Software License is
required.
1.7 UTS Software shall mean the software programs listed
in a Schedule and further specified in the
specifications
therefore together with all related documentation.
1.8 UTS Software shall mean the software programs
licensed by UNIX Systems Laboratories"," Inc. together
with all
related documentation which is made part of USL
Software.
2. The following provisions shall be added to Section 2.1:
Prior to the licensing of UTS Software the following
conditions must be satisfied:
(1) Customer shall have a valid license from the vendor for
any required Prerequisite Software for UTS Software
licensed on
each Designated Processor. Prior to Amdahl's granting
a license
for UTS Software"," Customer"," at Amdahl's request
shall provide a
written authorization from the relevant vendor
confirming that
Customer is licensed for such Prerequisite Software on
the
Designated Processor.
(2) Customer shall meet other applicable requirements ","
if any"," if specified in writing by the vendor of any
required
Prerequisite Software.
All licenses and rights granted to Customer under this
Supplement with respect to any UTS Software licensed to any
Designated Processor shall automatically terminate at any time
Customer ceases to be licensed for Prerequisite Software for
UTS
Software.
3. The following provision shall be added to the text of
Section 3.3.
Customer shall cause the vendor(s) of Prerequisite Software
to notify Amdahl that the Prerequisite Software is licensed
for the
machine intended to become a Designated Processor.
4. The following subsection 9.4 is added to Section 9.
PROTECTION AND SECURITY:
9.4 Notwithstanding anything in this Agreement to the
contrary"," Customer shall use at least the standard of care for
maintaining UTS Software in confidence that Customer is
required to
use by the vendor(s) of the Prerequisite Software to
maintain such
software in confidence.
5. The following subsection is added to Section 11. WARRANTY
11.6 UNIX Systems Laboratories"," Inc. (USL) MAKES NO
REPRESENTATION OR WARRANTY"," EXPRESS OR IMPLIED"," WITH REGARD
TO ANY USL
SOURCE CODE (SELECTED SOURCE CODE)"," WHETHER OR NOT SUCH
SELECTED SOURCE CODE IS INCLUDED IN THE UTS OPERATING SYSTEM.
BY
WAY OF EXAMPLE BUT NOT LIMITATION"," USL MAKES NO
REPRESENTATION OR
WARRANTY OF THE MERCHANTABILITY OF ANY SELECTED SOURCE CODE
OR OF
ITS FITNESS FOR ANY PARTICULAR PURPOSE"," OR THAT THE USE OF
ANY
SELECTED SOURCE CODE WILL NOT INFRINGE ANY PATENT","
COPYRIGHT OR
TRADEMARK"," USL SHALL NOT BE HELD TO ANY LIABILITY WITH
RESPECT TO
ANY CLAIM ON ACCOUNT OF"," OR ARISING FROM"," THE USE OF ANY
SELECTED
SOURCE CODE.
6. In Section 13. INTELLECTUAL PROPERTY INDEMNIFICATION"," the
following text shall replace the text of subsection 13.1:
Amdahl shall"," provided that the UTS Software is used
within the scope of the License granted hereunder"," defend
any action
brought against Customer in connection with a claim that the
portion
of UTS Software that is not part of software licensed by
UNIX System
Laboratories"," Inc. (Amdahl Code)"," infringes a United
States patent
or copyright or constitutes a misappropriation of a trade
secret.
Subject to the provisions of subsections 14.2(b) and (c)
","Amdahl shall pay ____"," damages and legal fees finally
awarded against the Customer
as a result of such claim"," provided Customer (1) notifies
Amdahl
promptly in writing of any claim and (2) allows Amdahl sole
control of
the defense of the claim and all related settlement
negotiations.
7. DISTRIBUTED SYSTEMS LICENSE OPTION (DSLO)
Amdahl offers the Distributed Systems License Option
(DSLO) for UTS Software. Under DSLO"," in addition to the
initial License (Basic License) Customer may obtain a license
(DSLO
License) on a Designated Processor specified in the
Schedule (DSLO
Designated Processor) for a DSLO charge.
A. For each DSLO License"," the Customer shall:
(1) copy the machine-readable portion of the UTS
Software and use such copy only on the DSLO Designated
Processor;
(2) provide problem documentation to Amdahl from the
Basic License Designated Processor;
(3) distribute to"," install and test on the DSLO
Designated Processor(s)"," any Subsequent
Release","local fix"," correction"," or bypass
provided by Amdahl to the Basic
License Designated Processor; and
(4) at Amdahl's request"," recreate any problem on the
Basic License Designated Processor.
B. Program Services"," if any"," for the DSLO Designated
Processor shall be provided only through the location of
the
Basic License Designated Processor.
C. There is no test period for DSLO Licenses. Notices of
termination of the Basic License shall be notice of
termination
of any DSLO license for that UTS Software granted to
Customer
under this Section. Thee is no warranty for DSLO
licenses.
EACH PARTY HERETO WARRANTS THAT IT HAS FULL POWER AND
AUTHORITY TO ENTER INTO AND PERFORM THIS SUPPLEMENT"," AND THE
PERSON SIGNING THIS SUPPLEMENT ON SUCH PARTY'S BEHALF HAS BEEN
DULY AUTHORIZED AND EMPOWERED TO ENTER INTO THIS SUPPLEMENT. EACH
PARTY FURTHER ACKNOWLEDGES THAT IT HAS READ THIS SUPPLEMENT
","UNDERSTANDS IT"," AND AGREES TO BE BOUND BY IT.
AMDAHL CORPORATION
(Amdahl) (Customer)
By: _________________________ By: _____________________
Authorized Signature Authorized Signature
_________________________
________________________
Name (Type or Print) Name (Type or Print)
_________________________
________________________
Title Title
_________________________
________________________
Date Date
Agreement No.
Schedule No.
SCHEDULE TO LICENSE AGREEMENT
FOR AMDAHL SOFTWARE PRODUCTS
This Schedule incorporates the terms and conditions of the
Agreement referenced above.
1. CUSTOMER NAME:
2. BILLING ADDRESS:
3. SHIPMENT ADDRESS:
4. LICENSE LOCATION:
5. SHIPMENT DATE:
6. LICENSE INFORMATION:
Designated Test Program ILF
Prepaid
Product Processor Warranty Period Service Rental
Upgrade
Description (model/s.n.) (Y/N) (Y/N) (Y/N) (Y/N)
(Y/N)
7. PREREQUISITE LICENSES:
8. LICENSE FEES:
Product Description Amount Type of
Fee
9. SPECIAL PROVISIONS:
AMDAHL CORPORATION
(Amdahl) (Customer)
By: _________________________ By:
______________________
Authorized Signature Authorized
Signature
_________________________
_________________________
Name (Type or Print) Name (Type or
Print)
_________________________
_________________________
Title Title
_________________________
_________________________
Date Date
EXHIBIT H
ENCORE STANDARD ACCEPTANCE PROCEDURE
Standard Acceptance Test Procedure
Customer:
Job No.:
System Type:
Installation Site:
Purchase Order#:
Satisfactory performance of the equipment listed in
System Configuration has been demonstrated and the equipment
is
accepted subject to the provisions listed in this
acceptance test
procedure and the warranty provisions of the contract.
Equipment Demonstrated By:
Signature: Date:
Name:
Title:
Equipment Accepted By:
Signature: Date:
Name:
Title:
CERTIFICATION OF FACTORY ACCEPTANCE TEST
Customer:
Sales Order:
This is to certify that the equipment itemized in this document
has been factory tested and conforms to published functional
specifications as demonstrated by successful completion of the
acceptance tests defined herein.
Test Certified By:
Date:
INTRODUCTION
This manual provides the Acceptance Test criteria and
corresponding checklist for installation of this system. A
system configuration section is provided to facilitate customer
inventory"," inspection and warranty functions. Any product
deviations applicable at the time of delivery are also provided.
The purpose of the Encore Customer Acceptance Test is to
demonstrate the hardware capabilities of the system by exercising
all appropriate diagnostic programs.
Encore Computer Corporation shall demonstrate the performance of
standard or special I/O device controllers only when connected to
Encore furnished peripheral devices or the equivalent devices
purchased direct from our vendors to Encore specifications and
with Encore prior approval.
DEMONSTRATION OF CONFORMANCE
The successful completion of these tests at the customer's
facility shall constitute proof of system operation in
conformance with Encore technical specifications and proposal and
shall also constitute proof of installation and readiness for
use. In the event a test fails"," acceptance testing shall be
halted until the cause is determined and the problem is
rectified. Testing shall be restarted with the first test of the
equipment or software which caused the unsuccessful test
conclusion"," provided that no changes have been made to the
configuration.
I/O channels which interface to customer
furnished equipment shall be excluded from
on-site acceptance testing.
SYSTEM CONFIGURATION
The specific system hardware items included in this configuration
are listed on the following pages.
SYSTEM INSPECTION
HARDWARE CONFIGURATION
Verify that the system is composed of the hardware specified and
that all serial numbers listed are correct.
SYSTEMS LOG
The Systems Log is intended to provide a convenient method to
track the maintenance/failure history of a system. This log
","when used in conjunction with the MCD file"," provides the
information necessary to identify the status of a system at any
point in time"," and to evaluate the system performance
characteristics.
