FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 4, 1998
BROADBAND TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
0-21766 56-1615990
(Commission File Number) (IRS Employer Identification No.)
4024 Stirrup Creek Drive
P.O. Box 13737
Durham, North Carolina 27709-3737
(Address of principal executive offices) (Zip Code)
(919) 544-0015
(Registrant's telephone number, including area code)
N/A
(Former name or former address, if changed since last report)
The Exhibit Index appears on Page 9 of this report.
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Item 5. Other Events.
On February 4, 1998, BroadBand Technologies, Inc. ("BBT") entered into several
agreements with Lucent Technologies, Inc. ("Lucent") that establish a new
nonexclusive relationship which replaces the exclusive relationship between BBT
and Lucent entered into in 1995 with respect to the SDBAS joint product.
The following description of agreements with Lucent are only summaries.
Investors are advised to read each agreement in their entirety to understand all
the terms of these agreements.
The new agreements between Lucent and BBT include a Settlement Agreement and
mutual releases by BroadBand and Lucent of all liabilities arising prior to
February 4, 1998. The Settlement Agreement terminates the SDV Supply Agreement
Contract No. LGC-A65-D between Lucent and BBT dated November 15, 1995, as
amended July 12, 1996 (the "Exclusive Agreement"), relating to the development
and sale of the joint BBT/Lucent SDBAS product. Pursuant to a new SDBAS Supply
Agreement BBT will continue to supply its FLX 2500 to Lucent. Under the
Settlement Agreement, BBT agrees to support Lucent's decisions with regard to
the marketing of SDBAS products and the appropriate transition to Lucent's
AnyMedia(TM) products. While Lucent will make all customer related decisions for
the joint SDBAS product, BBT is free to market its FLX-2500 product independent
of the joint SDBAS product either as a stand alone product or in conjunction
with the products of other digital loop carrier vendors. Substantial practical
impediments exist, however, to BBT selling its FLX-2500 product independent of
the SDBAS product. Under the Settlement Agreement, (i) BBT's expenses in
supporting Lucent other than ordinary expenses in fulfilling its obligations
under the SDBAS Supply Agreement are capped at $5.5 million in the aggregate;
(ii) Lucent cancelled BBT's obligation to pay Lucent $5 million in penalties
owed to Lucent under the Exclusive Agreement and (iii) Lucent cancelled BBT's
obligation to repay $6 million of hardware prepayments Lucent made to BBT under
the Exclusive Agreement.
On February 4, 1998, BBT and Lucent also entered into a Research and Development
Agreement (the "R & D Agreement"), for BBT to develop products for Lucent's new
AnyMedia digital loop carrier product. Under the R &D Agreement, Lucent has
committed to pay BBT at least $21 million payable in equal installments over a
three year period. BBT and Lucent will co-own the technology developed by BBT
under the R&D Agreement with certain restrictions on its use, including
restrictions on licensing third parties and producing products that are plug
compatible with the products of the other party and limitations on use by BBT
solely with BBT digital loop carrier products. Although specific products to be
developed by BBT for Lucent have not been identified, the parties agreed to
identify specific development projects as soon as practicable. Lucent also
agreed that the products to be developed by BBT and the configuration of such
products would be selected with a view toward maximizing the ability of BBT to
utilize the developed technology in BBT's own digital loop carrier products. The
ability of BBT to reuse technology developed for Lucent in BBT products will
depend upon a number of factors, including the products Lucent wants BBT to
design, how alike the BBT and Lucent products will be and the design schedules
for the Lucent and BBT products. There can be no assurance, however, as to the
amount, if any, of developed products that will be reusable in BBT
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digital loop carrier products. If BBT is not able to reuse substantial amounts
of the technology developed for Lucent, the value to BBT of the R & D Agreement
would be substantially decreased from BBT's expectations.
BBT and Lucent also entered into a Technology Transfer Agreement and Element
Manager Agreement on February 4, 1998 pursuant to which certain Lucent
technology is licensed to BBT. Under the Technology Transfer Agreement, Lucent
has granted BBT licenses to certain existing narrowband line card technology of
Lucent with certain restrictions on its use, including restrictions on licensing
third parties and producing products that are plug compatible with the products
of the other party and limitations on use by BBT solely with BBT digital loop
carrier products. BBT believes this narrowband line card technology will enable
BBT to increase the cost efficiency of its digital loop carrier products and
will save BBT substantial development time and development cost. Under the
Element Manager Agreement, BBT and Lucent will evaluate whether BBT will obtain
a license of Lucent's element manager technology. Whether or not BBT obtains a
license, Lucent will pay BBT $2 million for use in connection with an element
manager. If BBT does not obtain an element manager license from Lucent, BBT will
seek a license from another supplier or develop one internally.
On February 4, 1998 BBT and Lucent also executed a Manufacturing Agreement, an
agreement for Lucent to act as an original equipment supplier to BBT and an
agreement for BBT to act as an original equipment supplier to Lucent. Only the
Manufacturing Agreement contains guaranteed volumes. Under the Manufacturing
Agreement Lucent is to contract for excess manufacturing to be performed by BBT.
The Agreement provides BBT with products to sell to Lucent to absorb $18 million
of the cost of BBT maintaining its factory operations for three years. If Lucent
fails to provide orders for products in sufficient volume to absorb $18 million,
Lucent will pay BBT the amount that is not absorbed by Lucent's orders. As BBT
expects sales of BBT's current product, the FLX 2500, to be uncertain due to
regulatory delay, and to be low as Lucent transitions to its AnyMedia product,
the required absorption orders or payments will enable BBT to maintain its
manufacturing capabilities while BBT develops new products. Under the OEM
agreements, Lucent will manufacture for BBT certain special line cards utilizing
Lucent technology and BBT will sell its FLX-2500 product to Lucent. Neither
product has any guaranteed volume commitments. In addition, BBT and Lucent will
from time to time evaluate whether to add additional products to either or both
OEM agreements. It is expected such decisions will depend upon a number of
factors, including price, quality and the availability of other suppliers.
The R & D Agreement, the Technology Transfer Agreement and the
Manufacturing Agreement described above all contain provisions that would
enable Lucent to terminate the agreements, including licenses and volume
commitments, on certain conditions in a bankruptcy of BBT, material breach
by BBT or a "Change in Control" of BBT. The Change in Control provision
terminates February 4, 2003. Change in Control is very broadly defined in
the agreements and may cause BBT to have to choose to forego the benefits
of its agreements with Lucent to acquire another company, sell itself to
another company or enter into a strategic alliance with another company,
unless Lucent approves of the transaction. Should Lucent oppose a change of
control as it relates to the technology transfer, BBT has a period of 18
months to redesign the product
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architecture excluding Lucent's technology. In addition, BBT could lose the
benefits of the agreements with Lucent if a company acquires a control
position in BBT stock through market purchases without BBT's consent. A
Change of Control occurs upon any one of the following circumstances or
events: (i) The stockholders of BBT approve a transaction, including,
without limitation, a merger or consolidation (however denominated or
effectuated), with an Acquiror, including, without limitation, a merger or
consolidation, or series of transactions with the same Acquiror
("Combination"), and immediately after such transaction(s) less than 60% of
the combined voting power of the then-outstanding securities of BBT or the
Acquiror, will be held in the aggregate by the holders of securities
entitled, immediately prior to such Combination, to vote generally in the
election of directors of BBT ("Voting Securities"); (ii) The stockholders
of BBT approve the sale or transfer of all or substantially all of its
assets to any other person or entity, and less than 60% of the combined
voting power of the then-outstanding Voting Securities of such Acquiror
immediately after such transaction will be held in the aggregate by the
holders of the Voting Securities of BBT immediately prior to such sale;
(iii) An Acquiror acquires in one or a series of transactions beneficial
ownership of more than 40% of the outstanding shares of Voting Securities
of BBT; (iv) The stockholders of BBT approve a plan of complete liquidation
or dissolution of BBT; (v) Any Acquiror obtains direct or indirect Control
(as herein defined) over BBT and, in Lucent's reasonable judgment, such
Control may threaten Lucent's interests. For the purposes of this
subsection, the term "Control" means the possession directly or indirectly
of the power to direct or cause the direction of the management or policies
of BBT, whether through the ability to exercise voting power, by contract
or otherwise; (vi) At any time, Continuing Directors (as herein defined)
shall not constitute at least 50% of the members of the Board ("Continuing
Director" means (i) each individual, who has been a director of BBT for at
least twelve (12) consecutive months before such time and (ii) each
individual who was nominated or elected to be a director of BBT by at least
a majority of the Continuing Directors at the time of such nomination or
election); or (vii) Any other transaction which has the effect of causing
the substantive changes in BBT described in any of the preceding
paragraphs. The term "Acquiror" shall mean one person or entity, or two or
more persons and/or entities constituting a "group" for purposes of the
Securities Exchange Act of 1934, as amended.
Business Strategy.
The agreements with Lucent described above represent the first
component of BBT's new strategy to leverage BBT's core broadband competencies in
local loop infrastructure and improve BroadBand's financial position. The second
component of BBT's strategy is a plan to introduce new products that capitalize
on the growth in the loop access market attributable to increasing Internet and
data traffic. The third component of BBT's strategy is to form strategic
alliances to enhance the FLX-2500 to meet the emerging Full Service Access
Network ("FSAN") standard. FSAN is a global standard being developed by a
22-member interest group which includes 11 international and United States
telephone companies and 11 vendors, including BBT. The FSAN architecture is a
high bandwidth, asynchronous transfer mode mission (ATM), passive optical
network (PON), xDSL similar to the FLX-2500 architecture. BBT's management
believes that the FLX-2500 is positioned to evolve
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to meet the FSAN standard. There can be no assurance BBT will be able to
successfully implement its business strategies. Failure to implement any one or
more of the parts of the business strategy is likely to have a material adverse
effect on BBT.
Management Changes.
Lawrence A. McLernon resigned as a director of BBT, effective as of
January 26, 1998. Salim Bhatia resigned as a director of BBT and as Chairman of
the Board of Directors for BBT effective as of January 31, 1998. John R.
Hutchins, III was elected to replace Mr. Bhatia as Chairman of the Board. Mr.
Hutchins previously served as Chairman of BBT until April 1, 1997.
Risks.
Although management believes the relationship with Lucent offers
certain opportunities to BBT, the relationship includes certain risks as well.
As disclosed in prior filings, the relationship between BBT and Lucent
relating to SDBAS arising out of the November 1995 Exclusive Agreement did not
meet BBT's expectations and resulted in substantially lower than expected sales
volume. There can be no assurances the new relationship with Lucent will not
fail to meet BBT's expectations. BBT's relationship with Lucent, which was
designed to leverage the intellectual property and complimentary product
offerings, may also adversely affect the prospect for partnership with others in
the telecommunications industry, especially in light of restrictions contained
in the new Lucent agreements relating to a change of control of BBT. In such a
situation BBT would have 18 months to reachitect its digital loop carrier to
remove certain intellectual property from its design. Decisions by Lucent or
rumors of a decision by Lucent that changes Lucent's relationship with BBT may
have an adverse effect on the market price of the stock of BBT. In addition,
although the relationship with Lucent is designed to be complimentary with BBT
as to product offerings, Lucent is a vendor of digital loop carrier products and
BBT's product will compete with Lucent in some circumstances. Such competition
could adversely affect the ability of BBT and Lucent to cooperate to the extent
required under the new agreements.
To maximize the value of the new agreements with Lucent, BBT must
develop its own digital loop carrier product. Development of a new digital loop
carrier product by BBT will be subject to significant technical and other
challenges and will require a substantial investment of money and time. There
can be no assurance that BBT will be able to develop a digital loop carrier
product or that any product it develops will be attractive to customers and
price competitive with the products of competitors, including Lucent.
Given the current regulatory and customer environment and Lucent's
transition to AnyMedia products, sales volume for BBT's only current product,
the FLX-2500, are uncertain. Accordingly, except for revenues from the new
agreements with Lucent, BBT anticipates low sales volume until its new digital
loop carrier products are introduced into the market or regulatory change
accelerates local competition for residential services.
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Cautionary Statement Identifying Important Factors That Could Cause
BroadBand's Actual Results to Differ From Those Projected in Forward
Looking Statements.
In connection with the "safe harbor" provisions of the Private
Securities Litigation Reform Act of 1995, readers of this document are advised
that the document contains both statements of historical facts and forward
looking statements. Forward looking statements are subject to various risks and
uncertainty which could cause actual results to differ materially from those
indicated by the forward looking statements, including risks and uncertainties
described in the "Risks" section above, and in BBT's Form 10-K for the year end
December 31, 1996, and BBT's other documents filed with the Securities and
Exchange Commission. Examples of forward looking statements include but are not
limited to (i) projections of revenues, income or loss, earnings per share,
capital expenditures, capital structure and other financial items; (ii)
statements of the plans and objectives of BBT or its management or Board of
Directors, including the introduction of new products or methodology or
predictions of actions by customers, suppliers or competitors; (iii) statements
of future economic performance; and (iv) statements of assumptions underlying
other statements and statements about BBT and its business.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits.
Exhibit No. Exhibit
- ----------- -------
10.1 Umbrella Settlement Agreement, dated as of February
4, 1998, between BroadBand and Lucent. (1)
10.2 Form of Release.
10.3 Form of Release.
10.4 Supply Agreement, dated as of February 4, 1998,
between BroadBand and Lucent. (1)
10.5 Technology Transfer Agreement, dated as of February
4, 1998, between BroadBand and Lucent. (1)
10.6 Manufacturing Agreement, dated as of February 4,
1998, between BroadBand and Lucent. (1)
10.7 BBT OEM Agreement, dated as of February 4, 1998,
between BroadBand and Lucent. (1)
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10.8 Lucent OEM Agreement, dated as of February 4, 1998,
between BroadBand and Lucent. (1)
10.9 Research and Development Agreement, dated as of
February 4, 1998, between BroadBand and Lucent. (1)
10.10 Element Manager Software Letter Agreement, dated as
of February 4, 1998, between BroadBand and Lucent.
- ----------------------------------
(1) Confidential treatment for certain portions of this Exhibit is being
requested pursuant to Rule 24b-2 of the Securities and Exchange Commission under
the Securities Exchange Act of 1934, as amended.
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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, thereunto duly authorized.
BROADBAND TECHNOLOGIES, INC.
By: /s/ Timothy K. Oakley
---------------------
Name: Secretary and Chief Financial Officer
Dated: March 2, 1998
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EXHIBIT INDEX
Exhibit No. Description Page No.
- ----------- ----------- --------
10.1 Umbrella Settlement Agreement, dated as of February
4, 1998, between BroadBand and Lucent. (1)
10.2 Form of Release.
10.3 Form of Release.
10.4 Supply Agreement, dated as of February 4, 1998,
between BroadBand and Lucent. (1)
10.5 Technology Transfer Agreement, dated as of February
4, 1998, between BroadBand and Lucent. (1)
10.6 Manufacturing Agreement, dated as of February 4,
1998, between BroadBand and Lucent. (1)
10.7 BBT OEM Agreement, dated as of February 4, 1998,
between BroadBand and Lucent. (1)
10.8 Lucent OEM Agreement, dated as of February 4, 1998,
between BroadBand and Lucent. (1)
10.9 Research and Development Agreement, dated as of
February 4, 1998, between BroadBand and Lucent. (1)
10.10 Element Manager Software Letter Agreement, dated as
of February 4, 1998, between BroadBand and Lucent.
- ----------------------------------
(1) Confidential treatment for certain portions of this Exhibit is being
requested pursuant to Rule 24b-2 of the Securities and Exchange Commission under
the Securities Exchange Act of 1934, as amended.
Exhibit 10.1
**-Certain information omitted and filed separately with the Commission pursuant
to a confidential treatment request under Rule 24b-2 of the Commission.
SETTLEMENT AGREEMENT
This SETTLEMENT AGREEMENT dated as of February 4, 1998, between LUCENT
TECHNOLOGIES INC., a Delaware corporation, having offices at 600 Mountain
Avenue, Murray Hill, New Jersey 07974 ("Lucent"), and BROADBAND TECHNOLOGIES,
INC., a Delaware corporation, having offices at 4024 Stirrup Creek Drive,
Durham, North Carolina 27709-3737 ("BBT").
Recitals
WHEREAS on November 1, 1995 the Parties entered into the SDV Agreement
pertaining to the development, supply and marketing of SDBAS Products or
Services (as defined herein); and
WHEREAS the Parties hereto desire to settle and finally resolve certain
disputes relating to the SDV Agreement (as defined herein), to avoid the further
risks, burden, expense and inconvenience of continuing with dispute resolution
procedures, and to alter the contractual relationships between the Parties.
NOW, THEREFORE, in consideration of the covenants and other terms set forth
herein, each of the Parties hereto on behalf of itself and its Related Parties
(as defined
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herein), without any admission of liability, does hereby agree as follows:
ARTICLE I
Definitions
SECTION 1.1. Defined Terms. As used in this Agreement, the following terms
have the meanings specified below:
"Agreement" means this Settlement Agreement including all exhibits and
attachments hereto.
"BBT" is defined in the heading of this Agreement.
"Effective Date" means the date set forth in the first paragraph of this
Agreement.
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"First Amendment" means the First Amendment to Agreement
LGC-A65-D (known herein as the SDV Agreement) dated July 12, 1996, including all
exhibits and attachments thereto.
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"Lucent" is defined in the heading of this Agreement.
"Parties" means the parties to this Agreement.
"Party" means a party to this Agreement.
"Related Parties" means, in respect of any Party, such Party's wholly owned
subsidiaries, and the respective divisions, heirs, successors and assigns of
such Party and its wholly owned subsidiaries.
"SDBAS Products or Services" and "SDBAS Products and Services"
means the products and services listed on Exhibit C.
"SDV Agreement" means the agreement between BBT and Lucent known as
Contract No. LGC-A65-D dated November 1, 1995, as amended from time to time, and
includes the First Amendment and attachments thereto.
SECTION 1.2. Terms Generally. The definitions of terms herein shall apply
equally to the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include", "includes" and "including" shall
be deemed to be followed by the words "without limitation". The word "will"
shall be construed to have the same meaning and effect as the word "shall".
Unless the context requires otherwise, (a) any definition of or reference to any
agreement, instrument or other document herein shall be construed as referring
to such agreement, instrument or
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other document as from time to time amended, supplemented or otherwise modified,
(b) any reference herein to any Person shall be construed to include such
Person's successors and assigns, (c) the words "herein", "hereof" and
"hereunder", and words of similar import, shall be construed to refer to this
Agreement in its entirety and not to any particular provision hereof, and (d)
all references herein to Articles, Sections, Exhibits and Schedules shall be
construed to refer to Articles and Sections of, and Exhibits and Schedules to,
this Agreement.
ARTICLE II
Contractual Relationships
SECTION 2.1. Termination of SDV Agreement. Subject to the terms, conditions
and exceptions set forth herein, the Parties agree that the SDV Agreement hereby
is terminated. The parties agree that Lucent is in complete control of the
marketing strategy for SDBAS or SDBAS Products or Services. The Parties also
agree that except as otherwise provided herein or in the agreements in the forms
attached as Exhibits C-E and to be executed simultaneously with this Agreement,
going forward, neither BBT nor any BBT Related Party has, unless it receives
written permission from Lucent, the right, authority or entitlement to supply,
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market or promote SDBAS or SDBAS Products or Services. Nothing in this Agreement
shall prevent BBT from supplying, marketing or promoting its FLX product, as
long as it does not do so as part of an overall SDBAS system or SDBAS offer.
SECTION 2.2. Termination of Certain Continuing Obligations Under the SDV
Agreement. The parties agree to terminate BBT's obligations to refund and/or pay
any moneys to Lucent pursuant to Section 8.2 or Article 21 of the First
Amendment. This Section shall not terminate any other continuing obligations
either BBT or Lucent has pursuant to the SDV Agreement.
SECTION 2.3. SDBAS Customers. Lucent has certain goals with respect to the
marketing, supply and sales of SDBAS and SDBAS Products and Services to existing
customers. Lucent has no obligation to BBT not to change, alter or otherwise
modify these goals. BBT hereby agrees to use its reasonable best efforts to
assist Lucent in achieving these goals, to cooperate fully with Lucent in
Lucent's efforts to achieve these goals, to take no steps antagonistic to
Lucent's efforts to achieve these goals and to take positive steps to assist
Lucent in achieving these goals as requested to do so by Lucent (all hereinafter
referred to as "BBT Efforts"); provided that the obligations of the Parties
hereunder shall be limited to acts which are consistent with applicable law and
the rights of customers. BBT's
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obligations in the preceding sentence apply to Lucent's current goals and to any
changes, alterations or modifications in those goals that Lucent communicates to
BBT.
Subject to a cap of **********, BBT is responsible for: (1) paying its own
costs associated with BBT Efforts; and (2) reimbursing Lucent for Lucent's costs
associated with achieving these goals (subsections 1 and 2 collectively
"Customer Costs"). Customer Costs do not include any costs associated with
continued supply of SDBAS or SDBAS Products or Services to Customers in the
ordinary course of business, including but not limited to fulfilling obligations
under the agreement simultaneously executed in the form attached as Exhibit C.
Customer Costs do not include any costs for management time, although costs for
craft time are included. Any amounts that BBT expends on non-BBT equipment after
the effective date to satisfy its obligations to supply Material associated with
upgrades for use for existing customs pursuant to the second sentence of Section
24.02 of the SDBAS Supply Agreement simultaneously executed in the form attached
as Exhibit C shall count towards the above-mentioned *************** cap. BBT's
obligations under this Section do not terminate when and if the ************ cap
is reached, except that, in the event that this cap is reached, BBT is entitled
to reimbursement from Lucent for Customer
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Costs incurred by BBT (those costs described in (1) above) and BBT has no
obligation to reimburse Lucent for Customer Costs incurred by Lucent (those
costs described in (2) above).
BBT agrees to cooperate fully with Lucent in fulfilling any obligations
Lucent may have to any of the existing customers with respect to SDBAS or SDBAS
Products and Services, and to sell Lucent SDBAS Products and Services pursuant
to an agreement in the form attached as Exhibit C.
SECTION 2.4. ***************. BBT agrees to use reasonable
best efforts to: cooperate fully with Lucent, take no steps antagonistic to
Lucent, and assist Lucent in resolving any issues, disputes, disagreements,
claims, complaints, actions or the like that may arise between Lucent and
************** concerning the FSN Contract ("**** ********* Dispute"). BBT is
responsible for: (1) paying its own costs associated with providing such
assistance and cooperation with respect to any *************** Dispute; and (2)
reimbursing Lucent for Lucent's costs associated with resolving or attempting to
resolve any ************* Dispute (subsections (1) and (2) collectively
"********************* Costs"). ******************** Costs do not include any
costs associated with continued supply of SDBAS or SDBAS Products or Services to
******************* in the ordinary course of business, including but not
limited to fulfilling
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obligations under the Agreement simultaneously executed in the form attached as
Exhibit C. ************** Costs do not include any costs for management time,
although costs for craft time are included. BBT's responsibilities as set forth
above in this paragraph relating to ****************** Disputes shall be capped
at ************. BBT's obligations under this Section do not terminate when and
if the ******** ******** cap is reached, except that, in the event that this cap
is reached, BBT is entitled to reimbursement from Lucent for
********************* Costs incurred by BBT (those costs described in (1) above)
and BBT has no obligation to reimburse Lucent for ************** Costs incurred
by Lucent (those costs described in (2) above). Any amounts that BBT expends on
non-BBT equipment after the Effective Date to satisfy its obligations to supply
Material associated with upgrades for use for **************** pursuant to the
second sentence of Section 24.02 of the SDBAS Supply Agreement simultaneously
executed in the form attached as Exhibit C shall count towards the
above-mentioned *************** cap. Any amounts of the ************ of
prepayments made by **** *********** to BBT to be applied to contract BA-14494,
dated July 12, 1996, between **************** and BBT, that BBT is obligated to
refund to ************* shall count towards the above-mentioned *************
cap. Any portion of this **** ********* prepayment that BBT is obligated to
refund to ****
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********* that would exceed the cap in light of other moneys BBT has already
expended or paid to Lucent that count towards this cap will be either: (1) paid
directly to ****** ********** by Lucent, or (2) reimbursed to BBT by Lucent, at
Lucent's choice.
If ***************** makes Alternative Performance Payments to Lucent
pursuant to the FSN Agreement that result in a net gain to Lucent after
subtraction of all *********** ********** Costs (not limited for purposes of
this paragraph to the cap), Lucent will pay 33 1/3% of any such net gain to BBT.
SECTION 2.5. BBT Release. Simultaneously with and as a condition of
execution of this Agreement, BBT will deliver to Lucent a release executed by
BBT in the form attached as Exhibit A.
SECTION 2.6. Lucent Release. Simultaneously with and as a condition of
execution of this Agreement, Lucent will deliver to BBT a release executed by
Lucent in the form attached as Exhibit B.
SECTION 2.7. SDBAS Supply Agreement. Simultaneously with and as a condition
of execution of this Agreement, the Parties will execute an Agreement in the
Form attached as Exhibit C.
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SECTION 2.8. BBT OEM Supply Agreement. Simultaneously with and as a
condition of execution of this Agreement, the Parties will execute an agreement
in the form attached as Exhibit D.
SECTION 2.9. Lucent OEM Supply Agreement. Simultaneously with and as a
condition of execution of this Agreement, the Parties will execute an agreement
in the form attached as Exhibit E.
SECTION 2.10. Research and Development Agreement. Simultaneously with and
as a condition of execution of this Agreement, the Parties will execute an
agreement in the form attached as Exhibit F.
SECTION 2.11. Technology Transfer Agreement. Simultaneously with and as a
condition of execution of this Agreement, the Parties will execute an agreement
in the form attached as Exhibit G.
SECTION 2.12. Manufacturing Agreement. Simultaneously with and as a
condition of execution of this Agreement, the Parties will execute an agreement
in the form attached as Exhibit H.
SECTION 2.13. Element Manager Software Side Letter Agreement.
Simultaneously with and as a condition of execution of this Agreement, the
Parties will execute a side letter agreement in the form attached as Exhibit I.
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SECTION 2.14. ************************************************************.
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Notwithstanding anything in this Agreement to the contrary, Lucent may seek
relief from breach or anticipatory breach of this Section 2.14 in any court of
competent jurisdiction. In addition, BBT consents to the non-exclusive
jurisdiction of the courts of the State of New Jersey and the federal courts
located in the State of New Jersey for actions brought by Lucent arising out of
breach or anticipatory breach of this Section 2.14, and BBT agrees to waive any
defense of improper or inconvenient venue in connection with any such action by
Lucent.
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ARTICLE III
Representations and Warranties
SECTION 3.1. Each Party hereby represents and warrants to the other Party
as follows:
(a) Such Party, on advice of counsel, has duly considered the settlement
contemplated by this Agreement. This Agreement and the Releases, documents and
instruments to be executed on behalf of such Party and its Related Parties
hereunder have been duly authorized by all necessary action, including approved
by the Party's Board of Directors if necessary. This Agreement and each Release,
document and instrument simultaneously executed or delivered on behalf of such
Party or any of its Related Parties pursuant to Article II has been duly
executed and delivered by or on behalf of such Party and its applicable Related
Parties and constitute a legal, valid and binding obligation of such Party and
each such Related Party, as the case may be, enforceable in accordance with its
terms.
(b) The execution, delivery and performance by such Party and its Related
Parties of this Agreement and the Releases, documents and instruments to be
executed by or on behalf of such Party and its Related Parties pursuant to
Article II (i) do not require any consent or approval of, or other action by any
governmental authority, except such as has already been obtained, and will be in
full force and
<PAGE>
13
effect as of the Effective Date, and (ii) do not violate any applicable law or
regulation or the charter, bylaws or other organizational documents of such
Party or any of its Related Parties.
(c) The execution and delivery of this Agreement by such Party duly binds
and commits all its Related Parties.
ARTICLE IV
Miscellaneous
SECTION 4.1 Notices. Any notice or demand which under the terms of this
Agreement or under any statute must or may be given or made by BBT or Lucent
shall be in writing and shall be given or made by confirmed facsimile, or
similar communication or by commercial courier or by certified or registered
mail addressed to the respective Parties as follows:
To Lucent:
Lucent Technologies Inc.
67 Whippany Road
Whippany, New Jersey 07981
Attention: Access Product Management Vice
President
with a copy to:
Lucent Technologies Inc.
283 King George Road
Warren, New Jersey 07059
Attention: Corporate Counsel-Switching
and Access
<PAGE>
14
To BBT:
BroadBand Technologies, Inc.
P.O. Box 13737
4024 Stirrup Drive
Durham, North Carolina 27709-3737
ATTN: Chief Financial Officer
with a copy to:
James F. Verdonik, Esq.
Kilpatrick Stockton LLP
P.O. Box 300004
Raleigh, North Carolina 27622
The effective dates of such notice shall be (i) upon evidence of successful
facsimile transmission, or (ii) five days following the date mailed for
certified or registered letters or (iii) when delivered, if in person or by
commercial courier. The above addresses may be changed at any time by giving
prior written notice as above provided.
SECTION 4.2. No Admissions. This Agreement is a compromise and nothing
herein shall be deemed or construed to be an admission or concession of any
liability whatever on the part of any Party or Person.
SECTION 4.3. Waivers; Amendments. (a) No failure or delay by either Party
in exercising any right or power hereunder shall operate as a waiver thereof,
nor shall any single exercise of any such right or power or any discontinuance
of steps to enforce any such right or power preclude the further exercise
thereof.
<PAGE>
15
(b) Neither this Agreement nor any provision hereof may be waived, modified
or amended except pursuant to an agreement or agreements in writing entered into
by (i) in the case of a waiver, the Party against whom such waiver is to apply,
or (ii) in the case of a modification or amendment, each Party.
SECTION 4.4. Remedies for Breach. In the event that any Party breaches any
of its obligations under this Agreement, the other Party is entitled to specific
performance, injunctive relief and any damages resulting from that breach.
SECTION 4.5. Parties Bound. The provisions of this Agreement and the
Releases executed and delivered hereunder shall be binding upon the Parties and
their respective Related Parties. Each Party agrees to take such action as shall
be necessary to bind each of its Related Parties intended to be bound as
provided in this Section 4.5. and to secure the observance of this Agreement and
such Releases by each such Related Party.
SECTION 4.6. Confidentiality. Each Party agrees that it will not disclose
the contents of this Agreement or any Release or other Exhibit hereto to any
other Person, and agrees that it will maintain in confidence the terms and
conditions of this Agreement and the Releases and other Exhibits hereto, except:
(a) to the extent necessary to
<PAGE>
16
comply with law or the valid order of a court of competent jurisdiction or of a
state or federal regulatory authority; (b) to comply with governmental
disclosure requirements, including U.S. Securities and Exchange Commission
requirements (on written advice of counsel that such disclosure is necessary or
prudent to avoid liability); (c) to the extent necessary to comply with a civil
investigative demand issued by the United States Department of Justice or with
the Hart-Scott-Rodino Act or any second request thereunder; (d) to satisfy tax
authorities, including the U.S. Internal Revenue Service; (e) to the extent
necessary in connection with any action, suit or proceeding to enforce this
Agreement or any Release; or (f) to their respective subsidiaries and affiliated
companies, their banks, auditors, accountants, lawyers, or any other
representative of a Party who has a good faith need to know, provided that in
each case the Person to whom disclosure is made pursuant to this clause (f) is
advised of the confidentiality of the information disclosed and agrees to keep
such information confidential; (g) to the extent set forth in Section 4.7 below;
(h) by mutual agreement of the Parties; and (i) disclosure of the versions of
each of Exhibits C-I that are executed contracts shall be governed by the
disclosure provisions contained within that contract, although any relationship
of any of those contracts to this
1
<PAGE>
17
Agreement or to each other can only be disclosed in accordance with the
requirements of this Agreement. In the event of proposed disclosure pursuant to
clause (a) or (c) above, the Party proposing to make such disclosure (i) shall
give the other Party as much notice as is practicable of the proposed
disclosure, (ii) shall cooperate (at its own expense) with any attempt by such
other Party to obtain a protective order or other confidential treatment for the
information so disclosed and (iii) shall only disclose such information as is
legally required to be disclosed. In the event of disclosure to clause (b)
above, subsection (i) and (ii) shall apply. BBT agrees that, prior to any filing
pursuant to SEC regulations, BBT will afford Lucent the opportunity to require
BBT to request confidential treatment of specific portions of such agreements
and BBT shall comply with such reasonable requests of Lucent. The Parties
understand that BBT does not guarantee that the SEC shall grant such
confidentiality requests.
SECTION 4.7. Publicity. Neither Party shall make a public announcement or
issue a press release concerning the subject matter of this Agreement without
obtaining the prior written consent of the other Party. As soon as practicable
following execution of this Agreement, the Parties shall make a joint press
release that is mutually acceptable to the Parties. Furthermore, neither
2
<PAGE>
18
Party shall publish or use advertising, sales promotions or publicity material
wherein the other Party's name or marks are mentioned, or relating to the other
Party's products, without such other Party's prior written consent. Nothing in
this Section is meant to limit a Party's rights and obligations under Section
4.6.
SECTION 4.8. Use of Agreement. Neither this Agreement nor evidence of any
negotiations in connection with it shall be offered or received in evidence or
used in any way at any trial, arbitration or other action or proceeding between
or among the Parties except to enforce the terms and provisions hereof. The
Parties agree that this Agreement and evidence of any negotiations in connection
with it shall not be offered or received in evidence or used in any way at any
trial, arbitration or other action between or among the Parties relating to or
arising out of the agreements separately executed by the Parties in the forms
attached to this Agreement as Exhibits C, D, E, F, G, H and I. The parties also
agree that under no circumstances will a breach of or any dispute arising out of
or relating to any or all of the agreements separately executed by the Parties
in the forms attached to this Agreement as Exhibits C, D, E, F, G, H and I
invalidate or otherwise cause not to be effective the Releases separately
3
<PAGE>
19
executed by the Parties in the forms attached as Exhibits A and B.
SECTION 4.9. Survival. All covenants, agreements, representations and
warranties made by each Party herein and in the Releases or other instruments
executed and delivered in connection with or pursuant to this Agreement shall be
considered to have been relied upon by the other Party hereto and shall survive
the execution and delivery of this Agreement and the Releases and Exhibits
hereto.
SECTION 4.10. Counterparts; Integration; Effectiveness. This Agreement may
be executed in two or more counterparts, each of which shall be deemed an
original, but all of which when taken together shall constitute one and the same
instrument. Except as otherwise agreed in writing by the Parties hereto, this
Agreement and the Releases to be executed pursuant to this Agreement constitute
the entire contract between the Parties relating to the subject matter thereof
and supersede any and all previous agreements and understandings, oral or
written, relating to the subject matter thereof. This Agreement shall become
effective when counterparts hereof which, when taken together, bear the
signatures of each of the Parties, have been executed and delivered. Delivery of
an executed counterpart of a signature page of this Agreement by
<PAGE>
20
telecopy shall be effective as delivery of a manually executed counterpart of
this Agreement.
SECTION 4.11. Governing Law. This Agreement shall be construed in
accordance with and governed by the law of the State of New Jersey without
regard to its conflicts of law principles and laws.
SECTION 4.12. Restriction of Benefit. This Agreement is only intended to
benefit the Parties and their respective successors and assigns and shall not be
construed to confer rights on any third parties, except that (1) the Releases
executed in the forms attached as Exhibits A and B are intended to benefit the
Releasees listed therein; and (2) the indemnification obligations in Sections
4.15 and 4.16 are intended to benefit the Indemnified Parties as defined in
those Sections.
SECTION 4.13. Dispute Resolution. (a) The following procedures shall apply
to any dispute or disagreement between the Parties or any of their Related
Parties arising out of this Agreement or either of the Releases executed
pursuant to this Agreement. Any disputes arising out of any of the agreements
executed simultaneously with this Agreement in the forms attached as Exhibits C,
D, E, F, G, H and I shall be governed by the dispute resolution provisions
contained in the particular agreement at issue.
<PAGE>
21
(b) First:
(i) either Party may give written notification of such dispute or
disagreement to the other Party; and
(ii) the Parties shall communicate with each other promptly with a
view to resolving such dispute or disagreement within twenty-one (21) days
(or such extended period as the Parties agree is appropriate in any case)
after such written notification is given.
(c) The giving of any notice regarding any dispute or disagreement under
this Section 4.13 shall toll the running of all applicable statutes of
limitation until the later of (i) ninety (90) days following the giving of such
notice or (ii) thirty (30) days following the termination of discussions between
the Parties concerning such dispute or disagreement.
(d) Second, if at the end of the twenty-one (21) day period referenced in
Section 4.13(b) (as it may be extended) such dispute or disagreement has not
been resolved to the satisfaction of both parties, either Party may request in
writing that such dispute or disagreement be the subject of non-binding
mediation. Following such request, the Parties shall endeavor in good faith
promptly to identify a single person (who shall be a person with experience and
good reputation) who shall assist the Parties
<PAGE>
22
in discussing such dispute or disagreement and in attempting to reach a mutually
acceptable business resolution. Such mediation process shall terminate not later
than thirty (30) days following the request therefor (or such extended or
shorter period as the Parties agree is appropriate). All applicable statutes of
limitation shall be tolled during the period of mediation.
(e) Third, if at the end of the thirty (30) day period referenced in
Section 4.13(d) (as it may be extended or shortened) such dispute or
disagreement has not been resolved to the satisfaction of both parties, either
Party (the "complainant") may commence binding arbitration by giving the other
Party (the "respondent") notice in writing (the "initiating notice") setting
forth in reasonable detail the nature of its claim and the relief requested
stating that the complainant is invoking the procedures set forth in this
Section 4.13(e) and (f) and naming the complainant's representative on the
Arbitration Panel (as defined below). Within 21 days of receipt of an initiating
notice, the respondent shall give the complainant notice in writing (the
"response") setting forth in reasonable detail: (1) the basis of its response to
the claim; (2) the nature of any counterclaim it has against the complainant
arising from the same set of facts and circumstances that gave rise to the
original claim; (3) any other counterclaim that Party wishes
<PAGE>
23
to bring at that time (although the Party has no obligation to bring such
counterclaims at that time); (4) the relief requested; and (5) naming the
respondent's representative on the Arbitration Panel. The two representatives
shall select a third person who is mutually acceptable to them. If the
representatives fail to make such selection within twenty-one (21) days, the
complainant and the respondent shall each replace its representative with a new
representative and the new representatives shall be subject to the preceding
sentence and this sentence. Once a third person is selected, such person
together with the representatives of the complainant and the respondent shall
form the Arbitration Panel. The date upon which the Arbitration Panel is formed
shall be the "Commencement Date".
(f) The Arbitration Panel shall conduct proceedings to determine the merits
under applicable law of the claims set forth in the initiating notice and the
response. The proceedings shall be administered by JAMS/Endispute in accordance
with its Comprehensive Arbitration Rules and Procedures in effect as of the
Effective Date, subject to the following additional rules:
(i) the proceedings shall take place in New York City;
(ii) the Arbitration Panel (including, if necessary, any
replacement(s) to the Arbitration Panel)
<PAGE>
24
shall be selected as set forth in Section 4.13(e);
(iii) the available relief shall include damages, injunctive relief
and equitable relief to the extent allowed under the applicable law, this
Agreement and any other agreement between the parties;
(iv) the parties shall attempt in good faith promptly to agree on the
nature and extent of any discovery in connection with the arbitration,
provided that, in the absence of such agreement, discovery shall be
governed by JAMS/Endispute's Comprehensive Arbitration Rules and
Procedures. In addition, the applicable law with respect to privilege and
other protections from disclosure, including the work product doctrine
shall apply;
(v) the final decision of the Arbitration Panel (the "Award") shall be
issued within six months of the Commencement Date (the date of issuance of
the Award being the "Award Date") and must be joined by at least two
members of the Arbitration Panel;
(vi) each party to the proceedings shall pay its own costs in
connection with the proceedings, including the costs and expenses of its
representative on the Arbitration Panel, and the parties shall share
equally the other costs of the proceedings, including the fees of the third
member of the Arbitration Panel, except
<PAGE>
25
that the prevailing party shall be entitled to recover its attorneys' fees
incurred in prosecution thereof.
(g) In accordance with the Federal Arbitration Act, 9 U.S.C. ss. 1 et seq.,
the Award shall be final and binding and judgment thereon may be entered by any
state or federal court having jurisdiction thereof.
(h) Nothing in this Section 4.13 shall be construed to preclude either
party from seeking injunctive declaratory or other provisional relief in a court
of competent jurisdiction to prevent imminent irreparable harm. The dispute
resolution procedures set forth herein shall be stayed pending disposition of
any application for such relief. The Parties agree that a court of competent
jurisdiction may consider the merits of any claim that is subject to the dispute
resolution procedures set forth herein to the extent necessary to resolve any
permissible application for injunctive declaratory or other provisional relief.
SECTION 4.14. Compliance with Law. Nothing in this Agreement shall obligate
a Party to act in violation of any applicable legal requirement or prohibition.
To the extent that any provision of this Agreement may be construed at any time
to impose such an obligation upon a Party, that provision shall be deemed
modified insofar as necessary (but only to the least extent necessary) to
relieve the Party of
<PAGE>
26
such obligation and to allow the Party to comply in full with all applicable
legal requirements or prohibitions.
SECTION 4.15. Lucent Indemnification. At BBT's request, Lucent agrees to
indemnify, defend and hold harmless BBT, its wholly owned subsidiaries, their
respective officers, directors, employees, shareholders, agents and attorneys
and the respective heirs, executors, administrators, successors or assigns of
each of the foregoing (separately and collectively for the purposes of this
Section an "Indemnified Party") from and against any losses, damages, claims,
fines, penalties and expenses (including but not limited to attorney and expert
fees) that arise out of or result from any actions, complaints, causes of
action, demands, suits or claims, in law or in equity, brought against an
Indemnified Party by any officer, director or employee or former officer,
director or employee of Lucent or any of its subsidiaries or divisions relating
to or arising out of the relationship between Lucent and BBT prior to the
Effective Date.
SECTION 4.16. BBT Indemnification. At Lucent's request, BBT agrees to
indemnify, defend and hold harmless Lucent, its wholly owned subsidiaries, their
respective officers, directors, employees, shareholders, agents and attorneys
and the respective heirs, executors, administrators, successors or assigns of
each of the
<PAGE>
27
foregoing (separately and collectively for the purposes of this Section an
"Indemnified Party") from and against any losses, damages, claims, fines,
penalties and expenses (including but not limited to attorney and expert fees)
that arise out of or result from any actions, complaints, causes of action,
demands, suits or claims, in law or in equity, brought against an Indemnified
Party by any officer, director or employee or former officer, director or
employee of BBT or any of its subsidiaries or divisions relating to or arising
out of the relationship between Lucent and BBT prior to the Effective Date.
IN WITNESS WHEREOF, LUCENT and BBT have caused this Agreement to be
executed by their duly authorized officers.
LUCENT TECHNOLOGIES INC.,
By
Date:_____________________________ ____________________________________
BROADBAND TECHNOLOGIES, INC.
By
Date:_____________________________ ____________________________________
<PAGE>
28
EXHIBIT A
BROADBAND TECHNOLOGIES, INC.
RELEASE AND COVENANT NOT TO SUE
TO ALL TO WHOM THESE PRESENTS SHALL COME OR MAY CONCERN, KNOW THAT
BROADBAND TECHNOLOGIES, INC., a Delaware corporation ("BBT"), on behalf of
itself, its divisions, heirs, successors and assigns, its wholly owned
subsidiaries and their respective divisions, heirs, successors and assigns, and
all other persons that BBT has the power and authority to bind through its
execution of this Release and Covenant Not to Sue (herein, separately and
collectively, the "Releasors"), in consideration of good and valuable
consideration received from Lucent Technologies Inc., a Delaware corporation
("Lucent"), the receipt and sufficiency of which is hereby acknowledged, hereby
release, acquit and forever discharge Lucent, Lucent's predecessor AT&T (to the
extent Lucent has assumed any liabilities or obligations of AT&T), each of
Lucent's wholly owned subsidiaries, each of the above's respective officers,
directors, employees, shareholders, agents and attorneys and the respective
heirs, executors, administrators, successors and assigns of each of the
foregoing (herein, separately and collectively, the
<PAGE>
29
"Releasees"), from any and all actions, complaints, causes of action, demands,
damages, costs and expenses, liabilities, suits and claims, in law or in equity,
whether now known or unknown, whether asserted or unasserted (collectively
"Claims") which the Releasors ever had, now have, or hereinafter can, shall or
may have from the beginning of the world to the date of this Release
(hereinafter collectively referred to as the "Released Claims").
BBT represents and warrants that it has duly considered, approved and
authorized this Release and Covenant Not To Sue, has taken all necessary actions
for this Release and Covenant Not To Sue to be valid and binding and warrants
that the execution of this Release and Covenant Not To Sue by the undersigned on
behalf of BBT duly binds and commits all Releasors.
Releasors covenant and agree that they will forever refrain from
instituting, reinstating, maintaining or prosecuting any action or proceeding
against Releasees upon any Claims, whether or not now or hereafter known,
suspected or claimed which Releasors ever had, now have or hereafter can, shall
or may have or allege against Releasees on account of any of the Released
Claims.
<PAGE>
30
Notwithstanding Section 1542 of the California Civil Code, which provides:
"A general release does not extend to claims which the creditor does not
know or suspect to exist in his favor at the time of executing the release,
which if known by him must have materially affected his settlement with the
debtor,"
this Release and Covenant Not to Sue shall constitute a full release in
accordance with its terms. BBT knowingly and voluntarily waives the provisions
of Section 1542, if applicable, and any provisions of similar effect in the law
of the State of Minnesota or federal law or statutes, if applicable, and
acknowledges and agrees that this waiver is an essential part of this Release
and Covenant Not To Sue. BBT further acknowledges that this Release and Covenant
Not To Sue has been negotiated and agreed to in light of such possible damages,
losses, fees, costs or expenses and that BBT took that into account in agreeing
to execute this Release and Covenant Not To Sue.
Releasors represent and warrant that Releasors have not sold, assigned,
transferred, conveyed or otherwise disposed of any claim, demand or cause of
action or any part thereof relating to any matter covered by this Release and
Covenant Not To Sue and agree to indemnify Releasees against any and all claims
by third persons resulting from any such sale, assignment, transfer, conveyance
or other disposition.
<PAGE>
31
This Release and Covenant Not To Sue shall not be altered or modified in
any way except by written consent of authorized representatives of Releasors and
Releasees.
This Release and Covenant Not To Sue shall be governed by the laws of the
State of New Jersey.
IN WITNESS WHEREOF, RELEASORS have caused this Release to be executed by
their duly authorized agent as of February 4, 1998.
BROADBAND TECHNOLOGIES, INC.
------------------------------------
David E. Orr
President
<PAGE>
32
EXHIBIT B
LUCENT TECHNOLOGIES INC.
RELEASE AND COVENANT NOT TO SUE
TO ALL TO WHOM THESE PRESENTS SHALL COME OR MAY CONCERN, KNOW THAT LUCENT
TECHNOLOGIES INC., a Delaware corporation ("Lucent"), on behalf of itself, its
divisions, heirs, successors and assigns, its wholly owned subsidiaries and
their respective divisions, heirs, successors and assigns and all other persons
that Lucent has the power and authority to bind through its execution of this
Release and Covenant Not to Sue (herein separately and collectively the
"Releasors"), in consideration of good and valuable consideration received from
BroadBand Technologies, Inc., a Delaware corporation ("BBT"), the receipt and
sufficiency of which is hereby acknowledged, hereby release, acquit and forever
discharge BBT, each of BBT's wholly owned subsidiaries, each of the above's
respective officers, directors, employees, shareholders, agents and attorneys
and the respective heirs, executors, administrators, successors and assigns of
each of the foregoing (herein, separately and collectively, the "Releasees"),
from any and all actions, complaints, causes of action, demands, damages, costs
and expenses, liabilities, suits and claims, in law or in equity, whether now
known or unknown, whether asserted or
<PAGE>
33
unasserted (collectively "Claims") which the Releasors ever had, now have, or
hereinafter can, shall or may have from the beginning of the world to the date
of this Release (hereinafter collectively referred to as the "Released Claims").
Lucent represents and warrants that it has duly considered, approved and
authorized this Release and Covenant Not To Sue, has taken all necessary actions
for this Release and Covenant Not To Sue to be valid and binding and warrants
that the execution of this Release and Covenant Not To Sue by the undersigned on
behalf of Lucent duly binds and commits all Releasors.
Releasors covenant and agree that they will forever refrain from
instituting, reinstating, maintaining or prosecuting any action or proceeding
against Releasees upon any Claims, whether or not now or hereafter known,
suspected or claimed which Releasors ever had, now have or hereafter can, shall
or may have or allege against Releasees on account of any of the Released
Claims.
Notwithstanding Section 1542 of the California Civil Code, which provides:
"A general release does not extend to claims which the creditor does not
know or suspect to exist in his favor at the time of executing the release,
which if known by him must have materially affected his settlement with the
debtor,"
<PAGE>
34
this Release and Covenant Not to Sue shall constitute a full release in
accordance with its terms. Lucent knowingly and voluntarily waives the
provisions of Section 1542, if applicable, and any provisions of similar effect
in the law of the State of Minnesota or federal law or statutes, if applicable,
and acknowledges and agrees that this waiver is an essential part of this
Release and Covenant Not To Sue. Lucent further acknowledges that this Release
and Covenant Not To Sue has been negotiated and agreed to in light of such
possible damages, losses, fees, costs or expenses and that Lucent took that into
account in agreeing to execute this Release and Covenant Not To Sue.
Releasors represent and warrant that Releasors have not sold, assigned,
transferred, conveyed or otherwise disposed of any claim, demand or cause of
action or any part thereof relating to any matter covered by this Release and
Covenant Not To Sue and agree to indemnify Releasees against any and all claims
by third persons resulting from any such sale, assignment, transfer, conveyance
or other disposition.
This Release and Covenant Not To Sue shall not be altered or modified in
any way except by written consent of authorized representatives of Releasors and
Releasees.
This Release and Covenant Not To Sue shall be governed by the laws of the
State of New Jersey.
<PAGE>
35
IN WITNESS WHEREOF, RELEASORS have caused this Release to be executed by
their duly authorized agent as of February 4, 1998.
LUCENT TECHNOLOGIES INC.
-----------------------------
Janet G. Davidson
Product Marketing &
Management Vice President
Access
Exhibit 10.2
BROADBAND TECHNOLOGIES, INC.
RELEASE AND COVENANT NOT TO SUE
TO ALL TO WHOM THESE PRESENTS SHALL COME OR MAY CONCERN, KNOW THAT
BROADBAND TECHNOLOGIES, INC., a Delaware corporation ("BBT"), on behalf of
itself, its divisions, heirs, successors and assigns, its wholly owned
subsidiaries and their respective divisions, heirs, successors and assigns, and
all other persons that BBT has the power and authority to bind through its
execution of this Release and Covenant Not to Sue (herein, separately and
collectively, the "Releasors"), in consideration of good and valuable
consideration received from Lucent Technologies Inc., a Delaware corporation
("Lucent"), the receipt and sufficiency of which is hereby acknowledged, hereby
release, acquit and forever discharge Lucent, Lucent's predecessor AT&T (to the
extent Lucent has assumed any liabilities or obligations of AT&T), each of
Lucent's wholly owned subsidiaries, each of the above's respective officers,
directors, employees, shareholders, agents and attorneys and the respective
heirs, executors, administrators, successors and assigns of each of the
foregoing (herein, separately and collectively, the
<PAGE>
29
"Releasees"), from any and all actions, complaints, causes of action, demands,
damages, costs and expenses, liabilities, suits and claims, in law or in equity,
whether now known or unknown, whether asserted or unasserted (collectively
"Claims") which the Releasors ever had, now have, or hereinafter can, shall or
may have from the beginning of the world to the date of this Release
(hereinafter collectively referred to as the "Released Claims").
BBT represents and warrants that it has duly considered, approved and
authorized this Release and Covenant Not To Sue, has taken all necessary actions
for this Release and Covenant Not To Sue to be valid and binding and warrants
that the execution of this Release and Covenant Not To Sue by the undersigned on
behalf of BBT duly binds and commits all Releasors.
Releasors covenant and agree that they will forever refrain from
instituting, reinstating, maintaining or prosecuting any action or proceeding
against Releasees upon any Claims, whether or not now or hereafter known,
suspected or claimed which Releasors ever had, now have or hereafter can, shall
or may have or allege against Releasees on account of any of the Released
Claims.
<PAGE>
30
Notwithstanding Section 1542 of the California Civil Code, which provides:
"A general release does not extend to claims which the creditor does not
know or suspect to exist in his favor at the time of executing the release,
which if known by him must have materially affected his settlement with the
debtor,"
this Release and Covenant Not to Sue shall constitute a full release in
accordance with its terms. BBT knowingly and voluntarily waives the provisions
of Section 1542, if applicable, and any provisions of similar effect in the law
of the State of Minnesota or federal law or statutes, if applicable, and
acknowledges and agrees that this waiver is an essential part of this Release
and Covenant Not To Sue. BBT further acknowledges that this Release and Covenant
Not To Sue has been negotiated and agreed to in light of such possible damages,
losses, fees, costs or expenses and that BBT took that into account in agreeing
to execute this Release and Covenant Not To Sue.
Releasors represent and warrant that Releasors have not sold, assigned,
transferred, conveyed or otherwise disposed of any claim, demand or cause of
action or any part thereof relating to any matter covered by this Release and
Covenant Not To Sue and agree to indemnify Releasees against any and all claims
by third persons resulting from any such sale, assignment, transfer, conveyance
or other disposition.
<PAGE>
31
This Release and Covenant Not To Sue shall not be altered or modified in
any way except by written consent of authorized representatives of Releasors and
Releasees.
This Release and Covenant Not To Sue shall be governed by the laws of the
State of New Jersey.
IN WITNESS WHEREOF, RELEASORS have caused this Release to be executed by
their duly authorized agent as of February 4, 1998.
BROADBAND TECHNOLOGIES, INC.
------------------------------------
David E. Orr
President
Exhibit 10.3
LUCENT TECHNOLOGIES INC.
RELEASE AND COVENANT NOT TO SUE
TO ALL TO WHOM THESE PRESENTS SHALL COME OR MAY CONCERN, KNOW THAT LUCENT
TECHNOLOGIES INC., a Delaware corporation ("Lucent"), on behalf of itself, its
divisions, heirs, successors and assigns, its wholly owned subsidiaries and
their respective divisions, heirs, successors and assigns and all other persons
that Lucent has the power and authority to bind through its execution of this
Release and Covenant Not to Sue (herein separately and collectively the
"Releasors"), in consideration of good and valuable consideration received from
BroadBand Technologies, Inc., a Delaware corporation ("BBT"), the receipt and
sufficiency of which is hereby acknowledged, hereby release, acquit and forever
discharge BBT, each of BBT's wholly owned subsidiaries, each of the above's
respective officers, directors, employees, shareholders, agents and attorneys
and the respective heirs, executors, administrators, successors and assigns of
each of the foregoing (herein, separately and collectively, the "Releasees"),
from any and all actions, complaints, causes of action, demands, damages, costs
and expenses, liabilities, suits and claims, in law or in equity, whether now
known or unknown, whether asserted or
<PAGE>
33
unasserted (collectively "Claims") which the Releasors ever had, now have, or
hereinafter can, shall or may have from the beginning of the world to the date
of this Release (hereinafter collectively referred to as the "Released Claims").
Lucent represents and warrants that it has duly considered, approved and
authorized this Release and Covenant Not To Sue, has taken all necessary actions
for this Release and Covenant Not To Sue to be valid and binding and warrants
that the execution of this Release and Covenant Not To Sue by the undersigned on
behalf of Lucent duly binds and commits all Releasors.
Releasors covenant and agree that they will forever refrain from
instituting, reinstating, maintaining or prosecuting any action or proceeding
against Releasees upon any Claims, whether or not now or hereafter known,
suspected or claimed which Releasors ever had, now have or hereafter can, shall
or may have or allege against Releasees on account of any of the Released
Claims.
Notwithstanding Section 1542 of the California Civil Code, which provides:
"A general release does not extend to claims which the creditor does not
know or suspect to exist in his favor at the time of executing the release,
which if known by him must have materially affected his settlement with the
debtor,"
<PAGE>
34
this Release and Covenant Not to Sue shall constitute a full release in
accordance with its terms. Lucent knowingly and voluntarily waives the
provisions of Section 1542, if applicable, and any provisions of similar effect
in the law of the State of Minnesota or federal law or statutes, if applicable,
and acknowledges and agrees that this waiver is an essential part of this
Release and Covenant Not To Sue. Lucent further acknowledges that this Release
and Covenant Not To Sue has been negotiated and agreed to in light of such
possible damages, losses, fees, costs or expenses and that Lucent took that into
account in agreeing to execute this Release and Covenant Not To Sue.
Releasors represent and warrant that Releasors have not sold, assigned,
transferred, conveyed or otherwise disposed of any claim, demand or cause of
action or any part thereof relating to any matter covered by this Release and
Covenant Not To Sue and agree to indemnify Releasees against any and all claims
by third persons resulting from any such sale, assignment, transfer, conveyance
or other disposition.
This Release and Covenant Not To Sue shall not be altered or modified in
any way except by written consent of authorized representatives of Releasors and
Releasees.
This Release and Covenant Not To Sue shall be governed by the laws of the
State of New Jersey.
<PAGE>
35
IN WITNESS WHEREOF, RELEASORS have caused this Release to be executed by
their duly authorized agent as of February 4, 1998.
LUCENT TECHNOLOGIES INC.
-----------------------------
Janet G. Davidson
Product Marketing &
Management Vice President
Access
Exhibit 10.4
**-Certain information omitted and filed separately with the Commission pursuant
to a confidential treatment request under Rule 24b-2 of the Commission.
SDBAS SUPPLY AGREEMENT
This Supply Agreement is made effective as of the 4th day of February 1998
("Effective Date") by and between Lucent Technologies Inc., a Delaware
corporation, having an address at 600 Mountain Avenue, Murray Hill, New Jersey
07974 ("Company") and BroadBand Technologies, Inc., a Delaware corporation,
having an address at 4024 Stirrup Creek Drive, Durham, North Carolina 27709-3737
("Supplier") (together "the parties").
WITNESSETH
WHEREAS, Supplier and Company's predecessor-in-interest, AT&T Corp.,
entered into a certain Agreement LGC-A65-D dated as of November 1, 1995 (the
"Agreement") which sets forth terms and conditions governing the purchase and
sale of Supplier's products and services between the parties; and
WHEREAS, by Notice of Assignment dated February 5, 1996, AT&T Corp. has
assigned to Company all of its right, title and interest in and to the Agreement
effective as of February 1, 1996; and
WHEREAS, Company and ********************* Network Services, Inc. have
entered into a certain FSN Procurement Agreement, BC13760, dated as of July 12,
1996 (the "FSN Agreement"), whereby Company agrees to provide to **********
******** Network Services, Inc. and ************* Affiliates (collectively
"*************") certain products and services for a switched digital video
system to be deployed by ****** ************;
WHEREAS, the products and services to be furnished by Company to
************* under the FSN Agreement include, without limitation, certain
products and services to be provided by Supplier to Company;
WHEREAS, Supplier and Company entered into a First Amendment to Agreement
LGC-A65-D dated as of July 12, 1996 (the "First Amendment") which sets forth
terms and conditions under which Supplier shall sell to Company and Company may
purchase from Supplier those products and services which are to be furnished to
**************** under the FSN Agreement;
<PAGE>
2
WHEREAS, the parties desire that Agreement LGC-A65-D and the First
Amendment and any and all other amendments, modifications or revisions to the
Agreement be superseded by this Supply Agreement, which will set forth the sole
and exclusive terms and conditions under which Supplier shall sell to Company
and Company may purchase from Supplier those products and services which are to
be furnished to *************** under the FSN Agreement;
WHEREAS, Company may have existing obligations to certain other customers
(collectively "Customers") arising out of or relating to events or actions that
occurred prior to the Effective Date of this Agreement to provide to Customers
certain products and services for switched digital video systems or SDBAS
systems to be deployed by Customers ("Customer Obligations); and
WHEREAS, the parties desire that this Supply Agreement will set forth the
sole and exclusive terms and conditions under which Supplier shall sell to
Company and Company may purchase from Supplier certain products and services
which may be furnished to Customers to satisfy the Customer Obligations or any
other obligations that Company may from time to time undertake in lieu of the
Customer Obligations (collectively "Company's Obligations");
NOW, THEREFORE, in consideration of the mutual promises herein set forth
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged by the parties, Supplier and Company agree as follows:
ARTICLE I
Scope of Supply Agreement and Relationship of Parties
SECTION 1.01. Except as mutually agreed by the parties in writing, this
Supply Agreement shall apply only to transactions between Supplier and Company
for the purchase and sale of Material (as defined in Article II below) and
related services to be provided to ************** under the FSN Agreement or to
Customers pursuant to Company's Obligations. Such Material and related services
are hereby offered for sale by Supplier and may be purchased by Company as
required for the FSN Agreement and Company's Obligations in accordance with the
terms, conditions, and specifications of this Supply Agreement.
SECTION 1.02. Except to the extent provided in Article IV, this Supply
Agreement shall not be construed to impose any commitment by Company to purchase
any Materials
<PAGE>
3
or services, and Materials and services shall be furnished by Supplier on an
as-ordered basis. Except as provided in Article IV of this Supply Agreement, the
parties agree that nothing contained in this Supply Agreement shall be deemed a
commitment on behalf of Company to purchase from Supplier any minimum quantities
or dollar value of Materials; it being expressly understood and agreed that any
obligation of Company to purchase Materials under this Supply Agreement shall be
contingent upon the corresponding purchase of such Materials from Company by
******************** under the FSN Agreement or by Customers pursuant to
Company's Obligations.
SECTION 1.03. Supplier agrees that all Material to be sold to Company under
this Supply Agreement shall comply in all respects with the specifications
attached as Attachment A.
SECTION 1.04. The relationship of Supplier and Company as established under
this Supply Agreement will be and remain one of independent contractors, and
neither party will at any time or in any way represent itself as being a dealer,
agent or other representative of the other party or as having authority to
assume or create obligations or act in any manner on behalf of the other party.
SECTION 1.05. The parties acknowledge that Company has delivered to
Supplier a full and complete copy of the FSN Agreement. Supplier agrees to treat
such copy in accordance with the confidentiality and non-disclosure provisions
of this Supply Agreement.
ARTICLE II
Definitions
SECTION 2.01. For purposes of this Supply Agreement, the following
definitions shall apply:
"Access Subnetwork Equipment" or "ASE" means the SLC-2000 Access System
with FLX Switched Digital Video to be supplied by Company with the capability
for switched digital video under the FSN Agreement or pursuant to Company's
Obligations.
"***************** Affiliate" means an entity that owns, directly or
indirectly, a greater than fifty percent (50%) voting interest in
*********************************** ("Parent"), or any entity in which
************************* **************** or its Parent owns, directly or
indirectly, at least a fifty percent (50%) voting interest. The term shall also
include those entities in which ***************** *****************************
<PAGE>
4
********* or its Parent own, directly or indirectly, a less than fifty percent
(50%) but more than twenty percent (20%) voting interest ("Minority Owned
Affiliates") and that are listed in Appendix J to the FSN Agreement, as modified
and amended from time to time.
"**************** Region" means any and all of the areas of *************
*************** ****************************** Affiliate provided service at any
time during the Term.
"Beta Test Date" means ******************* initial deployment of hardware
and software under the FSN Agreement to a limited number of subscribers to test
the FSN.
"Change in Control" means any one of the following circumstances or events:
(i) The stockholders of a Party ("Acquired Party") approve a
transaction, including, without limitation, a merger or
consolidation (however denominated or effectuated), with an
Acquiror, including, without limitation, a merger or
consolidation, or series of transactions with the same Acquiror
("Combination"), and immediately after such transaction(s) less
than 60% of the combined voting power of the then-outstanding
securities of the Acquired Party or the Acquiror, will be held in
the aggregate by the holders of securities entitled, immediately
prior to such Combination, to vote generally in the election of
directors of the Acquired Party ("Voting Securities");
(ii) The stockholders of the Acquired Party approve the sale or
transfer of all or substantially all of its assets to any other
Person or entity, and less than 60% of the combined voting power
of the then-outstanding Voting Securities of such Acquiror
immediately after such transaction will be held in the aggregate
by the holders of the Voting Securities of the Acquired Party
immediately prior to such sale;
(iii) An Acquiror acquires in one or a series of transactions beneficial
ownership of more than 40% of the outstanding shares of Voting
Securities of a Party;
(iv) The stockholders of a Party approve a plan of complete liquidation
or dissolution of the Party;
<PAGE>
5
(v) Any Acquiror obtains direct or indirect Control (as herein
defined) over a party and, in Lucent's reasonable judgment, such
Control may threaten Lucent's interests. For the purposes of this
subsection, the term "Control" shall mean the possession directly
or indirectly of the power to direct or cause the direction of the
management or policies of a Party, whether through the ability to
exercise voting power, by contract or otherwise;
(vi) At any time, Continuing Directors (as herein defined) shall not
constitute at least 50% of the members of the Board ("Continuing
Director" means (i) each individual, who has been a director of
the Party for at least twelve (12) consecutive months before such
time and (ii) each individual who was nominated or elected to be a
director of the Party by at least a majority of the Continuing
Directors at the time of such nomination or election); or
(vii) Any other transaction which has the effect of causing the
substantive changes in the Acquired Party described in any of the
preceding paragraphs.
For the purposes of this definition, the term "Acquiror" shall mean one person
or entity, or two or more persons and/or entities constituting a "group" for
purposes of the Securities Exchange Act of 1934, as amended.
"Circuit Packs" means any or all of the **********************************
*******************************************************************************
****************************************************************************.
"Code Corrections" means corrections to Software malfunctions to bring
Software into conformance with its specifications.
"Companion Agreement" means that certain Procurement Agreement dated as of
July 1, 1996 between ***** ********** and Supplier for the purchase and sale of
any *** ***********************************************************************
*******************************************************************************
<PAGE>
6
********************************************************************************
*********************.
"Designated Processor" means hardware platforms used in the FSN with which
Software is compatible.
"Event" means (i) actual failures or adverse functioning of products
resulting in the disruption of network access and/or the services provided by an
ASE or equivalent system, to customers of ***************, Company, Supplier,
Customers, or any other purchaser or user of the products in the United States
of America, for a period of thirty (30) uninterrupted minutes per occurrence; or
(ii) actual defects in design and/or manufacturing of the products which are
known by Company and/or Supplier regardless of whether such actual defects in
design and/or manufacturing have resulted in any actual malfunctions or failures
of the products, and which have the ability of causing the disruption of network
access and/or the services provided by an ASE, or equivalent system, to
customers of ****************, Company, Supplier, Customers, or any other
purchaser or user of the products in the United States of America for minimum
period of thirty (30) uninterrupted minutes per occurrence. For purposes of this
definition, "products" means hardware and software sold by Company and Supplier
under the FSN Agreement and this Supply Agreement, respectively, and other items
that are manufactured and/or sold by Company or Supplier which are the same as,
or functionally or operationally similar to, such hardware and software.
"Executive Team" means a team comprised of two representatives of the
Company selected by the Company and two representatives of the Supplier selected
by the Supplier, with each team member having equal voting privileges.
"First Service Application" or "FSA" means a set of managed activities,
administered by Company, that validates the first deployment of new products
(Material) for the first time in any Company's customer environment. The FSA
process assures that the first service deployment is timely and exceeds
Company's customers' expectations with respect to quality, delivery,
installation, testing operation, maintenance, and acceptance.
"First Service Application Date" or "FSA Date" means ******************* or
a Customer's initial commercial deployment of hardware and software to provide
telephony and/or video services over the FSN. The *************** FSA Date is
targeted for two (2) months after the Beta Test Date.
<PAGE>
7
"Full Service Network" or "FSN" means a switched digital video system
deployed by ************* or a Customer that enables delivery of a range of
services, from narrowband to broadband telephony to digital broadcast video and
interactive multimedia services, as diagramed in Appendix B to the FSN
Agreement.
"HDT" means a host digital terminal as diagramed in Appendix B of the FSN
Agreement.
"Headcount Year" is a measure of services provided by one or more engineers
or programmers that are in the aggregate equivalent to those that would be
provided by a dedicated full-time programmer or engineer working two hundred
twenty (220) days.
"Homes Passed" shall have the meaning set forth in Section 4.04.
"Initial Availability" means the first date on which Material is delivered
and installed at a customer field or lab location on a newly developed offering.
"Initial Customer Application" means a controlled process, administered by
Company, to assure that new products (Material) meet or exceed Company's
customers' expectations with respect to quality, delivery, installation,
testing, operations, maintenance and acceptance.
"Interconnect Information" or "ICA" means the nonproprietary technical
information necessary to comply with those FCC requirements designed to provide
Company's customers a functional interface with the Material supplied by
Supplier hereunder.
"Licensed Materials" means the Software and Related Documentation for which
licenses are granted by Supplier to Company under this Supply Agreement.
"Material" means Supplier's Material (hardware and software) as listed in
Attachments A and B, including any additions or supplements thereto, attached to
and made part of this Supply Agreement.
"ONU" means an optical network unit as diagramed in Appendix B of the FSN
Agreement.
"Parts" means maintenance, replacement and repair parts for the Material
covered by this Supply Agreement.
<PAGE>
8
"Predecessor Agreement" means the agreement between Supplier and Company
known as Contract No. LGC-A65-D dated November 1, 1995, as amended.
"Purchase Order" means a purchase order from Company to Supplier sent
pursuant to this Supply Agreement.
"Related Documentation" means materials, useful in connection with Software
and Materials required to engineer, operate, maintain, and install Software such
as, but not limited to, programs, translations and parameters, listings, user
manuals, methods, practices, job aides, flow charts, installation and other
instructions, logic diagrams, and listings, program descriptions and
specifications.
"SDV" means a product, system or architecture that provides broadband
digital edge switching and transport and narrowband transport of electronic
and/or optical signals within the access portion of a communications or
distribution network.
"SDV Subsystem" means Supplier's hardware and software that provides SDV.
This includes two key hardware elements: (1) the Host Digital Terminal, and (2)
the Optical Network unit, operating software, and the video operation system
known as the VAM, and any additions or modifications to these elements as may
occur over the life of the Agreement.
"Software" means computer programs, procedures, and rules designed to make
use of and to extend the capabilities of hardware (including, but not limited
to, control programs, operating system programs, processing programs, diagnostic
programs, audit programs, system measurement programs and tools, special system
programs, authoring tools and documentation used to maintain, describe and use
all such programs) offered for license by Supplier hereunder. The term shall not
include Source Code format unless otherwise specified herein.
"Software Enhancement" means any change in Software that improves the basic
function of the Software.
"Software Upgrade" means improvements in Software that relate to operating
performance but do not change the basic function of the Software.
"Source Code" means any version of Software incorporating high level or
assembly language that generally is not directly executable by a processor.
<PAGE>
9
"Technical Information" shall include all Source Code, object code, and
Related Documentation for the operating system and any other Software used in
the Material or Parts, and all design drawings, materials/parts lists, and
specifications used in the design and manufacture of Material or Parts, as well
as all corrections, updates and enhancements to such Software and other
information.
"Technical Information" shall also include:
(i) manufacturing drawings and specifications including Circuit
Pack schematics; (ii) manufacturing drawings and specifications covering
special tooling and operation thereof; (iii) a detailed list of all
commercially available Parts and components purchased by Supplier on the
open market disclosing the part number, name and location of the
supplier; and (iv) repair specifications and test procedures, as
available.
"Term" shall have the meaning set forth in Section 3.01.
"Video Equipped HDTs" means that at least one or more of each of the
following has been shipped to ********** *********** by Company or Supplier for
use with an HDT: DBP 2515 Digital Broadcast Processor, ANI 2514 ATM Network
Interface Quad 3 UNI-Directional and 1 Bi-Directional card, ANI 2514 ATM Network
Interface Quad Uni-Directional card, SCP 2521 Shelf Control Processor, or any
successor equipment.
ARTICLE III
Term of Agreement
SECTION 3.01. Except as provided in Article XCII (Survival of Obligations),
the term ("Term") of this Supply Agreement shall commence as of the Effective
Date and shall be coterminous with the longer of the Company's Obligations or
the FSN Agreement, which is currently in effect until December 31, 2002. To the
extent the term of the FSN Agreement is extended beyond December 31, 2002, this
Supply Agreement shall be correspondingly extended upon the mutual written
agreement of the parties.
SECTION 3.02. Notwithstanding anything contained in Section 3.01 to the
contrary, this Supply Agreement shall terminate (a) upon the expiration or
earlier termination of the FSN Agreement for any cause or reason, as long as
there are no outstanding Customer Obligations or (b) in accordance
<PAGE>
10
with the provisions of Section 6.01 of this Supply Agreement.
SECTION 3.03. Either party may terminate this Supply Agreement by notice in
writing if (a) the other party makes an assignment for the benefit of creditors
(other than solely an assignment of monies due), or (b) the other party
evidences an inability to pay debts as they become due, unless adequate
assurance of such ability to pay is provided within thirty (30) calendar days of
such notice.
SECTION 3.04. If a proceeding is commenced under any provision of the
United States Bankruptcy Code, voluntary or involuntary, by or against either
party, and this Supply Agreement has not been terminated, the non-debtor party
may file a request with the bankruptcy court to have the court set a date within
sixty (60) calendar days after the commencement of the case, by which the debtor
party will assume or reject this Supply Agreement, and the debtor party shall
cooperate and take whatever steps necessary to assume or reject the Supply
Agreement by such date.
ARTICLE IV
***************** Purchase Objectives
SECTION 4.01. Subject to the terms and conditions of the FSN Agreement,
************* has committed to purchase during the Term, through itself and the
******** ************* Affiliates, certain hardware and software that includes
Video Equipped HDTs in sufficient volume to exceed
******************************** Homes Passed (as defined in Section 4.04)
within the ********************* Region. **** *************** may also purchase
in excess of the foregoing amounts under the FSN Agreement.
SECTION 4.02. Subject to the terms and conditions of the FSN Agreement,
************** and the **** *********** Affiliates have agreed that until the
earlier of (a) December 31, 1998, or (b) the date on which ************
********** has exceeded *********************** Homes Passed within the
**************** Region (the "Requirement Date"), ******************* will
purchase from Company under the FSN Agreement and/or Supplier under the
Companion Agreement all Circuit Packs required by ********************* and the
**** *********** Affiliates for deployment of the ASE in the **** ***********
Region.
SECTION 4.03. Subject to the provisions of Article VI, to the extent (a)
the commitment and agreement
<PAGE>
11
of ************** referenced in Sections 4.01 and 4.02 above includes Material,
and (b) ************** actually purchases such Material from Company under the
FSN Agreement, Company agrees to purchase all such Material from Supplier under
this Supply Agreement. To the extent *************** or the *****************
Affiliates actually purchase Circuit Packs from Company after the Requirement
Date under the FSN Agreement and subject to the provisions of Article VI,
Company also agrees to purchase such Circuit Packs from Supplier under this
Supply Agreement.
SECTION 4.04. With respect to purchases of Material, it is understood and
agreed that each HDT is designed to service multiple ONUs, and that each ONU,
when deployed and equipped with the appropriate Circuit Packs, has the
capability to provide telephone, video, telephone and video or other
telecommunications services to living units made up of single family dwellings,
single residences in multi-family dwellings and single business locations. When
Company has shipped to ******************** or any **** ***************
Affiliate an ONU, with or without associated Circuit Packs, ************** shall
be deemed to have passed the number of homes equal to the living unit engineered
capacity of that ONU; provided that a sufficient quantity of HDTs has been
shipped for use with such ONUs ("Homes Passed").
ARTICLE V
License Grants
SECTION 5.01. Supplier grants to Company (to the extent not already granted
pursuant to the Predecessor Agreement and still in full force and effect) a
nonexclusive, perpetual, fully paid-up, royalty-free license to reproduce and
use the Licensed Materials, and to sub-license and authorize Customers, Customer
Affiliates, ****** ******************, ************* Affiliates, other entities
purchasing Material under the FSN Agreement, and their end-users of the
Materials to use the Licensed Materials. Software provided in object code form
shall not be modified, decompiled, disassembled or reverse-engineered. Supplier
shall provide with each copy of the Software specific installation and
applications guidelines describing the procedures necessary to create additional
authorized implementations on a new Designated Processor to increase the
capacity of Designated Processors on multi-processor computer systems. Supplier
will exert reasonable efforts to ensure that all Software provided by Supplier
is delivered to Company with an appropriate proprietary legend so as to
<PAGE>
12
assist ************* and Customers in the protection of such Software.
SECTION 5.02. Notwithstanding anything contained in this Supply Agreement
to the contrary, Supplier, on behalf of itself, its successors, and assigns,
grants to Company (to the extent not already granted pursuant to the Predecessor
Agreement and still in full force and effect), an irrevocable, perpetual,
nontransferable, and nonexclusive:
(a) right to use Technical Information for the design, development,
manufacture, or maintenance of Material and Parts;
(b) license under its copyrights to create derivative works, and to use,
copy, and distribute Technical Information and any derivative works, but only in
connection with the design, development, manufacture, or maintenance of Material
and Parts;
(c) right to grant to any third party rights of the scope granted to
Company under subsections (a) and (b) above, to the extent reasonably necessary
to carry out activities of supplying Company with Material and Parts or
components thereof;
(d) license under its copyrights to copy, use, and distribute object code
versions of Software included in the Material or Parts but only in connection
with the sale, lease or distribution of such Material or Parts; and
(e) license under its patents and patent applications to make, have made,
use, offer to sell, sell, and import Material and Parts components thereof.
SECTION 5.03. The rights granted in Section 5.02 shall apply to Material
and Parts which are to be supplied by Company to Customers pursuant to Company's
Obligations and to **************** pursuant to the FSN Agreement and/or the
Companion Agreement. Company agrees not to exercise the rights granted in
Section 5.02 prior to a material failure by Supplier to supply Materials or
Parts and the expiration of any applicable cure period, and only for those
Materials or Parts which Supplier fails to supply. The rights granted in Section
5.02 shall terminate five years after Company first ships to a customer any
Materials or Parts manufactured by Company pursuant to Section 5.02, however,
Company shall retain rights under Section 5.02 for as long as necessary to
provide maintenance, replacement or repair parts to customers as required under
the FSN Agreement and the Companion Agreement. In the event that the Supplier
<PAGE>
13
should file a petition under the federal bankruptcy laws, or that an involuntary
petition shall be filed against the Supplier, the parties intend that Company
shall be protected in the continued enjoyment of its rights under Section 5.02,
including, if it so elects, the protection conferred upon licensees under 11
U.S.C. Section 365(n).
SECTION 5.04. Within seven (7) days after the execution of this Supply
Agreement, the parties shall execute and deliver, in the form provided as
Attachment G, an escrow agreement between Supplier and Company for the delivery
of Technical Information used in the development and manufacture of Materials
and Parts, for use by Company in accordance with the rights granted in Section
5.02.
SECTION 5.05. In the event Company elects to exercise any right granted in
Section 5.02, Company shall have no obligation to pay Supplier any additional
compensation for the exercise of such right prior to or during the six (6) month
period beginning when Company first furnished Materials or Parts manufactured
pursuant to Section 5.02 under the FSN Agreement or the Companion Agreement.
Thereafter, for a period not to exceed five (5) years from such first furnishing
by Company, Company shall pay to Supplier a royalty fee on each Material or Part
manufactured pursuant to Section 5.02 which Company furnishes under the FSN
Agreement or the Companion Agreement or pursuant to Company's Obligations. The
royalty fee shall be ************************************************ (if any)
from the sale of such Materials and Parts, and shall be payable on December 31
of each calendar year in which such Materials or Parts are shipped.
ARTICLE VI
Default and Termination
SECTION 6.01. Time is of the essence to this Agreement. In the even either
party is in breach of any of the terms, conditions or covenants of this Supply
Agreement or any Purchase Orders under this Supply Agreement, the defaulting
party shall initiate corrective action to remedy such breach or default or
provide the affected party a schedule acceptable to the nonbreaching party for
correcting such breach or default within ten (10) days after the giving of
written notice to the defaulting party thereof by the nonbreaching party. In the
event the breach or default is not corrected within thirty (30) days after the
giving of written notice to the defaulting party thereof by the nonbreaching
party or within the agreed upon schedule, whichever is later, then, in addition
to its right to pursue
<PAGE>
14
all other rights and remedies at law, equity or otherwise, the nonbreaching
party shall have the right to cancel this Supply Agreement and/or any such
orders in whole or in part without charge, obligation or liability whatsoever,
except as to payment for Material already accepted by ************* prior to
such notice pursuant to the FSN Agreement.
SECTION 6.02. In the event this Supply Agreement is terminated due to the
termination of the FSN Agreement and the FSN Agreement is terminated for cause
or reasons not attributable to Supplier, Company shall pay to Supplier as its
sole liability:
(a) The invoiced amount for any Material ordered and shipped to Company
prior to the date of notice of termination; and
(b) The invoiced amount for any Services ordered by and performed for
Company prior to the date of notice of termination.
SECTION 6.03. Notwithstanding anything contained in Section 6.02 to the
contrary, Company shall not be liable to pay for any Material or Services under
Sections 6.02(a) or 6.02(b) that are not accepted by ********************* in
accordance with the acceptance procedures set forth in the FSN Agreement.
SECTION 6.04. In the event of a Change in Control of Supplier then Supplier
shall provide notice to Company of such Change in Control within 10 days of the
knowledge of the Change in Control. In addition, Supplier shall provide to
Company within 10 days of release copies of all public announcements regarding
any expectations of a Change in Control of Supplier. Upon the effective date of
the Change in Control, Company shall have the right to terminate this Agreement
by giving Supplier written notice of its intention to terminate at least 90 days
prior to the termination date specified in the termination notice.
ARTICLE VII
Purchases
SECTION 7.01. Company and Supplier will work with ***********************
and Customers to determine Company's requirements for the purchase of Material
and services pursuant to this Supply Agreement, and Company will request the
required Materials and services through placement of a Purchase Order. The
delivery schedule, cancelation terms and additional terms applicable to each
Purchase Order will
<PAGE>
15
be agreed upon by Supplier and Company and set forth in the Purchase Order to
the extent not set forth herein. Company shall place each Purchase Order at
least ******************* ******** days in advance of the delivery date. If
Supplier, for any reason, cannot ship Material on the acknowledged ship date,
Supplier shall notify Company immediately. Company shall not, without Supplier's
consent, cancel or change the terms of a Purchase Order within one hundred
twenty (120) calendar days of the agreed upon delivery date for the Materials or
services to which said cancelation or change relates.
ARTICLE VIII
Inventory Prepayments and Existing Purchase Orders
SECTION 8.01. The parties acknowledge that Company has no outstanding
purchase commitments to Supplier (other than existing Purchase Orders already
placed by Company but not yet filled by Supplier pursuant to the Predecessor
Agreement), and that as of the Effective Date of this Agreement, Company has
made inventory prepayments in addition to the prepayments discussed in Article
IX (Prepayments) in the amount of **********, which shall serve as a credit
against future Purchase Orders placed by Company. These inventory prepayments
shall be credited against future Purchase Orders and shall be used up before
Supplier makes any further draw downs from the Hardware Prepayments discussed in
Article IX.
ARTICLE IX
Prepayments
SECTION 9.01. Software Prepayment. Company and Supplier acknowledge that
Company has provided to Supplier ********************************** as prepaid
Software right to use ("RTU") fees for Software licensed by Supplier to Company
under this Supply Agreement, and that Supplier has to date not drawn down any
amount from this prepayment. Supplier will draw down from this prepayment
*************** ************************* for each additional Home Passed by
**************** in the ************* Region, and will apply such amount to
amounts properly invoiced to Company for accepted Software (effective upon the
payment due date prescribed herein), until the total ************************
************ prepaid amount in exhausted. In the event this Supply Agreement
terminates, the Software prepayment under this Section 9.01 shall be
nonrefundable to Company.
<PAGE>
16
SECTION 9.02. Hardware Prepayment. Company and Supplier acknowledge that
Company has provided to Supplier **************************************** as a
prepayment for hardware purchased by Company under this Supply Agreement, and
that Supplier has to date not drawn down any amount from this prepayment.
Supplier will, for each Home Passed by **************** in the *************
Region, draw down from this prepayment and will apply such amount to amounts
properly invoiced to Company for accepted Material other than Software
(effective upon the payment due date prescribed herein), until the total
************************ ************** prepaid amount is exhausted.
SECTION 9.03. Letter of Credit. Within thirty (30) days of the execution of
this Supply Agreement, Supplier will deliver a fully executed irrevocable
Standby Letter of Credit in the principal amount of ****************
************************** naming Company as beneficiary and securing
*********************************** of the hardware prepayment set forth in
Section 9.02, to be drawn down at the rate of three dollars ($3.00) per Home
Passed after such time as the unused portion of said hardware prepayment equals
************************************* and pursuant to which Lucent is entitled
to any unused amounts in the event Supplier is unable for financial reasons to
deliver on hardware related Purchase Orders placed by Company pursuant to this
Agreement. This Standby Letter of Credit shall be issued by a bank acceptable to
Company. The term of the Standby Letter of Credit shall be effective immediately
upon delivery by Supplier thereof and shall be automatically renewable and
remain in effect until the date on which ***** ********* purchases from Company
under the FSN Agreement are in sufficient quantity to exceed two million
(2,000,000) Homes Passed.
ARTICLE X
Pricing
SECTION 10.01. Prices for Material and Services ordered under this Supply
Agreement shall be those set forth in Attachment B and Supplier agrees that such
prices will not be increased during the Term except as per the Change Control
Process. To the extent required as part of the agreement between
****************** and Company to identify areas where ***************** can
reduce FSN costs, Supplier agrees to work in good faith with Company to identify
areas where **************** can reduce FSN costs, and the parties may implement
such reductions.
<PAGE>
17
SECTION 10.02. In addition to the price modifications described in Article
XI of this Supply Agreement, the pricing set forth in Attachment B has been
modified to reflect the following effective immediately:
(a) Applicable only to purchases by Company for resale to Customers
pursuant to Company's Obligations and to ******************, *************
Affiliates, *****, and any other entities entitled to purchase from Company
under the FSN Agreement, Supplier agrees to extend the VAM Basic Software
License for applications from 120 digital broadcast channels up to and including
188 digital broadcast channels, at no additional cost to Company.
(b) Applicable only to purchases by Company for resale to Customers
pursuant to Company's Obligations and to ******************, *************
Affiliates, *****, and any other entities entitled to purchase from Company
under the FSN Agreement, Supplier agrees to extend the Basic Digital Broadcast
Software License for applications from 120 digital broadcast channels up to and
including 188 digital broadcast channels, at no additional cost to Company.
(c) Applicable only to purchases by Company for resale to Customers
pursuant to Company's Obligations and to *****************, *************
Affiliates, *****, and any other entities entitled to purchase from Company
under the FSN Agreement, Supplier agrees to extend the Interactive Video
Software - Low Penetration License to include applications from 25% up to and
including a 33% take rate, at no additional cost to Company.
SECTION 10.03. If at any time after three years from the Effective Date,
Company notifies Supplier in writing that *************** has obtained a written
proposal from another vendor offering to sell to ******************** systems
functionally equivalent to the ASE which are ***********************************
********************************************************************************
********************************************************************************
******************************************************************. If the
parties do not agree to lower their prices to coincide with any Market
<PAGE>
18
Proposal and ************** exercises its right to terminate the FSN Agreement
as a result thereof, Company shall have the right to terminate this Supply
Agreement by forwarding written notice thereof to Supplier. In the event of such
termination, Company shall be liable only for the amounts specified in Section
6.02; and, provided further that in such event Supplier shall promptly refund
the unused portion of any prepayments made pursuant to Sections 9.01 and 9.02.
SECTION 10.04. If, at any time after three years from the Effective Date,
*************** desires to purchase commercially available products which are
functionally equivalent to the ASE but contain features or enhancements which
are unavailable on the Material then provided by Supplier (a "New Material"),
then Company shall notify Supplier thereof in writing. *************************
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
In the event ***************** and the parties are unable to mutually agree upon
terms and conditions for Supplier to provide such features and/or enhancements
to *************** and *************** exercises its right to terminate the FSN
Agreement as a result thereof, Company may terminate this Supply Agreement by
forwarding written notice thereof to Supplier. In the event of such termination,
Company shall be liable only for the amounts specified in Section 6.02; and,
provided further that in such event Supplier shall promptly refund the unused
portion of any prepayments made pursuant to Sections 9.01 and 9.02.
ARTICLE XI
Price Modification to Achieve
Model Price Per Home Passed
SECTION 11.01. To achieve the *************** model price level of
****************************** with Flexterm, per Home Passed at a 2,000,000
Homes Passed volume, the prices set forth in Attachment B have been reduced by
****** *************************************** per Home Passed when applied to
the standard ************* FSN Model and shall be effective immediately.