The log should be maintained on the system from its initial
installation through its end life. All maintenance actions
(corrective and preventative) and all failure/problem systems
","should be recorded as they occur. The log then contains the
entire history of the system and is available to evaluate short-
term
problems and long-term system performance. The documenting of
all actions minimizes the potential for error in
reconstructing actions after a failure or maintenance action. an
accurate System Log provides the factual basis for effective
corrective action"," where necessary.
FIELD DESCRIPTIONS
SYSTEMS LOG
1. Site Location - Physical location of system.
2. System S/N - The serial number of the system.
3. Customer - The owner of the system.
4. Equipment Description - Type of CPU (i.e. 8750"," 6705","
Multimax).
5. Date - The date the activity occurred.
6. Activity/Problem Description - A concise description of the
activity performed"," failure symptom"," or problem
information.
7. Corrective Action - The action taken to correct a failure
(i.e. replaced).
8. Assy. Part Number/Assy. Serial Number - This area is
provided to record the assembly part number and assembly
serial
numberfor any assembly replaced. Items in this area should
also
be located and updated on the Systems Configuration Log.
9. Run Time Meter - The run time meter reading should be
recorded for each entry in the System Log.
SYSTEM LOG
Site Location 1 System Serial Number 2
Customer 3
Equipment Desc. 4
REPLACED UNIT
ASSY. PART
ACTIVITY/PR NUMBER RUN
OBLEM CORRECTIVE ASSY. SERIAL TIME
DATE DESCRIPTION ACTION NUMBER METER
5 6 7 8 9
SYSTEM CONFIGURATION DATA
The following pages provide system configuration details for this
Sales Order as delivered. The primary purpose of this section is
to support system inventory / inspection on site. The data
provided is also maintained in the Master Configuration Data
(MCD) file on the system disc. The MCD file should be maintained
on the system disc anytime a configuration change is made
(Reference Encore Publication 323-008260-000).
Location information is provided within this configuration data
which is primarily used by the MCD program. System 103-
configuration drawings"," X-Y cabinet locator drawings and PCB
controller information is provided for cross reference.
Master Configuration Data System Cabinet
(Front View)
[*CONFIDENTIAL MATERIAL DELETED*]
Master Configuration Data Communications Cabinet
(Front View)
[*CONFIDENTIAL MATERIAL DELETED*]
Master Configuration Data Peripheral Cabinet
(Front View)
[*CONFIDENTIAL MATERIAL DELETED*]
Data Item Descriptions and Examples for controllers
Common Data:
Cabinet Serial Number The serial number of the
cabinet in which the controller
is physically located.
Subsystem Name The name of the subsystem
in which this board is installed
(see subsystem information).
Unique Data:
Assembly Number The assembly (part)
number of the board.
Example: 221-500000-001","
221-500039-002.
Serial Number The serial number of the
board.
Location X The chassis slot number
in which the board is installed.
This information is used by the
physical view program to draw
pictures of the system. Slot
numbers start with 1 on the left.
Location Y Always 0 for controllers.
Minor Number The minor number for the
controller. For some controllers
this is also called board number
or controller number. For the CPU
board it will always be 0. For
most other cards"," including memory
cards"," it will be 0 for the first
card"," 1 for the second card"," etc.
Channel Number [*CONFIDENTIAL MATERIAL DELETED*]
Device Address [*CONFIDENTIAL MATERIAL DELETED*]
Opt1 [*CONFIDENTIAL MATERIAL DELETED*]
Opt2 [*CONFIDENTIAL MATERIAL DELETED*]
ACCEPTANCE TEST PROCEDURE
[*CONFIDENTIAL MATERIAL DELETED*]
Quality Assurance Policy Section Rev
ENCORE 6.5 B
Document Number 313-000013-000
Effective Page of
2-92 01 01
Subject: Control of Nonconforming Material/Product
POLICY: Product that does not conform to specified requirements
shall be prevented from inadvertent use or installation. A
system has been implemented to identify"," control","
segregate","review and dispose of nonconforming material; to
provide for
scrap and rework/repair reports and records. Definition of the
system and reporting methods is described in QAOP (per sub-
section 2.2) and
the other document types outlined in Section 2.0
of this manual.
REQUIREMENTS:
1.0 Procedures are established and maintained to:
_ identify the reporting forms and records required for
the control of nonconforming material;
_ appropriately classify and disposition the
nonconformance;
_ to identify the methods for controlling
nonconformances"," including those found in Customer-
owned
equipment that has been returned for update or
refurbishment.
2.0 A formal Material Review Board chaired by QA Engineering is
established for disposal of nonconforming material.
3.0 A secure holding area is used for withholding nonconforming
material"," pending review and disposition. A bonded area has
been established to house any Customer-returned equipment
requiring review and disposition.
4.0 Records of nonconforming material are audited to assure
compliance to the overall Quality Program. Auditing shall
include the extent of specific defect recurrence"," repair and
scrap costs"," and follow-up of corrective action activity.
Quality Assurance Policy Section Rev
ENCORE 6.6 B
Document Number 313-000013-000
Effective Page of
2-92 01 01
Subject: Statistical Techniques
POLICY: Recognized sampling plans and valid statistical process
control plans shall be used whenever 100% inspection/test is not
employed to maintain required quality levels.
REQUIREMENTS:
1.0 All sampling plans are based upon MILSTD-105","
MILSTD-414","and MIL-STD-1235; other plans require written
authorization by the Director of Quality Assurance (and Customer
concurrence if required by contract) prior to implementation.
2.0 Sampling plan selection shall include an evaluation of risks
and impact of undetected defect entry into the affected process
or product.
3.0 Statistical Process Control techniques will be used to
control key processes"," pending a process capability study
showing sufficient repeatability of results to enable
continuance.
4.0 SPC techniques are based upon dominant characteristics
(those that influence process consistency)"," and may collect
variables and/or attributes data.
5.0 Data collected by SPC are analyzed and entered onto
Control Charts; monthly trend analysis summaries are published to
all responsible organizations to effect corrective action where
warranted and to promote process and product improvement.
6.0 The sampling plans"," SPC system"," and associated reports
are defined in applicable Quality Assurance Operating Procedures
(QAO per sub-section 2.2 of this manual.)
Quality Assurance Policy Section Rev
ENCORE 6.7 B
Document Number 313-000013-000
Effective Page of
2-92 01 01
Subject: Indication of Inspection Status
POLICY: Status of work-in-process is normally identifiable by
its' location in the production line; however"," a bar-coding
system may be used to record activity progression. Other
approved status methods employed may include signatures","
stamps","tags"," or labels on report forms and/or product.
Inspection and
test status shall be maintained to ensure that only accepted
product is delivered to the Customer.
REQUIREMENTS:
1.0 Receiving Inspection records are the primary evidence of
inspection for all items released to stock upon acceptance; other
status indicators are only in support of these records.
2.0 In-process and final inspections and test status indicators
shall be through stamps/employee numbers on Status Tags"," and
electronic or written records.
3.0 A procedure is available which identifies the configuration
","issue"," and control of Inspection stamps.
4.0 Procedures describing the use of status
tags","identification labels and other approved media are also
available.
5.0 The records and forms identified above"," and the associated
instructions for their preparation"," use"," and control are
documented in QAOPs. (ref. sub-section 2.2).
Quality Assurance Policy Section Rev
ENCORE 7.1 C
Document Number 313-000013-000
Effective Page of
12-92 01 01
Subject:
Customer Inspection at Subcontractor/Vendor Facilities
POLICY: When invoked by Contract"," Encore's Customer
(Government or Commercial) reserves the right to inspect"," at
source"," supplies or services not manufactured or performed at
ENCORE COMPUTER CORPORATION.
REQUIREMENTS:
1.0 When Government inspection is a requirement"," the following
statement shall be added to affected Purchase Orders:
Government inspection is required prior to shipment from
your plant. Upon receipt of this order, promptly notify the
Government Representative who normally services your plant so
that
appropriate planning for Government inspection can be
accomplished.
2.0 When under authorization of the Government Representative
","copies of the Purchase Order are to be furnished directly by
the
subcontractor of vendor to the Govt. Representative at his
facility rather than through Government channels. ENCORE
COMPUTER CORPORATION shall add the following to the affected
Purchase Orders:
On receipt of this order, promptly furnish a copy to the
Government Representative who normally services your plant or if
none,
to the nearest Army, Navy, Air Force, or Defense Supply
Agency
inspection office. In the event the representative or
office cannot
be located, contact the Purchasing office of (ENCORE
COMPUTER
CORPORATION).
3.0 Govt. or commercial customer source inspection shall not
constitute their acceptance"," nor replace normal ENCORE
inspections or otherwise relieve ENCORE of responsibility in
furnishing an acceptable end item.
4.0 Reports on any defective Government-inspected material
received by ENCORE must be available for examination by the
Government Representative.
5.0 Similar requirements may be imposed by Customers other than
the U.S. Federal Government"," and/or by international regulatory
agencies. Each such request must be examined and authorized
through Encore Contracts Administration"," after impact upon each
of the affected departments and organizations is assessed and
determined to be acceptable.
6.0 QA Engineering shall audit Purchasing (per sub-section 3.7
","and associated QAOP) for compliance to the preceding policy
and requirements.