SECTION 11.02. To accommodate ***************** FSN model for higher video
traffic requirements (known as
<PAGE>
19
Case Y), which results in a model price level of ****************
**************************** per Home Passed, a new item has been added to
Attachment B which combines three software licenses into one license. The three
licenses are:
(a) the High Bandwidth Software License (1 Mbps/Drop) R1.0, 1.1, 2.0;
(b) the Extended Digital Broadcast Software License (>188 Channels)
R1.0, 1.1, 2.0; and
(c) the VAM Extended Software License (>188 Channels) R1.0, 1.1, 2.0.
These three licenses are consolidated into one license; the ****************
Enhanced Broadcast/Signaling Software R1.0, 1.1, 2.0, and is offered to Company
under this Supply Agreement only. This single license will be sold on a per FLX
shelf basis, and the price to Company is **************************************.
This ************* Enhanced Broadcast/Signaling Software R1.0, 1.1, 2.0 shall be
subject to the ************************ described in Article XIII of this Supply
Agreement.
SECTION 11.03. For the aggregate levels of Homes Passed by **************
and the ************* Affiliates as indicated in the first column of the table
set forth below, Supplier will apply to purchases under this Supply Agreement
the corresponding discounts set forth in the second column of said table. Said
discounts shall be applied against the prices set forth in Attachment B. All
price and cost reductions will be calculated using the standard ***********
*************** FSN model set forth in Appendix B to the FSN Agreement. Supplier
and Company will mutually determine the specific unit prices to adjust to
achieve the required price levels when calculated according to the
**************** FSN Model and Attachment B shall be revised accordingly.
- ----------------------------------------- --------------------------------------
# Homes Passed Supplier $ per
HP Reduction
- ----------------------------------------- --------------------------------------
2,000,001 - 2,250,000 *******
- ----------------------------------------- --------------------------------------
2,250,001 - 2,750,000 *******
- ----------------------------------------- --------------------------------------
2,750,001 - 3,000,000 *******
- ----------------------------------------- --------------------------------------
3,000,001 - 3,250,000 *******
- ----------------------------------------- --------------------------------------
3,250,001 - 4,000,000 *******
- ----------------------------------------- --------------------------------------
<PAGE>
20
- ----------------------------------------- --------------------------------------
4,000,001 and Over *******
- ----------------------------------------- --------------------------------------
SECTION 11.04. If during the term of the Agreement, Company is provided
more favorable pricing from Supplier due to cost reduction efforts, or for any
other reason, Supplier acknowledges that Company will receive this pricing for
Material supplied by Supplier under this Supply Agreement, subject to prior
Executive Team review and approval. However, in the event that the pricing set
forth in this Supply Agreement is the most favorable, Company will not extend
this pricing to any other customer without prior written approval from Supplier.
ARTICLE XII
Joint Cost Reduction Commitment
SECTION 12.01. Supplier agrees to work with Company to jointly achieve the
required cost reduction that will support a price reduction to ************** of
******** ************************************* per Homes Passed, when using the
standard *************** FSN model. This required cost reduction will entail a
commitment by both Supplier and Company to enter into joint design work to
achieve this cost reduction, regardless of the volume level projections. It is
the goal of the cost reduction efforts that this cost reduction will be achieved
within six months following completion of the ************** Beta Test.
SECTION 12.02. This Section is included as explanation of the Company and
Supplier cost reduction commitments, and should not be viewed as further
reductions to the price modifications as defined in Article XI (Price
Modification to Achieve Model Price Per Home Passed) of this Supply Agreement.
ARTICLE XIII
Software Incentive
SECTION 13.01. In order to motivate Company to maximize the selling price
of Supplier Software, Supplier agrees to provide to Company the sales incentive
described in Section 13.02 below on all Software licensed by Company under this
Supply Agreement during the Term. This includes all Software currently listed in
Attachment B of this Supply Agreement with the limited exception of that of
Supplier's
<PAGE>
21
Software which is noted with an asterisk (*) on Attachment B to this Supply
Agreement.
SECTION 13.02. For all eligible Software under Section 13.01, the sales
incentive shall be in the form of a cash rebate to Company and shall be
calculated at *** of the prices in Attachment B to this Supply Agreement (as in
effect at the time of the purchase by Company), including any modifications to
such Attachment B prices that are mutually agreed to by Company and Supplier.
Supplier shall pay the foregoing sales incentive to Company by the 15th day of
the month following the end of each calendar quarter that this incentive is in
effect. Supplier shall then remit such quarterly payment to Company for all
shipments made by Supplier to Company during said quarter.
ARTICLE XIV
Custom Software
SECTION 14.01. Mandatory Requests. (a) Supplier acknowledges that
******************* shall be entitled to fund annually up to 10 Headcount Years
of custom Software development for access products or applications ("Custom
Software") and that ******************* may require Company to develop Custom
Software for up to this limit. Company agrees to immediately provide written
notification to Supplier if any such development work requires the resources of
Supplier. **************, Company and Supplier shall mutually agree on the
requirements, Headcount Years and delivery schedule of such development, with
the goal being to commence such development work within three months of
*************** request. Also depending on the scope and nature of such
development work, Supplier's goal will be to complete such development work
within six months of ******** *********** request and shall, in all events, seek
to finish such development work within a commercially reasonable time period.
(b) Prior to Supplier commencing such development work, Company and
Supplier will negotiate in good faith the fees to be paid to Supplier. Such fees
shall be based on the agreed to scope and nature of the required development
work and the desired schedule. In no event, however, shall the fees payable to
Supplier for any such work exceed ****** *********************************** for
each Headcount Year. This ******************************************* limitation
may be adjusted in December of each calendar year up to the amount of any change
in the Producer Price Index for Telecommunications Systems, Custom Software
Development during the preceding 12-month period.
<PAGE>
22
SECTION 14.02. Discretionary Requests. Supplier acknowledges that
************** may also make discretionary requests for Custom Software in
addition to the mandatory development work cited above. Any such development
work to be performed by Supplier to meet ************* discretionary requests
shall be subject to prior negotiation between Company and Supplier regarding the
requirements, delivery schedule and the fees payable to Supplier for such
development work.
SECTION 14.03. Reservation of Rights. For mandatory Software development
requests, Company reserves the right to perform such development work itself, or
contract with other third parties to perform such development work, or at its
sole discretion, pass the requirement to Supplier. Company agrees that Supplier
shall have the right of first refusal prior to Company having any such
development work for SDBAS performed by any third party, except to the extent
that Company in its sole discretion believes that Supplier lacks the financial
resources or the ability to perform such development work.
SECTION 14.04. Ownership of Custom Software. All rights in and title to
Custom Software that is not embedded into existing Software or a derivative or
pre-existing work shall vest in the developing party. Supplier will grant to
Company, ***************** and *************** Affiliates a perpetual, fully
paid, exclusive license to use such Custom Software with the FSN, unless
**************, in its sole discretion, agrees to allow such Custom Software to
be licensed to others. In the event that any such Custom Software should be
licensed to others, compensation to ***** *********** will be negotiated on a
case-by-case basis.
ARTICLE XV
Controlled Introduction of Software
SECTION 15.01. Supplier agrees to notify Company prior to placing any
Software Upgrades or Software Enhancements on any Material covered under this
Supply Agreement or accepting any orders for delivery of Software Upgrades or
Software Enhancements for any Material covered under this Supply Agreement.
Supplier will submit to Company, for the purpose of testing by Company or its
customer (i.e., by *************** or one of the Customers), one prepurchase
copy of any proposed Software Upgrade or Software Enhancement at least 60 days
prior to the proposed general availability or proposed service date of such
Software Upgrade or Software Enhancement. In the event that
<PAGE>
23
any Software Upgrade or Software Enhancement is unacceptable, Company shall
immediately provide written notification to Supplier of same. Supplier agrees
that it will not be providing any Software Upgrade or Software Enhancement on
any of Company's orders during the evaluation period without prior written
consent of Company and its customer. Supplier also agrees that Company will not
furnish any Software Upgrade or Software Enhancement following its customer's
evaluation until written approval has been received by Company from its
customer. Supplier will not charge Company any fees associated with the Software
evaluation copy which Company submits to its customer and such evaluation shall
in no way obligate Company to subsequent charges or contingencies regardless of
the results of the evaluation.
ARTICLE XVI
Software Support
SECTION 16.01. During the Software warranty period set forth in Section
17.06, Supplier will promptly provide, at no additional charge, procedures, as
determined by Supplier for particular Software, to keep Software operating
consistently with its specifications. Such procedures shall include diagnostic
service using onsite or remote techniques to analyze a problem and prescribe
remedial action. Further, throughout the Term, Supplier will provide all Code
Corrections at no charge. Supplier may provide such Code Corrections either
unbundled or included with a Software Upgrade or Enhancement, on the condition
that bundling does not delay prompt release of the Code Corrections to Company,
***************** and Customers.
SECTION 16.02. Unless otherwise agreed to in writing, Supplier shall
furnish to Company, at no additional charge, and on a nonproprietary basis, no
less than one copy of Related Documentation, and any amendments or revisions
made by or on behalf of Supplier during the Term, as is sufficient for Company
to plan, engineer, procure, install, operate and maintain the Material. Such
Related Documentation shall be furnished to Company together with the Material
to which it relates or at such time as any amendments or revisions are made
thereto, whichever is earlier. Company may reproduce and distribute such Related
Documentation to third parties for the purposes described and shall include in
any such reproductions any copyright notices contained in the original of the
items being reproduced.
<PAGE>
24
ARTICLE XVII
Warranties
SECTION 17.01. Supplier warrants to Company and customers that Material
furnished will be new, merchantable, free from defects in design (except to the
extent designed by Company), material and workmanship and will conform to and
perform in accordance with the specifications, drawings and samples set forth in
this Agreement for a period of **** ************ for the hardware components of
the Material and *************** for the software components of the Material,
from the date of shipment from Supplier. Supplier also warrants to Company and
customers that services will be performed in a first class, workmanlike manner.
Future performance of the Material, as defined in Supplier's Performance
Specification (Attachment A), shall continue for the longer of (a) the
performance warranty period applicable to Company's sales to its customers of
the Material or of products which incorporate the Material, (b) one (1) year
after the Material is accepted by the Company's customer or (c) such greater
period as may be specified elsewhere in this Agreement. Supplier warrants that
at the time of delivery to Company such Material shall be free of any security
interest or any other lien or any other encumbrance whatsoever. All warranties
shall survive inspection, acceptance and payment to Supplier.
SECTION 17.02. Defective or non-conforming Material will, at Supplier's
option either be returned to Supplier for refund, repair, replacement and
reperformance, at no cost to Company or its customer, with risk of in-transit
loss and damage borne by Company or its customer and freight paid by Company or
its customer, or be repaired or replaced by Supplier on a customer's site or
another site designated by Company at no cost to Company. Unless otherwise
agreed upon by Supplier and Company, Supplier shall complete repairs and ship
the repaired Material within twenty-one (21) calendar days of receipt of
defective or non-conforming Material, or at Supplier option, ship replacement
Material within ten (10) calendar days after oral notification is given Supplier
by Company. Supplier shall bear the risk of in-transit loss and damage and shall
prepay and bear the cost of freight for shipments to Company of repaired or
replaced Material. If requested by Company, Supplier shall begin on-site repairs
within an average of three (3) days after verbal notification is given Supplier
by Company.
SECTION 17.03. If Material returned to Supplier or made available to
Supplier on site for repair as provided
<PAGE>
25
for in this clause is determined to be beyond repair, Supplier shall promptly so
notify Company and, unless otherwise agreed to in writing by Supplier and
Company, ship replacement Material without charge within fourteen (14) calendar
days of such notification.
SECTION 17.04. Company agrees to make a reasonable effort to detect and/or
have its customer(s) detect and eliminate No Fault Found (NFF) or No Trouble
Found (NTF) returns of Material. The return volume of NFF/NTF units will be
monitored by Supplier and if other than a reasonable number of returns are
involved, the Company or its customer will be billed a handling charge for such
returns as defined in Attachment C. Supplier will notify Company or its customer
in writing prior to any billing.
SECTION 17.05. Replacement of Material shall be warranted as set forth
above in this Article. Any Material which is repaired, modified or otherwise
serviced by Supplier shall be warranted as provided in this Article for the
remainder of the warranty period (based upon the date repair, modification or
other service is completed and accepted by Company) or six (6) months after the
Material is shipped by Supplier to Company or a customer, whichever is longer.
SECTION 17.06. Supplier warrants that Supplier has the right to grant to
Company the Software and other licenses granted under this Supply Agreement.
Supplier further warrants to Company that the furnished Software shall be free
from defects in design, that it will conform to the applicable specifications,
and that it will operate satisfactorily in the system environment in which it is
initially installed. Defective Software will be corrected or replaced after
notification is given to Supplier by Company. Supplier, at its option, will
undertake to either correct or replace the defective Software without charge at
the location where it is installed in accordance with corrective action
prescribed for the applicable Severity Code (per Appendix C to the General
Purchase Agreement in effect between ************* and Company), or, at
Supplier's option, provide a refund or credit of the original license fee;
provided, however, that Supplier may elect to provide a credit to Company only
where Company reasonably determines the credit to be of value.
SECTION 17.07. COMPANY'S SOLE AND EXCLUSIVE REMEDY FOR BREACH OF A WARRANTY
CONTAINED IN THIS ARTICLE SHALL BE SUPPLIER'S OBLIGATION TO REPAIR, REPLACE,
CREDIT, OR REFUND AS SET FORTH IN THIS AGREEMENT, EXCEPT THAT THE FOREGOING
LIMITATION ON REMEDIES FOR BREACHES OF WARRANTIES
<PAGE>
26
SHALL NOT LIMIT THE REMEDIES OF COMPANY OR ANY OTHER CAUSE OF ACTION FOR
PERSONAL INJURY INCLUDING DEATH AND PROPERTY DAMAGE CLAIMS AND FAILURE OF THE
MATERIAL TO MEET THE PORTABILITY, PERFORMANCE OR DESCRIPTIVE REQUIREMENTS OF
ATTACHMENT A, OR ANY COMBINATION OF THEM.
SECTION 17.08. SUPPLIER SHALL IN NO EVENT BE LIABLE TO COMPANY FOR ANY
INCIDENTAL, CONSEQUENTIAL, OR ANY OTHER INDIRECT LOSS OR DAMAGE, INCLUDING,
WITHOUT LIMITATION, LOST REVENUES OR LOST PROFITS OF ANY PERSON OR ENTITY,
ARISING OUT OF THIS ARTICLE OR ANY OBLIGATION RESULTING THEREFROM, WHETHER IN AN
ACTION FOR OR ARISING OUT OF BREACH OF CONTRACT, FOR TORT, OR ANY OTHER CAUSE OF
ACTION. EXCEPT FOR PERSONAL INJURY INCLUDING DEATH, AND PROPERTY DAMAGE CLAIMS,
SUPPLIER'S ENTIRE LIABILITY FOR DIRECT DAMAGES RESULTING FROM ANY CLAIM OR LOSS,
DAMAGE, OR EXPENSE FROM BREACH OF A WARRANTY CONTAINED IN THIS ARTICLE SHALL IN
NO EVENT EXCEED THE REPAIR OR REPLACEMENT COST, LICENSE FEE, OR PURCHASE PRICE,
AT SUPPLIER'S OPTION OF THE ITEM OR SERVICE THAT DIRECTLY GIVES RISE TO THE
CLAIM. NO ACTION OR PROCEEDING UNDER THIS ARTICLE AGAINST SUPPLIER MAY BE
COMMENCED MORE THAN THIRTY-SIX (36) MONTHS AFTER THE CAUSE OF ACTION ACCRUES.
ARTICLE XVIII
Additional Warranties
SECTION 18.01. (a) Supplier represents and warrants that, where applicable,
all products and Materials provided hereunder will be packaged, labeled, handled
and shipped in accordance with all applicable federal, state, county and local
laws, rules, regulations, orders and other lawfully mandated requirements. This
obligation shall include but not be limited to compliance with the following:
(i) all product labeling and other requirements imposed by the New
Jersey Worker and Community Right-to-Know Act, N.J.S.A. 34:5A-1, et seq.,
and all regulations adopted pursuant thereto;
(ii) all product labeling and other requirements imposed by the
Occupational Safety and Health Act of 1970 (OSHA), as amended, and all
regulations adopted pursuant thereto, including the Hazard Communication
Standard regulations; and
(iii) all requirements of the Hazardous Material Transportation
Act, the Toxic Substance Control Act, as amended, the Federal
Insecticide, Fungicide and
<PAGE>
27
Rodenticide Act (FIFRA) and the New Jersey Pesticide Control Code
(N.J.A.C. 7:30).
(b) All unit packages or other substances which must be disclosed under
applicable law must bear a label indicating the following:
(i) name of the product;
(ii) chemical name and Chemical Abstracts Service (CAS) number of
the five most predominant substances in a container, whether they are
hazardous or nonhazardous;
(iii) chemical name and CAS number for all hazardous substances
constituting greater than 1% of the product (or greater than 0.1% for
carcinogens, mutagens, and teratogens);
(iv) appropriate hazard warnings; and
(v) the name and address of the manufacturer, importer, or other
responsible party.
(c) The label must be a sign, emblem or sticker of durable nature affixed
to or stenciled onto a container. Labels must be in English, easy to read, not
obscured, and prominently displayed on the unit package.
(d) In addition, Supplier agrees to furnish Company on or before the date
of delivery of Material, and thereafter upon request of Company, a copy of the
applicable Material Safety Data Sheet(s) (MSDS) for all Material provided
hereunder, in accordance with the OSHA requirements cited above. In the event of
any change in the composition of the Material during the course of the
Agreement, Supplier shall provide Company an updated MSDS and Supplier must
update the product label accordingly.
(e) Supplier agrees to defend, indemnify and hold harmless Company for any
loss, damage, penalty, fine or liability (including any costs and attorney's
fees) sustained because of Supplier's noncompliance with the provisions of this
Article.
ARTICLE XIX
Repairs Not Covered By Warranty
SECTION 19.01. With respect to all Material ordered under this Supply
Agreement for provision to *******
<PAGE>
28
************ under the FSN Agreement, in addition to repairs provided for in
Article XVII, Supplier agrees to provide repair service during the term of this
Supply Agreement and until ****************** after the expiration of this
Supply Agreement with shipment and risk of loss to Company or its customer. With
respect to all Material ordered under this Supply Agreement for provision to
Customers pursuant to Company's Obligations, in addition to repairs provided for
in Article XVII, Supplier agrees to provide repair service during the greater of
the term of this Supply Agreement or until five years after the Discontinuance
of such Material pursuant to Article LIX. Material to be repaired under this
clause will be returned to a location designated by Supplier, and unless
otherwise agreed upon by Supplier and Company, Supplier shall ship the repaired
Material which meets the specifications within an average of twenty-eight (28)
days of receipt of the defective or non-conforming Material or replace such
Material within an average of fourteen (14) days, with shipment and risk of loss
to Supplier. With the concurrence and scheduling of Company, repair may be made
by Supplier on-site.
SECTION 19.02. If Material is returned to Supplier for repair as provided
for in this clause and is determined to be beyond repair, Supplier shall so
notify Company. If requested by Company, Supplier will sell to Company a
replacement at the price set forth in Supplier's then current agreement with
Company for said Material or, if no such agreement exists, at a reasonably
competitive price for such Material at the time for delivery or lastly, at a
price agreed upon by Supplier and Company.
SECTION 19.03. Replacement and repaired Material provided pursuant to this
Article shall be warranted for 90 calendar days from date of shipment.
SECTION 19.04. It is expressly understood and agreed that this Agreement
does not grant Supplier an exclusive privilege to repair any or all of the
Material purchased under this Supply Agreement for which Company may require
repair; and Company may perform the repairs or contract with others for these
services. In addition, Supplier authorizes Company and any qualified repairer
with whom Company may contract to perform repairs on all Material purchased
under this Supply Agreement.
SECTION 19.05. Price schedules for repairs under this clause are listed in
Attachment C. Supplier agrees to notify Company and obtain Company's approval in
writing if repair service will exceed 50% of replacement cost of new Material,
prior to performing any repair service for Company.
<PAGE>
29
ARTICLE XX
Repair Procedures
SECTION 20.01. Company shall furnish the following information with
Material returned to Supplier for repair: (a) Company's name(s) and complete
address; (b) name(s) and telephone numbers(s) of Company's employee(s) to
contact in case of questions about the Material to be repaired; (c)
ship-to-address for return of repaired Material if different than (a); (d) a
complete list of Material returned; (e) the nature of the defect or failure if
known; (f) whether or not returned Material is in warranty, and (g) RMA number
previously obtained from Supplier. Supplier Customer Service representative
shall be contacted concerning any questions that arise concerning repair.
SECTION 20.02. Material repaired by Supplier shall have the repair
completion date stenciled or otherwise identified in a permanent manner at a
readily visible location on the Material. Supplier shall provide a quarterly
summary report highlighting failure analysis.
SECTION 20.03. All invoices originated by Supplier for repair services must
be clearly identified as such, and must contain: (a) a reference to Company's
Purchase Order for these repair services, (b) a detailed description of repairs
made by Supplier and the need therefor, and (c) an itemized listing of parts and
labor charges, if any. Replaced parts will, upon request, be available for
inspection by or returned to Company. Further, the provisions of Articles LIV
(Invoicing) and LII (Shipping), other than provisions relating to transportation
charges with respect to Material repaired under warranty, shall apply to
Supplier's return to Company of repaired Material.
ARTICLE XXI
Change Control Process
SECTION 21.01. Supplier acknowledges that ******** ******** or one of the
Customers may submit written requests to Company to request changes or revisions
to hardware and software to be furnished under the FSN Agreement or pursuant to
Company's Obligations and, to the extent **************** or Customer's request
involves Material, Company shall immediately notify Supplier (a
<PAGE>
30
"Change Control Request"). Change Control Requests requiring 20 Headcount Years
or less will be handled in the normal change control process. Change Control
Requests that exceed 20 Headcount Years of effort ("Major Changes") will be
negotiated by the parties and will be performed under this process provided that
the parties reach mutually satisfactory agreement on requirements, Headcount
Years, price and delivery schedule. Any resulting Software shall be licensed to
Company under the provisions of Article V without payment of any additional
license fees or charges other than charges for the development work as provided
herein.
SECTION 21.02. Within fifteen (15) days (or a different period if mutually
agreed to by the parties) following receipt of a Change Control Request from
Company, Supplier shall provide a written response to Company specifying:
(a) the specifications for the work to be performed;
(b) the work schedule for the proposed work;
(c) a firm price quote for the work and associated new hardware unit
prices (if any) for the new Material;
(d) the number of Headcount Years required; and
(e) the impact, if any, on the delivery date of the Material to be
modified;
provided, however, that (i) the fees payable by Company for any such Change
Control Request shall not exceed *********** ***********************************
for each Headcount Year, and (ii) the Headcount Years proposed shall be
commercially reasonable. This ******************************************
limitation may be adjusted by Company in December of each calendar year up to
the amount of any change in the Producer Price Index for Telecommunications
Systems, Custom Software Development during the preceding 12-month period. This
limitation shall not, however, apply to Major Changes.
SECTION 21.03. If Supplier's response is approved in writing, Supplier will
proceed with the work. Supplier shall not be obligated to perform any requested
changes or revision to Material in advance of written approval from Company. In
the event that Supplier commits resources to the implementation of a Change
Control Request without prior written authorization, Company shall not be
charged for such work and such work shall not relieve Supplier of its
obligations to meet previously agreed upon schedules. For
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31
purposes of this Supply Agreement, each Change Control Request response approved
in writing by Company shall constitute a formal change to this Supply Agreement
modifying the prices, functionality and/or schedules as addressed therein, and
any hardware or Software developed pursuant to such a request shall fall within
the definition of the term "Material".
SECTION 21.04. Supplier agrees to pay to Company as a Software Incentive
Fee 10% of the amount of fees provided by Company to Supplier under this Section
for changes to Software only. The Software Incentive Fee due to Company under
this Section will be made by Supplier within 30 days of the payment of the fees
for the Software changes made by Company to Supplier under this Section.
ARTICLE XXII
This Article intentionally left blank.
ARTICLE XXIII
Manufacturing Capacity
SECTION 23.01. Supplier warrants that it has established and covenants that
it will maintain during the Term sufficient manufacturing capacity for Material
to ensure that ********************* Beta Test Date, its or any Customer's FSA
Date, and any commercial FSN deployment will not be jeopardized due to Supplier
delivery delays.
ARTICLE XXIV
Training/Lab Material
SECTION 24.01. Supplier acknowledges that ***** ************ requires the
delivery and installation of ***** ********************************** by the
dates set forth in Attachment D-1 to this Supply Agreement. Supplier and Company
acknowledge that *** of these test systems have been delivered and installed.
Company agrees to provide Supplier with Purchase Orders for Material required
for the ********* system, and Supplier agrees to accept such Purchase Orders and
ship such Material in sufficient time to enable Company to deliver and install
the laboratory test system on time.
SECTION 24.02. Supplier agrees to upgrade the system described as "Lab
System 1" in Appendix D to the FSN Agreement and will provide new features and
functionalities
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32
as each becomes available up through Release 2.1. Any Material associated with
such upgrades through Release 2.1 shall be provided by Supplier at no charge to
Company.
SECTION 24.03. Unless mutually agreed, Supplier shall have no obligation in
connection with sales to Customers to deliver software releases beyond those set
forth in Attachment D-2.
ARTICLE XXV
Interfaces
SECTION 25.01. Supplier agrees to provide Company, *********************
and Customers with any public interface specification documentation and
reasonable amounts of support to resolve any questions Company, ***************
or Customers may have regarding these interface specifications as they pertain
to FSN deployment or the ASE.
SECTION 25.02. For a period of *********** after providing any Material
pursuant to this Supply Agreement, Supplier shall, upon request, provide to
Company Interconnect Information.
ARTICLE XXVI
Testing and Quality
SECTION 26.01. Supplier will perform a factory systems test in accordance
with the following criteria:
(a) The term "system" is meant to describe a complete ASE transport system
including all standard subsystems. For normal production, it is acceptable to
test subsystems in a "system configuration" test environment consisting of a
captive test bed to which the specific subsystem under test is connected. These
arrangements are acceptable if the periodic qualification testing is used to
revalidate such test configurations. This can be accomplished by first testing a
defined system in the production manner followed by qualification testing of the
same system (using a full system environment).
(b) Correction of any production testing program deficiencies identified
will be made immediately. System configuration testing will be conducted on
Materials to demonstrate the ability to achieve stable, fault free operation for
a reasonable period of time while running operational exercises and diagnostic
routines at 120 degrees Fahrenheit. The testing duration will be such that
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33
adherence to reliability requirements can be demonstrated. Manufacturing testing
burn-in intervals will be of sufficient duration, so that when coupled with
normal installation and turnover intervals, early-life reliability performance
at cut over will be at or below two and one-half times the steady-state
reliability level. That is, the instantaneous failure rate at cut over shall be
less than or equal to two and one-half times the expected steady-state
instantaneous failure rate.
(c) Periodically, an entire system will be subjected to qualification
testing to assure that product and manufacturing processes continue to
demonstrate conformance to design intent. All Material shipped loose and not in
a complete system configuration, such as spares and additions for growth, shall
receive testing to demonstrate functionality and quality levels at least
equivalent to Material embedded in systems. Manufacturing testing and burn-in
intervals will be of sufficient duration so that infant mortality failure rate
of Material shipped is no greater than two and one-half times the predicted
steady-state failure rate.
(d) Testing performed will provide verification of operability as
completely as possible with current manufacturing test capabilities. This will
include verification of performance over ranges of design limits to assure
operation in all possible field applications. Testing in a simulated use
environment (test bed) will normally be included as one of the test steps.
************ ******** or Customer owned circuit packs returned for repair must
be tested in a simulated use environment as part of the repair process. Returned
circuit packs which are found to be operational upon their receipt will be
tested under heat (120(Degree) F) to identify thermostatic devices which may
have been the cause for return. Return and repair results data shall be made
available to ************** or *************** agent or to Customer or
Customer's agent. The effectiveness of simulated use environments or the manner
of subsystem testing employed must have been verified as consistent with a full
level system test. This verification must have been conducted initially and at
periodic intervals as part of the periodic qualification discussed above. When
internal machine diagnostics are used in the testing of systems, subsystems or
Material shipped loose, the effectiveness of those diagnostics in the
identification of defective Material must be verified initially and again as
part of the periodic product qualification test.
SECTION 26.02. Unless Company gives Supplier written notice to the
contrary, Supplier shall notify Company when each installment of Material is
ready for
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34
inspection and Company and its customer (i.e., ************* or one of the
Customers) or its customer's agent shall be given reasonable opportunity to
inspect the Material at any time prior to shipment under agreed upon Quality
Program Specifications listed in Appendix I to the FSN Agreement, as may be
changed from time to time with Supplier's written concurrence. Inspection or
failure to inspect on any occasion shall not affect Company's rights under
warranty or other provisions of this Supply Agreement. Supplier shall make
available at no additional cost to Company, such production testing facilities,
labor, data, specifications, procedures and such other documents, and assistance
as necessary for Company and its customer or its customer's agent to perform the
inspection. In addition, Supplier shall make available to Company and its
customer or its customer's agent, at no additional charge, data obtained through
Supplier's normal routines which show results of Supplier's inspection, tests
and audits of Material as specified in the agreed upon Quality Program
Specifications. Such data shall be sufficient to demonstrate that the Material
meets all quality and reliability requirements.
SECTION 26.03. Commitment to quality is a primary requirement of this
Supply Agreement and as used herein shall mean conformance to the terms,
conditions and specifications of this Supply Agreement. Supplier will ensure
continued quality improvement in the Materials covered in this Supply Agreement.
Supplier will demonstrate commitment to a "Quality Improvement Process" by
providing:
(i) a published statement of its quality policy signed by an
officer of the Company;
(ii) an established means of measuring and reporting customer
satisfaction;
(iii) a quality training and awareness program;
(iv) a continuous Quality Improvement Process;
(v) an established means of monitoring conformance to requirements
for Material and/or Services; and
(vi) an established in-coming "Material Quality Inspection
Program".
Further, Supplier shall implement and document a quality system(s) that
meets the requirements in ISO 9000 and Bellcore documents, GR-1252-CORE,
"Quality System Generic Requirements for Hardware", and TR-NWT-000179, "Quality
System Generic Requirements for Software". Upon Company's written request,
Supplier agrees to allow Company
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35
and its customer or its customer's agent to conduct on-site reviews at the
Supplier's hardware manufacturing and software development facility(ies) to
verify compliance with requirements. Supplier also agrees to develop corrective
action plans for any quality system deficiencies that may be detected during
these periodic on-site reviews, and submit these to the Company and its customer
or its customer's agent within 30 days after the review. Further, Supplier
agrees to use its commercially reasonable best efforts to implement these
corrective action plans within six months after the review.
SECTION 26.04. Supplier agrees to abide by and meet all applicable
provisions of the Quality and Reliability Specifications in Appendix I to the
FSN Agreement. Any existing or anticipated noncompliance by Supplier with such
Specifications will be disclosed by Supplier to Company in writing on or before
April 4, 1998, to enable Company to notify *************** thereof pursuant to
the FSN Agreement. Such notice from Supplier shall include a written schedule
pursuant to which Supplier shall cure such instances of noncompliance. To the
extent Company's customer waives any obligation of Company to comply with such
Specifications for a stated period of time under this FSN Agreement, Company
agrees to waive such obligation for Supplier to comply under this Supply
Agreement for the corresponding period of time. The parties acknowledge that the
acquiescence by ************* or one of the Customers in or agreement to a
schedule under which Supplier or Company shall cure any noncompliance shall not
constitute a waiver by *************** or such Customer.
ARTICLE XXVII
Trouble Reports
SECTION 27.01. Supplier acknowledges that ****** *********** must reduce
its Access Subnetwork Trouble Report Rate by at least half within three years
following the Beta Test Date ("Overall Objective"). Supplier's Material, as part
of *************** FSN, will contribute to meeting this Objective. Supplier
agrees to assist Company in supporting ***************** Overall Objective by
providing reliability and other information, including but not limited to
Failures in Time (FIT) Rates for Material, and will provide additional support
and expertise which may contribute to the specification and achievement of
**************** objectives if requested by Company, at no cost to Company.
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36
ARTICLE XXVIII
General FSN Support
SECTION 28.01. The parties acknowledge that the FSN Agreement and
concomitant Appendices contain performance obligations which are intended to be
performed by Company and Supplier individually and, in some instances, Company
and Supplier together. With respect to those obligations of the FSN Agreement
and Appendices related to content and/or Material to be provided by Supplier,
Supplier agrees to provide the same in a timely manner and to cooperate with and
support Company generally in the provision to ********** *************** and the
************* Affiliates of the FSN.
ARTICLE XXIX
Cooperative Project Development Management
SECTION 29.01. Supplier agrees to participate with Company and
*************** throughout the product life cycle to assure that all Material
and services are delivered on time, and that they meet all requirements,
including functionality, maintainability, quality and reliability. Supplier also
agrees to assist Company with unbundling and testing work associated with the
ASE to the extent required to make the ASE function with other vendor's
equipment. Accordingly, a core management team comprised of representatives of
Company, Supplier and *************** has been established. This core management
team (or one or more subteams thereof) will review, assess and take corrective
action, where appropriate, in the areas of project management, risk management
and quality assurance. Supplier agrees it will actively participate on this team
and share information with the team as required.
ARTICLE XXX
Operating System Software
SECTION 30.01. Material includes any software (operating program in machine
readable form and related documentation or firmware) and storage media normally
furnished with or embedded in the Material. Title, including copyright, shall
remain in Supplier, and title to the software storage media shall follow title
to the rest of the Material. For the life of the Material listed in this
Agreement, Supplier grants to Company and any subsequent purchaser a
nonexclusive license to use said software on the Material on which it was
delivered. Company and any
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37
subsequent purchaser may copy the software for use on such Material with which
it was originally delivered and for archival purposes, but shall not knowingly
reproduce either the original software or make copies of the software for
distribution to others. To avoid possible loss of Supplier Warranty, Company and
any subsequent purchaser may not add to, delete from or modify the software in
any manner without the written consent of Supplier. Any rejection by Supplier of
a Company proposed change to the Software or failure by the Supplier to respond
promptly to a Company proposed change shall be reviewed by the Executive Team
within (10) working days. In the event the Executive Team fails to take action
to the satisfaction of both parties within the ten (10) day period, either party
may move to mediation as set forth in Article XCIII (Dispute Resolution). No
changes, however extensive, shall alter Supplier's title to such original
software. Title to any such modification or addition to the software shall
remain in the entity which creates the modification or addition.
ARTICLE XXXI
Maintenance of Operating System Software
SECTION 31.01. Supplier agrees to promptly provide Company with any
modifications, in object code form, to Operating System Software made by
Supplier and normally furnished with or embedded in the material, where such
modifications have been announced by Supplier to be generally available. During
the Warranty Period, Supplier shall furnish such modifications at no charge or
at a mutually agreed to price to Company. Modifications which are "bug fixes"
shall be furnished at no charge to Company. After such Warranty Period, Supplier
shall offer such modifications no later than sixty (60) calendar days prior to
the public announcement by Supplier of such availability. Supplier shall
promptly provide to Company, at no charge, any revisions to the associated
documentation to reflect the modifications only if Company elects to upgrade.
All such modifications shall be subject to all terms and conditions (including
acceptance) of this Agreement. Company may incorporate the modifications into
the pre-existing software in its possession for Company's own use, or continue
using previous releases of the pre-existing software at Company's option.
SECTION 31.02. Supplier agrees to make available, at Company's request,
maintenance for at least two (2) previous releases of the software.
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ARTICLE XXXII
Product Documentation
SECTION 32.01. Supplier agrees to furnish electronically, at no charge, one
set of product documentation provided in Company format using Company templates
including, but not limited to any technical marketing, planning or other
literature, bulletins or documentation used to install, operate, support,
trouble shoot, maintain and/or describe Supplier's Material, and any succeeding
updates and/or changes thereto, as described in the technical specification.
Company may use, reproduce, reformat, and distribute such product documentation.
Any modification to documentation covering Material requires prior written
approval of Supplier. Such approval shall not be unreasonably withheld.
SECTION 32.02. Company agrees to reproduce Supplier's copyright notice
contained in any documentation reproduced without charge by Company. For
documentation which is reformatted or modified by Company, Company shall have
the right to place only Company's own copyright notice on the reformatted or
modified documentation. It is the intent of the parties that Company's copyright
notice shall be interpreted to protect the underlying copyright rights of
Supplier to the documentation to the extent such underlying rights are owned by
Supplier. Company will provide Suppler recognition for the SDV Subsystem on all
appropriate documentation.
ARTICLE XXXIII
Quality
SECTION 33.01. Supplier warrants that all Supplier design, development,
production and service of Material are ISO 9001 certified and commits to
maintaining an acceptable rating in all the functions addressed by this
certification. Supplier also warrants that all Supplier subcontracted
manufacturing is periodically audited to ISO 9000 standards, Bellcore
GR-1252-CORE "Quality System Generic Requirements for Hardware" and/or Bellcore
TR-NWT-000179 "Quality System Generic Requirements for Software" and that
consideration will be given to selecting subcontractors that have ISO compliant
Quality systems whenever feasible. Supplier agrees to periodic Quality Systems
Audits to be performed by Company, at Supplier's or its subcontractor's
location(s), based on criteria defined in ISO 9001, Bellcore specification
GR-1252-CORE and/or Bellcore specification TR-NWT-000179. Notification of
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audits will be given by Company to Supplier a minimum of 30 calendar days prior
to such audit(s).
SECTION 33.02. Supplier commits to establishing an end of the line Quality
Assurance audit on Material by first shipment of fully released production
Material. The focus of this audit shall be to replicate user application of
Material as specified to Company's customer. Test and examination of Material
under the quality audit shall be at an integration level sufficient to emulate
Supplier's system application environment and shall include but is not limited
to:
(a) Exercising said Material at circuit pack level as described in Section
26.01(b).
(b) Full operation of Material over a period of time sufficient to
demonstrate quality and reliability objectives as mutually defined by Supplier
and Company. It is the Supplier's option to meet the intent of these objectives
with either a single Quality Assurance audit test or with multiple audit test
steps necessary to demonstrate end Quality and Reliability objectives.
(c) A system for monitoring of key primary and ancillary product functions
and fault detection of material while under this test, as defined in the
Supplier quality plan.
Supplier agrees to perform a detailed failure analysis, down to the
component level as a minimum, of all Material found defective through the
Quality Assurance audit.
Supplier agrees to review customer return (defect) data to insure that the
scope of the Quality Assurance audit function, includes the
requirement(s)/condition(s) under which the return failed.
SECTION 33.03. Supplier commits to establishing a program of tracking
return rates on production Material. All Material which is in operation shall be
considered part of this tracking program. The return rate shall be defined as
the number of confirmed failures divided by the total number of circuit packs
installed in the field. For the purpose of this clause, the term "circuit pack"
shall be used to define the lowest replaceable unit of Material supplied to
Company.
The goals for this program shall be based on Bellcore TR-TSY-000929
"Reliability and Quality Measurements System" requirements for circuit pack
return rates. Any
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return rate found to be in excess of 1.5 times the expected value for returns
shall be investigated fully. These return rates shall be calculated monthly for
all circuit packs which are in use by the customer. The data will be distributed
internally and to Company to drive corrective action. This data may also be made
available to Bellcore and customer only by written authorization of Company.
SECTION 33.04. Supplier agrees to provide a written corrective action plan
to the Company if the field failure rate is in excess of the requirements
outlined in section 33.03 above, or the end of the line quality audit reveals
repetitive component level failures as described in section 33.02. At a minimum,
such written corrective action shall address the following:
a) Incorporate the remedy in affected Material; and
b) All subsequent shipments of Material will incorporate the required
modification(s) correcting the problem and will be done at no
additional charge to Company; and
c) Repair and/or replace previously shipped Material that contains
the same problem or trend. In the event that Company would incur
costs due to such repair and/or replacement, including but not
limited to labor and shipping costs, Supplier shall be notified in
writing of such costs and Company and Supplier shall mutually
agree on same, including methodology for repair or replacement,
prior to Company incurring any expense for which it expects
reimbursement. Supplier shall bear risk of in transit loss and
damage for such repaired and/or replaced Material.
In addition, Supplier shall maintain an action item register whereby
complaints from the Company may be registered and tracked until closure.
Supplier also agrees to maintain an internal corrective action system
that seeks to monitor and react to all performance data available at
Suppliers facility and its subcontractors. Emphasis shall be placed on
early detection and prevention.
SECTION 33.05. As part of a program of continuous improvement, Supplier
agrees to initiate and maintain an internal quality plan which addresses all
aspects of the quality program for Material. Contained within this plan shall be
a series of key quality objectives as mutually agreed to by the parties, with
assigned goals addressing
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long term reliability and quality. Performance to goals shall be measured on a
regular basis. Goals shall be adjusted to be more aggressive as the collected
data shows improvement.
In addition, Supplier agrees to initiate a joint quality plan with Company
addressing all aspects of the mutually agreed upon quality program. This plan
shall be specific to the Material. Supplier agrees that the plan shall include
commitments by Supplier to provide mutually agreed upon quality performance data
to Company.
SECTION 33.06. Prior to general availability of Material, Supplier shall
submit two (2) production samples produced in a continuous ran on permanent
production tooling to the Company's Product Management Organization or their
designant for examination and subsequent approval by the Product Manager.
Supplier shall not make any shipments under this Supply Agreement prior to
approval of the production samples which shall be issued by Company in writing
within thirty (30) calendar days of the receipt of samples. Unless specified
otherwise in this Agreement, the Company shall have the option of retaining and
paying for, or returning the samples to the Supplier.
If production samples do not comply in all respects with specifications and
drawings, Supplier shall have the option of resubmitting new samples or
retrofitting existing samples at no cost to Company to correct the
non-conformance. If such production samples are not submitted or retrofitted
within sixty (60) calendar days during the first six (6) months after the
availability of production Material or forty-five (45) calendar days during the
second six (6) months, or thirty (30) calendar days thereafter of the date of
Company's written notification to Supplier, Company shall have the right to
terminate this Agreement without any cost or charge to Company whatsoever,
including costs or charges incurred by Supplier in procuring equipment, Material
and special tooling to perform any part of this Agreement, loss or profits or
labor, and Materials expended in the production of samples. Company shall not
consider Supplier in default unless there is evidence of repeated failure to
meet these dates and only after notice in writing to Supplier. Upon receipt of
such notice the Executive Team shall have ten (10) working days to meet before
any action is taken by Company. In the event the Executive Team fails to take
action to the satisfaction on both parties within the ten (10) day period, and
subject to the provisions of Article XCIII (Dispute Resolution), either party
may pursue its rights and remedies at law, equity or otherwise.
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ARTICLE XXXIV
Material Testing
SECTION 34.01. In addition to any other tests to be requested by Company or
as set forth in this Supply Agreement, the Supplier is responsible for the
performance of standard factory production tests which, in the absence of any
other testing requested by Company as set forth elsewhere in this Agreement,
shall be deemed to be the final tests under this Agreement. Such tests shall be
performed in accordance with the Supplier's normal testing and quality control
procedures for Material of the type purchased here under in order to insure that
the Material provided hereunder meets all applicable specifications. At the
option of Company, the Supplier shall furnish a copy of its test plans and
quality control procedures to Company prior to initiating any such testing and
Company, at its expense, may witness any of the testing by giving prior notice
to the Supplier. The Supplier also agrees to maintain detailed records of all
such tests and to provide Company, if requested, with written results of these
tests.
SECTION 34.02. In the event that the Material fails to meet the applicable
specifications and test requirements, the Supplier shall make the necessary
adjustments or repairs and repeat the applicable tests. If, in the opinion of
Company, the failure rates experienced during these tests become unsatisfactory,
all shipments of like Material to Company shall be suspended unless otherwise
authorized by Company.
SECTION 34.03. If the Supplier is unable or unwilling to correct, at the
Supplier's expense, any mutually agreed to deficiencies found during testing
provided hereunder within ninety (90) calendar days of such discovery or such
longer period as may be mutually agreed upon, Company, at its option, shall be
relieved of all responsibilities under this Supply Agreement except for payment,
as specified in this Agreement, for any Material that has been received by
Company and has satisfactorily passed all applicable tests. Prior to any action
as stated above, written notice shall be given to Supplier. Upon receipt of such
notice, the Executive Team shall have ten (10) working days to meet before any
action is taken by Company. In the event the Executive Team fails to take action
to the satisfaction of both parties within the ten (10) day period, and subject
to the provisions of Article XCIII (Dispute Resolution), either party may pursue
its rights and remedies at law, equity or otherwise.
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ARTICLE XXXV
Engineering Changes
SECTION 35.01. Any change that Supplier proposes to the Material furnished
hereunder and the documentation related thereto that would impact upon (a)
reliability, (b) the Material specifications, or (c) form, fit, or function
requires the approval of Company, as outlined in the Engineering Change Control
Procedures set forth in Attachment E. Notwithstanding the requirements of
Attachment E, any rejection by Company of a Supplier proposed change to
Material, shall be reviewed by the Executive Team within ten (10) working days.
In the event the Executive Team fails to take action to the satisfaction of both
parties within the ten (10) day period, either party may move to mediation as
set forth in Article XCIII (Dispute Resolution). The Supplier shall forward such
proposed change to Company, at least thirty (30) calendar days prior to the
proposed effective date for those cases where an extremely unsatisfactory
condition requires immediate action, in which case Supplier shall promptly
advise Company. Supplier shall at the time of notification, provide Company with
(a) a product change number, (b) a description of such change, (c) the reason
for such change, (d) a classification of such change in accordance with the
change classifications below, (e) a description of the impact of such change
upon (1) reliability, (2) the equipment's specifications, and (3) form, fit, or
function; (f) proposed price impact, if any, for B, and (g) proposed effective
date for such change and recommended implementation schedule therefore.
SECTION 35.02. Any change in Material shall be classified into one of the
following two classes:
"A" Changes which are needed to correct inoperative electrical or
mechanical conditions, or extremely unsatisfactory operating
maintenance conditions, or conditions which result in safety
hazards, and which are judged severe enough to have to made to all
Material in process, stock, or installed. (Any conditional
application criteria to be specified in the change notification
document.)
"B" Changes which are sufficiently important to justify their
application to Material being manufactured (as soon as reasonably
possible), and which are recommended for application to existing
installations in the field. Examples of this
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class of change may include, but are not limited to:
(a) Providing new features that directly affect subscriber
service.
(b) Providing design improvement which result in better service
capabilities, longer life or improved transmission margins.
(c) Providing changes in design which result in important cost
savings to Supplier or Company.
(d) Conditions of mandatory nature, for example, the
fulfillment of federal registration or future compatibility
requirements, or for conditions of sufficient importance to
be intended for universal application (change to be shown
as "recommended"). The final classification of any product
change proposed by Supplier will be by mutual agreement
between Supplier and Company.
SECTION 35.03. For Class A changes, Supplier shall, pursuant to the
provisions of this Agreement governing repair or replacement of Material under
warranty, replace or modify, at no charge, all affected Material furnished
hereunder and documentation related thereto. Supplier shall supply relevant
documentation to Company for all Class A changes. Supplier shall propose a
schedule for the application of these changes at all equipment locations which
shall not exceed one (1) year from date of the change notice. This schedule
shall be mutually agreed upon by Company and the Supplier.
SECTION 35.04. If Company, at Supplier's request in writing, implements
Class A changes, all reasonable costs incurred by Company shall be reimbursed by
Supplier, net thirty (30) calendar days of receipt of invoice. Supplier shall be
notified in writing of such costs and Company and Supplier shall mutually agree
on same, including methodology for repair or replacement, prior to
implementation of change(s).
SECTION 35.05. For Class B changes, Supplier shall first notify Company of
the exact nature of the change. Details on the proposed implementation procedure
for Material which is being or will be manufactured shall be discussed with
Company. Company shall, at its option, determine if Material previously shipped
will be replaced or modified. Should such replacements or modifications be
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deemed necessary, Supplier shall, pursuant to the provision of this Agreement
governing repair of Material not covered under warranty, make arrangements for
the necessary Material replacement or modification at prices and schedules to be
mutually agreed upon by Company and the Supplier prior to implementation.
Documentation related thereto shall be provided by Supplier as specified for
Class A above.
SECTION 35.06. Company shall provide Supplier sixty (60) calendar days to
one hundred eighty (180) calendar days prior written notice of all Engineering
Changes that Company may request for incorporation into the Material. For a
service affecting defect, a corrective action plan shall be implemented by
Supplier within twenty-four (24) hours of being notified of such defect.
Supplier shall have thirty (30) calendar days to reply to the feasibility of the
requested Engineering Changes; if not feasible, Supplier will inform Company of
reason(s); if feasible, Supplier shall provide a quote of not less than thirty
(30) calendar days duration, on cost to be incurred by Company should Company
request supplier to implement change(s).
SECTION 35.07. To assist Company in determining the amount of the equitable
adjustment, the Supplier agrees to make available to Company pricing data
required by Company to accomplish the end. If the cost of supplies or materials
made obsolete or excess as a result of such change is included in the Supplier's
claim for adjustment, Company shall have the right to prescribe the manner of
disposition of such supplies or materials. Any claim for adjustment under this
clause must be asserted within thirty (30) calendar days from the date the
change is ordered. However, if Company determines that the facts justify such
action, it may receive, consider and adjust any such claim asserted at any time
prior to the date of final payment. Nothing contained in this clause shall
excuse the Supplier from proceeding with the work so changed.
SECTION 35.08. Change Induced Problems. If, after any engineering or any
other change by Supplier, Company determines and notifies Supplier that Material
or Parts do not operate in accordance with the specifications or fail to meet
any agreed upon acceptance test procedure, Supplier will evaluate any defective
Material or Part after their receipt and will notify Company of the result of
its evaluation and, if needed, its corrective action plan, within ten (10)
calendar days.
SECTION 35.09. Parts Obsolescence. In the event that any engineering or
other change made by Supplier obsoletes any Parts purchased by Company, Supplier
will
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46
notify Company in writing, and will, at Supplier's expense, replace the obsolete
parts or reimburse Company its costs (including original delivery costs) for
such Parts. At Supplier's option and expense, Company will return obsolete Parts
which have been replaced (or for which Company has been reimbursed) by Supplier.
SECTION 35.10. Change Documentation. During the term of this Agreement, and
thereafter as long as Parts are made available, Supplier will, at its expense,
provide Company with a copy of each Engineering Change Order (ECO), Field
Retrofit Orders (FRO) or like documentation issued with respect to the operation
or maintenance of the Material. Documentation will include: the type and scope
of the change, technical documentation covering the reason or the change, part
logistics (delivery, rework, stocking, and reclamation), necessary software
patches and time frames for implementation. Copies will be provided to Company
as soon as practicable, but no later than ten (10) calendar days after the
issuance by Supplier.
SECTION 35.11. Field Retrofit Orders (FRO). FROs are modifications to
installed Material required to: meet safety requirements, assure proper
operation, and/or assure that the Material meets its specifications. Supplier
will, at its expense, provide Company with any Parts and instructions necessary
to implement any FRO issued by it during the term of this Agreement, and
thereafter as long as Parts are made available under this Agreement. Supplier
will reimburse Company for Company's labor for each FRO installed by Company, at
a rate mutually agreed to in advance of action taken by Company and Supplier.
SECTION 35.12. Epidemic Failures. Supplier warrants that Material and Parts
will comply with the failure rate and/or reliability requirements set forth in
the specifications. Claims for non-compliance will be established from Company's
service records for the Material and by showing that the average failure rate of
the monitored Material is not in conformance with the specifications. In the
event of noncompliance, Supplier will (a) correct the cause on all Material and
Parts to be shipped thereafter and (b) repair or replace all Material and Parts
within the Warranty period or, alternately, at Supplier's option, will pay
Company its costs of remedying the non-compliance. Company and Supplier shall
mutually agree on such costs, including methodology for repair or replacement,
prior to Company incurring any expense for which it expects reimbursement.
SECTION 35.13. When not inconsistent with the other provisions of this
Article, Company shall issue EC/CAR
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47
in writing to notify Supplier of unsatisfactory conditions or performance of
Material which Company believes requires a change in the design, manufacturing
process or installation and engineering instructions. Supplier shall provide a
written acknowledgment to Company within 10 working days stating that Supplier
has received and will act on the EC/CAR. Supplier shall provide a written final
report to each EC/CAR within 90 days or for design related conditions within 120
days of receipt of such EC/CAR. This report shall include a plan for resolving
the EC/CAR and an estimated schedule for implementing the plan. To the extent
not inconsistent with this Supply Agreement, Supplier agrees to administer
EC/CAR in accordance with Bellcore Technical Reference TR-EOP-000230, Guidelines
for Engineering Complaints and Operational Trouble Reports. Nothing herein shall
limit Supplier's obligations under Article XXXV (Engineering Changes) and
Article XVII (Warranties) of this Supply Agreement.
ARTICLE XXXVI
Process Certification
SECTION 36.01. Company has the right to review, evaluate and recommend
Supplier's parts and supplies and Supplier's sources for parts and supplies. If
Supplier accepts Company's recommendation and this recommendation impacts
previously agree-to unit prices, such prices shall be negotiated and mutually
agreed to.
SECTION 36.02. In regard to Supplier's and its subcontractors manufacturing
processes, and with advance notice to Supplier, Company also reserves the right
to perform periodic quality surveys, evaluations and recommendations, including,
but not limited to, analyses of each manufacturing or assembly position for
acceptability of procedures, equipment calibration, and operator performance, as
well as evaluation of quality control/quality assurance and data collection and
analysis procedures.
SECTION 36.03. Supplier shall conduct appropriate incoming inspection of
components in accordance with its ISO Certification standard practices. Such
practices may be modified from time to time to address specific conditions as
requested by Company. Such modifications and any increases or decreases to price
resulting from such modifications shall be mutually agreed upon.
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48
ARTICLE XXXVII
Packing
SECTION 37.01. All Material and Parts will be packed by Supplier at no
charge and in accordance with Bellcore Spec. TRNWT 000063 Iss. 5, generally
accepted industry standards, which are equal to or better than National Motor
Freight Classification (NMFC) 100 series, as well as other requirements set
forth in the specifications. All electronic plug-ins shipped separately from
their associated frames or mountings must be packaged using Electrostatic
Shielded Packaging. Electrostatic Shielded Packaging is defined herein as
packaging that meets the applicable requirements for 'ELECTROSTATIC SHIELDING
TYPE' packaging as prescribed in Electronic Industries Association (EIA) Interim
Standard IS-5-A ('Packaging Material Standards for ESD Sensitive Items').
Supplier will package Parts individually (except for small Parts, such as
screws) with appropriate protective Material to guarantee safe arrival (e.g.,
plug-in boards should be in static controlled packing or padded cartons). Bulk
packaging of Material and Parts is acceptable if agreed to by both parties. Each
box will contain Material or Parts ordered under a single Purchase Order, but
multiple boxes may be placed in a larger container. Supplier will, when so
requested by Company and without additional charge, provide and affix to each
Material packaging, bar code labels as Company will specify. At Supplier's
request, Company will provide pre-printed sensitive bar code labels for
Supplier's use.
ARTICLE XXXVIII
Purchase Orders
SECTION 38.01. Purchase orders issued under this Agreement shall be sent to
the following address:
BroadBand Technologies, Inc.
4024 Stirrup Creek Drive
PO Box 13737
Research Triangle Park, NF 27709-3737
Attn: Customer Logistics Department
SECTION 38.02. Purchase orders shall specify: (a) description of Material,
inclusive of any numerical alphabetical identification referenced in the price
list in this Agreement, (b) ship date, (c) applicable price, (d) location to
which the Material is to be shipped and (e) location to which invoices shall be
sent for payment and
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49
mode of transportation (i.e. carrier choice, etc.). The printed terms appearing
on a Purchase Order and the standard terms appearing on an electronic Purchase
Order shall be ineffective. Purchase orders issued under this Agreement shall be
deemed to have been accepted by Supplier upon the occurrence of the earliest of:
(1) expiration of ten (10) calendar days from the date of issuance of the
Purchase Order; (2) Supplier's written acceptance of the Purchase Order
(acknowledgment copy); (3) shipment of the Material; (4) commencement of
performance of the services covered by the Purchase Order; or (5) submission of
Supplier's first invoice for currently installed Material or the continuation of
services currently being performed. Notwithstanding the above, Purchase Orders
issued by Company prior to general availability of Material may be rejected by
Supplier for reasonable cause.
SECTION 38.03. Supplier agrees that Company may issue Purchase Orders via
facsimile, or hard copy Electronic Data Service (EDS). All Purchase Orders shall
reference and be subject to the terms of this Agreement. All Purchase Orders
sent via facsimile or electronically shall be transmitted to telephone number
919-544-5246 or such other number as Supplier may specify by written notice to
the Company. Supplier agrees to accept facsimile Purchase Orders, pursuant to
this Agreement, and Company shall not be required to transmit hard copies of
such Purchase Orders to Supplier.
ARTICLE XXXIX
Electronic Data Interchange (EDI)
SECTION 39.01. On mutual agreement of the parties, Supplier and Company
will use electronic means of issuing Purchase Orders, acknowledgments, Purchase
Order changes, invoices, ship notices, or such other purchasing communications
as may be agreed upon by Supplier and Company for transactions under this
Agreement ("Electronic Data Interchange" or "EDI").
ARTICLE XL
Order Placement
SECTION 40.01. Supplier agrees to limit its acceptance of Purchase Orders
for Material placed against this Agreement to Purchase Orders placed from
Company's Omaha Works Procurement Organization and Company's Network Systems
Manufacturing Organization, North Andover, MA. If,
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50
during the terms of this Agreement, Supplier receives Purchase Orders from
Company locations other than as stated above, Supplier agrees to notify the
individual shown below as soon as possible for action to be taken on such
Purchase Order(s).
Lucent Technologies Inc.
Merrimack Valley
1600 Osgood Street
North Andover, MA 01845-1043
Attn: Edward J. Dubliel
MA0940 Room 30-MZC-7
Tel: (508) 960-4020
SECTION 40.02. Company agrees that Supplier shall not be in breach of this
Agreement for failing to accept Purchase Orders from other locations. All
Purchase Orders shall clearly state the location from which the Purchase Order
is issued and the Supplier shall rely on such statement without any obligation
to investigate.
ARTICLE XLI
Rejections
SECTION 41.01. If Company rejects any or all of the Material not conforming
to specifications and/or drawings covered by this Agreement, and after a cure
period of sixty (60) calendar days from first production shipment of Material
during the first year of the Agreement, or a thirty (30) calendar days cure
period thereafter, Supplier is unable to remedy, Company may, in addition to all
its other rights at law or equity, exercise one or more of the following: (1)
return rejected material for full credit at the price charged, or (2) accept a
conforming part of any shipment; or (3) consider this Agreement breached to the
extent of the quantity rejected on the Purchase Order involved; or (4) have
rejected Material replaced by Supplier at the purchase price stipulated in this
Agreement.
ARTICLE XLII
Type Approvals
SECTION 42.01. Supplier will support Company's efforts to obtain Type
Approvals by providing Company with such documentation, information and
technical assistance as may be reasonably requested by Company to support
Company's application(s) for Type Approvals.
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51
ARTICLE XLIII
Electrical Safety
SECTION 43.01. All Material furnished under this Supply Agreement which is
designed for connection to an external power source shall contain at least a
three (3) prong plug and the equipment and plug shall be labeled to evidence an
Underwriters' Laboratories catalog listing.
ARTICLE XLIV
Continuing Availability
SECTION 44.01. With respect to Material to be provided to **************
under the FSN Agreement, Supplier agrees to offer for sale to Company, during
the term of this Agreement and for at least one year after the expiration of
this Agreement and Material conforming to the technical specifications set forth
in this Agreement. Supplier further agrees to offer for sale to Company, during
the term of this Agreement and until five years after the expiration of this
Agreement, Parts which are functionally equivalent and identical in form and fit
for the Material covered by this Agreement. With respect to Material to be
provided to Customers pursuant to Company's Obligations, Supplier agrees to
offer for sale to Company, during the greater of the term of this Agreement or
one year after the notice of Discontinuance of such Material pursuant to Article
LIX and Supplier further agrees to offer for sale to Company during the greater
of the term of this Agreement or five years after the Discontinuance of such
Material pursuant to Article LIX, Parts of which are functionally equivalent and
identical in form and fit for such Material. The price for the Material and
Parts shall be the price set forth in Supplier's then current agreement with
Company for said Material or Parts or, if no such agreement exists, at a price
agreed upon by Company and Supplier. If the parties fail to agree on a price,
the price shall be a reasonably competitive price, for said Material or Parts at
the time for delivery. The Material and parts shall be warranted as set forth in
Article XVII (Warranties).
SECTION 44.02. In the event Supplier fails to materially supply such
Material or Parts and Supplier is unable to obtain another source of supply for
Company, then such failure or inability shall be considered noncompliance with
this Article and Supplier shall provide Company with the technical information
or any other rights required so that Company can manufacture, have manufactured
or obtain such Material or Parts from other sources. In any event
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52
when Company assumes manufacturing rights of Material as provided for in this
clause, the Executive Team shall be given 10 working days to meet and agree on
compensation to Supplier, as appropriate, for such right. In the event the
Executive Team fails to take action to the satisfaction of both parties within
the 10-day period, either party may move to mediation as set forth in Article
XCIII (Dispute Resolution).
The technical information includes, by example, and not by way of
limitation: (a) manufacturing drawings and specifications of raw materials and
components comprising such Material or Parts, (b) manufacturing drawings and
specifications covering special tooling and the operation thereof, (c) a
detailed list of all commercially available material or Parts and components
purchased by Supplier on the open market disclosing the material or part number,
name and location of the Supplier and price lists for the purchase thereof, and
(d) one complete copy of the source code used in the preparation of any software
licensed or otherwise acquired by Company from Supplier under this Agreement.
ARTICLE XLV
Technical Support
SECTION 45.01. Company shall be entitled to ongoing technical support,
including field service and assistance, provided, however, that the availability
or performance of this technical support service shall not be construed as
altering or affecting Supplier's obligations as set forth in Article XV or
elsewhere provided for in this Agreement.
SECTION 45.02. For the first twenty-one (21) months from January 1, 1998,
technical support via telephone will be provided at no charge and Supplier's
field service technical support services shall be provided to Company at no
charge, including emergency on-site twenty-four (24) hour technical assistance.
After the twenty-one (21) month period, and for a period of no less than five
(5) years after the expiration of this Agreement, charges for field service
technical support via telephone or on-site, will be as shown in Attachment C.
SECTION 45.03. If requested, Supplier agrees to provide on-site support at
no charge to Company (i) for the Beta Test and first service application of
Material in geographic areas defined by Company, and (ii) for the first service
application of each new release. Otherwise,
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53
technical support shall be billable at supplier's then current rates. Supplier's
on-site support obligations shall extend to each of *************** geographic
areas and, with respect to Customers, to one geographic area per Customer.
SECTION 45.04. Video Administration Module (VAM) support will be provided
by BBT. VAM support includes but is not limited to technical support and
training.
SECTION 45.05. Telephone technical support response time will be as
follows. Supplier's normal work hours (8AM to 6PM) Eastern time, Monday thru
Friday, excluding holidays. Response time is fifteen (15) minutes. For all other
hours, target response time is within fifteen (15) minutes but no longer that
thirty (30) minutes.
SECTION 45.06. With respect to technical support for newly introduced
Broadband products and services and for Broadband products and services for
which Company has not, using commercially reasonable efforts, developed
technical support expertise and with respect to level 3 technical support for
all products, in return for Company's responsibility for and execution of any
activities on behalf of Supplier related to technical support, Supplier agrees
to either monetarily reimburse Company or supply the appropriate resources
(i.e., personnel) to assist Company and thereby offset Company's expenses
incurred in performing such activities. These costs and expenses will be derived
through mutual negotiation between the involved parties and shall be reasonable.
The parties shall work together to identify products and services covered by
this Section, and, to the extent considered by Company to be commercially
reasonable, Company will attempt to develop the expertise needed to provide
level 1 and level 2 technical support for such products and services.
ARTICLE XLVI
FSA/ICA Support
SECTION 46.01. In the event Supplier is not installing the Material, and if
requested by Company, Supplier agrees to make available at the installation
site, without charge, a field engineer(s) to render installation and cut-over
assistance as requested by Company and as defined below.
SECTION 46.02. ************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
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54
********************************************************************************
**************************************************************************.
SECTION 46.03. *************************************************
********************************************************************************
*******************************************************************************.
SECTION 46.04. Additional Supplier FSA/ICA support to be mutually agreed
to, shall be at a cost as defined in Attachment C, unless mutually agreed to in
advance, in writing.
SECTION 46.05. Company will make a reasonable effort to notify Supplier, in
writing, at least 90 calendar days in advance of each FSA/ICA.
ARTICLE XLVII
Training
SECTION 47.01. If requested by Company, Supplier will, for internal Company
use, conduct training classes on Material, at no charge to Company as follows:
(a) Provide instructors and the necessary instructional modules, or manuals
and material both electronically and in paper copy in Supplier's standard format
and any succeeding updates and/or changes there to train up to 10 of Company's
personnel in the Supplier's offered course. The classes shall be conducted upon
at least 30 calendar days advance notice in writing at reasonable intervals at
locations agreed upon by Supplier and Company, and each class should ordinarily
have three or four participants.
(b) In addition, provide, on Supplier's premises, Training Certification
classes for up to 12 Company instructors, 6 in Planning and Engineering and 6 in
the Maintenance and Operations courses. Supplier recommends limiting each class
to three individuals. Trainer Certification if comprised of a three-day
technical class followed immediately with a two-day trainer certification class.
Up to two classes will be available per calendar quarter.
SECTION 47.02. Company agrees to pay Supplier three percent of actual
revenue received from Company's customer training classes TR-4661 and TR-4662 or
any future additional or similar type of course(s) developed during the period
of time this Agreement is in effect. Company will
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55
develop a specific revenue tracking mechanism to determine the accuracy of the
training revenues applicable to Supplier. Supplier shall invoice Company by the
end of each calendar quarter for the previous three months of activity, not
inclusive of the month of the date of invoice.
ARTICLE XLVIII
Marking
SECTION 48.01. All Material furnished under this Supply Agreement shall be
marked for identification purposes in accordance with the specifications set
forth in this Agreement and as follows:
(a) with Supplier model/series number;
(b) with month and year of manufacture;
(c) markings in accordance with the requirements outlined in Technical
Reference 52001, dated October 1985 and Bellcore Documents #TR-STS-000485,
TR-STS-000383, TR-ISD-000325, TR-TSY-000081, and KS-23490, as amended from time
to time;
(d) Company comcode numbers; and
(e) Warranty Eligibility System (WES) (Attachment F).
SECTION 48.02. In addition, Supplier agrees to add any other identification
which might be requested by Company. Charges, if any, for such additional
identification marking shall be as agreed upon by Supplier and Company prior to
the implementation of any such change. This clause does not reduce or modify
Supplier's obligations under Article LX (Identification).
ARTICLE XLIX
Bar Code Shipping and Receiving Labels
SECTION 49.01. Supplier shall at its sole expense place Company's specified
bar code labels on all shipping packages and containers for the material shipped
under this Agreement. Such bar code labels and the placement thereof shall meet
the requirements shown in the document "Bar Coding with Lucent Technologies-How
To Get Started" (May 1, 1996) (a copy of which Supplier has in its possession).
Company may change such specification upon written notice to Supplier and
Supplier shall comply with such changes.
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56
ARTICLE L
Emergency Service
SECTION 50.01. In addition to the Material replacement provisions set forth
in Article XVII (Warranties) and Article XIX (Repairs Not Covered Under
Warranty), Supplier agrees, in the event of an emergency out-of-service or a
dead on arrival (DOA) condition caused by Material furnished under this Supply
Agreement to ship on a best effort basis, replacement Material up to two units
at a time, within 24 hours of verbal notification only by Company or an
authorized representative of Company. Such notification must identify the
unit(s) to be replaced by model number and serial number, and identify if such
unit(s) are covered either under warranty or under a maintenance agreement with
Supplier. Company agrees to follow up the verbal notification with a written
confirmation by telefax within 24 hours. In order to schedule shipment of
replacement Material, Company may call Supplier at 800-736-4228 requesting
Technical Services. This service will be available 24 hours a day, seven days
per week. Supplier will respond to such calls within two hours of placement.
SECTION 50.02. If defective or nonconforming Material under warranty is not
returned to Supplier by Company in thirty (30) calendar days subsequent to
Company's receipt of replacement Material under this Article, it is understood
that Supplier shall have the right to invoice Company at the price set forth in
Supplier's then current agreement with Company for said Material or, if no such
agreement exists, at a price agreed to by Supplier and Company.
ARTICLE LI
Variation in Quantity
SECTION 51.01. Company assumes no liability for Material produced,
processed or shipped in excess of the amount specified in this Supply Agreement
or in a Purchase Order issued pursuant to this Supply Agreement. However, should
an overshipment occur, Company will use reasonable efforts to return such
Material to Supplier, at Supplier's expense.
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57
ARTICLE LII
Shipping
SECTION 52.01. Supplier shall do the following: (1) ship the Material
covered by this Supply Agreement or a Purchase Order complete unless instructed
otherwise, (2) ship to the destination designated in the Supply Agreement or
Purchase Order, (3) ship according to routing instructions given by Company, (4)
place the Agreement and Purchase Order number on all subordinate documents, (5)
enclose a packing memorandum with each shipment and, when more than one package
is shipped, identify the package containing the memorandum, (6) mark the
Purchase Order number on all packages and shipping papers and (7) not ship
Material five working days earlier or five working days later than the
agreed-upon shipment date without Company's prior written authorization.
Adequate protective packing shall be furnished at no additional charge. Shipping
and routing instructions may be furnished or altered by Company verbally. If
Supplier does not make a reasonable effort to comply with the terms of Article
LIII (FOB) or Purchase Order or with Company's shipping or routing instructions,
Supplier authorizes Company to charge back to Supplier any increased cost
incurred by Company as a result of Supplier's failure to comply. Company agrees
to review each shipment upon receipt for contents and advise Supplier within 15
calendar days of any deficiencies.
ARTICLE LIII
FOB
SECTION 53.01. The Material shall be shipped FOB Supplier's
factory--Freight prepaid and billed as a separate item unless directed otherwise
by Company.
ARTICLE LIV
Invoicing
SECTION 54.01. Supplier shall (a) render original invoices in duplicate, or
as otherwise specified in this Agreement, showing Agreement number, Purchase
Order number, through routing and weight, (b) render separate invoices for each
shipment within 24 hours after shipment and (c) mail invoices with copies of
bills of lading and shipping notices to the address shown on this Agreement or
the Purchase Order. If prepayment of transportation charges is authorized,
Supplier shall include the transportation
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58
charges from the FOB point to the destination as a separate item on the invoice
stating the name of the carrier used. No minimum billing charges are permitted
unless expressly authorized in the Agreement. If Company requests and Supplier
accepts a return of Material, Company shall be subject to a maximum restocking
charge, if applicable, of five percent of the list price of Material returned.
ARTICLE LV
Title and Risk of Loss
SECTION 55.01. Title and risk of loss and damage to Material purchased by
Company under this Agreement or a Purchase Order issued pursuant to this
Agreement shall vest in Company when the Material has been delivered at the FOB
point. If Supplier is expressly authorized to invoice Company for Material upon
shipment or prior to the performance of additional services, title to such
Material shall vest in Company upon payment of the invoice.
ARTICLE LVI
Monthly Order and Shipment Reports
SECTION 56.01. Supplier agrees to render monthly order and shipment reports
as applicable, on or before the tenth working day of the succeeding month
containing the information required on a mutually agreed to form.
ARTICLE LVII
Invoicing For Stock
SECTION 57.01. If Company requests, for reasons other than covered by
Article LXXIX (Force Majeure), that shipment be postponed beyond the date shown
on a Purchase Order, Supplier may invoice Company as of the original scheduled
delivery date for Material manufactured under this Agreement, if it has been
inspected and approved by Company's Product Management Organization or its
authorized agent, within five (5) working days after notification, (provided
inspection has been specified in this Agreement or in a Purchase Order issued
under this Agreement). If inspection is not completed within five (5) working
days, Supplier may invoice Company in accordance Article LIV (Invoicing) of this
Supply Agreement.
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59
ARTICLE LVIII
Storage of Paid for Stock
SECTION 58.01. All Material invoiced to Company in accordance with Article
LVII (Invoicing for Stock) shall be marked conspicuously as Company's property,
and safely stored by Supplier separately from other Material stocks, without
charge to Company for a period of sixty (60) days, and shall be shipped out as
ordered by Company. Supplier assumes responsibility for any loss or damage to
such Material while stored by Supplier. Beyond the sixty (60) days, charges to
Company shall be mutually agreed to. Supplier shall advise the Company in
writing of any removal of the Material from one building to another, or from one
part of the same building to another and shall give such advance notice as may
be requested by the Company. Supplier agrees upon request by Company, to execute
and deliver to Company a bill of sale evidencing the conveyance of such
Material, free from liens and encumbrances, together with any other document
such as a bailment agreement, warehouse receipt, lease (or storage space),
mortgage, deed of trust, or surety bond as Company may deem necessary to secure
title in such Material as against third parties, all of which documents shall be
in a form acceptable to Company.
ARTICLE LIX
Discontinuance of Material
SECTION 59.01. In the event the Supplier should discontinue manufacturing
any Material, Supplier will provide Company:
(a) At least twelve (12) months prior notice of discontinuance; and
(b) The opportunity to place an End of Life Purchase Order for
discontinued Material which Supplier will accept during the notice
period as set forth in subsection (a) of this Article; and
(c) Supplier will accept delivery schedules for such Material up to
six (6) months after such End of Life Purchase Order.
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60
ARTICLE LX
Identification
SECTION 60.01. Neither Supplier nor Company shall, without prior written
consent of the other, which shall not be unreasonably withheld, engage in
advertising, promotion or publicity related to this Agreement, or make public
use of any Identification in any circumstances related to this Agreement.
"Identification" means any copy or semblance of any trade name, trademark,
service mark, insignia, symbol, logo, or any other product, service or
organization designation, or any specification or drawing of the other party or
its affiliates, or evidence of inspection by or for any of them. Supplier shall
remove or obliterate any Identification prior to any use or disposition of any
material rejected or not purchased by the Company, and, shall indemnify, defend
and save harmless Company and its affiliates and each of their officers,
directors and employees from and against any losses, damages, claims, demands,
suits, liabilities, fines, penalties and expenses (including reasonable
attorneys' fees) arising out of Supplier's failure to comply with this clause.
ARTICLE LXI
Insignia
SECTION 61.01. If requested by Company in writing and agreed to by
Supplier, "Insignia", including certain trademarks, trade names, insignia,
symbols, decorative designs or packaging designs of Company or evidences of
Company's or Company's agent's inspection, will be properly affixed by Supplier
to the Material furnished or its packaging. Company shall retain all right,
title and interest in any and all packaging designs, finished artwork and
separations furnished to Supplier. Nothing in this Article shall be deemed to
apply to the SDV Subsystem, which shall be marked with Supplier's brand identity
and which shall include Supplier's FLX(C) trademark. This clause does not reduce
or modify Supplier's obligations under Article LX (Identification) and Article
LXII (Confidentiality). Material rejected or not purchased by Company which
utilized such Insignia shall have all such Insignia removed prior to any sale,
use or disposition thereof. Supplier agrees to indemnify and hold Company
harmless from any claim, loss or damage arising out of Supplier's failure to do
so.
ARTICLE LXII
Confidentiality
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61
SECTION 62.01. All Information ("Information") means proprietary
specifications, designs, plans, drawings, software, data, prototypes or other
business and/or technical information) provided by either Party to the other
under this Agreement shall be held in confidence by the receiving Party; shall
be used only for the purpose of performing acts and obligations required by this
Agreement; shall be reproduced only to the extent necessary for that purpose;
and shall not be disclosed by the receiving Party without the prior written
approval of the disclosing Party. The receiving Party may, however, disclose the
Information to its employees, consultants and contractors with a need to know;
provided, that the receiving Party binds those employees, consultants and
contractors to terms at least as restrictive as those stated herein, advises
those employees, consultants and contractors of their confidentiality
obligations, and indemnifies the disclosing Party for any breach of those
obligations. Information shall be subject to the restrictions in this section if
it is in writing or other tangible form, only if clearly marked as proprietary
when disclosed to the receiving Party; or, if not in tangible form, is of a
nature that a reasonable person would conclude is confidential Information, and
the Information is reduced to writing clearly marked as proprietary, with a copy
of the writing being furnished to the receiving Party within thirty (30) days of
the disclosure of the intangible information, and with the writing containing a
notice that the information was previously provided in intangible form. These
restrictions on the use or disclosure of Information shall not apply to any
Information: (i) which is independently developed by or for the receiving Party;
(ii) which is lawfully received free of restriction from another source; (iii)
after it has become generally available to the public without breach of this
Agreement by the receiving party; (iv) which at the time of disclosure to the
receiving Party was known to that Party free of restriction as evidenced by
documentation in that Party's possession; (v) which the disclosing Party agrees
in writing is free of such restrictions; or (vi) which the receiving Party is
required to disclose under applicable laws, rules and regulations, provided that
the receiving Party shall first notify the disclosing Party of such required
disclosure and afford the disclosing party the opportunity to seek a protective
order relating to such disclosure. All Information shall remain the property of
the disclosing Party and shall be returned upon written request or upon the
receiving Party's determination that it no longer has a need for such
Information. The receiving Party may retain one copy of all written materials
returned to provide an archive record of the disclosure.
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ARTICLE LXIII
Supplier's Information
SECTION 63.01. Supplier shall not provide under, or have provided in
contemplation of, this Agreement any idea, data, program, technical, business or
other intangible information, however conveyed, or any document, print, tape,
disc, semiconductor memory or other information-conveying tangible article,
unless Supplier has the right to do so.
ARTICLE LXIV
Compliance With Laws
SECTION 64.01. Each party and all persons furnished by each party shall
comply at their own expense with applicable Federal, state, local and foreign
laws, ordinances, regulations and codes, including those relating to the use of
chlorofluorocarbons, and including identification and procurement of required
permits, certificates, licenses, insurance, approvals and inspections, in
performance under this Agreement or a Purchase Order. Supplier agrees to
indemnify, defend and save harmless Company, its affiliates, and their customers
and each of their officers, directors and employees from and against losses,
damages, claims, demands, suits, liabilities, fines, penalties and expenses
(including reasonable attorneys' fees) that arise out of or result from any
failure to do so.
ARTICLE LXV
Taxes
SECTION 65.01. Company shall reimburse Supplier only for the following tax
payments with respect to transactions under this Agreement unless an exemption
applies: state and local sales and use taxes, as applicable. Taxes payable by
Company shall be billed as separate items on Supplier's invoices and shall not
be included in Supplier's prices. Company shall have the right to have Supplier
contest any such taxes that Company deems improperly levied at Company's expense
and subject to Company's direction and control.
ARTICLE LXVI
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63
Government Contract Provisions
SECTION 66.01. The following provisions regarding equal opportunity, and
all applicable laws, rules, regulations and executive orders specifically
related thereto, including applicable provisions and clauses from the Federal
Acquisition Regulations and all supplements thereto are incorporated in this
Agreement, for as long as such provisions shall be in force and effect, as they
apply to work performed under specific U.S. Government contracts: 41 CFR 60-1.4,
Equal Opportunity; 41 CFR 60-1.7, Reports and Other Required Information; 41 CFR
60-1.8, Segregated Facilities; 41 CFR 60-250.4, Affirmative Action for Disabled
Veterans and Veterans of the Vietnam Era (if in excess of $10,000); and 41 CFR
60-741.4, Affirmative Action for Disabled Workers (if in excess of $2500),
wherein the terms "contractor" and "subcontractor" mean "Supplier". In addition,
Purchase Orders placed under this Agreement containing a negotiation that the
Material or services are intended for use under Government contracts shall be
subject to such other Government provisions printed, typed or written thereon,
or on the reverse side thereof, or in attachments thereto. Supplier may refuse
or accept any such Purchase Order at Supplier's discretion.
ARTICLE LXVII
Right of Entry and Plant Rules
SECTION 67.01. Each party shall have the right to enter the premises of the
other party during normal business hours with respect to the performance of this
Agreement, subject to all plant rules and regulations, security regulations and
procedures and U.S. Government clearance requirements as applicable. Each party
shall provide safe and proper facilities for such purpose, and no charge shall
be made for such visits. It is agreed that prior notification will be given when
access is required.
ARTICLE LXVIII
Export Control
SECTION 68.01. Supplier and Company assure each other that they do not
intend to and will not knowingly, without the prior written consent of the
United States Department of Commerce, transmit directly or indirectly:
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64
(a) any technical information or software furnished to either party; or
(b) any immediate product (including processes, materials and services)
produced directly by the use of the technical information or software furnished
by either party; or
(c) any commodity produced by such immediate product if the immediate
product or the technical information or software furnished by either party is a
plant capable of producing a commodity or is a major component of such plant,
for as long as such applicable restrictions remain in effect;
to (i) Afghanistan, People's Republic of China, Iraq or to any Group Q, S, W, Y
or Z country as listed in Supplement No. 1 to Part 770 of the Export
Administration Regulations issued by the Department of Commerce, or (ii) any
citizen or resident of any of the aforementioned countries. Each party agrees to
promptly inform the other party in writing of any such written consent issued by
the Office of Export Administration.
SECTION 68.02. Each party assures the other that it will not transmit,
directly or indirectly, any information or software furnished hereunder or any
portion hereof, without the prior written consent of the other party, to any
country outside of the United States.
SECTION 68.03. The parties understand that the obligations under this
Article survive the expiration and/or termination of this Agreement.
ARTICLE LXIX
Assignment
SECTION 69.01. Supplier shall not assign any right or interest under this
Agreement (excepting solely for moneys due or to become due) without the prior
written consent of Company. Supplier shall be responsible to Company for all
Work performed by Supplier's sub-contractor(s) at any tier.
ARTICLE LXX
Releases Void
SECTION 70.01. Neither party shall require (a) waivers or releases of any
personal rights or
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65
(b) execution of documents which conflict with the provisions of this Agreement,
from employees, representatives or customers of the other in connection with
visits to its premises and both parties agree that no such releases, waivers or
documents shall be pleaded by them or third persons in any action or proceeding.
ARTICLE LXXI
Services
SECTION 71.01. It is understood that visits by Supplier's representatives
or its suppliers' representatives for inspection, adjustment or other similar
purposes in connection with Material purchased under this Agreement shall for
all purposes be deemed "Work under this Agreement" and shall be at no charge to
Company unless otherwise agreed in writing between the parties.
ARTICLE LXXII
Registration and Radiation Standards
SECTION 72.01. When Material furnished under this Agreement is subject to
Part 68, Part 15 or any other part of the Federal Communication Commission's
Rules and Regulations, as may be amended from time to time (hereinafter "FCC
Rules"), Supplier warrants that such material complies with the registration,
certification, type-acceptance and/or verification standards of the FCC Rules in
effect at the time of Material shipment, including, but not limited to, all
labeling, customer instruction requirements, and the suppression of radiation to
specified levels. Supplier shall also establish periodic on-going compliance
retesting and follow a Quality Control Program, submitted to Company, to assure
that Material shipped complies with the applicable FCC Rules. Supplier agrees to
indemnify and save Company harmless from any liability, claims or demands
(including the costs, expenses and reasonable attorney's fees on account
thereof) that may be made because of Supplier's noncompliance with the
applicable FCC Rules. Supplier agrees to defend Company, at Company's request,
against such liability, claim or demand.
SECTION 72.02. In addition, should Material which is subject to Part 15 of
the FCC Rules, during use generate harmful interference to radio communications,
Supplier shall provide to Company information relating to methods of suppressing
such interference and pay the cost of suppressing such interference or, at the
option of Company,
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66
accept the return of the Material and refund to Company the price paid for the
Material less a reasonable amount for depreciation, if applicable.
SECTION 72.03. To the extent that Material furnished under this Agreement
is also subject to FCC Rules governing the use of the Material as a component in
a system, Company shall be responsible for compliance with the applicable FCC
Rules governing the system. Supplier shall full cooperate with Company, by
providing technical support and information, and, upon written request from
Company, shall modify Material to enable Company to ensure ongoing compliance
with the FCC Rules. Company agrees to pay any verifiable increase in Supplier's
costs and/or expenses resulting from Company's request to modify Material to
enable Company to comply with the FCC Rules.
SECTION 72.04. Nothing in this clause shall be deemed to diminish or
otherwise limit Supplier's obligations under Article XVII (Warranties) or any
other clauses of this Supply Agreement.
ARTICLE LXXIII
Environment/Reliability Testing
SECTION 73.01. Supplier shall perform environmental testing of the
production Material in accordance with Bellcore's Technical
Reference-TR-NWT-000063 entitled NETWORK EQUIPMENT BUILDING SYSTEM (NEBS)
GENERIC EQUIPMENT REQUIREMENTS. The Supplier agrees to report the test results
to Company or its agents.
SECTION 73.02. An initial sample of production Material shall be subjected
by Supplier to Material Qualification Tests. These tests shall be more
comprehensive than the normal production tests and shall include checks of all
functions, protocols and interfaces and shall be repeated periodically at
intervals not to exceed three (3) months. Variables data (actual readings rather
than go/no go data) shall be recorded for these tests to ascertain any
changes/drifts in the measured parameters. Material Qualification Tests shall
also be performed upon the implementation of any major design changes requested
by Company.
SECTION 73.03. It is the responsibility of the Supplier to demonstrate
during the term of the Agreement that the actual reliability of the delivered
production Material equals or exceeds the reliability predictions. The Supplier
shall conduct studies to measure the
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67
replacement/failure of supplied production Material under actual operating
conditions or simulated operating conditions in a controlled laboratory
environment. These studies may be (1) factory based (where returns are compared
with shipment figures), (2) conducted at an operational site with a sufficient
population of production Material in service to provide reasonable confidence in
observed replacement estimates, (3) an ongoing factory based (controlled)
reliability test of a sufficient sample of production Material to provide a
timely assessment of production Material reliability or (4) all of the above. At
Company's request, the results and the analysis of the collected data shall be
provided by the Supplier to Company.
ARTICLE LXXIV
Toxic Substances and Product Hazards
SECTION 74.01. Supplier hereby warrants to Company that, except as
expressly stated elsewhere in this Agreement, all material furnished by Supplier
as described in this Agreement is safe for its foreseeable use, is not defined
as a hazardous or toxic substance or material under applicable Federal, state or
local law, ordinance, rule, regulation or order (hereinafter collectively
referred to as "law" or "laws"), and presents no abnormal hazards to persons or
the environment. Supplier also warrants that it has no knowledge of any Federal,
state or local law, that prohibits the disposal of the material as normal refuse
without special precautions except as expressly stated elsewhere in this
Agreement. Supplier also warrants that where required by law, all material
furnished by Supplier is either on the EPA Chemical Inventory compiled under
Section 8(a) of the Toxic Substance Control Act, or is the subject of an
EPA-approved premanufacture notice under 40 CFR Part 720. Supplier further
warrants that all material furnished by Supplier complies with all use
restrictions, labeling requirements and all other health and safety requirements
imposed under Federal, state, or local laws. Supplier further warrants that,
where required by law, it shall provide to Company, prior to delivery of the
material, a Material Safety Data Sheet which complies with the requirements of
the Occupational Safety and Health Act of 1970 and all rules and regulations
promulgated thereunder.
SECTION 74.02. Supplier shall defend, indemnify and hold Company harmless
for any expenses (including, but not limited to, the cost of substitute
material, less accumulated depreciation) that Company may incur by reason of the
recall or prohibition against continued use or
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68
disposal of material furnished by Supplier as described in its Agreement whether
such recall or prohibition is directed by Supplier or occurs under compulsion of
law. Company shall cooperate with Supplier to facilitate and minimize the
expense of any recall or prohibition against use or disposal of material
directed by Supplier or under compulsion of law.
SECTION 74.03. Supplier further shall defend, indemnify and hold Company
harmless of and from any claims, demands, suits, judgments, liabilities, costs
and expenses (including reasonable attorney's fees) which Company may incur
under any applicable Federal, state or local laws, and any and all amendments
thereto, including but not limited to the Comprehensive Environmental Response,
Compensation and Liability Act of 1980; the Consumer Product Safety Act of 1972;
the Toxic Substance Control Act; Fungicide, Rodenticide Act; the Occupational
Safety and Health Act; and the Atomic Energy Act; and any and all amendments to
all applicable Federal, state, or local laws, by reason of Company's
acquisition, use, distribution or disposal of material furnished by Supplier
under this Agreement.