Quality Assurance Policy Section Rev
ENCORE 7.2 C
Document Number 313-000013-000
Effective Page of
12-92 01 01
Subject: Government/Customer Furnished Property
POLICY: A system is available which defines actions for the
verification"," storage"," and maintenance of purchaser-supplied
product for incorporation into Encore product.
REQUIREMENTS:
1.0 Examination upon receipt"," to detect damage in transit.
2.0 Inspection for completeness and proper type and quantity.
3.0 Periodic inspection and precautions to assure adequate
storage conditions and to guard against damage from handling and
deterioration during storage.
4.0 Functional testing by qualified personnel"," either prior to
or after installation"," or both"," as required by contract or as
deemed necessary to determine satisfactory operation.
5.0 Identification and protection from unauthorized use or
improper disposal.
6.0 Maintenance of initial and periodic inspection records.
7.0 Occurrences of damaged"," malfunctioning material"," or
material which is otherwise unsuitable for use shall be reported
immediately to the Government or Customer Representative"," along
with determination of probable cause.
8.0 The preceding requirements are further defined in Quality
Assurance Operating Procedures (QAOP).
Quality Assurance Policy Section Rev
ENCORE 7.3 C
Document Number 313-000013-000
Effective Page of
12-92 01 01
Subject:
Customer Products: Encore Contract Manufacturing
POLICY: To outline the Quality System requirements for
reviewing"," managing"," and controlling processes involved in
the construction and delivery of products made for a Customer to
their design and for their end use.
(Note: for control of contracts involving equipment of Encore
design and for use in Encore end product"," refer to sub-section
3.2 of this manual).
REQUIREMENTS:
1.0 A cross-functional team shall be appointed; membership shall
include representatives from Quality Assurance","
Manufacturing","Manufacturing Engineering"," and Materials. This
team will be empowered by Encore's management with the
responsibility and authority to act in the following aspects of
Contract execution:
- Requests for Quote/Contract Review
- Order Management
- Pre-production Engineering Activities
- Manufacturing Commitment to Scheduling
- Material Receipt"," Handling"," Storage and Issue
- - - Routing and Status of Work-In-Process
- Assembly"," Test"," and Inspection of W-I-P
- Preparation for Finished Goods Delivery
2.0 During each of the facets listed above"," the team shall
ensure Encore's capability to comply with all specified
contractual requirements; to resolve elements which are not fully
defined or are unclear; to reach consensus with the Customer when
modification/exception to stated requirement is necessary.
3.0 The team shall establish Customer/Supplier responsibility
for issuance"," control/maintenance"," and security of the
following as a minimum:
- Assembly Drawings/Change Orders (and their control)
- - - Production Aids (pictorial views"," samples"," etc.) -
Materials (components"," hardware"," etc.)
- Special Tools/Material (fixtures"," containers"," etc.)
4.0 The team shall determine the Customer's expectations as
regards Encore records pertaining to (as a minimum):
- Control and Disposition of Nonconforming Material
- - - Corrective Actions
- Internal Auditing
- Employee Training
5.0 There shall be visual evidence of Customer and Supplier
mutual acceptance of the preceding"," and the provisions listed
in the Encore Contract For Services document.
EXHIBIT I
ENCORE STANDARD PACKAGING PROCEDURE
Packaging For Infinity Single Cabinet
Drawing No. 900-100104
The following procedure shall be followed at the time of
packaging for shipment to a customer.
1.0 Materials Required
Configuration
Description Part Number 19 Qty. 24 Qty.
Pallet 910-103068-004 1 1
Ramp 905-103068-002 1 1
Corner Pad 905-200151-006 4 4 Top
Pad 905-200150-004 1
Top Pad 905-200150-005 1
Corrugated Sleeve 905-200180-001 2 2
Corrugated Cap 905-200181-001 1
Corrugated Cap 905-200181-002 1
Polyethylene Shroud 905-100010-002 1 1
Antistatic Foam Sheets 905-200114-001 A/R A/R
Plastic Strapping 905-200121-001 A/R A/R
Plastic Buckles 905-200122-001 A/R A/R
Metal Banding 905-200104-001 A/R A/R
Metal Seals 905-200105-001 A/R A/R
Plastic Edge Protectors 905-200162-001 16 16
Shock Indicators 905-200113-001 2 2 Tip
Indicators 905-200112-001 2 2 Logo
Label 905-200143-001 2 2
International Labels 905-200183-001 4 4
High Center Of Gravity Label 905-200182-001 2 2
Unpackaging Instructions 901-100104 1 1
1.1 Hardware Required:
1.1.1 1/2 - 16 x 5 Tap Bolt"," Qty: 4
1.1.2 2 Fender Washer w/ 1/2 I.D."," Qty: 4
1.1.3 Locktite"," Blue 242
2.0 Packaging Procedure:
2.1 Using a dock high level or the ramp supplied"," roll
the cabinet onto the pallet.
2.2 Remove the levelers and set aside.
2.3 Place the 2 Fender Washer over the 1/2 Bolt and apply
a few drops of Locktite to the ends of the threads. Thread
the
bolts through the pallet and into the cabinet leveler
holes. See
Figure A.
2.4 Tighten the cabinet mounting bolts.
Figure A
2.5 Place the levelers in a polybag and staple to pallet
under the cabinet.
2.6 Place the Plastic Shroud over the cabinet.
2.7 Utilizing the Antistatic Foam Sheets secure the doors
and side panels as shown in Figure B. Secure the foam
with
Plastic Strapping and Buckles as shown.
Note: Buckles must be placed as not to be in contact with
the cornerpads.
Figure B
2.8 Place the Top Pad on top of the cabinet.
2.9 Utilizing strapping tape"," place the (4) Corner Pads
on the cabinet as shown in Figure C.
Note: Cut reliefs in the corner pads for any protrusions
such as the door handles or connectors.
2.10 Secure the Foam Corner Pads twice utilizing Plastic
Strapping and Buckles. See Figure C.
Figure C
2.11 Preform the Corrugated Cap and set aside. Prefold the
scores on the Corrugated Sleeves and place around cabinet
alternating inside end panels as shown in Figure D.
Place the
preformed cap over the sleeve to hold in place.
2.12 Secure the corrugated sleeves with Metal Banding and
Edge Protectors three times as shown in Figure E.
2.13 Secure the corrugated cap with Metal Banding and Edge
Protectors as shown in Figure E. Utilize predrilled holes
in
pallet.
2.14 Place (2) Shock Indicators and (2) Tip Indicators in
position shown on Figure E.
Figure D
2.15 Place Logo Labels"," High Center Of Gravity Labels","
and International Symbol labels in positions shown in
Figure F.
Figure E
Figure F
2.16 Attach Shipping Paper Work"," Unpackaging Instructions
(in a packing slip envelope). Place the address
labels"," one on
the face panel and one on the end panel.
Note: Shipping Paper Work is only attached to one cabinet
","per ship address"," per sales order.
2.17 Ship (1) prepackaged Ramp Assembly per ship address on
each sales order for single cabinet shipments. For Dual
Cabinet
Shipments see packaging specification 900-100101-005.
Quality Assurance Policy Section Rev
Document Number 313-000013-000 D
Effective Page of
1-94 01 01
Subject: Approval Document
The Quality Assurance Policies contained in this manual are
written and issued in support of the corporate and facility
policies on ENCORE COMPUTER CORPORATION"," and to define each
element of the Quality System developed to meet and sustain
compliance to both domestic (MIL-I-45208) and international (ISO
9002) quality requirements.
The signatures of the undersigned demonstrate commitment of
ENCORE COMPUTER CORPORATION'S management to Quality.
___________________________________
J. Kennedy
Director of Quality Assurance
___________________________________
J. Shaw
Vice-President of Manufacturing
Quality Assurance Policy Section Rev
Document Number 313-000013-000 D
Effective Page of
1-94 01 01
Subject: Revision History
Review Section Revision Change Description
Date 1.0 2.0 3.0 4.0 5.0 6.0 7.0
2/2/90 All Sections Rewritten
7/12/91 A A A A A A A Incorporates ISO 9002
Requirements
1/24/92 B B B B B B B Adds ISO 9002 Post-
audit change
requirements.
12/03/92 C B C B B B C Adds requirements for
Contract Mfg.
1/28/94 D B C B B B C Update Organization
Charts
INFINITY 90 CHECKLIST
Infinity System
CUSTOMER SITE ACCEPTANCE TEST REQUIREMENTS
------------------------------------------
CUSTOMER NAME =
SALES ORDER =
CABINET SERIAL NUMBER =
I HEREBY CERTIFY THAT I HAVE SUCCESSFULLY COMPLETED ALL
REQUIREMENTS INDICATED ON THIS CHECKLIST AS DEFINED BY THE
INFINITY SYSTEM CUSTOMER SITE ACCEPTANCE TEST
REQUIREMENTS.
SIGNATURE DATE EMPLOYEE #
REQUIREMENT INITIAL
Console power-up diagnostics completed successfully
Console subsystem windows operational
Subsystems Built In Self Tests completed
successfully
Subsystems boot Umax successfully
Mounted all IFS shared disk facilities on all
IFS server(s)
IFS initialization completed successfully on
all subsystems
Mounted all IFS shared disk facilities on
all IFS client(s)
ATP completed on all subsystems successfully
I HEREBY CERTIFY ALL REQUIREMENTS INDICATED ON THIS
CHECKLIST"," AS DEFINED BY THE INFINITY SYSTEM CUSTOMER
SITE ACCEPTANCE TEST PROCEDURE"," SUCCESSFULLY COMPLETED.