ARTICLE LXXV
CFC and/or Heavy Metals in Packaging
SECTION 75.01. Supplier warrants to Company that no lead, cadmium, mercury
or hexavalent chromium have been intentionally added to any packaging or
packaging component (as defined under applicable laws) to be provided to Company
under this Agreement and that packaging materials were not manufactured using
and do not contain chlorofluorocarbons. Supplier further warrants to Company
that the sum of the concentration levels of lead, cadmium, mercury and
hexavalent chromium in the package or packaging component provided to Company
under this Agreement does not exceed 100 parts per million. Upon request,
Supplier shall provide to Company Certificates of Compliance certifying that the
packaging and/or packaging components provided under this Agreement are in
compliance with the requirements set forth above in this clause.
ARTICLE LXXVI
Ozone Depleting Chemicals
SECTION 76.01. Supplier hereby warrants that it is aware of international
agreements and pending legislation in several nations, including the United
States, which would limit, ban and/or tax importation of any product containing,
or produced using ozone depleting chemicals ("ODCs"),
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69
including chlorofluorocarbons, halons and certain chlorinated solvents. Supplier
hereby warrants that the material furnished to Company will conform to all
applicable requirements established pursuant to such agreements, legislation and
regulations, and the material furnished to Company will be able to be imported
and used lawfully (and without additional taxes associated with ODCs not
reported to Company by Supplier as set forth in this clause) under all such
agreements, legislation and requirements. Supplier also warrants that it is
currently reducing, or if Supplier is not the manufacturer of the material, is
currently causing the manufacturing vendor to reduce and will, in an expeditious
manner, eliminate, or, as applicable, have its manufacturing vendor eliminate
the use of ODCs in the manufacture of the material.
SECTION 76.02. If the material furnished by Supplier under this Agreement
is manufactured outside the United States, Supplier shall, upon execution of
this Agreement, and at any time that new products are added to this Agreement or
changes are made to the material furnished under this Agreement, complete, sign
and return to Company the attached ODC Content Certification. The ODC Content
Certification must be signed by Supplier's facility manager, corporate officer
or his delegate.
SECTION 76.03. The term "ODC content" on the ODC Content Certification
means the total pounds of ODC used directly in the manufacture of each unit of
material. This includes all ODCs used in the manufacturing and assembly
operations for the material plus all ODCs used by Supplier's vendors and any
other vendors in producing components or other products incorporated into the
material sold to Company.
SECTION 76.04. Supplier is responsible to obtain information on the ODC
content of all components and other products acquired to manufacture the
material and to incorporate such information into the total ODC content reported
to Company; provided, however, that Supplier should not include in the ODC
content those components or other products which are manufactured in the United
States. Supplier hereby warrants to Company that all information furnished by
Supplier on the ODC Content Certification is complete and accurate and that
Company may rely on such information for any purpose, including but not limited
to providing reports to government agencies or otherwise complying with
applicable laws. Supplier shall defend, indemnify and hold Company harmless of
and from any claims, demands, suits, judgments, liabilities, fines, penalties,
costs and expenses (including additional ODC taxes as provided for in paragraph
one of this clause and reasonable
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70
attorney's fees) which Company may incur under any applicable Federal, state, or
local laws or international agreements, and any and all amendments thereto by
reason of Company's use of reliance on the information furnished to Company by
Supplier on the ODC Content Certification or by reason of Supplier's breach of
this clause. Supplier shall cooperate with Company in responding to any inquiry
concerning the use of ODCs to manufacture the material or components thereof and
to execute without additional charge any documents reasonably required to
certify the absence or quantity of ODCs used to manufacture the material or
components thereof.
ARTICLE LXXVII
Ozone Depleting Substance Labeling
SECTION 77.01. Supplier warrants and certifies that all products, including
packaging and packaging components, provided to Company under this Agreement
have been accurately labeled, in accordance with the requirements of 40 CFR Part
82 entitled "Protection of Stratospheric Ozone, Subpart E--The Labeling of
Products Using Ozone Depleting Substances".
ARTICLE LXXVIII
Year 2000 Functionality
SECTION 78.01. Supplier warrants that Software will record, store, process
and present calendar dates falling on or after January 1, 2000, in the same
manner and with the same functionality as it performed before January 1, 2000.
This maintenance will be considered part of and covered under the maintenance
provisions of the Agreement at any additional charge to Company.
SECTION 78.02. Supplier's warrants that Software will perform, store,
process and present calendar dates falling on or after January 1, 2000, in the
same manner and with the same functionality as it performed before January 1,
2000, and that such Software will be interoperable with other software used by
the Company which may deliver records, receive records or interact with Software
in the course of processing data. This functionality will be part of the license
of software and will be provided at no charge.
ARTICLE LXXIX
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Force Majeure
SECTION 79.01. Neither of the parties shall be held responsible for any
delay or failure in performance hereunder caused by fires, strikes, embargoes,
requirements imposed by Government regulation, civil or military authorities,
acts of God or by the public enemy or other similar causes beyond such party's
control. However, Supplier's delay or failure to perform shall not be excused by
a default of any of its subcontractors or suppliers unless such default arises
out of causes beyond the control of both the Supplier and its subcontractor or
supplier and without the fault or negligence of either of them, and unless the
supplies or services to be furnished by such subcontractor or supplier are not
obtainable from other sources. If such contingency occurs, the party injured by
the other's inability to perform may elect to: (a) terminate this Supply
Agreement or part thereof as to Material or Services not already received; (b)
suspend this Supply Agreement for the duration of the delaying cause, buy or
sell elsewhere Material and/or Services to be bought or sold hereunder, and
deduct from any commitment the quantity bought or sold for which commitments
have been made elsewhere; or (c) resume performance hereunder once the delaying
cause ceases with an option in the injured party to extend the period, hereunder
up to the length of time the contingency endured. Unless written notice is given
within thirty (30) days after such injured party is apprised of the contingency,
(c) shall be deemed selected.
ARTICLE LXXX
Regulatory Matters
SECTION 80.01. If requested by Company, Supplier will to the best of its
ability provide information and assistance required in the planning, conduct and
research associated with regulatory matters in connection with the Material to
be furnished hereunder.
ARTICLE LXXXI
Confidentiality and Non-Disclosure
SECTION 81.01. "Information" under Article LXII shall also include the FSN
Agreement (including, without limitation, the General Purchase Agreement between
********* ********* and Company) and any other information provided to Supplier,
in any form or medium, which is the confidential
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72
and/or proprietary information of Company, ************** or Customers.
Notwithstanding anything contained in Article LXII, Supplier agrees to hold the
FSN Agreement in confidence, shall use the FSN Agreement only for the purpose of
performing Supplier's obligations and duties under this Supply Agreement and
shall not disclose the FSN Agreement to any third party without prior written
approval of the Company and *********************, except to the extent that
Supplier is required to disclose the FSN Agreement to any governmental agency
under applicable laws, rules, and regulations and, in such instance, the parties
and ********* *********** shall work together to prevent the disclosure of those
provisions of the FSN Agreement which ************* or Company determines to
contain particularly sensitive information.
ARTICLE LXXXII
Publicity
SECTION 82.01. Supplier agrees to submit to Company and Company agrees to
make a reasonable effort to submit to Supplier all advertising, sales promoting,
press releases and other publicity material relating to the Material furnished
or the services performed by Supplier under this Agreement wherein the other
party's names or marks are mentioned or language from which the connection of
said names or marks with Company or Supplier may be inferred or implied.
Supplier further agrees and Company agrees to make a reasonable effort not to
publish or use such advertising, sales promotion, press releases, or publicity
Material without the other party's prior written approval. This does not reduce
or modify Supplier's obligation under Article LX (Identification) of this
Agreement.
ARTICLE LXXXIII
Infringement
SECTION 83.01. Supplier shall indemnify and save harmless Company, its
affiliates, its and their customers, and each of their officers, directors,
employees, successors and assigns (all hereinafter referred to in this clause as
"Company") from and against any losses, damages, liabilities, fines, penalties,
and expenses (including reasonably attorneys' fees) that arise out of or result
from any proved or unproved claim (a) of infringement of any patent, copyright,
trademark or trade secret right, or other intellectual property right, private
right or any other proprietary or personal interest, and (b) caused by the
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performance by Supplier under or in contemplation of this Agreement (an
"Infringement Claim"). If the Infringement Claim arises solely from the
Supplier's adherence to Company's written instructions regarding services or
tangible or intangible goods provided by Supplier ("Items") and if the Items are
not (a) commercial items available on the open market or the same as such items,
or (b) items of Supplier's designated origin, design or selection, Company shall
indemnify Supplier. Company or Supplier shall defend or settle, at its own
expense, any demand, action or suit on any Infringement Claim for which it is
the indemnitor under the preceding provisions, and each shall timely notify the
other of any assertion against it of any Infringement Claim and shall cooperate
in good faith with the other to facilitate the defense of any such claim.
SECTION 83.02. If the use and/or sale of such Material is enjoined,
Supplier shall at its own expense and option, procure for Company the right to
continue using or reselling Material, or replace the infringing Material or part
thereof with substantially equivalent Material or parts free of infringement, or
modify the Material or parts thereof so that they will be free of infringement,
or remove infringing Material in its entirety and refund to Company the full
Material purchase price and the costs associated with removal and transportation
of such Material.
ARTICLE LXXXIV
Indemnity
SECTION 84.01. All persons furnished by Supplier shall be considered solely
Supplier's employees or agents, and Supplier shall be responsible for payment of
all unemployment, social security and other payroll taxes, including
contributions when required by law. Supplier agrees to indemnify and save
harmless Company, its affiliates and their customers and each of their officers,
directors, employees, successors and assigns (all hereinafter referred to in
this clause as "Company") from and against any losses, damages, claims, demands,
suits and liabilities, fines, penalties and expenses (including reasonable
attorney's fees) that arise out of or result from: (1) injuries or death to
persons or damage to property, including theft, in any way arising out of or
occasioned by, caused or alleged to have been caused by or on account of the
performance of the work or services performed by Supplier or persons furnished
by Supplier, except any injuries (including death) or damage to property arising
from Company's negligence or willful misconduct, (2) assertions under Workers'
Compensation or similar acts made by persons furnished by Supplier or any
subcontractor, or by reason of any injuries to such persons for which Company
would be responsible under Workers' Compensation or similar acts
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74
if the persons were employed by the Company, (3) any failure on the part of
Supplier to satisfy all claims for labor, equipment, Materials and other
obligations relating directly or indirectly to the performance of the Work, or
(4) any failure by Supplier to perform Supplier's obligations under this clause
or Article LXXXVI (Insurance). Supplier agrees to defend Company against any
such claim, demand or suit.
SECTION 84.02. In the case of any matter as to which Company or any third
party is partly at fault, the parties agree Supplier's liability under this
indemnity shall be based upon, and limited by, the extent of the fault of
Supplier compared to the extent of fault of Company and/or any third party. The
parties agree to cooperate in the defense or settlement of concurrent or joint
claims, to use their best efforts to agree privately on the sharing of fault and
the defense of claims, and, if necessary, to litigate the issue of comparative
fault and/or contribution in a tribunal o proceeding independent of claimant.
Neither party shall be bound by a settlement made by the other to which it has
not consented. Each party agrees to notify the other party within a reasonable
time of any written claims or demands against it for which the other party is
responsible hereunder.
ARTICLE LXXXV
Indemnity Obligations of Company
SECTION 85.01. In the event any Material provided by Supplier to Company
pursuant to this Agreement is integrated into or sold with or as part of any
product or system by Company, whether or not such Material is sold as a separate
part, then the Company hereby agrees to indemnify and hold harmless Supplier and
its affiliates against any losses, damages, liabilities, fines, penalties and
expenses (including reasonable attorneys fees and expenses) that arise out of or
result from Company's gross negligence or willful misconduct. Nothing will
prevent Supplier from making any claim notwithstanding that the Agreement does
not provide for indemnification by Company.
ARTICLE LXXXVI
Insurance
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SECTION 86.01. Supplier shall maintain and cause Supplier's subcontractors
to maintain during the term of this Agreement: (1) Workers' Compensation
insurance as prescribed by the law of the state or nation in which the Work is
performed; (2) employer's liability insurance with limits of at least $500,000
for each occurrence; (3) automobile liability insurance if the use of motor
vehicles is required, with limits of at least $1,000,000 combined single limit
for bodily injury and property damage per occurrence; (4) Commercial General
Liability ("CGL") insurance, ISO 1988 or later occurrence form of insurance,
including Blanket Contractual Liability and Broad Form Property Damage, with
limits of at least $1,000,000 combined single limit for bodily injury and
property damage per occurrence; and (5) if the furnishing to Company (by sale or
otherwise) of material or construction services involved, CGL insurance endorsed
to include products liability and completed operations coverage in the amount of
$3,000,000 per occurrence. All CGL and automobile liability insurance shall
designate Lucent Technologies Inc., its affiliates, and its directors, officers
and employees (all referred to as "Company") as additional insured. All such
insurance must be primary and noncontributory and required to respond and pay
prior to any other insurance or self-insurance available. Any other coverage
available to Company shall apply on an excess basis. Supplier agrees that other
coverage available to Company shall apply on an excess basis. Supplier agrees
that Supplier, Supplier's insurer(s) and anyone claiming by, through under or in
Supplier's behalf shall have no claim, right of action or right of subrogation
against Company and its customers based on any loss or liability insured against
under the foregoing insurance. Supplier and Supplier's subcontractors shall
furnish prior to the start of Work certificates or adequate proof of the
foregoing insurance, including if specifically requested by Company,
endorsements and policies. Company shall be notified in writing at least thirty
(30) days prior to cancelation of or any change in the policy. Insurance
companies providing coverage under this Agreement must be rated by A-M Best with
at least an A-rating.
ARTICLE LXXXVII
Subcontracting
SECTION 87.01. Each party may use subcontractors to perform any portion of
that party's obligations under this Supply Agreement, provided that such party
remains solely and entirely responsible for the satisfactory performance of such
obligations, including the performance of its subcontractors.
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ARTICLE LXXXVIII
Timely Performance
SECTION 88.01. If Supplier has knowledge that anything prevents or
threatens to prevent the timely performance of Supplier's obligations under this
Agreement, Supplier shall immediately notify Company's Procurement
Representative thereof and include all relevant information concerning the delay
or potential delay.
ARTICLE LXXXIX
Exclusivity of Warranties
SECTION 89.01. The warranties of Supplier set forth in this Supply
Agreement are exclusive and are in lieu of all other express and implied
warranties (except warranties of title and against infringement), including, but
not limited to, warranties of merchantability and fitness for a particular
purpose.
ARTICLE XC
Waiver
SECTION 90.01. The failure of either party at any time to enforce any right
or remedy available to it under this Supply Agreement or otherwise with respect
to any breach or failure by the other party shall not be construed to be a
waiver of such right or remedy with respect to any other breach or failure by
the other party.
ARTICLE XCI
Notices
SECTION 91.01. Any notice or demand which under the terms of this Supply
Agreement or under any statute must or may be given or made by Supplier or
Company shall be in writing and shall be given or made by confirmed facsimile,
by hand or overnight courier service, or mailed by certified or registered mail
addressed to the respective parties as follow:
To Company: Lucent Technologies Inc.
Network Systems Manufacturing Org.
Merrimack Valley Works
1600 Osgood Street, Room 30-MZC-7
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North Andover, MA 01845-1043
Attn: Mr. Edward J. Dubliel
Tel: (508) 960-4020
Fax Copies to: Lucent Technologies Inc.
67 Whippany Road, Room 1C-330B
P.O. Box 903
Whippany, NJ 07981-0903
Attn: Ms. Linda C. Manchester
Tel: (973) 386-4693
Fax: (973) 386-5072
Lucent Technologies
67 Whippany Road, Room 1C-350
Whippany, NJ 07091-0903
Attn: Mr. Brian Basarath, Product Mgr.
Fax: (201) 386-2182
Lucent Technologies
283 King George Road
Warren, NJ 07059
Attn: Mr. Kevin Brenan, Esq.
Tel: (908) 559-3133
Fax: (908) 559-2176
To Suppliers: BroadBand Technologies, Inc.
4024 Stirrup Creek Drive
P.O. Box 13737
Durham, NC 27709-3737
Attn: Chief Financial Officer
SECTION 91.02. Such notice or demand shall be deemed to have been given or
made when sent by facsimile, when delivered by hand or overnight courier or when
deposited, postage prepaid, in the U.S. mail.
SECTION 91.03. The above addresses may be changed at any time by giving
prior written notice as above provided.
ARTICLE XCII
Survival of Obligations
SECTION 92.01. The obligations of the parties under this Agreement and any
Purchase Order issued pursuant to this Agreement, which by their nature would
continue beyond the termination, cancelation or expiration of this Agreement or
Purchase Order, including, by way of illustration only and not limitation, those
in Article LXIV
<PAGE>
78
(Compliance With Laws), Article XLIV (Continuing Availability), Article LX
(Identification), Article LXXXIII (Infringement), Article LXX (Releases Void),
Article XIX (Repairs Not Covered Under Warranty), Article LXII
(Confidentiality), Article LXXXI (Confidentiality and Non-Disclosure), Article
LXXXVI (Insurance), Article LXXXIV (Indemnity), and Article XVII (Warranties),
shall survive termination, cancelation or expiration of this Agreement or
Purchase Order.
ARTICLE XCIII
Dispute Resolution
SECTION 93.01. The following procedures shall apply to any dispute or
disagreement between the Parties arising out of this Agreement.
SECTION 93.02. First:
(a) either Party may give written notification of such dispute or
disagreement to the other Party and
(b) the Parties shall communicate with each other promptly with a view to
resolving such dispute or disagreement within 21 days (or such extended period
as the Parties agree is appropriate in any case) after such written notification
is given.
SECTION 93.03. The giving of any notice regarding any dispute or
disagreement under this Article shall toll the running of all applicable
statutes of limitation until the later of (i) 90 days following the giving of
such notice or (ii) 30 days following the termination of discussions between the
Parties concerning such dispute or disagreement.
SECTION 93.04. Second, if at the end of the 21 day period referenced in
Section 93.02(b)(as it may be extended) such dispute or disagreement has not
been resolved to the satisfaction of both parties, either Party may request in
writing that such dispute or disagreement be the subject of non-binding
mediation. Following such request, the Parties shall endeavor in good faith
promptly to identify a single person (who shall be a person with experience and
good reputation) who shall assist the Parties in discussing such dispute or
disagreement and in attempting to reach a mutually acceptable business
resolution. Such mediation process shall terminate not later than 30 days
following the request therefor (or such extended or shorter period as the
Parties agree is appropriate). All applicable
<PAGE>
79
statutes of limitation shall be tolled during the period of mediation.
SECTION 93.05. Third, if at the end of the 30 day period referenced in
Section 93.04 (as it may be extended or shortened) such dispute or disagreement
has not been resolved to the satisfaction of both parties, either Party (the
"complainant") may commence binding arbitration by giving the other Party (the
"respondent") notice in writing (the "initiating notice") setting forth in
reasonable detail the nature of its claim and the relief requested stating that
the complainant is invoking the procedures set forth in Sections 93.05 and 93.06
and naming the complainant's representative on the Arbitration Panel (as defined
below). Within 21 days of receipt of an initiating notice, the respondent shall
give the complainant notice in writing (the "response") setting forth in
reasonable detail: (1) the basis of its response to the claim; (2) the nature of
any counterclaim it has against the complainant arising from the same set of
facts and circumstances that gave rise to the original claim; (3) any other
counterclaim that Party wishes to bring at that time (although the Party has no
obligation to bring such counterclaims at that time); (4) the relief requested;
and (5) naming the respondent's representative on the Arbitration Panel. The two
representatives shall select a third person who is mutually acceptable to them.
If the representatives fail to make such selection within 21 days, the
complainant and the respondent shall each replace its representative with a new
representative and the new representatives shall be subject to the preceding
sentence and this sentence. Once a third person is selected, such person
together with the representatives of the complainant and the respondent shall
form the Arbitration Panel. The date upon which the Arbitration Panel is formed
shall be the "Commencement Date".
SECTION 93.06. The Arbitration Panel shall conduct proceedings to determine
the merits under applicable law of the claims set forth in the initiating notice
and the response. The proceedings shall be administered by JAMS/Endispute in
accordance with its Comprehensive Arbitration Rules and Procedures in effect as
of the Effective Date, subject to the following additional rules:
(a) the proceedings shall take place in New York City;
(b) the Arbitration Panel (including, if necessary, any replacement(s) to
the Arbitration Panel) shall be selected as set forth in Section 93.05;
<PAGE>
80
(c) the available relief shall include damages, injunctive relief and
equitable relief to the extent allowed under the applicable law, this Agreement
and any other agreement between the parties;
(d) the parties shall attempt in good faith promptly to agree on the nature
and extent of any discovery in connection with the arbitration, provided that,
in the absence of such agreement, discovery shall be governed by
JAMS/Endispute's Comprehensive Arbitration Rules and Procedures. In addition,
the applicable law with respect to privilege and other protections from
disclosure, including the work product doctrine, shall appply.
(e) the final decision of the Arbitration Panel (the "Award") shall be
issued within six months of the Commencement Date (the date of issuance of the
Award being the "Award Date") and must be joined by at least two members of the
Arbitration Panel;
(f) each party to the proceedings shall pay its own costs in connection
with the proceedings, including the costs and expenses of its representative on
the Arbitration Panel, and the parties shall share equally the other costs of
the proceedings, including the fees of the third member of the Arbitration
Panel, except that the prevailing party shall be entitled to recover its
attorneys' fees incurred in prosecution thereof.
SECTION 93.07. In accordance with the Federal Arbitration Act, 9 U.S.C. ss.
1 et seq., the Award shall be final and binding and judgment thereon may be
entered by any state or federal court having jurisdiction thereof.
SECTION 93.08. Nothing in this Article shall be construed to preclude
either party from seeking injunctive relief in a court of competent jurisdiction
to prevent imminent irreparable harm. The dispute resolution procedures set
forth herein shall be stayed pending disposition of any application for such
relief. The Parties agree that a court of competent jurisdiction may consider
the merits of any claim that is subject to the dispute resolution procedures set
forth herein to the extent necessary to resolve any permissible application for
injunctive relief.
ARTICLE XCIV
Choice of Law
<PAGE>
81
SECTION 94.01. The construction, interpretation and performance of this
Agreement and all transactions under it shall be governed by the laws of the
State of New Jersey, excluding its choice of law rules and excluding the
Convention for the International Sale of Goods. The parties agree that the
provisions of the New Jersey Uniform Commercial code apply to this Agreement and
all transactions under it, including agreements and transactions relating to the
furnishing of services, the lease or rental of equipment or Material, and the
license of software.
ARTICLE XCV
Jurisdiction
SECTION 95.01. Supplier and Company agree that any action or legal
proceeding arising out of this Agreement shall be brought only in a court of
competent jurisdiction in the United States of America and Supplier and Company
expressly submit to, and accept the jurisdiction of, any such court in
connection with such action or proceeding and Supplier and Company further
consent to the enforcement of any judgment against either party arising
therefrom in any jurisdiction in which either party has or shall have any
assets.
ARTICLE XCVI
Headings
SECTION 96.01. The headings of the Articles and Sections in this Supply
Agreement are inserted for convenience only and are not intended to effect the
meaning or interpretation of this Agreement.
ARTICLE XCVII
Severability
SECTION 97.01. If any of the provisions of this Agreement shall be invalid
or unenforceable, such invalidity or unenforceability shall not invalidate or
render unenforceable the entire Agreement, but rather the entire Agreement shall
be construed as if not containing the particular invalid or unenforceable
provision or provisions, and the rights and obligations of Supplier and Company
shall be construed and enforced accordingly.
<PAGE>
82
ARTICLE XCVIII
Entire Agreement
SECTION 98.01. Except as otherwise agreed to in writing by the parties,
this Agreement shall constitute the entire agreement between the parties with
respect to the subject matter of this Agreement and shall supersede all
contemporaneous oral agreements and all prior oral and/or written quotations,
communications, agreements and understandings of the parties with respect to the
subject matter of this Supply Agreement. This Agreement shall not be modified or
rescinded, except by a writing signed by the party against whom the other party
is seeking to enforce a modification or recision.
ARTICLE XCIX
Counterparts
SECTION 99.01. This Supply Agreement may be executed in two or more
counterparts, and by each party on the same or different counterparts, but all
of such counterparts shall together constitute one and the same instrument and
agreement of the parties hereto.
ARTICLE C
Lost Profits
SECTION 100.01. Neither Supplier nor Company shall bring an action, claim
or suit against the other for its own lost profits arising out of any obligation
contained in this Supply Agreement, whether in an action for or arising out of
breach of contract, or tort, or in any other cause of action, except as a
counterclaim in the event that the other Party brings an action, claim or suit
against it.
ARTICLE CI
******************* Cancelations
SECTION 101.01. ********************* may cancel any purchase order, in
whole or in part, at any time after sixty (60) days from the delivery date set
forth in the applicable order. In the event that *************** cancels any or
all of such purchase orders, Company may cancel any related purchase orders
placed under this Supply Agreement. The amount of any canceled purchase orders
shall be
<PAGE>
83
credited against any other committed purchases of Supplier under this Supply
Agreement.
SECTION 101.02. In the event ************* exercises its rights under the
FSN Agreement to defer or cancel delivery of all or any portion of a purchase
order for failure to obtain required regulatory approvals, Company shall have
the corresponding right to defer or cancel delivery of all or any portion of
related purchase orders for Material upon notice to Supplier. Upon such notice,
Supplier will not ship any Material covered by such orders until Company is
authorized by ***************** and Company instructs Supplier to do so.
ARTICLE CII
Nonconformance
SECTION 102.01. In the event ********************* notifies Company that
any Software release set forth in Attachment D-1 to this Agreement has not been
delivered with the required features and/or in conformance with ***********
*********** requirements by the scheduled lab test date, the Beta Test Date, the
FSA Date, or the general availability date set forth in Attachment D-1
("Nonconformance"), Company shall promptly provide notice thereof to Supplier.
Supplier will attempt to remedy any Nonconformances within the applicable
Performance Fee Date set forth in Attachment D-1.
SECTION 102.02. Supplier and Company agree to jointly work all aspects of
development and deployment to deliver conforming Software releases to
*************** on a timely basis.
ARTICLE CIII
Disclosure of Defects
SECTION 103.01. Supplier acknowledges that, for each and every Event that
results in the disruption of ***** ********** network access and/or the services
provided by an ASE, or equivalent system, to customer of ************** for a
period of thirty (30) uninterrupted minutes per occurrence, Company is required
to notify *************** of the occurrence of an Event within twenty-four (24)
hours of Company's first knowledge of the same and, within forty-eight (48)
hours thereafter, providing a detailed written description of the following: (i)
activities which led up
<PAGE>
84
to or preceded the Event, (ii) the cause or causes of, including any and all
known contributing factors to, the Event, (iii) any and all actions taken by
Company, its agents, and contractors, and by the owner or user of the products
which are subject to the Event, to correct it, (iv) the date the Event will be
resolved, and (v) any and all measures which can be reasonably taken to avoid
the occurrence of the Event in *********************** products. Company is
further obligated to continue to provide these written descriptions to
************* every forty-eight (48) hours until such time as the Event has been
successfully resolved or until Company and *************** agree on their
discontinuance. For purposes of this Section, "products" means hardware and
software sold by Company and Supplier under the FSN Agreement and this Supply
Agreement, respectively, and other items that are manufactured and/or sold by
Company or Supplier which are the same as, or functionally or operationally
similar to, such hardware and software.
SECTION 103.02. Supplier agrees to cooperate with Company and to assist
Company in providing notifications and other information required of Company
under Section 103.01 with respect to the Material and other items that are
manufactured and/or sold by Supplier which are the same as, or functionally or
operationally similar to, such Material.
IN WITNESS WHEREOF, Company and Supplier have executed this Supply
Agreement by their authorized representatives.
Dated: February 4, 1998 LUCENT TECHNOLOGIES INC.,
by
-------------------------
BROADBAND TECHNOLOGIES, INC.,
by
-------------------------
<PAGE>
Attachment A
MATERIAL/PERFORMANCE SPECIFICATIONS
All MATERIAL performance specifications and MATERIAL delivery milestones shall
be established through the Specification Control Process administered by Company
and Supplier. This Specification Control Process shall be mutually agreed to and
be implemented within thirty (30) calendar days of the effective date of this
Agreement.
<PAGE>
ATTACHMENT B
SUPPLY AGREEMENT MATERIAL
<TABLE>
<CAPTION>
==================================================================================================================================
LUCENT BBT PRODUCT CUSTOMER CONTRACT UNIT
COMCODE NUMBER SPECIFIC PRODUCT DESCRIPTION UNIT OF MEASURE PRICE
==================================================================================================================================
<S> <C> <C> <C> <C> <C>
FLX 2500 SYSTEM SOFTWARE & LICENSES
- ----------------------------------------------------------------------------------------------------------------------------------
Release 1.0 to 2.1 for *************** only
- ----------------------------------------------------------------------------------------------------------------------------------
*********** *********** BA ************************ per FLX Shelf ********
- ----------------------------------------------------------------------------------------------------------------------------------
*********** *********** BA ************************ per FLX Shelf ********
- ----------------------------------------------------------------------------------------------------------------------------------
*********** *********** BA ************************ per FLX Shelf ********
- ----------------------------------------------------------------------------------------------------------------------------------
*********** *********** BA ************************ per FLX Shelf ********
- ----------------------------------------------------------------------------------------------------------------------------------
*********** *********** BA ************************ per FLX Shelf ********
- ----------------------------------------------------------------------------------------------------------------------------------
*********** *********** BA ************************ per FLX Shelf ********
- ----------------------------------------------------------------------------------------------------------------------------------
*********** *********** BA ************************ per FLX Shelf ********
- ----------------------------------------------------------------------------------------------------------------------------------
Release 1.0 to 1.2
- ----------------------------------------------------------------------------------------------------------------------------------
*********** *********** ************************
- ----------------------------------------------------------------------------------------------------------------------------------
*********** *********** ************************ per FLX shelf ********
- ----------------------------------------------------------------------------------------------------------------------------------
*********** *********** ************************ per FLX Shelf ********
- ----------------------------------------------------------------------------------------------------------------------------------
*********** *********** ************************ per FLX Shelf ********
- ----------------------------------------------------------------------------------------------------------------------------------
*********** *********** ************************ per FLX Shelf ********
- ----------------------------------------------------------------------------------------------------------------------------------
*********** *********** ************************ per FLX Shelf ********
- ----------------------------------------------------------------------------------------------------------------------------------
*********** *********** ************************ per FLX Shelf ********
- ----------------------------------------------------------------------------------------------------------------------------------
FLX 2500 SYSTEM TOOLS & LICENSES
- ----------------------------------------------------------------------------------------------------------------------------------
Release 1.2
- ----------------------------------------------------------------------------------------------------------------------------------
*********** *********** ************************ ********
- ----------------------------------------------------------------------------------------------------------------------------------
*********** *********** ************************ per 8 FLX Shelves ********
- ----------------------------------------------------------------------------------------------------------------------------------
*********** *********** ************************ per each Incremental FLX ********
Shelf beyond first 8 shelves
- ----------------------------------------------------------------------------------------------------------------------------------
FLX 2500 VAM EQUIPMENT SOFTWARE & LICENSES
- ----------------------------------------------------------------------------------------------------------------------------------
Release 4.0 to 4.2.5
==================================================================================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
==================================================================================================================================
LUCENT BBT PRODUCT CUSTOMER CONTRACT UNIT
COMCODE NUMBER SPECIFIC PRODUCT DESCRIPTION UNIT OF MEASURE PRICE
==================================================================================================================================
<S> <C> <C> <C> <C> <C>
*********** *********** ************************ N/A ********
- ----------------------------------------------------------------------------------------------------------------------------------
*********** *********** ************************ per FLX Shelf ********
- ----------------------------------------------------------------------------------------------------------------------------------
*********** *********** ************************ per VAM Hardware ********
- ----------------------------------------------------------------------------------------------------------------------------------
*********** *********** Hutchinson ************************ per FLX Shelf ********
- ----------------------------------------------------------------------------------------------------------------------------------
*********** *********** ************************ per VAM Hardware ********
- ----------------------------------------------------------------------------------------------------------------------------------
*********** *********** BA ************************ per VAM Hardware ********
- ----------------------------------------------------------------------------------------------------------------------------------
*********** *********** BA ************************ per FLX Shelf ********
- ----------------------------------------------------------------------------------------------------------------------------------
*********** *********** ************************ per 100 Channels ********
- ----------------------------------------------------------------------------------------------------------------------------------
FLX 2500 VAM TOOLS & LICENSES
- ----------------------------------------------------------------------------------------------------------------------------------
Release 1.0
- ----------------------------------------------------------------------------------------------------------------------------------
*********** *********** ************************ per VAM Hardware ********
- ----------------------------------------------------------------------------------------------------------------------------------
*********** *********** ************************ per VAM Hardware ********
- ----------------------------------------------------------------------------------------------------------------------------------
*********** *********** ************************ per VAM Hardware ********
- ----------------------------------------------------------------------------------------------------------------------------------
*********** *********** ************************ per VAM Hardware ********
- ----------------------------------------------------------------------------------------------------------------------------------
FLX SHELF MECHANICALS
- ----------------------------------------------------------------------------------------------------------------------------------
*********** *********** ************************ each ********
- ----------------------------------------------------------------------------------------------------------------------------------
*********** *********** ************************ each ********
- ----------------------------------------------------------------------------------------------------------------------------------
*********** *********** ************************ each ********
- ----------------------------------------------------------------------------------------------------------------------------------
*********** *********** ************************ each ********
- ----------------------------------------------------------------------------------------------------------------------------------
*********** *********** ************************ each ********
- ----------------------------------------------------------------------------------------------------------------------------------
*********** *********** ************************ each ********
- ----------------------------------------------------------------------------------------------------------------------------------
*********** *********** ************************ each ********
- ----------------------------------------------------------------------------------------------------------------------------------
*********** *********** ************************ each ********
- ----------------------------------------------------------------------------------------------------------------------------------
*********** *********** ************************ each ********
- ----------------------------------------------------------------------------------------------------------------------------------
FLX SHELF PLUG-INS
- ----------------------------------------------------------------------------------------------------------------------------------
*********** *********** ************************ each ********
==================================================================================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
==================================================================================================================================
LUCENT BBT PRODUCT CUSTOMER CONTRACT UNIT
COMCODE NUMBER SPECIFIC PRODUCT DESCRIPTION UNIT OF MEASURE PRICE
==================================================================================================================================
<S> <C> <C> <C> <C> <C>
*********** *********** ************************ each ********
- ----------------------------------------------------------------------------------------------------------------------------------
*********** *********** ************************ each ********
- ----------------------------------------------------------------------------------------------------------------------------------
*********** *********** ************************ each ********
- ----------------------------------------------------------------------------------------------------------------------------------
*********** *********** ************************ each ********
- ----------------------------------------------------------------------------------------------------------------------------------
*********** *********** ************************ each ********
- ----------------------------------------------------------------------------------------------------------------------------------
*********** *********** ************************ each ********
- ----------------------------------------------------------------------------------------------------------------------------------
*********** *********** ************************ each ********
- ----------------------------------------------------------------------------------------------------------------------------------
FLX NODE
- ----------------------------------------------------------------------------------------------------------------------------------
*********** ************************ each ********
- ----------------------------------------------------------------------------------------------------------------------------------
*********** *********** ************************ each ********
- ----------------------------------------------------------------------------------------------------------------------------------
*********** *********** ************************ each ********
- ----------------------------------------------------------------------------------------------------------------------------------
*********** *********** ************************ each ********
- ----------------------------------------------------------------------------------------------------------------------------------
*********** *********** ************************ each ********
- ----------------------------------------------------------------------------------------------------------------------------------
*********** *********** ************************ each ********
- ----------------------------------------------------------------------------------------------------------------------------------
*********** *********** BA ************************ each ********
- ----------------------------------------------------------------------------------------------------------------------------------
*********** *********** BA ************************ each ********
- ----------------------------------------------------------------------------------------------------------------------------------
*********** *********** ************************ each ********
- ----------------------------------------------------------------------------------------------------------------------------------
*********** *********** ************************ each ********
- ----------------------------------------------------------------------------------------------------------------------------------
*********** *********** ************************ each ********
- ----------------------------------------------------------------------------------------------------------------------------------
*********** *********** ************************ each ********
- ----------------------------------------------------------------------------------------------------------------------------------
*********** *********** BA ************************ each ********
- ----------------------------------------------------------------------------------------------------------------------------------
POWER EQUIPMENT
- ----------------------------------------------------------------------------------------------------------------------------------
*********** *********** Hutchinson ************************ each ********
- ----------------------------------------------------------------------------------------------------------------------------------
*********** *********** Hutchinson ************************ each ********
- ----------------------------------------------------------------------------------------------------------------------------------
*********** *********** Hutchinson ************************ each ********
- ----------------------------------------------------------------------------------------------------------------------------------
*********** *********** Hutchinson ************************ each ********
- ----------------------------------------------------------------------------------------------------------------------------------
*********** *********** Hutchinson ************************ each ********
==================================================================================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
==================================================================================================================================
LUCENT BBT PRODUCT CUSTOMER CONTRACT UNIT
COMCODE NUMBER SPECIFIC PRODUCT DESCRIPTION UNIT OF MEASURE PRICE
==================================================================================================================================
<S> <C> <C> <C> <C> <C>
CROSS CONNECT EQUIPMENT
- ----------------------------------------------------------------------------------------------------------------------------------
*********** *********** RCN ************************ each ********
- ----------------------------------------------------------------------------------------------------------------------------------
*********** *********** RCN ************************ each ********
- ----------------------------------------------------------------------------------------------------------------------------------
*********** *********** RCN ************************ each ********
- ----------------------------------------------------------------------------------------------------------------------------------
*********** *********** RCN ************************ each ********
- ----------------------------------------------------------------------------------------------------------------------------------
CUSTOMER PREMISE EQUIPMENT
- ----------------------------------------------------------------------------------------------------------------------------------
Pre-Packaged Assemblies
- ----------------------------------------------------------------------------------------------------------------------------------
*********** *********** ************************ each ********
- ----------------------------------------------------------------------------------------------------------------------------------
*********** *********** ************************ each ********
- ----------------------------------------------------------------------------------------------------------------------------------
*********** *********** ************************ each ********
- ----------------------------------------------------------------------------------------------------------------------------------
*********** *********** ************************ each ********
- ----------------------------------------------------------------------------------------------------------------------------------
Individually Orderable Spares
- ----------------------------------------------------------------------------------------------------------------------------------
*********** *********** ************************ each ********
- ----------------------------------------------------------------------------------------------------------------------------------
*********** *********** ************************ each ********
- ----------------------------------------------------------------------------------------------------------------------------------
*********** *********** ************************ each ********
- ----------------------------------------------------------------------------------------------------------------------------------
*********** *********** ************************ each ********
- ----------------------------------------------------------------------------------------------------------------------------------
*********** *********** ************************ each ********
- ----------------------------------------------------------------------------------------------------------------------------------
*********** *********** ************************ each ********
- ----------------------------------------------------------------------------------------------------------------------------------
*********** *********** ************************ each ********
- ----------------------------------------------------------------------------------------------------------------------------------
*********** *********** ************************ each ********
- ----------------------------------------------------------------------------------------------------------------------------------
*********** *********** ************************ each ********
- ----------------------------------------------------------------------------------------------------------------------------------
*********** *********** ************************ each ********
==================================================================================================================================
</TABLE>
* Base items not subject to 10% commission
** Customer Premise Equipment has a 24 month warranty from FOB Point
+ Company and Supplier shall negotiate discounts within 60 days of the
effective date of the Agreement
++ This hardware is beyond Release 1.2
<PAGE>
ATTACHMENT B
Other Materials
Notwithstanding anything in this Agreement or its Attachments to the contrary,
any existing Supplier products, or products previously promised by Supplier, or
any of its employees or agents to a Customer not listed herein that is required
by Company to fulfill its Customer Obligations shall be provided by Supplier at
a price equal to Supplier's **** ********
<PAGE>
Attachment C
REPAIR AND FIELD SERVICE TECHNICAL SUPPORT PRICES
Out-of-Warranty or customer damaged MATERIAL repair charges shall be a minimum
of ***** of the current contract price, or **********, whichever is greater.
MATERIAL returned to SUPPLIER for repair with No Trouble Found shall incur a
********* handling charge.
Telephone Technical Support: No charge during WARRANTY period for MATERIAL
Beyond the WARRANTY period, no charge for calls received during SUPPLIER'S
normal work hours*. Calls received during non-working hours will be billed at a
rate of ********* per hour ** with
************************.
One-site Engineering at ********* per hour** per person Field Service Technical
Support, Monday through Friday, with ***************** per person ***. The rate
for weekends and holidays is ********* per hour.
* Supplier's normal work hours are 8:00 AM to 6:00 PM Eastern Standard
Time, Monday through Friday, except for holidays.
** Hourly rates shown are good through 12/31/99.
*** Billable time is calculated portal to portal. Any travel and lodging
expenses will be additional, as required.
<PAGE>
*************************
EXHIBIT D-1
<TABLE>
<CAPTION>
DELIVERY PERFORMANCE DAILY PERFORMANCE
DATE FEE DATE FEE FEE CAP
---- -------- --- -------
<S> <C> <C> <C> <C>
PRERELEASE LAB: ****************** ***** ***** *****
********************************************************
RELEASE 1.0 LAB: ************** ************** ************** **************
FSA: ************** ************** ************** **************
********************************************************
RELEASE 1.0.1 LAB: ************** ************** ************** **************
FSA: ************** ************** ************** **************
GA: ************** ************** ************** **************
********************************************************
ONU-32 Housing FSA: ************** ************** ************** **************
FLX Node-32 FSA: ************** ************** ************** **************
RELEASE 1.1 Pre-rels LAB: ************** ************** ************** **************
LAB: ************** ************** ************** **************
BETA: ************** ************** ************** **************
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
DELIVERY PERFORMANCE DAILY PERFORMANCE
DATE FEE DATE FEE FEE CAP
---- -------- --- -------
<S> <C> <C> <C> <C>
FSA: ************** ************** ************** **************
GA: ************** ************** ************** **************
********************************************************
RELEASE 1.2 FSA: **************
GA: **************
********************************************************
RELEASE 1.2.1* LAB: ************** ************** ************** **************
FSA: ************** ************** ************** **************
GA: ************** ************** ************** **************
********************************************************
RELEASE 2.0 LAB: ************** ************** ************** **************
FSA: ************** ************** ************** **************
GA: ************** ************** ************** **************
********************************************************
RELEASE 2.1 LAB: ************** ************** ************** **************
FSA: ************** ************** ************** **************
GA: ************** ************** ************** **************
********************************************************
</TABLE>
<PAGE>
******
******************************************************************
****************************
***********************************************************************
********************************************************
***********************************************
***********************************************************************
***********************************************************************
*******************
****************************************************************
*********************************************************
*****************************************************************
***********************************
***************************************
**************************************************************
***************************************
***************************************
***************************************
**************************************************************
**************************************************************
**************************************************************
**************************************************************
**************************************************************
**************************************************************
**************************************************************
<PAGE>
SBC, RCN, Telus
EXHIBIT D-2
<TABLE>
<CAPTION>
DELIVERY
DATE
----
<S> <C>
PRERELEASE LAB: *********************
***************************************************
RELEASE 1.0 LAB: *********************
FSA: *********************
***************************************************
RELEASE 1.0.1 LAB: *********************
FSA: *********************
GA: *********************
***************************************************
ONU-32 Housing FSA: *********************
FLX Node-32 FSA: *********************
RELEASE 1.1 Pre-rels LAB: *********************
LAB: *********************
BETA: *********************
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
DELIVERY
DATE
----
<S> <C>
FSA: *********************
GA: *********************
***************************************************
RELEASE 1.2 FSA: *********************
GA: *********************
***************************************************
</TABLE>
<PAGE>
******
********************************************************************************
****************************
***********************************************************************
********************************************************
***********************************************
***********************************************************************
***********************************************************************
*******************
****************************************************************
*********************************************************
***********************************************************************
***********************************
*****************************************************
**************************************************************
*****************************************************
*****************************************************
*************************************************
**************************************************************
**************************************************************
**************************************************************
**************************************************************
**************************************************************
**************************************************************
**************************************************************
<PAGE>
Attachment E
ENGINEERING CHANGE CONTROL PROCEDURES
Supplier agrees to perform and administer all "Product Changes" in accordance
with Bell Communications Research document GR 209 CORE, Issue 2, January 1996,
titled "Generic Requirements for Product Change Notices", which is incorporated
herein by reference.