----------- --------
SIGNATURE DATE
Quality Feedback Report
Encore Computer Corporation feels that the comments and
suggestions from our customers provide the best feedback
concerning the quality of out shipment and the effectiveness of
our on-site installations. Your input is essential in our effort
to provide high quality systems"," products and services. Please
take a few minutes to complete this questionnaire and help us
provide for future successful installations.
SYSTEM SERIAL NO. SALES ORDER NO.
FIELD SERVICE ENGINEER CUSTOMER NAME
FIELD OFFICE LOCATION LOCATION
INSTALLATION TIME DATE OF INSTALLATION
(complete)
YES NO
N/A
Item
SITE LOCATION
1. Was the intended site prepared according to
the site preparation guidelines?
2. Were the power requirements (voltage"," phases","
current and frequency) planned prior to
installation?
3. Were environmental conditions planned prior
to installation?
DAMAGE
4. Did a field engineer supervise and/or unpack
the system?
5. Were the packing containers damaged?
6. Were the tip and tell or shock watches
triggered?
7. Were the contents of the packaging damaged?
INSTALLATION
8. Was the correct equipment delivered"," as
indicated on the P/O and packing slip
(no unauthorized backorders)?
9. Were all unit identifications correct?
10. Was the system configured as ordered?
11. Were any changes made to the configuration
during the installation?
12. Were system installation kits and accessories
complete?
13. Were the controller boards and memory property
jumpered for the configuration?
14. Were spares kits complete as ordered?
15. Were add-on kits complete?
DOCUMENTATION/SOFTWARE
16. Were all manuals complete and correct for the
configuration as ordered?
17. Was the software complete and available on the
correct media as ordered?
18. Was the correct revision level of the operating
system/diagnostic available for use?
FUNCTIONAL TESTS
19. Did the CPU (Encore manufactured equipment)
function properly?
20. Did the peripheral devices function properly?
21. Did the diagnostics run error free?
22. Did the operating system run error free?
GENERAL
23. Were any minor errors or nonconformances noted
during the installation?
24. Were the appearance factors or workmanship
standards acceptable?
25. Did installation require calls to the factory
for assistance?
26. Was the installation satisfactory?
COMMENTS
ITEM NO.
ITEM NO.
DEFECTIVE PARTS
PART NUMBER/MODEL NUMBER SERIAL NUMBER NOMENCLATURE
DESCRIPTION OF
DEFECT
Quality Assurance Policy Section Rev
ENCORE D
Document Number 313-000013-000
Effective Page of
1-94 01 01
Subject: Approval Document
The Quality Assurance Policies contained in this manual are
written and issued in support of the corporate and facility
policies on ENCORE COMPUTER CORPORATION"," and to define each
element of the Quality System developed to meet and sustain
compliance to both domestic (MIL-I-45208) and international (ISO
9002) quality requirements.
The signatures of the undersigned demonstrate commitment of
ENCORE COMPUTER CORPORATION'S management to Quality.
___________________________________
J. Kennedy
Director of Quality Assurance
___________________________________
J. Shaw
Vice-President of Manufacturing
Quality Assurance Policy Section Rev
ENCORE D
Document Number 313-000013-000
Effective Page of
1-94 01 01
Subject: Revision History
Review Section Revision Change Description
Date 1.0 2.0 3.0 4.0 5.0 6.0 7.0
2/2/90 All Sections Rewritten
7/12/91 A A A A A A A Incorporates ISO 9002
Requirements
1/24/92 B B B B B B B Adds ISO 9002 Post-
audit change
requirements.
12/03/92 C B C B B B C Adds requirements for
Contract Mfg.
1/28/94 D B C B B B C Update Organization
Charts
Underwriters Laboratories"," Inc.
SYSTEM FOR THE REGISTRATION OF FIRMS OF ASSESSED
CAPABILITY
Certificate of Registration
File Number: A2047 Vol.: 1 Issue Date: 15-Jan-
92
Underwriters Laboratories Inc. (hereinafter referred to as
UL)
hereby grants to
Encore Computer Corp.
100 N. Babcock Street
Melbourne"," FL 32935
(hereinafter called the Firm) the right to be listed as a UL
Registered Firm of Assessed Capability in respect of the goods or
services particularly described in the Appendix hereto"," bearing
the same number as this Certificate. Goods shall be produced by
the Firm at"," or services shall be offered at or from"," only
the address(es) given above"," all in accordance with
ISO 9002:1987 : EN 29002:1987 : BS 5750
Part 2: 1987 :
ANSI/ASC Q92:1987
The Certificate of Registration is granted subject to the
Regulations governing the Registration referred to above.
Issued by: Underwriters Laboratories Inc.
Authorized by: ______________________________
Robert H. Levine
Vice President
Underwriters Laboratories"," Inc.
SYSTEM FOR THE REGISTRATION OF FIRMS OF ASSESSED
CAPABILITY
Appendix
File Number: A2047 Vol.: 1 Issue Date: 15-Jan-92
Appendix
Revision Date: 8-Nov-93
Issued to:
Encore Computer Corp.
100 N. Babcock Street
Melbourne"," FL 32935
Goods or services in respect of which the Firm is
Registered
3571 (US) Electronic Computers;
7273 (US) Prepackaged Software; 3302
(UK) Electronic Data Processing Equipment:
The manufacture"," assembly"," integration and test of
Encore computer systems. The reproduction of operating system
and application software for use with these computer systems.
Products are produced to customer specifications which are
communicated through sales representatives of Encore Computer
Corporation. Encore Contract Manufacturing provides production
services for the assembly and test of Printed Circuit Boards.
Issued by: Underwriters Laboratories Inc.
Authorized by: ______________________________
Robert H. Levine
Vice President
Appendix Renewal Date: 15-Jan-94
Certificate Appendix renewed annually
Quality Assurance Policy Section Rev
ENCORE D
Document Number 313-000013-000
Effective Page of
1-94 01 01
Subject: Table of Contents
MAIN SUB-
SECTION SECTION DESCRIPTION
ISO REF
Figures 1 & 2 -- ORGANIZATION CHARTS
1.0 QUALITY SYSTEM
4.1.1/4.1.3
2.0 QA DOCUMENTATION
2.1 Document Format"," Approval","
Control
2.2 QA Operating Procedures
4.2
2.3 QA Inspection Instructions
2.4 Problem Reports
2.5 Special QA Plans
3.0 QUALITY PROGRAM MANAGEMENT
3.1 Organization
4.1.2
3.2 Contract Review
4.3
3.3 Work Instructions & Process
Control 4.8
3.4 Records
4.9.4/4.15
3.5 Corrective Action
4.13
3.6 Product Ident. and Traceability
4.7
3.7 Auditing
4.16
3.8 Training
4.17
3.9 Costs Related to Quality
- - -
4.0 FACILITIES AND STANDARDS
4.1 Drawings"," Documentation/Changes
4.4
4.2 Measuring and Testing Equipment
4.10
4.3 Production Tooling & Fixtures 4.10
4.4 Use of Equipment by Customer --
5.0 CONTROL OF PURCHASES
5.1 Supplier Assessment/Verification
4.5/4.6
5.2 Purchasing Data
4.5.3
6.0 MANUFACTURING CONTROL
6.1 Receiving Inspection and Testing
4.9.1
6.2 In-process Inspection and Testing
4.9.2
6.3 Final Inspection and Testing 4.9.3
6.4 Handling","
Storage","Packaging/Delivery 4.14 6.5
Control of Nonconforming Material 4.12
6.6 Statistical Techniques
4.18
6.7 Indication of Inspection Status
4.11
7.0 CUSTOMER COORDINATION
7.1 Source Inspections by Customer --
7.2 Govt./Customer Furnished Property
4.6
7.3 Customer Prod.: Contract Mfg. --
Quality Assurance Policy Section Rev
ENCORE 1.0 D
Document Number 313-000013-000
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Subject: Quality System
POLICY: The Melbourne Team is committed to an on-going quality
improvement process to provide defect-free products and services
delivered on-time in conformance to the requirements of our
internal and external customers and suppliers. -- The Melbourne
Quality Policy expressed by top management.
This Quality Assurance Policy manual outlines the elements of the
standard Encore Quality System"," which incorporates the
requirements of ISO 9002. Non-standard programs are outlined in
Sub-sections 2.5 and 7.3
REQUIREMENTS:
1.0 Charter Quality/Assurance provides a check-and-balance to
ensure control of both process and product"," and the records
necessary to demonstrate performance. While this Quality System
emphasizes nonconformance prevention"," it also recognizes that a
system to establish root cause of problems and their timely
resolution is an essential element.
2.0 System Review. Encore management convenes annually as a
minimum"," for the purpose of reviewing all aspects of the
Quality System; to discuss actions required to correct any
recurring problems"," and to note significant improvements.
Records of these meetings are maintained"," and used as a tool
for performance measurement.
3.0 QA Structure. An Organization Chart"," enclosed as Figure
'1' illustrates the relationship between Quality Assurance and
its' peer organizations; Figure '2'"," shows the QA
organization","including the assignment of the ISO Management
Representative.