Supplier may make changes to MATERIAL, modify drawings, or make changes to
manufacturing specifications, provided the changes, modifications, or
substitutions DO NOT have an impact on the performance, reliability, form, fit,
or function of the MATERIAL without prior notification to Company. Supplier
shall maintain written records of all such changes, and make these records
available for Company's review upon request.
For such changes or modifications which DO have an impact on performance,
reliability, form, fit, or function, Supplier shall identify each such change or
modification in accordance with the classifications contained in the above Bell
Communications Research document via a Product Change Notification (PCN) form.
The Company shall immediately acknowledge receipt of the PCN to the
address/contact as stated on the PCN form and shall have thirty (30) calendar
days to advise Supplier if the proposed change or modification is unacceptable.
If Company notifies Supplier as required herein, that the proposed change or
modification is unacceptable, Supplier shall not implement such change or
modification. Company may reject any MATERIAL offered by Supplier which has been
changed or modified in a manner unacceptable to Company.
If Company has not notified Supplier that the change or modification is
unacceptable within thirty (30) calendar days following issuance of the Change
Notification, Supplier shall implement the change or modification as described
in the Change Notification.
If during the review of a proposed Product Change Notification, which has a
classification of either A or AC, issued by Supplier during the Warranty period
of the affected MATERIAL, the Company determines that implementation of the
PRODUCT CHANGE will cause the Company to incur "unreasonable expenses" such as,
but not limited to, expenses resulting from escorting Supplier's personnel to
numerous Company locations containing affected MATERIFAL or repeated product
changes to the same item of MATERIAL within a one (1) year time period, the
Company shall so notify Supplier, in writing, prior to the implementation of
such PRODUCT CHANGE. Upon such notification, the Company and Supplier shall
jointly determine the implementation procedure which will utilize the Supplier's
and/or Company's personnel in the most cost effective manner.
<PAGE>
If Supplier and the Company conclude the agreed to implementation procedure will
probably cause the Company to incur "unreasonable expenses", the Company and
Supplier shall jointly determine the likely extent of such expenses and agree,
in writing, to a "not to exceed" estimate for such expenses. In no event shall
such estimate exceed the Company's purchase price for the MATERIAL to be
changed. The Company shall track and record all such expenses associated with
the PRODUCT CHANGE. Upon completion of its efforts, the Company shall submit to
Supplier, for reimbursement by Supplier, an invoice of the Company's
"unreasonable expenses" within forty-five (45) calendar days after the Company's
receipt of such invoice.
Issuing a Class A or AC product Change Notification shall not constitute an
agreement to provide such a change, but shall be construed as a recommendation
by the Supplier that the change is absolutely necessary.
<PAGE>
Lucent Technologies 09-22-97
Warranty Eligibility System
Warranty Eligibility System (WES)
Transaction
The Warranty Eligibility System (WES) tracks a serialized product from
manufacturing to the customer and provides up-to-date information about the
product's warranty status. In order to accomplish this, WES receives data from
entities whose functions affect an item's warrantability.
At the end of the manufacturing, shipping, or repair processes, information
about an item will be sent to WES for inclusion on the Warranty Database. This
file can be sent to WES using
1) UNIX file transfer at,
/usr/spool/uucppublic/receive/wes/origsystem/WESXXNNNN
where origsystem is the UNIX machine originating the file XX is a
location code entry in the location table and NNNN is the sequence
number on the header record.
2) or by placing the formatted file on a floppy disk and mailing the disk
directly to the WES group at:
Lucent Technologies
Westwood of Lisle
Attn.: L. Fitzgerald
2443 Warrenville Rd.
Lisle, IL 60532
Batch files received for processing by WES must be processed by a Header Record
as attached. Following the Data Records must be a Trailer Record also attached.
The Header and Trailer Records are interrogated by WES and messages are returned
to the sending location indicating the status of each file transmitted to WES.
These files should be sent at least once a week, depending on volume, in order
to keep the database current. That data needs to be formatted as shown on the
following page.
HEADER RECORD
LUCENT TECHNOLOGIES, INC. - PROPRIETARY
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<PAGE>
Lucent Technologies 09-22-97
Warranty Eligibility System
COLUMN FIELD SIZE FIELD CONTENT COMMENTS
- ------ ---------- ------------- --------
1-5 (05) Transaction Code &&HDR
6 (01) Blank
7-14 (08) Source of Input Job Name of Feeder
15 (01) Blank
16-19 (04) Transmission Sequence Zero Filled
Number Right Justified
20 (01) Blank
21-26 (06) Time HHMMSS
27 (01) Blank
28-33 (06) Date MMDDYY
34-123 (90) Blank
124-125 (02) Originating Location Location that
Originates this
Transaction
ALL ALPHA REPRESENTATION SHOULD BE CAPITALIZED
TRAILER RECORD
LUCENT TECHNOLOGIES, INC. - PROPRIETARY
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<PAGE>
Lucent Technologies 09-22-97
Warranty Eligibility System
COLUMN FIELD SIZE FIELD CONTENT COMMENTS
- ------ ---------- ------------- --------
1-5 (05) Transaction Code &&TLR
6 (01) Blank
7-12 (06) Record Count
13-125 (113) Blank
ALL ALPHA REPRESENTATION SHOULD BE CAPITALIZED
ADD TRANSACTION FORMAT
COLUMN FIELD SIZE FIELD CONTENT COMMENTS
- ------ ---------- ------------- --------
LUCENT TECHNOLOGIES, INC. - PROPRIETARY
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<PAGE>
Lucent Technologies 09-22-97
Warranty Eligibility System
1) 1 (01) Transaction Code A
2) 2-13 (12) Item Serial Number
3) 14-23 (10) Order Number AT&T Order
Number
24-38 (15) Blank
4) 39-44 (06) Manufacture Ship Date MMDDYY
5) 45-56 (12) Blank
6) 57-61 (05) Product Line Left Justified
7) 62-86 (25) Product Identification
Number
87-123 (37) Blank
8) 124-125 (02) Originating Location Location that
Originated
Transaction
ALL ALPHA REPRESENTATION SHOULD BE CAPITALIZED
1) One digit code representing the transaction to be performed by WES, i.e. A
= Add, R = Repair, etc.
2) The twleve (12) digit number assigned to each unique product manufactured.
Includes a two or three digit manufacturing number (vendor code) as
described in KS-23490.
Example - 12 Digit Serial Number with a two (2) digit manufacturing id
number 9T
2 Characters last two digits of the year
2 Characters manufacturing identification number (vendor code)
2 Characters month (01 to 12) or fiscal week (21 to 72)
6 Characters sequential serial number
i.e. First Product Manufactured in March of 1997 = 979T03000001
Example - 12 Digit Serial Number with a three (3) digit manufacturing
id number of A0J
2 Characters last two digits of the year
2 Characters manufacturing identification number (vendor code)
2 Characters month (01 to 12) or fiscal week (21 to 72)
1 Character last digit of the manufacturing id number (vendor
code)
5 Characters sequential serial number
ie. First Product Manufactured in March of 1997 = 97A003J00001.
3) The identifier of an order placed by a customer.
4) The date an item was shipped from manufacturing. The format is MMDDYY.
LUCENT TECHNOLOGIES, INC. - PROPRIETARY
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<PAGE>
Lucent Technologies 09-22-97
Warranty Eligibility System
5) The item serial number of the equipment that the current item is embedded in.
6) A five character identifier used to distinguish product for determining
warranty, which is assigned by the product manager in agreement with WES.
7) The product identification number assigned by the product manager which
consists of the comcode. Left justified.
8) Location which originates the transaction.
SES TRANSACTION FORMAT
COLUMN FIELD SIZE FIELD CONTENT COMMENTS
------ ---------- ------------- --------
LUCENT TECHNOLOGIES, INC. - PROPRIETARY
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<PAGE>
Lucent Technologies 09-22-97
Warranty Eligibility System
1) 1 (01) Transaction Code C
2) 2-13 (12) Item Serial Number
3) 14-23 (10) Order Number SES Order
Number
24-38 (15) Blank
4) 39-44 (06) Ship Date MMDDYY
45 (01) Blank
5) 46-51 (06) RMA Number (B-Spec)
6) 52-55 (04) Item Number (Main Item) Right Justified
w/leading zeros
56 (01) Blank
7) 57-61 (05) Product Line Left Justified
8) 62-86 (25) Product Identification
Number
87-123 (37) Blank
9) 124-125 (02) Originating Location Location that
Originated this
Transaction
ALL ALPHA REPRESENTATION SHOULD BE CAPITALIZED
SES SHIP TRANSACTION FORMAT
cont'd
1) One digit code representing the transaction to be performed by WES, i.e. C =
SES Ship, A = Add, etc.
LUCENT TECHNOLOGIES, INC. - PROPRIETARY
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<PAGE>
Lucent Technologies 09-22-97
Warranty Eligibility System
2) The number assigned to each unique product produced by factory. Includes a
two digit manufacturing identification number (assigned by the product manager
in agreement with WES) used in positions 3 and 4 of the 12 character serial
number as described in KS-23490.
3) The identifier of an order placed by a customer.
4) The date an item was shipped. The format is MMDDYY.
5) The returned material authorization item number.
6) Item number on the returned material authorization.
7) A five character identifier used to distinguish product for determining
warranty, which is assigned by the product manager in agreement with WES.
8) The product identification number assigned by the product manager which
consists of the comcode. Left justified.
9) Location which originates the transaction.
RGM TRANSACTION FORMAT
COLUMN FIELD SIZE FIELD CONTENT COMMENTS
------ ---------- ------------- --------
1) 1 (01) Transaction Code G
LUCENT TECHNOLOGIES, INC. - PROPRIETARY
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<PAGE>
Lucent Technologies 09-22-97
Warranty Eligibility System
2) 2-13 (12) Item Serial Number
3) 14-23 (10) Order Number AT&T
Order Number
24-38 (15) Blank
4) 39-44 (06) Returned Date MMDDYY
45-123 (79) Blank
5) 124-125 (02) Originating Location Location that
Originated
Transaction
ALL ALPHA REPRESENTATION SHOULD BE CAPITALIZED
1) One digit code representing the transaction to be performed by WES, i.e. A =
Add, G = RGM, etc.
2) The number assigned to each unique product produced by factory. Includes a
two digit manufacturing identification number (assigned by the product manager
in agreement with WES) used in positions 3 and 4 of the 12 character serial
number as described in KS-23490.
3) The identifier of an order placed by a customer.
4) The date an item was returned accompanied by a returned good memorandum or an
SES exchange.
5) Location which originates the transaction.
MMC SHIP TRANSACTION FORMAT
COLUMN FIELD SIZE FIELD CONTENT COMMENTS
------ ---------- ------------- --------
1) 1 (01) Transaction Code M
2) 2-13 (12) Item Serial Number
LUCENT TECHNOLOGIES, INC. - PROPRIETARY
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<PAGE>
Lucent Technologies 09-22-97
Warranty Eligibility System
3) 14-23 (10) Order Number Number
24-38 (15) Blank
4) 39-44 (06) MMC Ship Date MMDDYY
45-61 (17) Blank
5) 62-86 (25) Product Identification Left Justified
Number
6) 87-91 (05) Product Line
92-123 (32) Blank
7) 124-125 (02) Originating Location Location that
Originated
Transaction
ALL ALPHA REPRESENTATION SHOULD BE CAPITALIZED
1) One digit code representing the transaction to be performed by WES, i.e. A =
Add, R = Repair, M = MMC Ship, etc.
2) The number assigned to each unique product produced by factory. Includes a
two digit manufacturing identification number (assigned by the product manager
in agreement with WES) used in positions 3 and 4 of the 12 character serial
number as described in KS-23490.
3) The identifier of an order placed by a customer.
4) The date an item was shipped from the MDC or Service center.
5) The product identification number assigned by product manager which consists
of the comcode. Left justified.
6) Up to five character code used to distinguish product for determining
warranty, which is assigned by the product manager in agreement with WES.
7) Location which originates the transaction.
REPAIR TRANSACTION FORMAT
COLUMN FIELD SIZE FIELD CONTENT COMMENTS
------ ---------- ------------- --------
1) 1 (01) Transaction Code R
2) 2-13 (12) Item Serial Number
3) 14-23 (10) Repair Order Number
LUCENT TECHNOLOGIES, INC. - PROPRIETARY
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<PAGE>
Lucent Technologies 09-22-97
Warranty Eligibility System
4) 24-38 (15) Customer Repair Order
Number
5) 39-44 (06) Repair Date MMDDYY
45-56 (12) Cust. Order Number
(overflow)
6) 57-61 (05) Product Line Left Justified
7) 62-86 (25) Product Identification
Number
8) 87-101 (15) Circuit Pack Code
or Microcode
9) 102-113 (12) Circuit Pack Series
or Issue of Microcode
114-116 (03) Blank
10) 117 (01) Repair Code
11) 118-119 (02) Manufacturing Location *
12) 120-123 (04) Manufacturing Date
13) 124-125 (02) Originating Location
ALL ALPHA REPRESENTATION SHOULD BE CAPITALIZED
* Location of manufacture required for 00LL00SSSSSS Item Serial Numbers.
LL is the location code for the site affixing the label
SSSSSS is the next serial number to be assigned by the location.
This format is only valid when the item was not previously bar-coded.
REPAIR TRANSACTION FORMAT
cont'd
1) One digit code representing the transaction to be performed by WES, i.e. A =
Add, R = Repair, etc.
2) The number assigned to each unique product produced by factory. Includes a
two digit manufacturing identification number (assigned by the product manager
in agreement with WES) used in positions 3 and 4 of the 12 character serial
number as described in KS-23490.
LUCENT TECHNOLOGIES, INC. - PROPRIETARY
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<PAGE>
Lucent Technologies 09-22-97
Warranty Eligibility System
3) This is the order number the item was repair under, not the one it was
initially order under.
4) The customer's identifier for their repair order.
5) Date the item was repaired.
6) A five character used to distinguish product for determining warranty, which
is assigned by the product manager in agreement with WES.
7) The product identification number assigned by product manager which consists
of the comcode. Left justified.
8) Apparatus code assigned for identification of product at cpcode level.
9) Production level of the cpcode.
10) The code that indicates what type of action was taken by repair organization
to satisfy the customer's repair order. The possible values are:
A = not repairable
K = no trouble found
R = trouble found (repairable)
11) Two digit code indicating place of manufacture.
12) Date of manufacture. MMYY
13) Location which originates the transaction.
SUBSTITUTE TRANSACTION FORMAT
COLUMN FIELD SIZE FIELD CONTENT COMMENTS
------ ---------- ------------- --------
1) 1 (01) Transaction Code S
2) 2-13 (12) Replaced Item Serial No.
3) 14-23 (10) Repair Order No.
LUCENT TECHNOLOGIES, INC. - PROPRIETARY
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<PAGE>
Lucent Technologies 09-22-97
Warranty Eligibility System
4) 24-38 (15) Customer Order No.
5) 39-44 (06) Substitute Date MMDDYY
6) 45-56 (12) Replacing Item Serial No.
7) 57-61 (05) Product Line Product Line
Left Justified
8) 62-86 (25) Product Identification
87-98 (12) Cust. Order No. (overflow)
99-123 (25) Blank
9) 124-125 (02) Originating Location Location that
Originated
Transaction
ALL ALPHA REPRESENTATION SHOULD BE CAPITALIZED
SUBSTITUTE TRANSACTION FORMAT
cont'd
1) One digit code representing the transaction to be performed by WES, i.e. A =
Add, R = Repair, S = Substitute, etc.
2) Serial number of product returned by customer or installer. Format same as
item serial number.
3) Required if item is to be added to database.
4) The customer's identifier for their repair order.
LUCENT TECHNOLOGIES, INC. - PROPRIETARY
Use Purusuant to Company Instruction
<PAGE>
Lucent Technologies 09-22-97
Warranty Eligibility System
5) Data substitution was made.
6) Item serial number of product the repair organization returned to a customer,
product withdrawn from an installation pool and added to an order, item sent in
by customer on a spares exchange. Format same as item serial number.
7) A five character used to distinguish product for determining warranty, which
is assigned by the product manager in agreement with WES.
8) Replacing serial number's product identification number assigned by product
manager which consists of the comcode. Left justified.
9) Location which originates the transaction.
LUCENT TECHNOLOGIES, INC. - PROPRIETARY
Use Purusuant to Company Instruction
<PAGE>
EXHIBIT G
Escrow Agreement
This Escrow Agreement is entered into and effective as of February _____,
1998 ("Effective Date") by and among BroadBand Technologies, Inc. ("BBT") having
its principal place of business at 4024 Stirrup Creek Drive, Durham, North
Carolina 27709-3737, and Lucent Technologies Inc. ("Lucent"), having its
principal place of business at 600 Mountain Avenue, Murray Hill, New Jersey
07974, and Fort Knox Escrow Services, Inc. ("Escrow Agent"), having its
principal place of business at 3539-A Church Street, Clarkston, Georgia
30021-1717.
WHEREAS, BBT has granted a license to Lucent to use certain computer
software and manufacturing information pursuant to the terms and conditions of
that certain SDBAS Supply Agreement between BBT and Lucent, dated as of February
4, 1998 (the "Supply Agreement"); and
WHEREAS, the uninterrupted availability of the computer software and
manufacturing information is critical to Lucent in the conduct of its business;
and
WHEREAS, BBT has agreed to deposit in escrow a copy of the source code form
of all computer programs and a copy of the manufacturing information used in the
design and manufacture of Material and Parts (as such terms are defined in the
Supply Agreement), including the Technical Information (as such term is defined
in the Supply Agreement), all relevant commentary, explanations and other
documentation (collectively the "Software and Manufacturing Information"), as
well as any corrections, enhancements, and periodic updates to such Software and
Manufacturing Information, to be held by Escrow Agent in accordance with the
terms and conditions of this Escrow Agreement.
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
and other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties agree as follows:
Section 1.0 Deposit.
(a) This agreement replaces and supercedes the escrow agreement between
BBT, Lucent and Escrow Agent dated July 31, 1996 (the "Prior Agreement"), which
is considered canceled. Escrow Agent is instructed to return to BBT all
information deposited by BBT under the Prior Agreement. BBT shall immediately
deposit the returned materials with Escrow Agent pursuant to this Escrow
Agreement.
(b) To the extent not already deposited pursuant to Section 1.0(a), BBT
shall deposit with Escrow Agent a copy of the Software and Manufacturing
Information within thirty (30) days after the Effective Date. BBT also agrees to
deposit with Escrow Agent, at such times as they are made, a copy of all
revisions to the Software and Manufacturing Information encompassing all
corrections, modifications, updates or enhancements made to the Software and
Manufacturing Information by or on behalf of BBT as soon as
<PAGE>
practicable after such corrections, modifications, updates or enhancements have
been developed and accepted by the customer. Simultaneous with the delivery to
Escrow Agent of the Software and Manufacturing Information or any revisions
thereof, BBT shall deliver to Escrow Agent and to Lucent a written statement
specifically identifying all items deposited and stating that Software and
Manufacturing Information or revisions, as the case may be, so deposited are
completed and accurate. Promptly after any such revision is deposited with
Escrow Agent, both BBT and the Escrow Agent shall give written notice thereof to
Lucent.
(c) For each Material and its corresponding Parts, BBT shall create a
separate complete package of Software and Manufacturing Information used in the
design and manufacture of such Material and corresponding Parts and deposit all
such packages with the Escrow Agent. Each package shall be clearly labeled to
indicate the Material and Parts to which the package relates. Similarly, BBT
shall package and label all corrections, enhancements and periodic updates
according to the Material and Parts to which such corrections, enhancements and
periodic updates relate.
Section 2.0 Term.
Except as provided in this section, this Escrow Agreement shall remain in
effect from the Effective Date through the later of: (a) the expiration or
earlier termination of all continuing sale and/or support obligations of BBT
pursuant to the SDBAS Supply Agreement entered into by BBT and Lucent as of
February 4, 1998, or (b) the expiration or earlier termination of that certain
Procurement Agreement dated as of July 1, 1996, between Bell Atlantic Corp. and
BBT ("the Companion Agreement"). Termination hereof is automatic upon delivery
of all (but not less than all) of the deposited Software and Manufacturing
Information to Lucent in accordance with the provisions hereof.
Section 3.0 Default.
A default by BBT shall be deemed to have occurred under this Escrow
Agreement upon the occurrence of any of the following:
(a) if BBT has availed itself of, or been subjected to by any third party,
a proceeding in bankruptcy in which BBT is the named debtor, an assignment by
BBT for the benefit of its creditors, the appointment of a receiver for BBT, or
any other proceeding involving insolvency of the protection of, or from,
creditors, provided, however, if the action is initiated by a party other than
BBT, BBT shall have sixty (60) days to terminate the proceedings before a
default shall be deemed to have occurred; or
(b) if BBT has ceased fro at least thirty (30) days its on-going business
operations or sale, licensing, maintenance or other support of the Materials or
Parts; or
(c) if BBT materially fails to supply Materials or Parts under the Supply
Agreement or the Companion Agreement.
Section 4.0 Notice of Default.
<PAGE>
(a) Lucent shall give written notice to Escrow Agent and BBT of the
occurrence of a default hereunder. If the event of default is one described in
paragraph (b) or (c) of Section 3.0 hereof, Lucent shall specify in the written
notice to Escrow Agent and BBT the specific Materials which BBT has ceased to
sell, license, maintain or support (in the case of paragraph (b)) or which BBT
fails materially to supply (in the case of paragraph (c)).
(b) Unless within ten (10) business days BBT files with the Escrow Agent
its affidavit executed by a responsible executive officer stating that the
default has been cured or has not occurred, then the Escrow Agent shall upon the
eleventh (11th) business day deliver to Lucent in accordance with Lucent's
instructions: (1) the entire Software and Manufacturing Information then being
held by the Escrow Agent if the event of default is one described in paragraph
(a), or if BBT has ceased for at least thirty (30) days its ongoing business
operations under paragraph (b); or (2) the Software and Manufacturing
Information then being held by the Escrow Agent for Materials identified in
Lucent's notice under Section 4.0(a) to Escrow Agent and BBT if the default is
one described in paragraph (b) for other than a ceasing of business or one
described in paragraph (c) of Section 3.0.
(c) Nothing in this Agreement shall have any effect on the rights of Lucent
to use any Software and Manufacturing Information, which right is defined in
other agreement(s) between BBT and Lucent.
Section 5.0 Compensation.
As compensation for the services to be performed by Escrow Agent hereunder,
Lucent shall pay to Escrow Agent reasonable fees to be agreed upon before
execution of this document by Lucent and escrow agent.
Section 6.0 Liability.
Escrow Agent shall not, by reason of its execution of its Agreement, assume
any responsibility or liability for any transaction between BBT and Lucent,
other than the performance of its obligations, as Escrow Agent, with respect to
the Software and Manufacturing Information held by it in accordance with this
Agreement. Escrow Agent will not be liable for special, indirect, incidental or
consequential damages hereunder.
Section 7.0 Tests.
Upon written notice to BBT and Escrow Agent, Lucent shall have the right to
conduct tests of the Software and Manufacturing Information held in escrow, no
more than quarterly, under the supervision of BBT, to confirm that it is the
current Software and Manufacturing Information for the Materials and Parts
specified in the Supply Agreement and the Companion Agreement.
Section 8.0 Confidentiality.
<PAGE>
Except as provided in this Agreement, Escrow Agent agrees that it shall not
divulge or disclose or otherwise make available to any third person whatsoever,
or make any use whatsoever, of the Software and Manufacturing Information,
without the express prior written consent of BBT.
Section 9.0 Address.
All notices or other communications required or contemplated herein shall
be in writing, sent by certified mail, return receipt requested, addressed to
another party at the address indicated below or as same may be changed from time
to time by notice similarly given:
If to BBT: BroadBand Technologies, Inc.
4024 Stirrup Creek Drive
Durham, North Carolina 27709-3737
Attention: David Austin
If to Lucent: Lucent Technologies Inc.
Room 4M-530
101 Crawford Corner Road
Holmdel, New Jersey 007733
Attention: David Spear
If to Escrow Agent: Fort Knox Escrow Services, Inc.
3539-A Church Street
Clarkston, Georgia 30021-1717
Attention: Contractor
Administrator
Section 10.0 Indemnity.
Lucent and BBT shall, jointly and severally, indemnify and hold harmless
Escrow Agent and each of its directors, officers, agents, employees and
stockholders ("Escrow Agent Indemnities") absolutely and forever, from and
against any and all claims, actions, damages, suits, liabilities, obligations,
costs, fees, charges, and any other expenses whatsoever, including reasonable
attorneys' fees and costs, that may be asserted against any Escrow Agent
Indemnitee in connection with this Agreement or the performance of Escrow Agent
or any Escrow Agent Indemnitee hereunder.
Section 11.0 Disputes and Interpleader.
<PAGE>
In the event of any dispute between any of Escrow Agent, Lucent and/or BBT
relating to delivery of the Software and Manufacturing Information by Escrow
Agent or to any other matter arising out of this Agreement, Escrow Agent may
submit the matter to any court of competent jurisdiction in an interpleader or
similar action. Any and all costs incurred by Escrow Agent in connection
therewith, including reasonable attorneys' fees and costs, shall be borne 50% by
each of Lucent and BBT. Escrow Agent shall perform any acts ordered by any court
of competent jurisdiction, without any liability or obligation to any party
hereunder by reason of such act.
Section 12.0 Bankruptcy.
BBT and Lucent acknowledge that this Agreement is an "agreement
supplementary to" the Supply Agreement as provided in Section 365(n) of Title
11, United States Code (the "Bankruptcy Code"). BBT acknowledges that if BBT as
a debtor in possession or a trustee in Bankruptcy in a case under the Bankruptcy
Code rejects the Supply Agreement or this Agreement, Lucent may elect to retain
its rights under the Supply Agreement and this Agreement as provided in Section
365(n) of the Bankruptcy Code. Upon written request of Lucent to BBT or the
Bankruptcy Trustee, BBT or such Bankruptcy Trustee shall not interfere with the
rights of Lucent as provided in the Supply Agreement and this Agreement,
including the right to obtain the Software and Manufacturing Information from
Escrow Agent.
Section 13.0 Counterparts; Governing Law.
This Agreement may be executed in counterparts, each of which when so
executed shall be deemed to be an original and all of which when taken together
shall constitute one and the same Agreement. This Agreement shall be construed
and enforced in accordance with the laws of the State of New York.
Section 14.0 No Waiver.
No failure on the part of any party hereto to exercise, and no delay in
exercising any right, power or single or partial exercise of any right, power or
remedy by any party will preclude any other or further exercise thereof or the
exercise of any other right, power or remedy. No express waiver or assent by any
party hereto to any breach or default in any term or condition of this Agreement
shall constitute a waiver of or an assent to any succeeding breach of or default
in the same or any other term or condition hereof.
Section 15.0 Assignment.
Neither this Escrow Agreement, nor any rights, liabilities or obligations
hereunder may be assigned by any party without the prior written consent of
Lucent and BBT.
IN WITNESS WHEREOF, Lucent, BBT and Escrow Agent have executed this Escrow
Agreement by their authorized representatives.
Dated: February ___, 1998
<PAGE>
LUCENT TECHNOLOGIES INC.,
by
------------------------------------
BROADBAND TECHNOLOGIES, INC.,
by
------------------------------------
FORT KNOX ESCROW SERVICES, INC.
by
------------------------------------
EXHIBIT 10.5
**-Certain information omitted and filed separately with the Commission pursuant
to a confidential treatment request under Rule 24b-2 of the Commission.
TECHNOLOGY TRANSFER AGREEMENT
Between
LUCENT TECHNOLOGIES INC.
And
BROADBAND TECHNOLOGIES, INC.
<PAGE>
TECHNOLOGY TRANSFER AGREEMENT
This Agreement is made between Lucent Technologies Inc. ("Lucent"), a Delaware
corporation having an office at 600 Mountain Avenue, Murray Hill, New Jersey
07974, United States of America, and BroadBand Technologies, Inc. ("Licensee"),
a corporation of Delaware having an office at 4024 Stirrup Creek Drive, Durham,
NC 27709-3737.
WHEREAS, Lucent is the owner of, or has the rights to certain technology and
associated intellectual property rights (defined herein as Lucent Information);
and
WHEREAS, Licensee has a need to utilize said Lucent Information; and
WHEREAS, Lucent is willing to make said Lucent Information available to Licensee
based upon the terms and conditions set out herein.
NOW, THEREFORE, in consideration of the mutual promises herein set forth and
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged by the parties, Lucent and Licensee agree as follows:
ARTICLE 1
DEFINITIONS
1.01 Subsidiary of a company means a corporation or other legal entity (i) the
majority of whose shares or other securities entitled to vote for election of
directors (or other managing authority) are now or hereafter controlled by such
company either directly or indirectly; or (ii) which does not have outstanding
shares or securities but the majority of whose ownership interest representing
the right to manage such corporation or other legal entity is now or hereafter
owned and controlled by such company either directly or indirectly; but any such
corporation or other legal entity shall be deemed to be a Subsidiary only as
long as such ownership and control exists.
1.02 Lucent Information means Lucent ****************** Technology and Lucent
****************** Technology, collectively.
1.03 Lucent ****************** Technology means the information transferred or
to be transferred from Lucent to Licensee pursuant to this Agreement as
identified in Attachment 2 of this Agreement.
1.04 Lucent **************** Technology means the information transferred or to
be transferred from Lucent to Licensee pursuant to this Agreement as identified
in Attachment 1 of this Agreement.
1
<PAGE>
1.05 BBT DLC PRODUCTS means any product of Licensee which is designed and
marketed by Licensee to be a component of a digital loop carrier system. The
digital loop carrier system would provide concentration from a central office to
a traditional Remote Terminal or a Remote Terminal deployed in an Optical
Network Unit-like configuration, with either a fiber or metallic interface.
1.06 **************************************************************************
********************************************************************************
********************************************************************************
************************************************************************
1.07 A Change of Control occurs upon any one of the following circumstances or
events:
(i) The stockholders of a Party ("Acquired Party") approve a transaction,
including, without limitation, a merger or consolidation (however
denominated or effectuated), with an Acquiror, including, without
limitation, a merger or consolidation, or series of transactions with the
same Acquiror ("Combination"), and immediately after such transaction(s)
less than 60% of the combined voting power of the then-outstanding
securities of the Acquired Party or the Acquiror, will be held in the
aggregate by the holders of securities entitled, immediately prior to
such Combination, to vote generally in the election of directors of the
Acquired Party ("Voting Securities");
(ii) The stockholders of the Acquired Party approve the sale or transfer of
all or substantially all of its assets to any other Person or entity, and
less than 60% of the combined voting power of the then-outstanding Voting
Securities of such Acquiror immediately after such transaction will be
held in the aggregate by the holders of the Voting Securities of the
Acquired Party immediately prior to such sale;
(iii) An Acquiror acquires in one or a series of transactions beneficial
ownership of more than 40% of the outstanding shares of Voting Securities
of a Party;
(iv) The stockholders of a Party approve a plan of complete liquidation or
dissolution of the Party;
(v) Any Acquiror obtains direct or indirect Control (as herein defined) over
a party and, in Lucent's reasonable judgment, such Control may threaten
Lucent's interests. For the purposes of this subsection, the term
"Control" shall mean the possession directly or indirectly of the power
to direct or cause the direction of the management or policies of a
Party, whether through the ability to exercise voting power, by contract
or otherwise;
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(vi) At any time, Continuing Directors (as herein defined) shall not
constitute at least 50% of the members of the Board ("Continuing
Director" means (i) each individual, who has been a director of the Party
for at least twelve (12) consecutive months before such time and (ii)
each individual who was nominated or elected to be a director of the
Party by at least a majority of the Continuing Directors at the time of
such nomination or election); or
(vii) Any other transaction which has the effect of causing the substantive
changes in the Acquired Party described in any of the preceding
paragraphs.
For the purposes of this Section, the term "Acquiror" shall mean one
person or entity, or two or more persons and/or entities constituting a
"group" for purposes of the Securities Exchange Act of 1934, as amended.
1.08 Plug Compatible shall mean products which can be installed and operate with
the other so that both are fully functional, with no changes or with only
trivial and inexpensive modification or reconfiguration.
1.09 Material Breach by Licensee shall mean a breach of this Agreement that
arises from an unauthorized use or disclosure by Licensee of the Lucent
Information where such breach in Lucent's reasonable sole opinion has or is
likely to result in material harm to Lucent and which cannot be cured by
damages, either because of the nature of the harm or Licensee's financial
inability to pay damages, which breach is capable of being cured and remains
uncured for more than ten (10) days following notice of the breach from Lucent.
1.10 Effective Date means the date on which the last Party executes this
Agreement.
1.11 **************************************************************************
********************************************************************************
********************************************************************************
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ARTICLE 2
INFORMATION FURNISHED
2.01(a) Lucent shall, within thirty (30) days after Licensee's written request,
commence furnishing the Lucent Information or such portions thereof as may be
necessary to meet an implementation schedule to be mutually agreed upon by
Lucent and Licensee. If Lucent cannot so furnish such Lucent Information, Lucent
shall advise Licensee of such additional reasonable period within which Lucent
shall furnish said Lucent Information or portions thereof to Licensee.
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(b) Delivery of any Lucent Information shall be deemed to occur on the date
such documentation is received by Licensee. Lucent shall pay all delivery costs.
(c) With the delivery of the Lucent Information, Lucent shall also furnish
to Licensee a list which completely identifies the information delivered. Lucent
and Licensee shall promptly notify each other of any inaccuracies in the list.
Said list shall be deemed to be a part of the definition of Lucent Information.
(d) All information furnished, regardless of medium or form, by Lucent to
Licensee in association with the performance of this Agreement, whether or not
required thereby, shall be deemed to be a part of the Lucent Information.
ARTICLE 3
SERVICES FURNISHED
3.01 Lucent, at Licensee's reasonable request and upon reasonable notice, but
not earlier than is necessary to meet an implementation schedule to be agreed
upon by Lucent and Licensee, shall furnish to Licensee, technical assistance
services reasonably necessary to enable Licensee to use the Lucent Information,
not to exceed 46 man-days, as mutually agreed at locations to be agreed upon by
Licensee and Lucent.
3.02 Lucent and Licensee shall at all times retain the administrative
supervision of their respective personnel.
3.03 Personnel of both Parties shall, while on any location of the other Party,
comply with that Party's rules and regulations with regard to safety and
security. Each Party shall have full control over its personnel and shall be
entirely responsible for their complying with the rules and regulations of the
other Party. Each Party agrees to indemnify and save the other Party harmless
from any claims or demands, including the costs, expenses and reasonable
attorney's fees incurred on account thereof, that may be made by (i) anyone for
injuries to persons or damage to property resulting from acts or omissions of
the other Party's personnel; or (ii) the other Party's personnel under Worker's
Compensation or similar laws. Each agrees to defend the other against any such
claim or demand.
3.04 Lucent and Licensee do not contemplate the provision of assistance or
training services in any country other than the United States under this
Agreement. Any such assistance or training services to be provided will be the
subject of a separate agreement between the appropriate parties.
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ARTICLE 4
GRANTS OF RIGHTS TO USE
LUCENT INFORMATION
4.01 Subject to the termination provisions of Article 7, Lucent grants to
Licensee, a perpetual, **************, non-exclusive, nontransferable, and
worldwide:
(a) right to use the Lucent ************** Technology for the design,
development, manufacture, marketing or maintenance of BBT DLC PRODUCTS, provided
that this Section 4.01(a) shall not convey to Licensee any right to disclose the
Lucent *********** Technology to any entity other than its Subsidiaries;
(b) license under its copyrights on or covering any Lucent ***********
Technology to create derivative works, and to use, copy, and distribute the
Lucent ***************** Technology and any derivative works, but only in
connection with the design, development, manufacture, marketing or maintenance
of BBT DLC PRODUCTS, provided that this subsection shall not convey to Licensee
any right to disclose the Lucent ***************** Technology to any entity
other than its Subsidiaries;
(c) license under any claim of any patent which Lucent has a right to
license as of the effective date of this Agreement which would be infringed by a
BBT DLC PRODUCT, to the extent that such claim is necessarily infringed by the
use of the Lucent ************* Technology;
(d) right to grant to any third party supplier listed on Attachment 3,
subject to the provisions of a confidentiality agreement acceptable to Lucent,
rights of the scope granted to Licensee under Sections 4.01(a), 4.01(b) and
4.01(c), but only to the extent reasonably necessary to carryout activities of
supplying Licensee with components of BBT DLC PRODUCTS. BBT may add suppliers to
Attachment 3 with prior written consent of Lucent; and
(e) license under its copyrights to copy and distribute "Distributable
Versions" (as that term is defined in this Paragraph) of the BBT DLC PRODUCTS
and associated documentation. A Distributable Version of the BBT DLC PRODUCTS
may include object code compiled from the Lucent ************* Technology and
shall be limited to Lucent **************** Technology commercially reasonably
necessary to distribute in connection with commercial transfers of BBT DLC
PRODUCTS. A use shall be deemed to be commercially reasonably necessary for
purposes of this paragraph to the extent Lucent distributes like material with
its own products. Products distributed to third parties pursuant to the right
and license granted in this paragraph shall not be deemed to include
confidential information and such distribution shall not be deemed to be a
breach of Section 5.03.
4.02 Subject to the termination provisions of Article 7, Lucent grants to
Licensee, a perpetual, ************, non-exclusive, nontransferable, and
worldwide license to use the
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Lucent *********************** Technology and any Lucent-owned copyright on such
technology, solely for the purpose of design, manufacture, development,
marketing or maintenance of Licensee's backplane conversion card for use in
connection with the Lucent ************************* Products listed on
Attachment 4 to this Agreement. Lucent further grants to Licensee a license
under any claim of any patent which Lucent has a right to license as of the
effective date of this Agreement which would be infringed by such Licensee
backplane conversion card, to the extent that such claim is necessarily
infringed by the use of the Lucent ***************** Technology. This subsection
shall not convey any right to Licensee any right to disclose the Lucent
******************** Technology to any entity other than its Subsidiaries.
4.03 The rights to use and licenses granted to Licensee in Sections 4.01 and
4.02:
(a) shall not be interpreted to provide Licensee with any right or license
to use the Lucent Information in the design, manufacture, development, marketing
or maintenance of products (1) other than BBT DLC PRODUCTS, (2) which are chips
or chip sets sold, transferred or otherwise disposed of as stand-alone products,
(3) which are components of ***************************************************
*************************************************** (including the associated
*****************), or private branch exchange switches; or (4) which are
********************* or ************** *********** which are electrically or
optically compatible with a Lucent system.
(b) shall not be interpreted to provide Licensee with any right or license
to sell, transfer or disclose any test tools, test data, or similar information
except as may be required to allow Licensee to exercise its rights under Section
4.01(d);
(c) shall not allow Licensee to grant to any entity the right to remarket
BBT DLC PRODUCTS which contain Lucent Information with such entities' brand name
affixed to such products without the prior written consent of Lucent, except
that this subsection (C) shall not apply to Lucent's ****************
Information beyond five (5) years after the Effective Date; and
(d) shall permit Licensee, except as provided in subsection 4.03 (c) above,
to sell to third parties for resale; including resale under such third parties'
private label; and
(e) shall permit Licensee to create improvements.
4.04 Licensee shall own any improvements and derivative works to the Lucent
Information created by Licensee. The use of any such improvements or derivative
works in connection with Lucent Information shall be subject to the restrictions
on use of Lucent Information set out in this Agreement.
4.05 Lucent is providing the Lucent Information to Licensee subject to the
license grant set forth above. In so doing, the Parties understand and agree
that Licensee is not acquiring any rights, title or interest therein except as
expressly set forth above.
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4.06 Export Control- Licensee will not use, distribute, transfer or transmit any
products, software or technical information (even if incorporated into other
products) provided under this Agreement except in compliance with U.S. export
laws and regulations (the "Export Laws"). Licensee will not, directly or
indirectly, export or re-export the following items to any country which is in
the then current list of prohibited countries specified in the applicable Export
Laws: (a) software or technical data disclosed or provided to Licensee by
Licensee or Licensee's subsidiaries or affiliates; or (b) the direct product of
such software or technical data. Licensee agrees to promptly inform Lucent in
writing of any written authorization issued by the U.S. Department of Commerce
office of export licensing to export or re-export any such items referenced in
(a) or (b) which is issued prior to five years after the Effective Date. The
obligations stated above in this clause will survive the expiration,
cancellation or termination of this Agreement or any other related agreement.
ARTICLE 5
LICENSEE'S OBLIGATIONS AND CONFIDENTIALITY
5.01 Licensee agrees:
(i) that it will not use the Lucent Information except as expressly
provided herein;
(ii) that it shall keep the Lucent Information confidential;
(iii) that it will not, without Lucent's express written permission, make
or have made, or permit to be made, more copies of any of the Lucent
Information than are necessary for its use hereunder;
(iv) that it will not, without Lucent's express written permission, (a) use
in advertising, publicity, or otherwise any trade name, trademark,
trade device, service mark, symbol or any other identification or any
abbreviation, contraction or simulation thereof owned or used by
Lucent or any of its Subsidiaries, or (b) represent, directly or
indirectly, that any product or service produced in whole or in part
with the use of any of the Lucent Information is a product or service
of Lucent or any of its Subsidiaries or is made in accordance with or
utilizes any information or documentation of Lucent or any of its
Subsidiaries; provided, however, that nothing in this Section 5.01
shall be construed as prohibiting Licensee from representing that it
is licensed by Lucent with respect to the Lucent Information; and
(v) that the Lucent Information and all documents furnished hereunder are
deemed to be and shall remain the property of Lucent, and that upon
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termination of this Agreement or Licensee's rights hereunder, Licensee
shall upon request deliver to Lucent all documents containing any of
the Lucent Information and all copies thereof then under Licensee's or
its supplier's control.
5.02 It is recognized that during the performance of this Agreement, Licensee's
personnel may unavoidably receive or have access to private or confidential
information of Lucent which is not the Lucent Information. Licensee agrees that
all such information shall be treated for the purposes of the provisions of this
Agreement as if it were Lucent Information.
5.03 (a) Unless otherwise agreed in writing by the Parties, during the period
beginning on the Effective Date of this Agreement and extending twelve (12)
years thereafter, a party receiving proprietary or confidential information in
connection with this Agreement, including the Lucent Information, will (i)
maintain it in confidence and will not disclose any part of it to anyone except
those of its employees, agents or advisors having a need to know in order to
accomplish the purposes of this Agreement and who are bound by terms similar to
those of this section, (ii) use at least the same degree of care to maintain its
secrecy as it uses in maintaining the secrecy of its own confidential and trade
secret information of equal importance, (iii) always use at least a reasonable
degree of care in maintaining its secrecy, and (iv) use it only for the purpose
of exercising its rights and performing its obligations under this Agreement.
Notwithstanding the foregoing, Licensee agrees that it shall maintain the Lucent
****************** Technology in confidence in perpetuity.
(b) Neither party will have any obligation (confidentiality or restriction
on use) concerning that part of the other's information which (i) at the time of
disclosure in writing is not marked with a legend identifying it as
"Proprietary", "Confidential" or a similar legend or, within thirty (30) days
after oral disclosure, is not so identified in writing, (ii) at the time of
disclosure to the receiving party was known to that party free of restriction as
evidenced by documentation in that party's possession, (iii) is lawfully
obtained from a third party under no obligation of confidentiality, (iv) is or
becomes publicly available other than as a result of an act or failure to act of
the receiving party, or (v) is independently developed by a party without use of
the other's confidential information.
(c) If any part of a party's confidential or proprietary information is
wrongfully disclosed or used, then, in addition to the remedies provided by this
Agreement or by law or in equity, the party which provides the information will
be entitled to an injunction preventing further disclosure of the information by
the other party or further disclosure or use of the information by any third
parties to whom the information has been wrongfully disseminated.
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ARTICLE 6
WARRANTY
6.01 (a) Lucent believes the Lucent Information to be furnished hereunder will
be true and accurate. Lucent and its Subsidiaries shall not be held to any
liability for errors or omissions in the Lucent Information.
(b) Lucent warrants that the Lucent Information licensed to Licensee under
this Agreement are the original work of Lucent or its Subsidiaries (or Lucent
has a valid right to license such property) and it has the power to grant the
rights described in this Agreement.