4.0 QA Functions. The QA organization is comprised of three
distinct groups; each with a unique purpose and goal. All
members of each group receive training in their respective
disciplines"," and in the Quality Education System (QES)
described on the next page.
- Incoming/Receiving Inspection. I.R.I. is responsible
for assuring that products purchased for use in Encore
products
are free of defects. This is accomplished by
subjecting incoming
materials to thorough visual"," mechanical"," and
electrical
verifications to requirements expressed in the
procurement
document and engineering drawing.
- Process QA. This functional group is responsible for
assuring that the processes and procedures used to produce
Encore
products comply with established test
procedures","latest engineering drawings nd workmanship
standards.
Additionally"," this group has responsibility for review
of C.O.P.S. (Customer
Order Processing Systems) for deviations from Encore's
standard
QA program.
Quality Assurance Policy Section Rev
ENCORE 1.0 D
Document Number 313-000013-000
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Subject: Quality System
QA Engineering. The members of this group are responsible for
development and execution of the plans and actions necessary to
build-in confidences that end items will function as intended and
comply with specified Customer and Supplier requirements. Vital
functions performed by QAE include:
- Quality Improvement Planning - includes Employee
Training; generation and maintenance of QA policies
","procedures"," instructions; QA Databases Reports.
- Supplier Measurement - includes source qualification
"," performance evaluation and communication","
including the
resolution of potential or actual nonconformances ","
and disqualification of unsatisfactory suppliers.
- Process/Product Assurance - includes measurement of
work-in-process for compliance to establish standards of
workmanship"," function"," performance and reliability.
- Customer Liaison - includes the control of Customer-
Furnished
Material/Equipment"," measurement of site
installations","and coordination with Customer
Representations.
A common thread throughout this overview of the Encore Quality
System is the recognition for the need for employee training ","
and the concept of defect prevention. These are concepts
inherent to the QES (QUALITY EDUCATION SYSTEM) introduced to all
Encore- Melbourne
employees during January of 190. At that time"," Encore
signed an agreement with Philip Crosby Associates"," an
international consulting firm"," to assist us in the
establishment of a continuous Quality Improvement Process.
An integral part of a formal 14-step process is the education of
all employees in the individual skills necessary to cause
continuous quality improvement in all facets of the business. The
QES provides each employee with four days of intensive training
utilizing various visual aids"," videos"," and workshops
conducted by a licensed instructor in such techniques as cause
and effect analysis"," measurement"," team building"," and other
analytical techniques designed to cause improvement to happen.
The course also provides each employee a common language of
Quality"," thus enhancing communications.
[*CONFIDENTIAL MATERIAL DELETED*]
[*CONFIDENTIAL MATERIAL DELETED*]
Quality Assurance Policy Section Rev
ENCORE 2.1 B
Document Number 313-000013-000
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Subject: Document Format"," Approval and Control
Policy: QA Engineering is responsible for the preparation of all
Quality Assurance policies and procedures; for review/approval of
all inspection instructions. A standardized format and numbering
system shall be utilized wherever practicable. Each shall
reflect review and approval of QA Management. Note: Documents
prepared by and for the use of organizations other than QA
require the review and approval of the specific department's
management prior to issue.
REQUIREMENTS:
1.0 Document Numbering. Each Quality Assurance document
category shall be assigned a unique prefix designation; each
document within each category will be assigned a unique body
number. Suffix numbers may be used to define variations on a
subject.
2.0 Document Categories. The QA Policy Manual (this document)
establishes the standard Quality Assurance Plan employed by all
facilities of ENCORE COMPUTER CORPORATION. Subordinate QA
documents are as follows:
QA Operating Procedure (defined in Sub-Section 2.2)
QA Inspection Instructions (defined in Sub-Section 2.3)
QA Problem Reports (defined in Sub-Section 2.4)
Special QA Plans (defined in Sub-Section 2.5)
Document Structure and content will vary with document type.
3.0 Initial Approval. QA Engineering supervision shall review
each document for appropriateness of content"," and route to the
Director of Quality Assurance or designee for signature of
approval and authorization to issue to manual holders.
4.0 Document Issue. The QA documents listed above are available
electronically"," with read access available to all personnel;
write access only to QA Engineering and its management. Hard
copies will be updated only if identified as Control Copy.
Controlled copies are assigned a sequential number"," appearing
both on the manual and a record of manual number"," assignees
name","date of issue"," and a receipt acknowledgement.
5.0 Master Index. In addition to the database referenced above
","an index for each document type used in this facility will be
maintained to ensure usage of only current issue documents.
6.0 Document Review. QA Engineering shall annually review this
manual and QAOPs; the review is reflected by advancement of each
document's revision level.
Quality Assurance Policy Section Rev
ENCORE 2.2 B
Document Number 313-000013-000
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2-92 01 01
Subject: Quality Assurance Operating Procedure (QAOP)
POLICY: QA Operating Procedures designed to define the methods
for supporting and implementing the policies of this manual.
QAOPs are originated by QA Engineering"," and shall be reviewed
annually for needs of revision.
REQUIREMENTS:
1.0 QAOPs shall conform to the following format:
PURPOSE. A clear"," concise description of procedure
intent. SCOPE. Identification of all areas of groups
affected.
REFERENCE DOCUMENTS. A listing of procedures/instructions
needed to support"," or are pertinent to"," the subject text.
DEFINITIONS. Explanation of terms or acronyms used.
CONDITIONS: Identification of any prerequisites"," such as
equipment set-ups"," special environmental requirements","
indication of prior operation completion"," etc.
PROCEDURE: Defines"," either directly or through reference
to a QA Inspection Instruction (refer to Sub-Section 2.3)
"," the method or system to be used; requirements for proper
implementation; anticipated results and any necessary
reports or records of accomplishment.
2.0 QAOPs are numbered using a 12-digit system consisting of a
3-digit prefix (480); a six-digit body; a 3-digit suffix.
Responsibility for number assignment"," maintenance and QAOP
distribution is assigned to QA Engineering.
3.0 An electronic file of QAOPs is maintained as identified in
Sub-Section 2.1. Included is an index reflecting the title
","document number"," and the current revision issue of each.
Quality Assurance Policy Section Rev
ENCORE 2.3 B
Document Number 313-000013-000
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Subject: QA Inspection Instructions
POLICY: Documents to provide detailed guidance in specialized or
complex inspections"," tests"," or other QA tasks"," may be
initiated by any QA organization member; however"," each QAII
must be reviewed and authorized by QA Engineering prior to issue
and implementation.
REQUIREMENTS:
1.0 The QAOP format (ref. Sub-Section 2.2) may be used as a
general guide; however"," content must remain flexible to address
the various categories and diversity of subjects.
2.0 QA Inspection Instructions (QAII) are based upon established
and approved standards"," and criteria/parameters such as those
presented in Encore engineering specifications and drawings ","
or industry-accepted standards such as those of IPC"," ANSI","
DoD and applicable intentional standards.
3.0 Although in most instances"," QAII contents normally will
not change significantly"," a master-list shall be maintained and
reviewed annually as a minimum to assure: that criteria and
methods expressed comply with current industry practices; they
any user inputs are addressed and incorporated as necessary.
Quality Assurance Policy Section Rev
ENCORE 2.4 B
Document Number 313-000013-000
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2-92 01 01
Subject: Problem Reports
POLICY: Sources of actual or potential problems are documented
and acted upon to prevent problem occurrences"," or as a
minimum","to manage problem impact; to prevent problem
recurrence"," and
confirm that full and positive corrective action has taken place.
REQUIREMENTS:
1.0 Requests from Encore suppliers for temporary departure from
established practices or documented requirements shall be
recorded on the Supplier Deviation Authorization form.
2.0 Where a problem or departure is known or suspected to be
recurring in nature"," and/or may affect more than one part
type","product or product"," one of the following report forms
will be
initiated"," depending upon the condition described:
- Quality Assurance Directive (QAD). Authorizes shipment
of items which deviate from present documentation "," or
permits
temporary deviation within identified limits.
- Quality Bulletin. Clarifies existing instructions or
requirements whose wording/intent may be
misinterpreted.
- Corrective Action Request (CAR). Used to identify the
sources of nonconformity (products or methods)"," both
internally
and at suppliers. (Customer-directed needs for
corrective action
will normally be reported on the Customer's own form
","with Encore's response provided also on that form).
- Defective Parts Purge. Effects the removal of known
or suspected nonconforming items from specified points in
the
production process.
3.0 Instruction for the preparation"," use and distribution of
these forms is provided by subordinate QAOP documents.
Quality Assurance Policy Section Rev
ENCORE 2.5 B
Document Number 313-000013-000
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2-92 01 01
Subject: Special QA Plans
POLICY: The content of this manual forms the basis of the
standard Quality Plan"," incorporating all requirements of ISO
9002. Departures from the content of this manual"," made
necessary by Contract or uniqueness of product"," requires
development and issue of a QA Plan specific to these new
requirements.
REQUIREMENTS:
Each QA Plan"," developed to satisfy either contractual needs or
new deliverable product incorporating materials or utilizing a
process beyond existing production capability"," shall contain
the following elements as a minimum:
1.0 Departures From Standard Practices. All needs to deviate
from existing design or processing requirements"," or from
criteria for measuring acceptability"," shall be identified and
listed.
2.0 Tooling and Equipment Needs. Identify all requirements for
new inspection or test equipment"," fixtures"," or other tooling
necessary to assure and maintain specified levels of quality. The
plan shall include provision for identification marking
schemes"," and prescribed intervals for requalification and/or
calibration of such items.
3.0 Facility/Environmental Requirements. Specify each instance
where state-of-the-art process"," tools or equipment requires
alteration of the existing facility or necessitates special
environmental conditions.
4.0 Records of Performance. Indicate the need for records which
are not part of standard control systems. Examples of such needs
might include: data from environmental testing"," Lot-traceable
component records; special equipment
qualification","requalification or calibrations; personnel
training to special
requirements; records achieving/disposal requirements which
depart from the standard identified in Sub-Section 3.4.
Quality Assurance Policy Section Rev
ENCORE 3.1 C
Document Number 313-000013-000
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Subject: Organization
POLICY: Responsibilities and authorities for personnel
performing the quality assurance function are defined by this
manual and by the subordinate documents listed in Sub-Section
2.1. All QA personnel are trained to ensure knowledge of this
manual's content; their responsibilities and authorities. The QA
department's resources are illustrated by the organization chart
included as part of this manual.
REQUIREMENTS:
1.0 Responsibility and Authority: the QA organization has the
organizational freedom and authority to:
- initiate action to prevent product nonconformity
- identify and record any product quality problems
- recommend or provide solutions thru designated channels
- verify the implementation of solutions
- control further processing"," delivery or installation
of nonconforming product until the deficiency is
corrected.
2.0 Verification Resources and Personnel: inspection/testing of
purchased goods"," work-in-process"," and finished products are
performed at the points and frequencies defined by the document
types described in Sub-Sections 2.2 - 2.5 of this manual. Any
quality-critical measurements are also addressed by these
documents to ensure end-item conformance to stated requirements.
3.0 Management Representative: a representative is appointed
(refer to Organization Chart Figure '1') to ensure all
requirements of this manual"," and those of the International
Standard it represents"," are fully implemented and maintained.
Quality Assurance Policy Section Rev
ENCORE 3.2 C
Document Number 313-000013-000
Effective Page of
12-92 01 01
Subject: Contract Review
POLICY: This QA Policy manual constitutes the standard Quality
System of ENCORE COMPUTER CORPORATION for products that will be
identified with and marketed under corporate logo and Model/part
identifiers contained in the ENCORE marketing literature.
Product to Customer design and for their end use do not apply to
this QA Policy Manual Section; the policy for such product is
outlined in Sub-section 7.3
REQUIREMENTS:
1.0 The Encore Contracts organization reviews specific
requirements and expectations with a prospective Customer. A
list of Encore products meeting those needs is developed and
negotiated into a mutually agreed-upon written contract. Quality
Assurance will support Sales and Marketing"," Program Management
and Contracts in preparation of proposal responses.
2.0 Proposed contractual requirements which deviate from
standard practices must be approved by the Director of Quality
Assurance"," and contract-specific Quality Plan generated as
outlined in Sub-Section 2.5.
3.0 The Quality Plan mentioned previously will be issued upon
award of the contract"," and the necessary actions taken to
provide the controls for special requirements compatible
throughout manufacturing"," inspection and testing.
4.0 QA Engineering shall support all areas of the process with
participation in varied disciplines"," including design review of
new product"," reliability modeling and estimates"," process
controls to assure product manufacturability and repeatability","
the selection/qualification of suppliers and their product"," and
the maintenance of the Qualified Vendor/Parts List.
5.0 Melbourne's Order Entry Management group reviews each
contract represented by the C.O.P.S. provided by Contracts at Ft.
Lauderdale. The Process QA group performs a final review of each
contract for presence of any special or unusual requirements
which depart from the standard Quality System"," as defined in
the Contract Review QAOP. All such departures shall be reported
to QA Engineering's attention.
6.0 A record of all contract (C.O.P.S.) review shall be
maintained.
Quality Assurance Policy Section Rev
ENCORE 3.3 C
Document Number 313-000013-000
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Subject: Work Instructions and Process Controls
POLICY: The primary goal at Encore is the prevention of defect
occurrence"," or as a minimum"," their earliest detection.
Processes directly affecting product quality shall be
controlled","especially those which cannot be verified by
subsequent
inspection"," or where deficiencies may only become apparent
after the product is in use.
REQUIREMENTS:
1.0 The current Manufacturing Standards manual is used"," in
conjunction with applicable engineering drawings"," to measure
product compliance to engineering and quality requirements. These
documents provide acceptance criteria and constitute the primary
work instructions in the production process.
2.0 Supporting work instructions for the processing and assembly
of complex or high volume product are prepared and issued by the
Manufacturing Engineering organization; the content and accuracy
is measured by Process QA through product/process auditing
performed in accordance with Production Audits QAOP.
3.0 These audits have been developed by QA Engineering"," and
identify specific auditing points in the manufacturing process
that require controlling"," as well as definition of audit
elements and their frequency. Also see Sub-Section 3.7.
4.0 Identification of any required skills training is inherent
in the ability to achieve compliance to process requirements.
Refer to Sub-Section 3.8 for employee training policy"," and
Personnel Training QAOP for methods employed.
5.0 Issuance and control of the documentation identified in the
preceding is addressed in sub-section 4.1 and by subordinate
QAOPs.
Quality Assurance Policy Section Rev
ENCORE 3.4 C
Document Number 313-000013-000
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Subject: Records
POLICY: Quality records are maintained as objective evidence of
the required quality and effective operation of the quality
system.
REQUIREMENTS:
1.0 All quality records shall be legible and identifiable to the
product involved.
2.0 Regardless of maintenance media (paper or
electronic)","records shall be complete and accurately reflect
actual
occurrences.
3.0 Records shall include"," but are not limited to:
- Results of inspection and test (including qualitative
"," quantitative data and actions taken).
- Results of QA Auditing
- Customer Correspondence
- CFE/GFE logs (as applicable - see Section 7.0)
- Employee Training and Certifications
- Correction of deficiencies (including dispositioning of
nonconforming product and material).
4.0 Paper records are maintained for three (3) years"," except
for Customer-identified needs for corrective action which must be
maintained for five (5) years (with an annual review per Sub-
Section 3.5)","unless otherwise directed by contract.
5.0 QA records in the Quality Database are indexed"," filed and
stored as described in the applicable QAOP"," subordinate to this
manual.
6.0 A list of archived paper records and those which have been
destroyed shall be maintained. The list shall indicate location
(Box#"," location"," etc.)"," and the container identified as to
contents.
Quality Assurance Policy Section Rev
ENCORE 3.5 C
Document Number 313-000013-000
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Subject: Corrective Action
POLICY: A closed-loop system is maintained whose objective is to
preclude recurrence of nonconformances by identifying and
correcting their causes and contributing factors. This system is
applicable to in-house and supplier activities"," as well as
needs for corrective action that may be identified by the
Customer. This system is fully documented in the subordinate
QAOPs (ref. Sub-Section 2.2).
REQUIREMENTS:
1.0 The Corrective Action system shall provide for
identification"," evaluation"," classification"," and
prioritization of problems in both process and product.
2.0 The system shall provide analysis for potential defect
trends.
3.0 The Corrective Action system shall provide for the
assignment of responsibility as to cause"," and the
implementation of a cost-effective action to correct the
nonconformance cause ","particularly as related to necessity for
Scrap occurrences.
4.0 Deficiency causes determined to be vendor responsibility
will prompt the issuance of a Corrective Action Request form to
the source responsible"," identifying the observation and
requiring a response citing action planned/taken to prevent
recurrence.
5.0 Records of customer-identified needs for corrective action
shall be kept active for a period of five (5) years"," and be
subject to quarterly review by facility management to assure
actions taken to prevent recurrence have been sustained.
6.0 All Corrective Action requests shall be monitored until
action taken has been confirmed and determined to be
satisfactory.
7.0 Records shall be maintained which enable identification of
each problem cause"," report initiation and closure dates.
8.0 Instructions for form generation"," routing"," and
definition of the Corrective Action System is provided by QAOP.
Quality Assurance Policy Section Rev
ENCORE 3.6 C
Document Number 313-000013-000
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Subject: Product Identification and Traceability
POLICY: Product manufactured by or for Encore Computer
Corporation shall bear appropriate identification markings unique
to each commodity"," device or unit type.
REQUIREMENTS:
1.0 Procured off-the-shelf parts and materials identification
shall be verified as compliant to Encore Qualified Parts List
(per QAOP) and/or associated purchasing specification.
2.0 Devices fabricated to Encore design shall be identified in
accordance with the applicable engineering drawing or spec.
3.0 Quality Assurance enforces Company policy with regard to
product identification marking"," such as is contained in the
Marking Specification (193-103005) and regulatory labeling
requirement"," throughout the production process per the
applicable QAOPs.
4.0 Verification of the preceding shall be through documentation
review identified in Sub-section 4.1"," the inspections/tests
described in Section 6.0"," and the audits of Sub-Section 3.7 of
this manual.