6.02 EXCEPT AS PROVIDED IN SECTION 6.01, LUCENT MAKES NO REPRESENTATIONS OR
WARRANTIES, EXPRESS OR IMPLIED. BY WAY OF EXAMPLE BUT NOT OF LIMITATION, LUCENT
AND ITS SUBSIDIARIES MAKE NO REPRESENTATIONS OR WARRANTIES OF MERCHANTABILITY OR
FITNESS FOR ANY PARTICULAR PURPOSE, OR THAT THE USE OF THE LUCENT INFORMATION OR
ANY PORTION OF IT WILL NOT INFRINGE ANY PATENT OF ANY THIRD PARTY, AND IT SHALL
BE THE SOLE RESPONSIBILITY OF LICENSEE TO MAKE SUCH DETERMINATION AS IS
NECESSARY WITH RESPECT TO THE ACQUISITION OF LICENSES UNDER PATENTS OR OTHER
INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES. LUCENT AND ITS SUBSIDIARIES SHALL
NOT BE HELD TO ANY LIABILITY WITH RESPECT TO ANY PATENT INFRINGEMENT OR ANY
OTHER CLAIM MADE BY LICENSEE OR ANY THIRD PARTY ON ACCOUNT OF, OR ARISING FROM
THE USE OF, THE LUCENT INFORMATION OR ANY PORTION OF IT.
ARTICLE 7
TERMINATION
7.01 Licenses and rights granted under this Agreement shall be effective during
the term commencing on the effective date hereof and continuing until such
licenses and rights are terminated pursuant to the provisions hereof.
7.02 If Licensee shall fail to fulfill one or more of its material obligations
under this Agreement such that it is in Material Breach of its obligations set
forth herein, Lucent may, upon its election and in addition to any other
remedies that it may have, at any time, terminate all of Lucent's obligations
hereunder and all of the licenses and rights granted by Lucent hereunder by not
less than ten (10) days written notice to Licensee specifying any such breach or
failure, unless within the period of such notice all grounds specified therein
for termination pursuant to this Section 7.02 shall have been remedied.
7.03 If Lucent shall fail to fulfill one or more of its material obligations
under this Agreement, or if Lucent shall fail to fully comply with all the
requirements of United States law or other law applicable to this Agreement, to
the extent that any such failure is not
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attributable to any failure on the part of Licensee to perform any of its
obligations under this Agreement, Licensee may, upon its election and in
addition to any other remedies that it may have, at any time terminate this
Agreement by not less than two (2) months written notice to Lucent specifying
any such breach or failure, unless within the period of such notice all grounds
specified therein for termination pursuant to this Section 7.03 shall have been
remedied.
7.04 The obligations of Licensee under this Agreement which, by their nature
would survive termination of this Agreement, shall survive and continue after
any such termination.
7.05 (a) If a voluntary or involuntary petition under applicable bankruptcy laws
is filed by or against Licensee, unless Licensee provides to Lucent reasonable
assurances that Licensee will be able to comply with the confidentiality
provisions and provisions restricting Licensee's use of Lucent Information of
this Agreement, Lucent may terminate this Agreement. Licensee shall immediately
notify Lucent of the filing of any bankruptcy petition by or against Licensee.
Notwithstanding the foregoing, a Change in Control of Licensee which results
from bankruptcy proceedings shall be treated as provided in Section 7.06.
(b) If a proceeding is commenced under any provision of the United States
Bankruptcy Code, voluntary or involuntary, by or against either party, and this
Agreement has not been terminated, the non-debtor party may file a request with
the bankruptcy court to have the court set a date within sixty (60) days after
the commencement of the case, by which the debtor party will assume or reject
this Agreement, and the debtor party shall cooperate and take whatever steps are
necessary to assume or reject the Agreement by such date.
7.06 Termination For Change In Control - In the event of a Change In Control of
Licensee, or a reasonable expectation of a Change in Control of Licensee, then
Licensee shall provide notice to SellerLucent of such actual or expected Change
in Control event within ten (10) days of the knowledge or reasonable expectation
of the Change in Control event. Upon the effective date of a Change in Control,
Lucent shall have the right to terminate this Agreement provided that Lucent
gives Licensee written notice of its intention to terminate at least thirty (30)
days prior to the termination date specified in the termination notice.
7.07 In the event that Lucent terminates Licensee's rights under this Agreement
pursuant to Section 7.06, termination of Licensee's rights under Section 4.01
(Lucent *********** Technology) shall not become effective until eighteen (18)
months from the date on which Lucent notifies Licensee of such termination. The
parties acknowledge that this eighteen month period is intended to permit
Licensee to develop a commercial product of Licensee that substitutes for the
product that utilizes the intellectual property for which Licensee's rights are
being terminated. Lucent shall not be obligated to grant any extensions to the
eighteen month period. This Section 7.07 shall not affect Lucent's right to
terminate Licensee's rights under Section 4.02 (Lucent ****************
Technology) upon giving Licensee the thirty day notice specified in Section
7.06.
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7.08 Termination of Licensee's rights pursuant to Section 7.06 shall not
terminate any license to the extent required to enable Licensee to fulfill
contracts entered into prior to the effective date of termination.
7.09 Lucent's right under Sections 7.02, 7.05 and 7.06 to terminate the license
to BBT granted under Section 4.01 (for Lucent *************** Technology) shall
cease five (5) years after the Effective Date. This Section 7.09 shall not
affect Lucent's rights under this Agreement to terminate the licenses granted
herein to BBT under Section 4.02 (for Lucent ******************** Technology).
ARTICLE 8
DISCLAIMERS/ LIMITATIONS OF LIABILITY
8.01 Licensee agrees to indemnify and save Lucent and its Subsidiaries harmless
from any claims or demand for personal injury or property damage (including
reasonable expense of litigation and settlement of such claims) by third persons
to the extent that such claims arise out of, or in connection with, the
furnishing or use of any information hereunder.
8.02 Neither Lucent nor Licensee shall be liable for any loss, damage, delay or
failure of performance resulting directly or indirectly from any cause which is
beyond its reasonable control, including but not limited to acts of God,
extraordinary traffic conditions, riots, civil disturbances, wars, states of
belligerency or acts of the public enemy, strikes, work stoppages, or the laws,
regulations, acts or failure to act of any governmental authority. In the event
that performance under this Agreement is prevented for a continuous period of
two (2) months or longer by any of the foregoing causes, the Party, which does
not receive the benefit of the performance of the other Party shall have the
right to terminate this Agreement by giving written notice to the other Party.
8.03 NOTWITHSTANDING ANY OTHER SECTIONS OF THIS AGREEMENT TO THE CONTRARY,
NEITHER PARTY SHALL BE LIABLE FOR INCIDENTAL OR CONSEQUENTIAL LOSS OR DAMAGES OF
ANY NATURE, HOWEVER CAUSED.
ARTICLE 9
DISPUTES
9.01 (a) The following procedures shall apply to any dispute or disagreement
between the Parties or any of their Subsidiaries arising out of this Agreement.
(b) First:
(i) either Party may give written notification of such dispute or
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disagreement to the other Party and
(ii) the Parties shall communicate with each other promptly with a
view to resolving such dispute or disagreement within 21 days (or such
extended period as the Parties agree is appropriate in any case) after such
written notification is given.
(c) The giving of any notice regarding any dispute or disagreement under this
Section 9.01 shall toll the running of all applicable statutes of limitation
until the later of (i) 90 days following the giving of such notice or (ii) 30
days following the termination of discussions between the Parties concerning
such dispute or disagreement.
(d) Second, if at the end of the 21 day period referenced in Section 9.01(b)(as
it may be extended) such dispute or disagreement has not been resolved to the
satisfaction of both parties, either Party may request in writing that such
dispute or disagreement be the subject of non-binding mediation. Following such
request, the Parties shall endeavor in good faith promptly to identify a single
person (who shall be a person with experience and good reputation) who shall
assist the Parties in discussing such dispute or disagreement and in attempting
to reach a mutually acceptable business resolution. Such mediation process shall
terminate not later than 30 days following the request therefor (or such
extended or shorter period as the Parties agree is appropriate). All applicable
statutes of limitation shall be tolled during the period of mediation.
(e) Third, if at the end of the 30 day period referenced in Section 9.01(d) (as
it may be extended or shortened) such dispute or disagreement has not been
resolved to the satisfaction of both parties, either Party (the "complainant")
may commence binding arbitration by giving the other Party (the "respondent")
notice in writing (the "initiating notice") setting forth in reasonable detail
the nature of its claim and the relief requested stating that the complainant is
invoking the procedures set forth in this (e) and (f) and naming the
complainant's representative on the Arbitration Panel (as defined below). Within
21 days of receipt of an initiating notice, the respondent shall give the
complainant notice in writing (the "response") setting forth in reasonable
detail: (1) the basis of its response to the claim; (2) the nature of any
counterclaim it has against the complainant arising from the same set of facts
and circumstances that gave rise to the original claim; (3) any other
counterclaim that Party wishes to bring at that time (although the Party has no
obligation to bring such counterclaims at that time); (4) the relief requested;
and (5) naming the respondent's representative on the Arbitration Panel. The two
representatives shall select a third person who is mutually acceptable to them.
If the representatives fail to make such selection within 21 days, the
complainant and the respondent shall each replace its representative with a new
representative and the new representatives shall be subject to the preceding
sentence and this sentence. Once a third person is selected, such person
together with the representatives of the complainant and the respondent shall
form the Arbitration Panel. The date upon which the Arbitration Panel is formed
shall be the "Commencement Date".
(f) The Arbitration Panel shall conduct proceedings to determine the merits
under
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applicable law of the claims set forth in the initiating notice and the
response. The proceedings shall be administered by JAMS/Endispute in accordance
with its Comprehensive Arbitration Rules and Procedures in effect as of the
Effective Date, subject to the following additional rules:
(i) the proceedings shall take place in New York City;
(ii) the Arbitration Panel (including, if necessary, any replacement(s) to
the Arbitration Panel) shall be selected as set forth in Section
9.01(e);
(iii) the available relief shall include damages, injunctive relief and
equitable relief to the extent allowed under the applicable law, this
Agreement and any other agreement between the parties;
(iv) the parties shall attempt in good faith promptly to agree on the
nature and extent of any discovery in connection with the arbitration,
provided that, in the absence of such agreement, discovery shall be
governed by JAMS/Endispute's Comprehensive Arbitration Rules and
Procedures and the applicable law with respect to privilege and other
protections from disclosure, including the work product doctrine;
(v) the final decision of the Arbitration Panel (the "Award") shall be
issued within six months of the Commencement Date (the date of
issuance of the Award being the "Award Date") and must be joined by at
least two members of the Arbitration Panel;
(vi) each party to the proceedings shall pay its own costs in connection
with the proceedings, including the costs and expenses of its
representative on the Arbitration Panel, and the parties shall share
equally the other costs of the proceedings, including the fees of the
third member of the Arbitration Panel, except that the prevailing
party shall be entitled to recover its attorneys' fees incurred in
prosecution thereof.
(g) In accordance with the Federal Arbitration Act, 9 U.S.C. ss.1 et seq., the
Award shall be final and binding and judgment thereon may be entered by any
state or federal court having jurisdiction thereof.
(h) Nothing in this Section 9.01 shall be construed to preclude either party
from seeking injunctive relief in a court of competent jurisdiction to prevent
imminent irreparable harm. The dispute resolution procedures set forth herein
shall be stayed pending disposition of any application for such relief. The
Parties agree that a court of competent jurisdiction may consider the merits of
any claim that is subject to the dispute resolution procedures set forth herein
to the extent necessary to resolve any permissible application for injunctive
relief.
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ARTICLE 10
MISCELLANEOUS
10.01 This Agreement shall prevail in the event of any conflicting terms or
legends which may appear on documents or the Lucent Information furnished
hereunder.
10.02 All article headings and the table of contents are for convenience
purposes only and shall in no way affect, or be used in, the interpretation of
this Agreement.
10.03 This Agreement sets forth the entire agreement and understanding between
the parties as to the subject matter hereof and merges all prior discussions
between them, and neither of the parties shall be bound by any conditions,
definitions, warranties, modifications, understandings or representations with
respect to such subject matter other than as expressly provided herein, or in
any prior existing written agreement between the parties, or as duly set forth
on or subsequent to the effective date hereof in writing and signed by a proper
and duly authorized representative of the party to be bound thereby.
10.04 Lucent may assign all or any part of its rights and obligations to any
successor in interest of its business to which this Agreement relates or to any
of its Subsidiaries. BBT shall not assign any right or interest under this
Agreement (excepting solely for moneys due to or become due) without the prior
written consent of Lucent. Subject to Lucent's right to terminate upon the
occurrence of a Change in Control, a merger or consolidation shall not be deemed
to be an assignment. BBT will provide Lucent with thirty (30) days prior written
notice prior to the closing of a merger or consolidation. However, it is
understood and agreed by the Parties that this does not prohibit Licensee from
subcontracting certain activities in accordance with the provisions of Section
4.01(d). Notwithstanding the foregoing, following five (5) years after the
Effective Date, Licensee may assign any rights hereunder except rights under
Section 4.02 to the Lucent ************************ Technology.
10.05 This Agreement shall be interpreted in accordance with the laws of the
state of New Jersey, without giving effect to any choice of laws rules.
10.06(a) Until further notice in writing, the following organizations or
individuals shall administer activities and performances under this Agreement:
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(i) For Lucent,
Michael Kania
Access Project Management Director
Lucent Technologies Inc.
Whippany, New Jersey
United States of America
(ii) For Licensee,
BroadBand Technologies, Inc.
4024 Stirrup Creek Drive
Durham, NC 27709-3737
Attention: Chief Financial Officer
(b) All requests for information, documents and technical assistance and
training services shall be made by Licensee in writing, or if made orally then
confirmed in writing within seven (7) days after such request has been made, to
the organization designated in Section 10.06(a). Lucent shall acknowledge
requests made pursuant to this Section 10.06(b) in writing and shall within
fourteen (14) days after the receipt of the written request indicate whether it
will or will not comply with such request or propose an alternative to such
request.
10.07 Except as provided in Section 10.06, until further notice in writing, any
notice or other communication hereunder shall be deemed to be sufficiently given
to the addressee and any delivery hereunder deemed made when delivered by U.S.
Mail:
(i) To Lucent,
To Lucent: Lucent Technologies Inc.
Address: 67 Whippany Road
Whippany, New Jersey 07981
Attn: Access Product Management Vice President
with a copy to:
Lucent Technologies Inc.
283 King George Road
Warren, New Jersey 07059
Attention: Corporate Counsel - Switching and Access
15
<PAGE>
(ii) To Licensee:
BroadBand Technologies, Inc.
4024 Stirrup Creek Drive
Durham, NC 27709-3737
(Attention: Chief Financial Officer)
with a copy to:
James F. Verdonik
Kilpatrick Stockton LLP
Post Office Box 300004
Raleigh, North Carolina 27622
The effective dates of such notice shall be: (1) five (5) days following the
date mailed for certified or registered letters and (2) two (2) days following
the date mailed for overnight letters. The above addresses may be changed at any
time by giving prior written notice as above provided.
10.08 This Agreement may be executed in one or more counterparts.
10.09 Breach by a Party of any other agreement between the Parties shall not
constitute a breach of this Agreement, unless the same conduct independently
breaches this Agreement. A breach of this Agreement shall not constitute a
breach of any other agreement between the Parties, unless the same conduct
independently breaches such other agreement.
16
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be executed
in duplicate originals by its duly authorized representatives on the respective
dates entered below.
LUCENT TECHNOLOGIES INC.
By:
--------------------------------------------------
M. R. Greene
Acting Group President - Intellectual Property
Date:
------------------------------------------------
BROADBAND TECHNOLOGIES, INC.
By:
--------------------------------------------------
David E. Orr
President & CEO
Date:
------------------------------------------------
THIS AGREEMENT DOES NOT BIND OR OBLIGATE EITHER PARTY
IN ANY MANNER UNLESS DULY EXECUTED BY AUTHORIZED
REPRESENTATIVES OF BOTH PARTIES
17
<PAGE>
ATTACHMENT 1
Lucent ****************** Technology
Lucent's ************ Technology means the following line interface information
owned by Lucent for Lucent's *************************************************
************************************************ :
Parts list (including part numbers and supplier lists)
Schematic diagrams
Board layout documentation
For purposes of clarity, the parties recognize that Lucent's ***********
Technology shall not include any source code programs, read-only memory (ROM)
code, embedded protocols (interface specifications), or application specific
integrated circuit (ASIC) design information or schematics.
18
<PAGE>
ATTACHMENT 2
Lucent ******************** Technology
Lucent's ************ Technology means the following line interface information
owned by Lucent for Lucent's *************************************************
************************************************ :
Parts list (including part numbers and supplier lists)
Schematic diagrams
Board layout documentation
Interface specifications
For purposes of clarity, the parties recognize that Lucent's ****************
Technology shall not include any source code programs, read-only memory (ROM)
code, or application specific integrated circuit (ASIC) design information or
schematics.
19
<PAGE>
ATTACHMENT 3
BBT Approved Suppliers
DESIGN SERVICES:
**************************
**************************
**************************
MANUFACTURING SUBCONTRACTORS:
**************************
**************************
**************************
**************************
20
<PAGE>
ATTACHMENT 4
List of Lucent ****************************** Products
- --------------------------------------------------------------------------------
********* ****************************
- --------------------------------------------------------------------------------
********* ****************************
- --------------------------------------------------------------------------------
********* ****************************
- --------------------------------------------------------------------------------
********* ****************************
- --------------------------------------------------------------------------------
********* ****************************
- --------------------------------------------------------------------------------
********* ****************************
- --------------------------------------------------------------------------------
********* ****************************
- --------------------------------------------------------------------------------
********* ****************************
- --------------------------------------------------------------------------------
********* ****************************
- --------------------------------------------------------------------------------
********* ****************************
- --------------------------------------------------------------------------------
********* ****************************
- --------------------------------------------------------------------------------
********* ****************************
- --------------------------------------------------------------------------------
********* ****************************
- --------------------------------------------------------------------------------
********* ****************************
- --------------------------------------------------------------------------------
********* ****************************
- --------------------------------------------------------------------------------
********* ****************************
- --------------------------------------------------------------------------------
21
Exhibit 10.6
**-Certain information omitted and filed separately with the Commission pursuant
to a confidential treatment request under Rule 24b-2 of the Commission.
MANUFACTURING AGREEMENT
BETWEEN
LUCENT TECHNOLOGIES INC.
AND
BROADBAND TECHNOLOGIES, INC.
<PAGE>
MANUFACTURING AGREEMENT
TABLE OF CONTENTS
CLAUSE
1.0 EFFECTIVE PERIOD OF AGREEMENT
1.1 PREPARATION PERIOD
2.0 MATERIAL
3.0 PRICE
4.0 PAYMENT TERMS
5.0 SHIPMENT
6.0 FORECAST OF MATERIAL
7.0 PURCHASE COMMITMENT
8.0 SHIPPING
9.0 SHIPPING INTERVAL
10.0 FREIGHT CLASSIFICATION
11.0 SPECIFICATIONS OR DRAWINGS
12.0 PURCHASE ORDERS
13.0 ASSIGNMENT
14.0 INTELLECTUAL PROPERTY RIGHTS
15.0 DISTRIBUTION RIGHTS
16.0 CONFIDENTIALITY
17.0 EPIDEMIC CONDITION
18.0 FORCE MAJEURE
19.0 HEAVY METALS AND/OR CFC IN PACKAGING
20.0 IDENTIFICATION
21.0 IMPLEADER
22.0 INDEMNITY
23.0 INFRINGEMENT
24.0 INSIGNIA
25.0 INSURANCE
26.0 INVOICING FOR GOODS
27.0 MARKING
28.0 MONTHLY ORDER AND SHIPMENT REPORTS
29.0 NEW AND CHANGED METHODS, PROCESSES AND EQUIPMENT
30.0 NON-EXCLUSIVE MARKET RIGHTS
31.0 NOTICES
32.0 ENVIRONMENTAL WARRANTY LIMITATION
33.0 ORDERING COMPANIES
34.0 OZONE DEPLETING CHEMICALS
35.0 PACKING, LABELING AND SERIALIZATION
36.0 PAYMENT TERMS
37.0 PRODUCT CONFORMANCE REVIEWS
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<PAGE>
38.0 REJECTIONS
39.0 REPAIRS NOT COVERED UNDER WARRANTY
40.0 REPAIR PROCEDURES
41.0 RIGHT OF ENTRY
42.0 SERVICES
43.0 SOFTWARE
44.0 INVOICING FOR STOCK
45.0 SURVIVAL OF OBLIGATIONS
46.0 TAXES
47.0 TIMELY PERFORMANCE
48.0 TITLE AND RISK OF LOSS
48A.0 EQUIPMENT
49.0 TOXIC SUBSTANCES AND PRODUCT HAZARDS
50.0 TERMINATION
51.0 WARRANTY
52.0 EXPORT CONTROL
53.0 OZONE DEPLETING SUBSTANCES LABELING
54.0 INFRINGEMENT
55.0 SEVERABILITY
56.0 CHOICE OF LAW
57.0 DISPUTE RESOLUTION
58.0 BANKRUPTCY AND CHANGE OF CONTROL
59.0 ENTIRE AGREEMENT
60.0 COMPLIANCE WITH LAWS
61.0 COMPLIANCE WITH UNITED STATES CUSTOMS LAWS AND REGULATIONS
62.0 RELATIONSHIP OF PARTIES
63.0 INDEPENDENT AGREEMENT
64.0 COUNTERPARTS
ATTACHMENTS
A CHANGE CONTROL PROCEDURES
Page 3
<PAGE>
MANUFACTURING AGREEMENT
This Agreement is entered into and made effective as of February 4, 1998
("Effective Date"), by and between Lucent Technologies Inc., a corporation
organized under the laws of the State of Delaware and having its principal place
of business at 600 Mountain Avenue, Murray Hill, New Jersey 07974 ("Lucent"),
and BroadBand Technologies, Inc., a corporation organized under the laws of the
State of Delaware and having its principal office at 4024 Stirrup Creek Drive,
Durham, North Carolina 27709-3737 ("BroadBand") (collectively "the Parties").
WITNESSETH:
WHEREAS, Lucent is in the business of, among other things, producing and
marketing telecommunications equipment and related supplies and services; and
WHEREAS, BroadBand manufactures and sells products related to some of the
business of Lucent, and Lucent desires BroadBand to manufacture for Lucent
various Lucent products, pursuant to Lucent specifications, for Lucent to sell
to Lucent's customers, subject to the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual promises herein set forth and
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged by the parties, BroadBand and Lucent agree as follows:
1.0 EFFECTIVE PERIOD OF AGREEMENT - The term of this Agreement shall commence on
the Effective Date, and shall, except as otherwise provided in this Agreement,
continue in effect thereafter for a period of three years from the end of the
Preparation Period as defined herein.
1.1 PREPARATION PERIOD - Promptly after the execution of this Agreement, each
Party will appoint a team of representatives to work together on establishing a
set of procedures to be followed by the Parties in implementing this Agreement.
That team will also agree on the initial Product Letter for Material to be
manufactured pursuant to this Agreement. The initial Product Letter will include
the following information: (a) the identification of the initial Material to be
manufactured by BroadBand for Lucent; (b) the Specifications to be used by
BroadBand in manufacturing that Material; (c) the initial twelve (12) month
forecast for that Material; (d) the per unit price to be charged by BroadBand to
Lucent for the Material identified in the forecast, and the price schedule for
repairs of the Material; (e) the monetary amount of Manufacturing Absorption
associated with each unit of Material in the initial forecast ("the
Manufacturing Absorption Rate"); (f) the warranty period for the Material if
other than five (5) years; (g) identification of test documentation, equipment,
or other information or materials to be provided by Lucent in connection with
the Material; (h) the packaging standards for each item of Material; (i) the
freight classification for each item of Material; (j) the norm for rejection
rates and period of time to achieve quality levels (See Section 50); (k) the
schedule under which Lucent may change its forecast or purchase order quantity
without charge; (l) any long lead time components, custom materials or other
components authorized for procurement by BroadBand;
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<PAGE>
(m) the percentages for failures and defects of Material referenced in the
clause entitled PRODUCT CONFORMANCE REVIEWS; and (n) the identification of the
applicable Lucent quality inspection organization. These tasks will be completed
within ninety (90) days from the Effective Date of this Agreement ("the
Preparation Period"). The document produced by this team will constitute the
first Product Letter under this Agreement. Subsequent Product Letters will
contain the same information as set forth in this Article. Product Letters are
effective only when signed by both Parties.
2.0 MATERIAL - "Material" or "material" as used in this Agreement shall mean the
products described in a Product Letter. Such Material shall be manufactured by
BroadBand pursuant to Lucent specifications set forth in the Product Letter and
will be sold only to Lucent in accordance with the terms, conditions and
specifications stated in this Agreement. Material shall be furnished to Lucent
on an as ordered basis. "Specification(s)" as used in this Agreement shall mean
all of the specifications made part of a Product Letter.
3.0 PRICE - Prices for Material to be manufactured hereunder shall be set forth
in the applicable Product Letter.
4.0 PAYMENT TERMS - Payment for Material shall be due net 30 days from the date
of delivery of the Material to Lucent or receipt of the applicable invoice by
Lucent, whichever occurs later.
5.0 SHIPMENT. - The Material shall be shipped FOB BroadBand's factory. Freight
will be prepaid and billed as a separate item unless directed otherwise by
Lucent.
6.0 FORECAST OF MATERIAL - Lucent will provide BroadBand each month with a
twelve (12) month rolling forecast of the Material it plans to order and have
delivered during each month. The first such forecast will be prepared during the
Preparation Period. Lucent will provide more frequent updates as appropriate.
Consistent with the change order provisions set forth in the clause entitled
"PURCHASE ORDERS", these forecasts shall constitute a commitment by Lucent.
BroadBand agrees to acknowledge receipt of and provide acceptance of forecasts
in writing within ten (10) working days from receipt. Lucent will make
reasonable efforts to provide balanced forecasts and purchase orders for
Material to avoid sharp increases or decreases in production.
7.0 PURCHASE COMMITMENT - Following the end of the Preparation Period, Lucent
shall purchase a volume of Material from BroadBand sufficient to enable
BroadBand to absorb the amounts of the manufacturing costs identified in the
definition of Manufacturing Absorption set forth in Article 7.1 of this
Agreement ("Manufacturing Absorption") shown below, for each indicated period
("Absorption Period"):
******** End of Preparation Period through December 31, 1998
******** January 1, 1999 through June 30, 1999
******** July 1, 1999 through December 31, 1999
******** January 1, 2000 through June 30, 2000
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<PAGE>
******** July 1, 2000 through December 31, 2000
******** January 1, 2001 through May 1, 2001.
-----------
$18 million Total
Purchases will be arranged, to the extent practicable, to provide the same level
of Manufacturing Absorption each quarter. If at the end of the first Absorption
Period, Lucent has not purchased sufficient Material to absorb ************* of
Manufacturing Absorption, Lucent shall pay the deficiency in Manufacturing
Absorption to BroadBand within thirty (30) days of the end of such Absorption
Period. A similar calculation will be made at the end of each subsequent
Absorption Period. If this Agreement is terminated by Lucent other than for
cause or the end of the last Absorption Period is reached without BroadBand
having received eighteen million dollars ($18,000,000) in Manufacturing
Absorption, Lucent shall pay the deficiency to BroadBand within thirty (30) days
of such termination or end of Absorption Period. The Manufacturing Absorption
Rate associated with the initial Material to be manufactured by BroadBand will
be established by the representatives of the Parties during the Preparation
Period. Consistent with the process established by the Parties during the
Preparation Period, the Parties' representatives will meet monthly following the
Preparation Period to establish the Manufacturing Absorption Rate for each unit
of Material identified in Lucent's then current forecast.
7.1 The term "Manufacturing Absorption", as used in Article 7.0 and elsewhere in
this Agreement, shall mean all costs associated with direct and indirect labor
and related overheads, depreciation of capital equipment, facility amortization,
manufacturing variance and other direct and indirect expenses. The term does not
include direct material acquisition costs.
7.1.1 Direct labor and associated overhead: includes salaries and fringe
benefits of personnel who are manufacturing/testing products;
7.1.2 Indirect labor and associated overhead: includes salaries and fringe
benefits of personnel in support of production, quality, test and process
engineering, documentation, etc.
7.1.3 Direct expenses: expenses associated with the manufacture of the
product (e.g., line scrap, engineering change orders, obsolesence, unique
tools, etc.)
7.1.4 Indirect expenses: associated expense not directly attributable to a
specific product, but nonetheless layered over the operation (e.g.,
facilities, heat, transportation, etc.)
7.1.5 Manufacturing variance: does not include product warranty cost.
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<PAGE>
8.0 SHIPPING - BroadBand shall: (1) ship the Material covered by a forecast or a
purchase order substantially complete unless instructed otherwise; (2) ship to
the destination designated in the purchase order; (3) ship according to routing
instructions given by Lucent; (4) place the Agreement and purchase order number
on all subordinate documents; (5) enclose a packing memorandum with each
shipment and, when more than one package is shipped, identify the package
containing the memorandum; (6) mark the purchase order number on all packages
and shipping papers; and (7) not ship Material more than five (5) working days
earlier or five (5) working days later than the agreed upon shipment date
without Lucent's prior written authorization. Adequate protective packing shall
be furnished at no additional charge. Shipping and routing instructions must be
furnished or altered by Lucent in writing. If BroadBand does not make a
reasonable effort to comply with the terms of the purchase order or with
Lucent's written shipping or routing instructions, BroadBand authorizes Lucent
to charge back to BroadBand any increased cost incurred by Lucent as a result of
BroadBand's failure to comply. Lucent agrees to review each shipment upon
receipt for contents and damage and advise BroadBand within fifteen (15)
calendar days of any deficiencies. Unless Lucent notifies BroadBand of
deficiencies within such fifteen (15) day period, the shipment shall be deemed
accepted.
9.0 SHIPPING INTERVAL - The delivery schedule and interval applicable to each
purchase order will be agreed upon by BroadBand and Lucent and set forth in the
purchase order.
9.1 If BroadBand exceeds the delivery intervals then, in addition to all other
rights and remedies at law or equity or otherwise, and without any liability or
obligation of Lucent, Lucent shall have the right to: (a) cancel such purchase
order with regard to the affected Material following the expiration of a five
(5) business day grace period or (b) extend such delivery date to a later date,
subject, however, to the right to cancel as in (a) preceding if delivery is not
made or performance is not completed on or before such extended delivery date.
If Lucent elects to extend such delivery date, BroadBand shall absorb the
difference between the charges to ship via normal transportation and the charges
to ship premium overnight. The grace period will be extended by the amount of
any delay caused by delay in BroadBand receiving parts, information or services
from Lucent or any of its affiliates that Lucent has agreed to provide under the
relevant Product Letter or other writing executed by Lucent.
9.2 If a purchase order is canceled by Lucent pursuant to the above, Lucent
shall have the right to retain or return any or all Material received by or paid
for by Lucent under such purchase order. Within fifteen (15) days of BroadBand's
receipt of returned Material, BroadBand shall reimburse Lucent for the costs of
shipping the Material returned to BroadBand and for any amounts, including
shipping costs, previously paid by Lucent for the Material. Lucent shall pay for
any Material it retains at the prices set forth in the purchase order or a
Product Letter. Lucent shall receive credit for the Manufacturing Absorption
Rate associated with canceled orders.
9.3 If, during the course of this Agreement, BroadBand determines that BroadBand
will no longer be able to ship within the agreed interval, BroadBand shall
immediately notify Lucent's buyer to that effect. BroadBand shall also notify
Lucent's buyer, as soon as it becomes apparent, if BroadBand is unable to meet
the delivery date for an order.
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<PAGE>
10.0 FREIGHT CLASSIFICATION - Material purchased under this Agreement shall be
shipped to Lucent or Lucent's customers subject to freight charges appropriate
for goods classified as set forth in a Product Letter or a purchase order.
BroadBand shall indicate on the bill of lading that Lucent's contract rates
apply.
11.0 SPECIFICATIONS OR DRAWINGS - The Product Letters will include manufacturing
specifications (referred to herein as "Technical Specifications" or
"Specifications") for Lucent products to be manufactured by BroadBand. The
Specifications for the Material included on the initial forecast will be agreed
to during the Preparation Period. Specifications for Material to be added to any
subsequent forecast will be agreed upon prior to inclusion of the Material on a
forecast.
In accordance with the notification requirements outlined in the clause
NOTICES, Lucent shall provide BroadBand with at least thirty (30) days prior
written notice of any change proposed to be made by Lucent in the Specifications
for Material to be manufactured by BroadBand under this Agreement.
If the parties do not agree to the change proposed by Lucent, and the
parties are unable to agree on a mutually acceptable modification, Lucent may
opt to continue the purchase of the Material under the agreed upon
Specifications or cancel any existing orders for that Material; provided,
however, that orders for delivery within the period set forth in the applicable
Product Letter during which Lucent may not change its purchase order quantity
may not be canceled without the written agreement of BroadBand. BroadBand may
not unilaterally cease manufacture of Material subject to an accepted purchase
order.
12.0 PURCHASE ORDERS - Purchase orders issued under this Agreement shall be sent
to the following address:
BroadBand Technologies, Inc.
P.O. Box 13737
4024 Stirrup Creek Drive
Durham, North Carolina 27709-3737
Attention: Customer Logistics Organization
Each purchase order shall specify: (a) description of material, inclusive
of any numerical/alphabetical identification, (b) delivery schedule or dates,
(c) applicable price, (d) location to which the material is to be shipped and
(e) location to which invoices shall be sent for payment. Preprinted terms on
Lucent's purchase order form will be ignored.
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<PAGE>
Lucent may at any time subsequent to the issuance of a forecast or purchase
order under this Agreement change the forecast or purchase order quantity at no
charge in accordance with the schedule set forth in the applicable Product
Letter.
At the option of Lucent, and at any time during the Agreement should
Material covered by a commitment to BroadBand become outdated or replaced by
later technology or newer components, such commitment shall be transferred to
the new technology i.e., Material; provided, however, that such transfer shall
not affect Material scheduled for delivery within the period prior to scheduled
delivery established in the applicable Product Letter within which Lucent may
not amend a purchase order, without the written approval of BroadBand.
For Lucent authorized changes, Lucent's liability if any, for commitments
covering the older technology/components(s) shall be limited to BroadBand's
standard cost (purchase price plus associated overhead in accordance with
BroadBand's standard accounting practices) of all components for the material
ordered by BroadBand and not transferable to the new technology or (not usable
in BroadBand's other operations or saleable to BroadBand's other customers),
less any salvage value thereof. However, no such charges shall be payable if
within sixty (60) calendar days after notice of change, Material equivalent in
kind to that being terminated is ordered by Lucent from BroadBand, and Broadband
has not expended best efforts to reduce Lucent's liability for such material
during said sixty (60) calendar days period. If requested, BroadBand agrees to
substantiate effort and such costs by, for example, submitting supporting
invoices for all material invoiced to Lucent.
BroadBand is authorized by Lucent to procure long lead-time components,
custom materials and/or components that are required to be purchased in large
minimum order quantities (MO's) as indicated in Product Letters. Any amendment
agreed by the parties shall not apply to orders made by BroadBand prior to the
effective date of the amendment, except that an amendment shall apply to prior
orders to the extent that BroadBand fails to take reasonable action to cancel or
reduce an order made prior to the date of the amendment. When possible,
BroadBand shall purchase such items in quantities to meet Lucent's expected
schedule unless otherwise agreed. If Lucent specifies a lead ordering time
longer than sixty (60) working days and/or BroadBand must place a longer-than-90
day firm and irrevocable order for such parts with the approved supplier, Lucent
will be obligated to purchase from BroadBand at BroadBand's cost the parts
required to fill Lucent's purchase order upon the earlier to occur of (i) the
time the purchase order is canceled by Lucent, or (ii) the time this Agreement
terminates, unless Lucent indicates is will honor a purchase order with a
scheduled delivery after the date this Agreement terminates, or (iii) the time
that such parts are no longer required due to changes mutually agreed by both
parties.
BroadBand shall make available to Lucent, upon request, reasonable
quantities of any components used in Material for Lucent's repair activity. Such
components are referred to as "Bench Stock." Reasonable infrequent requests for
quantities of Bench Stock will be sold to Lucent at BroadBand's actual purchase
price.
13.0 ASSIGNMENT - BBT shall not assign any right or interest under this
Agreement (excepting solely for moneys due or to become due) without the prior
written consent of Lucent.
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<PAGE>
Subject to Lucent's right to terminate upon the occurrence of a Change in
Control, a merger or consolidation shall not be deemed to be an assignment. BBT
will provide Lucent with written notice of a merger or consolidation within ten
(10) business days after having knowledge or reasonable expectation of the
merger or consolidation.
14.0 INTELLECTUAL PROPERTY RIGHTS - This is not a product development contract.
In the event that Lucent desires BroadBand to perform any product development,
such work is to be performed under a separate agreement. The Parties
acknowledge, however, that from time to time, BroadBand may propose minor
changes to the manufacturing Specifications or other elements of the Materials.
BroadBand agrees that Lucent shall own any such changes approved by Lucent and
incorporated into the Material supplied by BroadBand, including intellectual
property rights thereto or embodied therein, absent express written agreement
otherwise.
15.0 DISTRIBUTION RIGHTS - BroadBand agrees that it will not manufacture
Materials other than for Lucent. BroadBand further agrees that it will not sell
or offer for sale anywhere in the world products which are the same or
essentially the same in external appearance and/or placement of external
controls as Material except for products of its own design and manufacture which
evolve from a project under the Research and Development Services Agreement
between the parties of even date herewith. Nothing in this clause shall restrict
BroadBand from selling or offering for sale any assembly, subassembly, or
component of the product which BroadBand has manufactured pursuant to its own
design specifications or at its own expense. Nothing in this clause shall be
deemed to be in contradiction with the rights of Lucent as stated in the clause
NONEXCLUSIVE MARKET RIGHTS.
16.0 CONFIDENTIALITY - All Information ("Information" means proprietary
specifications, designs, plans, drawings, software, data, prototypes or other
business and /or technical information) provided by either Party to the other
pursuant to this Agreement shall be held in confidence by the receiving Party;
shall be used only for the purpose of performing acts and obligations pursuant
to this Agreement; shall be reproduced only to the extent necessary for that
purpose; and shall not be disclosed by the receiving Party without the prior
written approval of the disclosing Party. The receiving Party may, however,
disclose the Information to its employees, consultants and contractors with a
need to know; provided, that the receiving Party binds those employees,
consultants and contractors to terms at least as restrictive as those stated
herein, advises those employees, consultants and contractors of their
confidentiality obligations, and indemnifies the disclosing Party for any breach
of those obligations. Information shall be subject to the restrictions in this
section if it is in writing or other tangible form, only if clearly marked as
proprietary when disclosed to the receiving Party; or, if not in tangible form,
is of a nature that a reasonable person would conclude is confidential
Information, and the Information is reduced to writing clearly marked as
proprietary, with a copy of the writing being furnished to the receiving Party
within thirty (30) days of the disclosure of the intangible information, and
with the writing containing a notice that the information was previously
provided in intangible form. These restrictions on the use or disclosure of
Information shall not apply to any Information: (i) which is independently
developed by or for the receiving Party; (ii) which is lawfully received free of
restriction from another source; (iii) after it has become generally available
to the public without breach of this Agreement by the receiving party; (iv)
which at the time of disclosure to the receiving Party was known to that Party
free of restriction as evidenced
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by documentation in that Party's possession; (v) which the disclosing Party
agrees in writing is free of such restrictions; or (vi) which the receiving
Party is required to disclose under applicable laws, rules and regulations,
provided that the receiving Party shall first notify the disclosing Party of
such required disclosure and afford the disclosing party the opportunity to seek
a protective order relating to such disclosure. All Information shall remain the
property of the disclosing Party and shall be returned upon written request or
upon the receiving Party's determination that it no longer has a need for such
Information. The receiving Party may retain one copy of all written materials
returned to provide an archive record of the disclosure.
17.0 EPIDEMIC CONDITION - If, during the term of this Agreement and for one year
after the last shipment date of Material under this Agreement, Lucent notifies
BroadBand that any Material shows evidence of an "Epidemic Condition" caused by
BroadBand's manufacturing and not by any specifications, designs, instructions,
component suppliers or materials provided by or approved by Lucent, BroadBand
shall prepare and propose a Corrective Action Plan ("CAP") with respect to such
Material, addressing implementation and procedure milestones for remedying such
Epidemic Condition(s). BroadBand shall provide the CAP within ten (10) days of
receiving information from Lucent reasonably required to identify and replicate
the problem and prepare the CAP. An extension of this time-frame is permissible
upon mutual written agreement of the parties.
Upon notification of the Epidemic Condition to BroadBand, Lucent shall have
the right to postpone all or part of the shipments of unshipped Material
exhibiting the Epidemic Condition, by giving written notice of such postponement
to BroadBand, pending correction of the Epidemic Condition. Such postponement
shall temporarily relieve BroadBand of its shipment liability and Lucent of its
shipment acceptance liability. Should BroadBand not agree to the existence of an
Epidemic Condition or should Lucent not agree to the CAP, the matter will be
handled in accordance with the clause DISPUTE RESOLUTION.
An Epidemic Condition will be considered to exist when one or more of the
following conditions occur:
(1) Failure reports or statistical samplings show that four (4) percent or more
of Material installed or four (4) percent or more of Material shipped
during any two consecutive months, or four (4) percent or more of the
Material tracked by Lucent's Field Quality Engineering contain a potential
safety hazard (such as personal injury or death, fire, explosion, toxic
emissions, etc.), or exhibit a highly objectionable symptom (such as
emissions of smoke, loud noises, deformation of housing) or other
disconcerting symptoms of this type.
(2) Reliability plots of relevant data indicate that the material has actual
Mean Time Between Failures (MTBF) of less than 80% of the MTBF stipulated
in the Technical Specification. The MTBF parameter of Material is defined
as the total operating or power-on time of any population under observation
("T"), in hours, divided by the total number of critical failures ("n")
that have occurred during the observed period. A critical failure is
defined as a failure to operate per the requirements of the Technical
Specification. The total operating time of a population is the summation of
operating time of individual units in
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that population. MTBF is expressed as MTBF = T/n. An Epidemic Condition
shall exist when data derived from populations being tracked confirms the
condition with 80% confidence.
(3) Material Dead on Arrival (DOA) failures exceed the Epidemic DOA failure
rate which is defined as 1.2 x DOA specified in the article of this
Agreement entitled PRODUCT CONFORMANCE REVIEW.
Only major functional and visual/mechanical/appearance defects are
considered for determining Epidemic Condition. Material can be either sampled
or, at Lucent's option, 100% audited at Lucent warehouses, factories or Lucent's
customers' locations. If material is sampled, the data must have 80% or better
statistical confidence.
For the purpose of this Agreement, functional DOA shall be defined as any
material that during the test, installation or upon its first use fails to
operate as expected or specified. Visual/mechanical/appearance DOA is defined as
any material containing one or more major defects that would make the material
unfit for use or installation.
An Epidemic Condition shall not include failures due to customer
misapplication, utilization of parts not approved by BroadBand, or chain
failures induced by internally or externally integrated subassemblies.
In the event that BroadBand develops a remedy for the defect(s) that caused
the Epidemic Condition and Lucent agrees in writing that the remedy is
acceptable, BroadBand shall:
(a) Incorporate the remedy in the affected Material in accordance with the
Engineering Change Control procedures set forth in Attachment A to this
Agreement.
(b) Ship all subsequent material incorporating the required modification
correcting the defect(s) at no additional charge to Lucent; and
(c) Repair and/or replace material that caused the Epidemic Condition. In the
event that Lucent incurs costs due to such repair and/or replacement,
including but not limited to labor and shipping costs, BroadBand shall
reimburse Lucent for such reasonable costs. BroadBand shall bear risk of in
transit loss and damage for such repaired and/or replaced material.
BroadBand and Lucent shall mutually agree in writing as to the remedy's
implementation schedule. BroadBand shall use its best efforts to implement the
remedy in accordance with the agreed-upon schedule.
If BroadBand is unable to develop a mutually agreeable remedy, or does not
adequately take into account the business interests of Lucent, as reasonably
agreed by the parties, Lucent may (1) develop and implement such remedy and, in
such case, reasonable implementation costs and risk of in-transit loss and
damage shall be allocated between the parties as set forth in this clause,
and/or (2) cancel postponed orders without liability and return all material
affected by such Epidemic Condition for full refund, payable by BroadBand within
thirty (30) days after
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receipt of returned material (with risk of loss or in-transit damage borne by
BroadBand) and/or (3) terminate this Agreement without further liability.