Quality Assurance Policy Section Rev
ENCORE 3.7 C
Document Number 313-000013-000
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Subject: Auditing
POLICY: All activities and functions which may affect product
quality shall be subjected to periodic auditing for the purpose
of problem prevention; as a vehicle to facilitate identified
needs for corrective action"," and to meet international
standards requirements.
REQUIREMENTS:
1.0 Auditing System:
The basis for the auditing described in the classifications below
are the control methods and procedures written for use in those
areas. QAOPs are available which identify the audit
characteristics necessary to verify compliance with the source
documentation.
2.0 Audit Classifications:
- QA Program Auditing. Performed to verify compliance
with the requirements of this manual"," and those of ISO
9002.
- Production Auditing. Performed to verify that
established processing methods and procedures are being
followed.
- Operation Auditing. Performed to verify that the
various functional areas and departments are complying with
their
internal policies and procedures.
- Installation Audits. Performed at the Customer site
(or through input provided by the Customer) to
determine the
level of satisfaction with ENCORE product and service.
- Vendor Audits. Performed at candidate suppliers as a
measurement of their capabilities; as periodic follow- up
to
assure sustained levels of performance.
3.0 Audit Performance:
QA Engineering shall be responsible for audit
content","scheduling"," and performance unless otherwise
directed. Audits
will be performed by personnel not associated with the area or
function being audited.
Tentative audit schedules for each classification shall be
published annually. Amendment to scheduling may be directed by
QA management on the basis of criticality"," or status of
specific areas of functions.
4.0 Audit Results:
The results of each audit will be published and distributed to
the responsible area supervisors"," and follow-up performed to
assure positive corrective action has been implemented.
Completed audits shall be maintained on file in accordance with
Sub-Section 3.4 of this manual.
Quality Assurance Policy Section Rev
ENCORE 3.8 C
Document Number 313-000013-000
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Subject: Training
POLICY: In addition to QES training (see Section
1.0)","personnel whose job assignment affects or influences
quality
shall be trained to the extent necessary to assure competence in
their assigned task. QA Engineering shares responsibility with
Manufacturing Engineering for the preparation and the
presentation of employee process/product-related training.
REQUIREMENTS:
1.0 A QAOP Procedure for employee training defined the
criteria for establishing training levels"," whether on-the-job
or formal classroom; whether certification is required"," and the
type of recognition of accomplishment best suited.
2.0 New Hires will receive orientation training to familiarize
them with Encore requirements (workmanship criteria"," etc.).
3.0 Each area supervisor is responsible for ensuring that their
subordinates possess adequate skills and knowledge to perform
their current (or impending) assigned tasks in accordance with
Encore requirements. Needs for additional skills training are
identified to either Manufacturing or QA Engineering.
4.0 Manufacturing Engineering and QA Engineering"," in
conjunction with records of inspection"," process control and
auditing"," as a basis for determining training needs.
5.0 The preceding will be used by QA Engineering"," in
conjunction with records of inspection"," process control and
auditing"," as a basis for determining training needs.
6.0 Records demonstrating accomplishment of training"," and
listing all employees in attendance"," are maintained"," via
database as identified in QAOP"," for these employee training
programs. NOTE: the QES training records are maintained
separately.
Quality Assurance Policy Section Rev
ENCORE 3.9 C
Document Number 313-000013-000
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Subject: Drawings"," Documentation and Changes
POLICY: Quality improvement and cost reduction programs have
been instituted for the reduction of Quality Costs. The
principal emphasis is on error prevention"," and the elimination
of the root cause for the deficiency.
REQUIREMENTS:
1.0 Inter-organizational teams are organized to identify the
root causes of unsatisfactory levels of quality"," whether in
procured material"," manufactured product"," or services provided
to Encore or to our Customers and Suppliers.
2.0 These Quality Improvement teams are created and
administered by upper-management steering committees comprised of
members of Accounting"," Manufacturing"," Manufacturing
Engineering","Quality Assurance"," and Human Resources.
3.0 Each steering committee is to be chartered to consider the
cost of doing-things-wrong"," what corrective steps are
required","how to measure and sustain improvement"," and
determine appropriate means of recognition.
4.0 The Quality Improvement teams shall report findings to their
steering committee; in turn"," the steering committee will
provide support"," guidance"," remove obstacles"," and give
progress reports to upper management.
5.0 Quality Assurance will measure the results of changes and
ensure that levels of improvement are sustained.
Quality Assurance Policy Section Rev
ENCORE 3.9 C
Document Number 313-000013-000
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Subject: Cost Related To Quality
POLICY: Quality improvement and cost reduction programs have
been instituted for the reduction of Quality Costs. The
principal emphasis is on error prevention"," and the elimination
of the root cause for the deficiency.
REQUIREMENTS:
1.0 Inter-organization teams are organized to identify the root
causes of unsatisfactory levels of quality"," whether in procured
material"," manufactured product"," or services provided to
Encore or to our Customers and Suppliers.
2.0 These Quality Improvement teams are created and
administered by upper-management steering committees comprised of
members of Accounting"," Manufacturing"," Manufacturing
Engineering","Quality Assurance"," and Human Resources.
3.0 Each steering committee is to be chartered to consider the
cost of doing-things-wrong"," what corrective steps are
required","how to measure and sustain improvement"," and
determine appropriate means of recognition.
4.0 The Quality Improvement teams shall report findings to their
steering committee; in turn"," the steering committee will
provide support"," guidance"," remove obstacles"," and give
progress reports to upper management.
5.0 Quality Assurance will measure the results of changes and
ensure that levels of improvement are sustained.
Quality Assurance Policy Section Rev
ENCORE 4.1 B
Document Number 313-000013-000
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Subject: Drawings"," Documentation and Changes
POLICY: Quality Assurance Engineering"," an active
participant in both
design reviews and documentation release"," has the
authority to deny
acceptance of designs and documents not meeting established
requirements. QA Engineering functions as administrator of
the
database for Melbourne internal procedures and their
control.
REQUIREMENTS:
1.0 A QAOP (ref. sub-section 2.2) identifies the
Documentation
Control database employed in the Melbourne Manufacturing
facility for
internal procedures and work instructions"," such as
referred to in
sub-section 3.3. Engineering documents (drawings"," and
their changes)
are controlled through a separate database.
2.0 Currentness of released documentation is verified by
each user
(including members of QA) prior to utilization by accessing
an
electronic database containing revision level data for each
engineering document.
3.0 Database updating is done with each new document issue
","and as drawings are revised through documented
engineering changes.
4.0 QA Engineering participates in the review of changes to
engineering drawings"," performed prior to distribution for
use.
5.0 QA Engineering shall develop/implement Audit checklists
designed
to further evaluate the documentation control and storage
system.
These are made available as QAOPs.
6.0 QA shall determine if contractual requirements exist
(ref.
Sub-Section 3.2) which require Customer notification of
drawing
changes prior to their implementation.
Quality Assurance Policy Section Rev
ENCORE 4.2 B
Document Number 313-000013-000
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Subject: Measuring and Testing Equipment
POLICY: The calibration system for measurement and test
equipment conforms to the requirements of MIL-STD-45622","
whether these calibrations are performed internally or by an
accredited outside source. Calibration Standards must be
verified as traceable to NIST (the National Institute of
Standards and Technology). Special Equipment will be qualified
prior to and/or during use.
REQUIREMENTS:
1.0 Calibration standards are to be certified on an annual
basis.
2.0 Equipment and standards are labeled to indicate the date of
the last calibration"," by whom it was calibrated (Encore's
calibration personnel"," or identity of external service)"," and
the due date for the next calibration. The condition of the
equipment as received shall be recorded.
3.0 A subordinate procedure (QAOP) is established to define:
environmental conditions required within the
facility","calibration intervals"," handling/storage of standards
and
equipment"," and calibration record requirements.
4.0 Quality critical measurements"," i.e."," parameters
essential to ensure compliance with affected product's fit","
form"," function","and reliability requirements (stated in
Engineering and Quality Assurance documentation) are identified.
5.0 Equipment not used for acceptance measurement purposes are
not subject to calibration control; however"," is identified with
a No Calibration Required (NCR) label.
6.0 The Calibration system is subject to auditing per Sub-
Section 3.7.
7.0 Special Equipment used during the production process shall
be qualified for use prior to initial use"," and at established
intervals thereafter in accordance with an approved process. Such
items include: Torque tools"," Crimping tools"," and Wire Wrap
Bits"," Soldering Stations"," and other equipment and materials
associated with the control of electro-statis discharge shall be
identified by a QAOP concerning the subject of ESD. All
equipment is subject to auditing per Sub-Section 3.7
8.0 Prior to contracting the services of an outside source for
equipment calibration"," the candidate shall be assessed to the
requirements of the subordinate QAOP.
Quality Assurance Policy Section Rev
ENCORE 4.3 B
Document Number 313-000013-000
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Subject: Production Tooling and Fixtures
POLICY: Accuracy for intended application of
fixtures","templates"," jigs or patterns used in the production
process will
be verified prior to use where quality of the associated end
product may be affected. Periodic reexamination will be required
where usage can alter device accuracy.
REQUIREMENTS:
1.0 the following are examples of Production Tooling and are
subject to the requirements outlined below:
- Component lead forming/trimming devices
- Wave-soldering Pallets
- Wiring Harness Boards
- Any device also used by QA for making acceptance
decisions.
2.0 The intended application of such devices"," if not readily
apparent"," shall be documented. This document will include a
comprehensive description of device intend and any critical
dimensional requirements.
3.0 Each device shall be identified"," either by a unique tool
number or reference to the assembly to which it is associated.
4.0 The using area shall maintain a list of all such devices;
the list shall indicate initial approval"," by whom and date","
and whether periodic checking is required (if this is the
case","provision must be made for including who and when).
5.0 Quality Assurance shall verify compliance to the above
requirements through process control (Sub-Section 3.3)"," the
auditing program identified in Sub-Section 3.7"," and the
subordinate documents (QAOP) detailing the requirements of those
sub-sections.
Quality Assurance Policy Section Rev
ENCORE 4.4 B
Document Number 313-000013-000
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Subject: Use of Equipment By Customer
POLICY: When a contractual requirement or as authorized by the
Director of Quality Assurance"," inspection equipment or
facilities shall be made available for use by the Customer
representative(s).
REQUIREMENTS:
1.0 Gages"," measuring and testing equipments of the type used
by Encore QA shall be made available to representatives of the
Customer for use in verifying inspection/test results.
2.0 In lieu of direct Customer use of such equipment"," if
requested"," personnel trained in the use of such equipment will
be provided to perform this verification measurement.
3.0 Subordinate documents (QAOP per sub-section 2.2) shall be
available to add definition to the Policy and Requirements stated
previously.
Quality Assurance Policy Section Rev
ENCORE 5.1 B
Document Number 313-000013-000
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Subject: Assessment and Verification of Suppliers
POLICY: Suppliers and sub-contractors are selected on the
basis of
their ability to met documented Encore requirements. Source
inspection may be used as a verification vehicle. This
policy
addresses only Quality Assurance requirements.
Source inspection may be used as a verification vehicle.
Purchased
materials are inspected upon receipt as stated in Policy
Sub- Section
6.1.
REQUIREMENTS:
1.0 Suppliers and sub-contractors identified to QA as
candidate for
selection as a source for a specific commodity of service
must be
capable of demonstrating their ability to deliver a quality
product
meeting Encore requirements with consistency.
2.0 Objective evidences may include measurement of end item
to the
specification"," presence of process controls for in-process
work"," and a
documented quality system.
3.0 Product facilities must meet all preceding
requirements"," while a
distributorship need only demonstrate capability to supply
product
meeting Encore specification/QPL requirements.
4.0 Encore QA reserves the right to visit the supplier
facility for
the purpose of performing source inspections"," and/or to
perform
facility and process audits. This right is extended to the
Customers
of Encore as well if authorized by contract.
5.0 Each item supplied by each candidate supplier is
subjected to
qualification testing. Accepted vendors and their product
are entered
onto a qualified vendor/parts list (Encore QVL/QPL).
6.0 Supplier performance"," consistent with the inherent
complexity and
the expected quality level of the supplier's product"," is
measured and
results recorded into Vendor History records as described in
Sub-Section 6.1.
7.0 Any deficient materials received shall be made known to
the
supplier"," so that corrective action may take place.
8.0 Subordinate documents"," such as the QAOP (ref. sub-
section 2.2)"," shall be made available to add definition to
the preceding Policy and
Requirements.
Quality Assurance Policy Section Rev
ENCORE 5.2 B
Document Number 313-000013-000
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Subject: Purchasing Data
POLICY: Purchase Orders shall contain data clearly describing
the product ordered. Only approved products and sources shall be
utilized for buys destined for use in released product in
production at Encore Manufacturing facilities.
REQUIREMENTS:
1.0 Purchase Orders shall reflect the document number and the
required revision level of the Encore Specification or Drawing
representing the requirements for the product being ordered.
2.0 The Purchase Order shall identify the quantity required for
each line item listed.
3.0 The Purchase Order shall also identify any requirements not
listed by the spec. or drawing (such as special handling or
packaging"," applicability of special quality systems"," needs
for special test data or report"," C of C"," Customer source
inspection per sub-section 7.1 of this manual"," etc.).
4.0 Only sources listed n the Qualified Vendor List; then only
the parts identified in the Qualified Parts List may be used.
5.0 Encore Purchasing shall maintain procedures echoing the
above requirements"," as well as identifying the process through
which the P.O. is initiated"," reviewed and approved.
6.0 QA Engineering shall perform audits of the Purchasing
organization (in accordance with sub-section 3.7 of this manual
","and the applicable subordinate QAOP) to ensure compliance with
the preceding Policy and Requirements.
Quality Assurance Policy Section Rev
ENCORE 6.1 B
Document Number 313-000013-000
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Subject: Receiving Inspection and Testing
POLICY: Procured items are inspected to the extent necessary
upon receipt to verify compliance with requirements; the extent
of inspection is reduced only on the basis of objective data;
nonconforming product shall be identified and controlled to
prevent release and inadvertent use.
REQUIREMENTS:
1.0 Procedures are available which define general operating
requirements (QAOPs per this manual's Sub-Section 2.2)"," and
specific instructions for inspection and test (QAIIs per Sub-
Section 2.3).
2.0 QAOPs are available which implement the sampling plans of
MIL-STD-105"," MIL-STD-414"," and MIL-STD-1235"," identifying the
process for adjusting the sampling levels.
3.0 Results of product inspections and tests are recorded and
maintained on file. A monthly summary is published which
provides input to supplier ratings. Detailed instructions are
provided by applicable QAOP and/or QAII.
4.0 Materials determined to not conform to engineering or
quality requirements are identified and controlled in accordance
with Sub-Section 6.5 of this manual.
Quality Assurance Policy Section Rev
ENCORE 6.2 B
Document Number 313-000013-000
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Subject: In-Process Inspection and Testing
POLICY: Inspections and tests are performed during manufacturing
of product to verify process control and that the product
complies with engineering and quality requirements.
REQUIREMENTS:
1.0 Engineering documents and the Manufacturing Standards are
used to measure product conformance.
2.0 Assembly instructions used in production for work-in-process
are verified by QA as compliant established requirements.
3.0 Status tags"," travelers"," and various checklist forms are
used to record accomplishment of process activities"," and the
result (accept or reject) of inspections.
4.0 Statistical Process Control are implemented wherever they
are practicable (ref. Sub-Section 6.6) to ensure adequacy of
equipment and instruction"," and to measure operator/inspector
skills.
5.0 Product or processes that do not meet stated requirements
are promptly acted upon"," including cessation of further
processing until corrective action is achieved.
6.0 Control of the documents and systems identified int the
preceding are defined in the QAOPs nd QAIIs referenced in Section
2.0 of this manual.
Quality Assurance Policy Section Rev
ENCORE 6.3 B
Document Number 313-000013-000
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Subject: Final Inspection and Testing
POLICY: All products are subject to final acceptance inspection
and test to the extent necessary to ensure conformance to
contract"," engineering and quality requirements. No end item is
shipped until all identified nonconformances have been addressed
and resolved.
REQUIREMENTS:
1.0 Written final inspection procedures are in sufficient detail
to measure overall quality"," and shall include validation of the
product's configuration.
2.0 Acceptance tests shall simulate"," to the extent possible","
the end-use environment of the Customer.
3.0 Deficiencies observed during inspection and test shall be
immediately reported to enable prompt corrective action.
4.0 Any changes"," modification"," repair or replacement made to
a product after performance of acceptance testing and final
inspection requires retest and reinspection (extent to be
predetermined and documented)"," unless a waiver has been granted
by Quality Assurance management.
5.0 The documents and systems outlined in the preceding
represent the QAOPs and QAIIs referenced in Section 2.0 of this
manual.
Quality Assurance Policy Section Rev
ENCORE 6.4 B
Document Number 313-000013-000
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Subject: Handling"," Storage"," Packaging & Delivery
POLICY: Procedures exist for handling"," storage"," packaging
and shipping to protect product quality and prevent loss","
damage"," or degradation of the product. Such procedures include
those contained in engineering specifications"," and those
available in electronic databases or on computer disk.
REQUIREMENTS:
1.0 Purchased materials are examined upon receipt to ensure that
the supplier complies with the procedures outlined in the above
policy statement.
2.0 Items with limited shelf-life shall be identified and
controlled"," through audits performed by QAOP"," to prevent use
beyond stated expiration date.
3.0 Static-sensitive devices or units are protected from ESD
events as defined in ESD Handbook 447-008011-000 and applicable
QAOP.
4.0 All Encore-manufactured and purchased product is stocked and
stored using methods outlined in Mfg. Engineering Procedure 610-
100200-001
(and other applicable subordinate documents) to
prevent damage"," deterioration"," loss or inadvertent
substitution.
5.0 Stockroom facilities are audited to assure that only
accepted material is present; that defective or improperly
processed items have not been substituted"," and that issue
occurs on a first-in-first-out basis.
6.0 Procedures developed by the Manufacturing Packaging
Engineer which consider the characteristics of the deliverables
to be prepared for shipment" and the transportation system to be
used are reviewed by QA Engineering prior to issue.
7.0 The services provided by Common Carriers and their modes of
transport are assessed and qualified to the requirements of the
associated subordinate QAOP.
EXHIBIT J
ORDERING PROCEDURE
To be mutually defined by the parties after contract
signature pursuant to Section 4B