18.0 FORCE MAJEURE - Neither party shall be held responsible for any delay or
failure in performance of any part of this Agreement to the extent such delay or
failure is caused by fire, flood, strike, civil, governmental or military
authority, act of God, or other similar causes beyond its control and without
the fault or negligence of the delayed or non-performing party or its
subcontractors. BroadBand's liability for loss or damage to Lucent's material in
BroadBand's possession or control shall not be modified by this clause. When a
party's delay or nonperformance continues for a period of at least thirty (30)
days, the other party may terminate, at no charge, any order affected by the
force majeure condition. In addition, the other party may terminate this
Agreement in the event that a force majeure condition persists for a period of
at least six (6) months within which 50% or more of the Material forecast to be
delivered and paid for during such period is affected. Lucent shall receive
credit for the Manufacturing Absorption associated with the Material for which
orders are canceled by Lucent under this Article.
19.0 HEAVY METALS AND/OR CFC IN PACKAGING - BroadBand warrants to Lucent that no
lead, cadmium, mercury or hexavalent chromium have been intentionally added to
any packaging or packaging component (as defined under applicable laws) to be
provided to Lucent under this Agreement and that packaging materials were not
manufactured using and do not contain chlorofluorocarbons. BroadBand further
warrants to Lucent that the sum of the concentration levels of lead, cadmium,
mercury and hexavalent chromium in the package or packaging component provided
to Lucent under this Agreement does not exceed 100 parts per million. Upon
request, BroadBand shall provide to Lucent Certificates of Compliance certifying
that the packaging and/or packaging components provided under this Agreement are
in compliance with the requirements set forth above in this clause.
20.0 IDENTIFICATION - BroadBand shall not, without Lucent's prior written
consent, engage in publicity related to this Agreement, or make public use of
any Identification in any circumstances related to this Agreement.
"Identification" means any semblance of any trade name, trademark, service mark,
insignia, symbol, logo, or any other designation or drawing of Lucent
Technologies or its affiliates. BroadBand shall remove or obliterate any
Identification prior to any use or disposition of any material rejected or not
purchased by Lucent. Lucent recognizes that BroadBand is a public company and
that some disclosure of this Agreement by BroadBand may be required by
applicable law.
21.0 IMPLEADER - Neither party shall implead or bring an action against the
other based on any claim by any person for personal injury or death to an
employee of the other party for which the other party has previously paid or is
obligated to pay worker's compensation benefits to such employee or claimant and
for which such employee or claimant could not otherwise bring legal action
against the other party.
22.0 INDEMNITY - At Lucent's request, BroadBand agrees to indemnify, defend and
hold harmless Lucent, its affiliates, customers, employees, successors and
assigns (all referred to as "Lucent") from and against any losses, damages,
claims, fines, penalties and expenses (including reasonable attorney's fees)
that arise out of or result from: (1) injuries or death to persons or
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damage to property, including theft, in any way arising out of or caused or
alleged to have been caused by the work or services performed by, or material
provided by BroadBand or persons furnished by BroadBand; or (2) assertions under
Workers' Compensation or similar acts made by persons furnished by BroadBand.
BroadBand agrees to indemnify, defend (with counsel selected by Lucent) and
hold Lucent and Lucent's affiliates and the directors, officers, shareholders,
employees, tenants, contractors, assigns and successors and their affiliates
harmless from any claims (including without limitation third-party claims for
personal injury or real or personal property damage), actions, administrative
proceedings (including informal proceedings), judgments, damages, punitive
damages, penalties, fines, liabilities (including sums paid in settlement of
claims), interest or costs, including attorneys' fees (including any fees and
expenses incurred in enforcing this indemnity), consultant fees, and expert fees
sought from or asserted against Lucent in connection with the presence,
suspected presence, release, suspected release, or threat of release of any
Hazardous Substance, whether into the air, soil, surface water or groundwater at
any and all of the manufacturing facilities owned, operated and/or leased by
BroadBand.
23.0 INFRINGEMENT - BroadBand shall indemnify and save harmless Lucent, its
affiliates and their customers, officers, directors, and employees (all referred
to in this clause as "Lucent") from and against any losses, damages,
liabilities, fines, penalties, and expenses (including reasonable attorneys'
fees) that arise out of or result from any and all claims (1) of infringement of
any patent, copyright, trademark or trade secret right, or other intellectual
property right, private right, or any other proprietary or personal interest,
and (2) related to the manufacturing processes used by BroadBand in
manufacturing Material under this Agreement (an "Infringement Claim"). If the
Infringement Claim arises solely from BroadBand's adherence to Lucent's written
instructions regarding services or tangible or intangible goods provided by
BroadBand ("Items") and if the Items are not (1) commercial items available on
the open market or the same as such items, or (2) items of BroadBand's
designated origin, design or selection, Lucent shall indemnify BroadBand. Lucent
or BroadBand (at Lucent's request) shall defend or settle, at its own expense
any demand, action or suit on any Infringement Claim for which it is indemnitor
under the preceding provisions and each shall timely notify the other of any
assertion against it of any Infringement Claim and shall cooperate in good faith
with the other to facilitate the defense of any such Claim.
24.0 INSIGNIA - Upon Lucent's written request, "Insignia", including certain
trademarks, trade names, insignia, symbols, decorative designs or packaging
designs of Lucent, or evidences of Lucent's inspection will be properly affixed
by BroadBand to the material furnished or its packaging. Such Insignia will not
be affixed, used or otherwise displayed on the material furnished or in
connection therewith without written approval by Lucent. The manner in which
such Insignia will be affixed must be approved in writing by Lucent in
accordance with standards established by Lucent. Lucent shall retain all right,
title and interest in any and all packaging designs, finished artwork and
separations furnished to BroadBand. This clause does not reduce or modify
BroadBand's obligations under the IDENTIFICATION and USE OF INFORMATION clauses.
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25.0 INSURANCE - BroadBand shall maintain and cause BroadBand's subcontractors
to maintain during the term of this Agreement: (1) Workers' Compensation
insurance as prescribed by the law of the state or nation in which the work is
performed; (2) employer's liability insurance with limits of at least $500,000
for each occurrence; (3) automobile liability insurance if the use of motor
vehicles is required, with limits of at least $1,000,000 combined single limit
for bodily injury and property damage per occurrence; (4) Commercial General
Liability ("CGL") insurance, ISO 1988 or later occurrence form of insurance,
including Blanket Contractual Liability and Broad Form Property Damage, with
limits of at least $1,000,000 combined single limit for bodily injury and
property damage per occurrence; and (5) if the furnishing to Lucent (by sale or
otherwise) of material or construction services is involved, CGL insurance
endorsed to include products liability and completed operations coverage in the
amount of $5,000,000 per occurrence. All CGL and automobile liability insurance
shall designate Lucent Technologies Inc., its affiliates, and its directors,
officers and employees (all referred to in this clause as "Lucent") as
additional insured. All such insurance must be primary and non-contributory and
required to respond and pay prior to any other insurance or self-insurance
available. Any other coverage available to Lucent shall apply on an excess
basis. BroadBand agrees that BroadBand, BroadBand's insurer(s) and anyone
claiming by, through, under or in BroadBand's behalf shall have no claim, right
of action or right of subrogation against Lucent and its customers based on any
loss or liability insured against under the foregoing insurance. BroadBand and
BroadBand's subcontractors shall furnish prior to the start of Work certificates
or adequate proof of the foregoing insurance, including if specifically
requested by Lucent, endorsements and policies. In the event that BroadBand
changes insurers, BroadBand will notify Lucent of such change. Insurance
companies providing coverage under this Agreement must be rated by A-M Best with
at least an A- rating.
26.0 INVOICING FOR GOODS - BroadBand shall: (1) render original invoice, or as
otherwise specified in this Agreement, showing Agreement and order number,
through routing and weight; (2) render separate invoices for each shipment
within twenty-four (24) hours after shipment; and (3) mail invoices with copies
of bills of lading and shipping notices to the address shown on this Agreement
or order. If prepayment of transportation charges is authorized, BroadBand shall
include the transportation charges from the FOB point to the destination as a
separate item on the invoice stating the name of the carrier used.
27.0 MARKING - All Material furnished under this Agreement shall be marked for
identification purposes in accordance with the Specifications set forth in a
Project Letter to this Agreement and as follows:
(a) with Lucent model/serial number; and
(b) with month and year of manufacture.
In addition, BroadBand shall add any other identification which might be
reasonably requested by Lucent such as but not limited to indicia conforming to
Lucent's serialization plan. Charges, if any, for such additional identification
marking shall be as agreed upon by BroadBand and Lucent. This clause does not
reduce or modify BroadBand's obligations under the IDENTIFICATION clause.
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28.0 MONTHLY ORDER AND SHIPMENT REPORTS - BroadBand shall render monthly order
and shipment reports on or before the fifth working day of the succeeding month
containing the information reasonably required on report forms furnished by
Lucent.
29.0 NEW AND CHANGED METHODS, PROCESSES AND EQUIPMENT - BroadBand shall keep
abreast of major developments in BroadBand's industry and promptly advise Lucent
of any developments which might affect the production of any material under this
Agreement.
If during the term of this Agreement BroadBand's costs are reduced by using
improvement from (1) the adoption of new production methods, processes,
techniques, or materials; or (2) the use of additional, new, or different
equipment or facilities, prices shall be reduced by agreement of the parties to
fairly reflect such reduction.
30.0 NON-EXCLUSIVE MARKET RIGHTS - This Agreement does not grant to BroadBand an
exclusive right or privilege to sell to Lucent any or all products of the type
described in the MATERIAL clause which Lucent may require. Therefore, Lucent may
contract with other manufacturers and suppliers for the procurement of
comparable products. In addition, Lucent shall, at its sole discretion, decide
the extent to which Lucent will market advertise, promote, support or otherwise
assist in further offerings of the material. Purchases by Lucent under this
Agreement shall neither restrict the right of Lucent to cease purchasing nor
require Lucent to continue any level of such purchases.
31.0 NOTICES - Any notice or demand which under the terms of this Agreement or
under any statute must or may be given or made by BroadBand or Lucent shall be
in writing and shall be given or made by confirmed facsimile, or similar
communication or by express mail or overnight courier addressed to the
respective parties as follows:
To Lucent: Lucent Technologies Inc.
7725 West Reno Avenue
Oklahoma City, Oklahoma 73126-0060
Attention: Access Engineering Director
With a copy to: Lucent Technologies Inc.
Address: 67 Whippany Road
Whippany, New Jersey 07981
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Attention: Access Product Management Vice
President
To BroadBand: BroadBand Technologies, Inc.
Address: P.O. Box 13737
4024 Stirrup Creek Drive
Durham, North Carolina 27709-3737
Attention: Chief Financial Officer
Such notice or demand shall be deemed to have been given or made when received.
The above addresses may be changed at any time by giving prior written notice as
above provided.
32.0 ENVIRONMENTAL WARRANTY LIMITATION - The warranties and indemnities of
BroadBand in the clauses INDEMNITY, OZONE DEPLETING CHEMICALS and TOXIC
SUBSTANCES AND PRODUCT HAZARDS shall not apply to materials provided by Lucent
or manufactured by another supplier to a Lucent specification.
33.0 ORDERING COMPANIES - Lucent or any affiliated corporation, partnership, or
venture, both U.S. and foreign, as may be designated in writing by Lucent, may
order under this Agreement. For the purpose of this Agreement, the term "Lucent"
shall mean the corporation or other entity which enters into or issues a
contract or order under this Agreement. An affiliated corporation, partnership,
or venture is an entity, a majority of whose voting stock or ownership interest
is owned directly or indirectly by Lucent. Any contract or order issued under
this Agreement will be a contractual relationship between Lucent and BroadBand
and BroadBand shall look only to Lucent for performance of Lucent's obligations
under such contract or order.
34.0 OZONE DEPLETING CHEMICALS - Subject to the clause ENVIRONMENTAL WARRANTY
LIMITATION, BroadBand hereby warrants that it is aware of international
agreements and pending legislation in several nations, including the United
States, which would limit, ban and/or tax importation of any product containing,
or produced using ozone depleting chemicals ("ODCs"), including
chloroflurocarbons, halons and certain chlorinated solvents. BroadBand hereby
warrants that the material furnished to Lucent will conform to all applicable
requirements established pursuant to such agreements, legislation and
regulations, and the material furnished to Lucent will be able to be imported
and used lawfully (and without additional taxes associated with ODCs not
reported to Lucent by BroadBand as set forth in this clause) under all such
agreements, legislation and requirements. BroadBand also warrants that it is
currently reducing, or if BroadBand is not the manufacturer of the material, is
currently causing the manufacturing vendor to reduce and will, in an expeditious
manner, eliminate, or, as
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applicable, have its manufacturing vendor eliminate the use of ODCs in the
manufacture of the material.
If the material furnished by BroadBand under this Agreement is manufactured
outside the United States, BroadBand shall, upon execution of this Agreement,
and at any time that new products are added to this Agreement or changes are
made to the material furnished under this Agreement, complete, sign and return
to Lucent the attached ODC Content Certification. The ODC Content Certification
must be signed by BroadBand's facility manager, corporate officer or his
delegate.
The term "ODC content" on the ODC Content Certification means the total pounds
of ODC used directly in the manufacture of each unit of material. This includes
all ODCs used in the manufacturing and assembly operations for the material plus
all ODCs used by BroadBand's vendors and any other vendors in producing
components or other products incorporated into the material sold to Lucent.
BroadBand is responsible to obtain information on the ODC content of all
components and other products acquired to manufacture the material and to
incorporate such information into the total ODC content reported to Lucent;
provided however, that BroadBand should not include in the ODC content those
components or other products which are manufactured in the United States.
BroadBand hereby warrants to Lucent that all information furnished by BroadBand
on the ODC Content Certification is complete and accurate and that Lucent may
rely on such information for any purpose, including but not limited to providing
reports to government agencies or otherwise complying with applicable laws.
BroadBand shall defend, indemnify and hold Lucent harmless of and from any
claims, demands, suits, judgments, liabilities, fines, penalties, costs and
expenses (including additional ODC taxes as provided for in paragraph one of
this clause and reasonable attorney's fees) which Lucent may incur under any
applicable federal, state, or local laws or international agreements, and any
and all amendments thereto by reason of Lucent's use of reliance on the
information furnished to Lucent by BroadBand on the ODC Content Certification or
by reason of BroadBand's breach of this clause. BroadBand shall cooperate with
Lucent in responding to any inquiry concerning the use of ODCs to manufacture
the material or components thereof and to execute without additional charge any
documents reasonably required to certify the absence or quantity of ODCs used to
manufacture the material or components thereof.
35.0 PACKING, LABELING AND SERIALIZATION - Material purchased, repaired,
replaced or refurbished under this Agreement shall be packed, labeled and
serialized by BroadBand at no additional charge in accordance with the packaging
standards agreed in the applicable Product Letter. In developing the packaging
standards, the representatives of the Parties will consider OEMPS No. 101
"Packing and Shipping Requirements," X-20587 "Specification Requirements for
Package Content Identification Label," and KS-23490 "Product Bar Code, Serial
and Comcode Label".
36.0 PAYMENT TERMS - Invoices shall be paid in accordance with the terms in this
Agreement, and due dates for payment shall be computed from the date of receipt
of invoices by Lucent.
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37.0 PRODUCT CONFORMANCE REVIEWS - All Material is subject to a Product
Conformance Review ("Review") prior to shipment. BroadBand shall notify Lucent's
designated quality inspection organization when Material is ready for such
Review. BroadBand may ship Material without a Review but Lucent may perform such
Review prior to shipment by giving BroadBand notice to that effect, in which
event BroadBand shall notify Lucent's designated quality inspection organization
when material is ready for such Review. BroadBand will provide, without charge,
any production testing facilities and personnel required to perform or assist in
the Review as specified in the applicable Quality Program Specification or other
quality specification provided under this Agreement or order. Lucent's Reviews
as set forth above may only be waived by written notification from Lucent's
designated quality inspection organization.
Any major failure, detected in Lucent's acceptance inspection, shall be
considered as Dead on Arrival (DOA) which exceeds the percentages set forth in a
purchase order or Product Letter for functional failures and for total
(functional and visual/mechanical) defects in the material delivered in any one
month interval. DOA values (AOQL) specified in this Article shall be consistent
with the AQL levels agreed to for the material.
38.0 REJECTIONS - If Lucent rejects any or all of the Material not conforming to
Specifications and/or drawings covered by this Agreement, Lucent may, in
addition to all its other rights and remedies at law or equity, exercise one or
more of the following remedies: (1) return rejected material for full credit at
the price charged plus transportation charges from BroadBand's plant and return;
or (2) accept a conforming part of any shipment; or (3) have rejected material
replaced by BroadBand at the purchase price stipulated in this Agreement. Should
Lucent select option (1), it will receive credit for the Manufacturing
Absorption associated with the rejected Material. If the Material rejected is
all or part of the last scheduled shipment of that type of Material by
BroadBand, Lucent shall return the Material to BroadBand and allow BroadBand a
reasonable opportunity to repair and re-deliver the Material before exercising
any other remedy.
39.0 REPAIRS NOT COVERED UNDER WARRANTY - In addition to repairs provided for in
the WARRANTY clause, BroadBand shall provide repair service on all Material
ordered under this Agreement during the term of this Agreement and until five
(5) years after the last delivery of the related Material by BroadBand. Material
to be repaired under this clause will be returned to a location designated by
BroadBand, and, unless otherwise agreed upon by BroadBand and Lucent, BroadBand
shall ship the repaired Material which meets the Specifications set forth in the
SPECIFICATIONS OR DRAWINGS clause and all other Specifications within fifteen
(15) calendar days of receipt of the defective or non-conforming Material. With
the concurrence and scheduling of Lucent, repair may be made by BroadBand on
site.
If Material is returned to BroadBand for repair as provided for in this
clause and is determined to be beyond repair, BroadBand shall so notify Lucent.
If requested by Lucent, BroadBand will sell to Lucent a replacement at the price
set forth in BroadBand's then current agreement with Lucent for said Material
or, if no such agreement exists, at a price agreed upon by BroadBand and Lucent.
If the parties fail to agree on a price, the price shall be a reasonably
competitive price for such Material at the time for delivery. Further, if
requested by Lucent,
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BroadBand shall take the necessary steps to dispose of the unrepairable Material
and pay to Lucent the salvage value, if any.
Replacement and repaired Material shall be warranted as set forth in the
WARRANTY clause.
This Agreement does not grant BroadBand an exclusive privilege to repair
any or all of the Material purchased under this Agreement for which Lucent may
require repair; and Lucent may perform the repairs or contract with others for
these services. In addition, BroadBand authorizes Lucent and any qualified
repairer with whom Lucent may contract to perform repairs on all Material
purchased under this Agreement.
All transportation costs of and in transit risk of loss and damage to
Material returned to BroadBand for repair under this clause will be borne by
Lucent and all transportation costs of and in transit risk of loss and damage to
such repaired or replacement Material returned to Lucent will be borne by
Lucent.
Price schedules for repairs under this clause are listed in the applicable
Product Letter.
40.0 REPAIR PROCEDURES - Lucent shall furnish the following information with
Material returned to BroadBand for repair: (a) Lucent's name and complete
address; (b) name(s) and telephone numbers(s) of Lucent's employee(s) to contact
in case of questions about the Material to be repaired; (c) ship-to address for
return of repaired Material if different than (a); (d) a complete list of
Material returned; (e) the nature of the defect or failure if known; (f) RMA
number previously obtained from BroadBand and (g) whether or not returned
Material is in warranty. BroadBand's customer service representative shall be
contacted concerning any questions that may arise concerning repair.
Material repaired by BroadBand shall have the repair completion date
stenciled or otherwise identified in a permanent manner at a readily visible
location on the Material and the repaired Material shall be returned with a tag
or other papers describing the repairs which have been made.
All invoices originated by BroadBand for repair services must be clearly
identified as such, and must contain: (1) a reference to Lucent's purchase order
for these repair services, (2) a detailed description of repairs made by
BroadBand and the need therefor, and (3) an itemized listing of parts and labor
charges, if any. Replaced parts will, upon request, be available for inspection
by or returned to Lucent. Further, the provisions of the INVOICING and SHIPPING
clauses, other than provisions relating to transportation charges with respect
to Material repaired under warranty, shall apply to BroadBand's return to Lucent
of repaired Material.
41.0 RIGHT OF ENTRY - Each party shall have the right to enter the premises of
the other party during normal business hours with respect to the performance of
this Agreement, subject to all plant rules and regulations, clearances, security
regulations and procedures as applicable. Each party shall provide safe and
proper facilities for such purpose
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42.0 SERVICES - Visits by BroadBand's representatives or its suppliers'
representatives for inspection, adjustment or other similar purposes in
connection with Material purchased under this Agreement shall for all purposes
be deemed "Work under this Agreement" and shall be at no charge to Lucent unless
otherwise agreed in writing between the parties.
43.0 SOFTWARE - Should there be any Software or Firmware other than of Lucent's
design included in the Materials to be manufactured by BroadBand, the Parties
will agree on appropriate license language in a Product Letter.
44.0 INVOICING FOR STOCK - If Lucent requests, for reasons other than covered by
the FORCE MAJEURE clause, that shipment be postponed beyond the date shown on a
purchase order, BroadBand may invoice Lucent as of the original scheduled
delivery date for Material manufactured under this Agreement, if it has been
inspected and approved by Lucent or its authorized agent. If Lucent does not
complete inspection within five (5) working days, BroadBand may deliver its
invoice to Lucent for payment.
45.0 SURVIVAL OF OBLIGATIONS - The obligations of the parties under this
Agreement and any purchase order issued pursuant to this Agreement, which by
their nature would continue beyond the termination, cancellation or expiration
of this Agreement or purchase order, including, by way of illustration only and
not limitation, those in the clauses IDENTIFICATION, INFRINGEMENT, REPAIRS NOT
COVERED UNDER WARRANTY, CONFIDENTIALITY, INSURANCE, and WARRANTY, shall survive
termination, cancellation or expiration of this Agreement or purchase order.
46.0 TAXES - Lucent shall reimburse BroadBand only for the following tax
payments with respect to transactions under this Agreement unless Lucent advises
BroadBand that an exemption applies: state and local sales and use taxes, as
applicable. Taxes payable by Lucent shall be billed as separate items on
BroadBand's invoices and shall not be included in BroadBand's prices. Lucent
shall have the right to have BroadBand contest any such taxes that Lucent deems
improperly levied at Lucent's expense and subject to Lucent's direction and
control.
47.0 TIMELY PERFORMANCE - If BroadBand has knowledge that anything prevents or
threatens to prevent the timely performance of the work under this Agreement,
BroadBand shall promptly notify Lucent's Representative thereof and include all
relevant information concerning the delay or potential delay.
48.0 TITLE AND RISK OF LOSS - Title and risk of loss and damage to Material
purchased by Lucent under this Agreement shall vest in Lucent when the Material
has been delivered at the FOB point.
48A.0 EQUIPMENT - The cost for custom tools, test facilities, mechanical
fixtures, stencils or other equipment identified in a Product Letter
("Equipment') required by BroadBand to manufacture the Material for Lucent shall
be borne by Lucent and billed by BroadBand as incurred by BroadBand. All
Equipment so purchased by Lucent, upon reimbursement by Lucent to BroadBand,
shall be the property of Lucent and shall not be included in any calculation of
Manufacturing Absorption.
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All Equipment purchased by Lucent, either through BroadBand or consigned to
BroadBand, for use by BroadBand must be used for Lucent purposes only. BroadBand
agrees to keep such Equipment in good working condition and will advise Lucent
of problems, needed repairs and life expentancy in a resolvable timeframe to
avoid business interruption. Lucent will be responsible for repairs other than
regular maintenance. Lucent will assign an Equipment part number for
identification purposes which BroadBand agrees not to remove. Lucent reserves
the right to request BroadBand to return Lucent-owned Equipment upon demand.
BroadBand agrees not to deface, cover, otherwise conceal any tag, label or other
indicator of Lucent's ownership on the Equipment. BroadBand also agrees not to
relocate the Equipment to a manufacturing location not authorized to produce
product for Lucent. BroadBand shall execute and allow Lucent to file with
appropriate government offices any documents Lucent deems appropriate to
evidence and protect Lucent's ownership of such Equipment.
49.0 TOXIC SUBSTANCES AND PRODUCT HAZARDS - Subject to the clause ENVIRONMENTAL
WARRANTY LIMITATION, BroadBand hereby warrants to Lucent that, except as
expressly stated elsewhere in this Agreement, all material furnished by
BroadBand as described in this Agreement is safe for its foreseeable use, is not
defined as a hazardous or toxic substance or material under applicable federal,
state or local law, ordinance, rule, regulation or order (hereinafter
collectively referred to as "law" or "laws"), and presents no abnormal hazards
to persons or the environment. BroadBand also warrants that it has no knowledge
of any federal, state or local law, that prohibits the disposal of the material
as normal refuse without special precautions except as expressly stated
elsewhere in this Agreement. BroadBand also warrants that where required by law,
all material furnished by BroadBand is either on the EPA Chemical Inventory
compiled under Section 8 (a) of the Toxic Substance Control Act, or is the
subject of an EPA-approved pre manufacture notice under 40 CFR Part 720.
BroadBand further warrants that all material furnished by BroadBand complies
with all use restrictions, labeling requirements and all other health and safety
requirements imposed under federal, state, or local laws. BroadBand further
warrants that, where required by law, it shall provide to Lucent, prior to
delivery of the material, a Material Safety Data Sheet which complies with the
requirements of the Occupational Safety and Health Act of 1970 and all rules and
regulations promulgated thereunder.
BroadBand shall defend, indemnify and hold Lucent harmless for any expenses
(including, but not limited to, the cost of substitute material, less
accumulated depreciation) that Lucent may incur by reason of the recall or
prohibition against continued use or disposal of material furnished by BroadBand
as described in its Agreement whether such recall or prohibition is directed by
BroadBand or occurs under compulsion of law. Lucent shall cooperate with
BroadBand to facilitate and minimize the expense of any recall or prohibition
against use or disposal of material directed by BroadBand or under compulsion of
law.
BroadBand further shall defend, indemnify and hold Lucent harmless of and
from any claims, demands, suits, judgments, liabilities, costs and expenses
(including reasonable attorney's fees) which Lucent may incur under any
applicable federal, state or local laws, and any and all amendments thereto,
including but not limited to the Comprehensive Environmental Response,
Compensation and Liability Act of 1980; the Consumer Product Safety Act of 1972;
the Toxic Substance Control Act; Fungicide, Rodenticide Act; the Occupational
Safety and Health Act; and
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the Atomic Energy Act; and any and all amendments to all applicable federal,
state, or local laws, by reason of Lucent's acquisition, use, distribution or
disposal of material furnished by BroadBand under this Agreement.
50.0 TERMINATION -
a) Either party may terminate this Agreement upon sixty (60) days prior
written notice to the other party for failure of such other party to
fulfill any of its material obligations hereunder; provided, however, if
during the period of such notice the other party shall have remedied such
failure, this Agreement shall continue in full force and effect as it would
have had such failure not occurred.
b) Should Material experience rejection rates by Lucent beyond the norm
established in a Product Letter, Lucent may terminate this Agreement with
respect to such Material. The effect of such a termination will be to
proportionately reduce Lucent's obligation respecting Manufacturing
Absorption set forth in Clause 7.0. The proportionate reduction associated
with any such rejection shall be calculated in accordance with the
following:
1. Each item of Material will be assigned a weighting in the relevant
Product Letter. To do so, the expected annual percentage of
Manufacturing Absorption will be identified and the expected
percentage of the term of this Agreement that the Material will be
manufactured by BroadBand will be defined. The weight assigned to the
Material will be calculated by multiplying the two percentages
together. ************************************************************
**********************************************************************
2. BroadBand will have the period of time identified in a Product Letter
for that Material to achieve the quality level set forth in the
Product Letter.
3. If BroadBand is unable to achieve the quality level within the time
period or to maintain the quality level (with respect to the reject
rate norm), Lucent may terminate its obligation for that Material and
receive credit for the associated Manufacturing Absorption.
**********************************************************************
**********************************************************************
Should the cumulative reductions of the Manufacturing Absorption obligation
pursuant to this clause reach nine million dollars, Lucent shall be
entitled to terminate this Agreement with no further obligation to
BroadBand.
c) In the event of a Change in Control of BroadBand or a reasonable
expectation of a Change in Control of BroadBand, BroadBand shall provide
notice to Lucent of such actual or expected Change in Control event within
ten (10) business days of the knowledge or reasonable expectation of the
Change in Control event. Upon the effective date of a Change in Control,
Lucent shall have the right to terminate this Agreement by giving BroadBand
written notice of its intention to terminate at least ninety (90) days
prior to the termination date specified in the termination notice. The
Parties understand and agree that if Lucent elects to exercise its
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right to terminate, then such termination shall apply on a going forward
basis, but shall not apply to past purchase orders that are completed or to
current purchase orders that are firm and binding commitments of Lucent.
A Change in Control occurs upon any one of the following circumstances or
events:
(i) The stockholders of a Party ("Acquired Party") approve a transaction,
including, without limitation, a merger or consolidation (however
denominated or effectuated), with an Acquiror, including, without
limitation, a merger or consolidation, or series of transactions with the
same Acquiror ("Combination"), and immediately after such transaction(s)
less than 60% of the combined voting power of the then-outstanding
securities of the Acquired Party or the Acquiror, will be held in the
aggregate by the holders of securities entitled, immediately prior to such
Combination, to vote generally in the election of directors of the
Acquired Party ("Voting Securities");
(ii) The stockholders of the Acquired Party approve the sale or transfer of all
or substantially all of its assets to any other Person or entity, and less
than 60% of the combined voting power of the then-outstanding Voting
Securities of such Acquiror immediately after such transaction will be
held in the aggregate by the holders of the Voting Securities of the
Acquired Party immediately prior to such sale;
(iii) An Acquiror acquires in one or a series of transactions beneficial
ownership of more than 40% of the outstanding shares of Voting Securities
of a Party;
(iv) The stockholders of a Party approve a plan of complete liquidation or
dissolution of the Party;
(v) Any Acquiror obtains direct or indirect Control (as herein defined) over a
party and, in Lucent's reasonable judgment, such Control may threaten
Lucent's interests. For the purposes of this subsection, the term
"Control" shall mean the possession directly or indirectly of the power to
direct or cause the direction of the management or policies of a Party,
whether through the ability to exercise voting power, by contract or
otherwise;
(vi) At any time, Continuing Directors (as herein defined) shall not constitute
at least 50% of the members of the Board ("Continuing Director" means (i)
each individual, who has been a director of the Party for at least twelve
(12) consecutive months before such time and (ii) each individual who was
nominated or elected to be a director of the Party by at least a majority
of the Continuing Directors at the time of such nomination or election);
or
(vii) Any other transaction which has the effect of causing the substantive
changes in the Acquired Party described in any of the preceding
paragraphs.
For the purposes of this Section, the term "Acquiror" shall mean one
person or entity, or two or more persons and/or entities constituting a
"group" for purposes of the Securities Exchange Act of 1934, as amended.
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51.0 WARRANTY - BroadBand warrants to Lucent that Material furnished will be new
and free from defects in material and workmanship and will conform to the
Specifications, drawings and samples set forth in this Agreement. These
warranties extend for *********** from the date of delivery to Lucent unless
otherwise agreed by the Parties in a Product Letter or other writing.
If Material furnished contains one or more manufacturer's warranties that
are assignable, BroadBand hereby assigns such warranties to Lucent. BroadBand
warrants that at the time of delivery to Lucent such Material shall be free of
any security interest or any other lien or any other encumbrance whatsoever. All
warranties shall survive inspection, acceptance and payment.
Defective or non-conforming Material will, at BroadBand's option, either
be returned to BroadBand for repair or replacement, at no cost to Lucent, with
risk of in-transit loss and damage borne by BroadBand and freight paid by
BroadBand, or be repaired or replaced by BroadBand on Lucent's or Lucent's
customer's site or another site designated by Lucent at no cost to Lucent.
Unless otherwise agreed upon by BroadBand and Lucent, BroadBand shall complete
repairs and ship the repaired Material within 10 working days of receipt of
defective or non-conforming Material, or at Lucent's option, ship replacement
Material within 10 working days after verbal notification is given BroadBand by
Lucent. BroadBand shall bear the risk of in-transit loss and damage and shall
prepay and bear that cost of freight for shipments to Lucent of repaired or
replaced Material.
If Material returned to BroadBand is determined to be beyond repair,
BroadBand shall promptly so notify Lucent and, unless otherwise agreed to in
writing by BroadBand and Lucent, ship replacement Material without charge within
ten (10) days of such notification.
Replacement Material shall be warranted as set forth above in this
WARRANTY clause. Any Material which is repaired, modified, or otherwise serviced
by BroadBand shall be warranted as provided in this WARRANTY clause for the
remainder of the warranty period (based upon the date repair, modification or
other service is completed and accepted by Lucent) or ninety (90) days after the
Material is returned to Lucent, whichever is later.
LUCENT'S SOLE AND EXCLUSIVE REMEDY FOR BREACH OF A WARRANTY CONTAINED IN
THIS ARTICLE SHALL BE BROADBAND'S OBLIGATION TO REPAIR, REPLACE, CREDIT, OR
REFUND AS SET FORTH IN THIS AGREEMENT, EXCEPT THAT THE FOREGOING LIMITATION ON
REMEDIES FOR BREACHES OF WARRANTIES SHALL NOT LIMIT THE REMEDIES OF LUCENT OR
ANY OTHER CAUSE OF ACTION FOR PERSONAL INJURY INCLUDING DEATH AND TANGIBLE
PROPERTY DAMAGE CLAIMS.
NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR ANY INCIDENTAL,
CONSEQUENTIAL, OR ANY OTHER INDIRECT LOSS OR DAMAGE, INCLUDING, WITHOUT
LIMITATION, LOST REVENUES OR LOST PROFITS OF ANY PERSON OR ENTITY, ARISING OUT
OF THIS AGREEMENT OR ANY OBLIGATION RESULTING THEREFROM, WHETHER IN AN ACTION
FOR OR ARISING OUT OF BREACH OF CONTRACT, FOR TORT, OR ANY OTHER CAUSE OF
ACTION. EXCEPT FOR PERSONAL INJURY INCLUDING DEATH,
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BROADBAND'S ENTIRE LIABILITY FOR DIRECT DAMAGES RESULTING FROM ANY CLAIM OR
LOSS, DAMAGE, OR EXPENSE FROM BREACH OF A WARRANTY CONTAINED IN THIS ARTICLE
SHALL IN NO EVENT EXCEED THE REPAIR OR REPLACEMENT COST, LICENSE FEE, OR
PURCHASE PRICE, AT BROADBAND'S OPTION OF THE ITEM OR SERVICE THAT DIRECTLY GIVES
RISE TO THE CLAIM. NO ACTION OR PROCEEDING UNDER THIS ARTICLE AGAINST BROADBAND
MAY BE COMMENCED MORE THAN THIRTY-SIX (36) MONTHS AFTER THE CAUSE OF ACTION
ACCRUES.
52.0 EXPORT CONTROL- BroadBand will not use, distribute, transfer or transmit
any products, software or technical information (even if incorporated into other
products) provided under this Agreement except in compliance with U.S. export
laws and regulations (the "Export Laws"). BroadBand will not, directly or
indirectly, export or reexport the following items to any country which is in
the then current list of prohibited countries specified in the applicable Export
Laws:(a) software or technical data disclosed or provided to BroadBand by Lucent
or Lucent's subsidiaries or affiliates; or (b) the direct product of such
software or technical data. BroadBand agrees to promptly inform Lucent in
writing of any written authorization issued by the U.S. Department of Commerce
office of export licensing to export or reexport any such items referenced in
(a) or (b). The obligations stated above in this clause will survive the
expiration, cancellation or termination of this Agreement or any other related
agreement.
53.0 OZONE DEPLETING SUBSTANCES LABELING - BroadBand warrants and certifies that
all products, including packaging and packaging components, provided to Lucent
under this Agreement have been accurately labeled, in accordance with the
requirements of 40 CFR Part 82 entitled "Protection of Stratospheric Ozone,
Subpart E - The Labeling of Products Using Ozone Depleting Substances."
BroadBand agrees to indemnify, defend and save harmless Lucent, its officers,
directors and employees.
54.0 INFRINGEMENT - Lucent shall indemnify and save harmless BroadBand, its
affiliates and their customers, officers, directors, and employees (all referred
to in this clause as "BroadBand") from and against any losses, damages,
liabilities, fines, penalties, and expenses (including reasonable attorneys'
fees) that arise out of or result from any and all claims (1) of infringement of
any patent, copyright, trademark or trade secret right, or other intellectual
property right, private right, or any other proprietary or personal interest
related to the Specifications for the Material, and (2) related by circumstances
to the existence of this Agreement or performance under or in contemplation of
it (an Infringement Claim). Lucent or BroadBand (at Lucent's request) shall
defend or settle, at Lucent's expense any demand, action or suit on any
Infringement Claim for which Lucent is indemnitor under the preceding provisions
and each shall timely notify the other of any assertion against it of any
Infringement Claim and shall cooperate in good faith with the other to
facilitate the defense of any such Claim. Broadband shall similarly indemnify
and save harmless Lucent from any Infringement Claim associated with BroadBand's
manufacturing or other processes.
55.0 SEVERABILITY - If any of the provisions of this Agreement shall be invalid
or unenforceable, such invalidity or unenforceability shall not invalidate or
render unenforceable this entire Agreement, but rather this entire Agreement
shall be construed as if not containing the
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<PAGE>
particular invalid or unenforceable provision or provisions, and the rights and
obligations of the parties shall be construed and enforced accordingly.
56.0 CHOICE OF LAW - This Agreement and all transactions under it shall be
governed by the laws of the State of New Jersey excluding its choice of laws
rules and excluding the Convention for the International Sale of Goods.
BroadBand agrees to submit to the jurisdiction of any court wherein an action is
commenced against Lucent based on a claim for which BroadBand has agreed to
indemnify Lucent under this Agreement.
57.0 DISPUTE RESOLUTION (a) The following procedures shall apply to any dispute
or disagreement between the Parties or any of their Related Parties (i.e., such
Party's wholly owned subsidiaries, and the respective divisions, heirs,
successors and assigns of such Party and its wholly owned subsidiaries) arising
out of this Agreement.
(b) First:
(i) either Party may give written notification of such dispute or
disagreement to the other Party and
(ii) the Parties shall communicate with each other promptly with a
view to resolving such dispute or disagreement within 21 days (or such
extended period as the Parties agree is appropriate in any case) after
such written notification is given.
(c) The giving of any notice regarding any dispute or disagreement under
this Section 10.1 shall toll the running of all applicable statutes of
limitation until the later of (i) 90 days following the giving of such notice or
(ii) 30 days following the termination of discussions between the Parties
concerning such dispute or disagreement.
(d) Second, if at the end of the 21 day period referenced in Section
57.0(b)(as it may be extended) such dispute or disagreement has not been
resolved to the satisfaction of both parties, either Party may request in
writing that such dispute or disagreement be the subject of non-binding
mediation. Following such request, the Parties shall endeavor in good faith
promptly to identify a single person (who shall be a person with experience and
good reputation) who shall assist the Parties in discussing such dispute or
disagreement and in attempting to reach a mutually acceptable business
resolution. Such mediation process shall terminate not later than 30 days
following the request therefor (or such extended or shorter period as the
Parties agree is appropriate). All applicable statutes of limitation shall be
tolled during the period of mediation.
(e) Third, if at the end of the 30 day period referenced in Section
57.0(d) (as it may be extended or shortened) such dispute or disagreement has
not been resolved to the satisfaction of both parties, either Party (the
"complainant") may commence binding arbitration by giving the other Party (the
"respondent") notice in writing (the "initiating notice") setting forth in
reasonable detail the nature of its claim and the relief requested stating that
the complainant is invoking the procedures set forth in this Section 57.0(e) and
(f) and naming the complainant's representative on the Arbitration Panel (as
defined below). Within 21 days of receipt of an initiating notice, the
respondent shall give the complainant notice in writing (the "response") setting
forth in
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reasonable detail: (1) the basis of its response to the claim; (2) the nature of
any counterclaim it has against the complainant arising from the same set of
facts and circumstances that gave rise to the original claim; (3) any other
counterclaim that Party wishes to bring at that time (although the Party has no
obligation to bring such counterclaims at that time); (4) the relief requested;
and (5) naming the respondent's representative on the Arbitration Panel. The two
representatives shall select a third person who is mutually acceptable to them.
If the representatives fail to make such selection within 21 days, the
complainant and the respondent shall each replace its representative with a new
representative and the new representatives shall be subject to the preceding
sentence and this sentence. Once a third person is selected, such person
together with the representatives of the complainant and the respondent shall
form the Arbitration Panel. The date upon which the Arbitration Panel is formed
shall be the "Commencement Date".
(f) The Arbitration Panel shall conduct proceedings to determine the
merits under applicable law of the claims set forth in the initiating notice and
the response. The proceedings shall be administered by JAMS/Endispute in
accordance with its Comprehensive Arbitration Rules and Procedures in effect as
of the Effective Date, subject to the following additional rules:
(i) the proceedings shall take place in New York City;
(ii) the Arbitration Panel (including, if necessary, any
replacement(s) to the Arbitration Panel) shall be selected as set forth in
Section 57.0(e);
(iii) the available relief shall include damages, injunctive relief
and equitable relief to the extent allowed under the applicable law, this
Agreement and any other agreement between the parties;
(iv) the parties shall attempt in good faith promptly to agree on
the nature and extent of any discovery in connection with the arbitration,
provided that, in the absence of such agreement, discovery shall be
governed by JAMS/Endispute's Comprehensive Arbitration Rules and
Procedures. In addition, the applicable law with respect to privilege and
other protections from disclosure, including the work product doctrine
shall apply;
(v) the final decision of the Arbitration Panel (the "Award") shall
be issued within six months of the Commencement Date (the date of issuance
of the Award being the "Award Date") and must be joined by at least two
members of the Arbitration Panel;
(vi) each party to the proceedings shall pay its own costs in
connection with the proceedings, including the costs and expenses of its
representative on the Arbitration Panel, and the parties shall share
equally the other costs of the proceedings, including the fees of the
third member of the Arbitration Panel, except that the prevailing party
shall be entitled to recover its attorneys' fees incurred in prosecution
thereof.
(g) In accordance with the Federal Arbitration Act, 9 U.S.C. ss.1 et seq.,
the Award shall be final and binding and judgment thereon may be entered by any
state or federal court having jurisdiction thereof.
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<PAGE>
(h) Nothing in this Section 57.0 shall be construed to preclude either
party from seeking injunctive relief in a court of competent jurisdiction to
prevent imminent irreparable harm. The dispute resolution procedures set forth
herein shall be stayed pending disposition of any application for such relief.
The Parties agree that a court of competent jurisdiction may consider the merits
of any claim that is subject to the dispute resolution procedures set forth
herein to the extent necessary to resolve any permissible application for
injunctive relief.
58.0 BANKRUPTCY AND CHANGE OF CONTROL If a proceeding is commenced under any
provision of the United States Bankruptcy Code, voluntary or involuntary, by or
against either party, and this Agreement has not been terminated, the non-debtor
party may file a request with the bankruptcy court to have the court set a date
within sixty (60) days after the commencement of the case, by which the debtor
party will assume or reject this Agreement, and the debtor party shall cooperate
and take whatever steps are necessary to assume or reject the Agreement by such
date. If a bankruptcy proceeding results in a Change In Control, the provisions
in this Agreement pertaining to Change In Control shall govern.
59.0 ENTIRE AGREEMENT - This Agreement shall constitute the entire agreement
between the parties with respect to the subject matter of this Agreement and
shall not be modified or rescinded, except by a writing signed by BroadBand and
Lucent. The provisions of this Agreement supersede all contemporaneous and prior
oral and written agreements, communications or understandings of the parties
with respect to the subject matter of this Agreement.
60.0 COMPLIANCE WITH LAWS - BroadBand shall, in the manufacture and sale of the
Material to Lucent, and in all other performance under the provisions of this
Agreement, fully comply with all applicable federal, state, local and other
governmental laws and regulations.
61.0 COMPLIANCE WITH UNITED STATES CUSTOMS LAWS AND REGULATIONS - BroadBand
shall ensure that its activities in performance of this Agreement shall not put
Lucent in violation of any United States Customs laws, statutes, or regulations.
BroadBand agrees to assist Lucent in every way necessary to ensure that Lucent
can import the Material into the United States in accordance with all applicable
customs laws, statutes, and regulations, and in support of this assistance,
BroadBand agrees to follow Lucent's directives, if any, which may be attached to
and made part of this Agreement.
62.0 RELATIONSHIP OF PARTIES - The relationship of the Parties as established
under this Agreement shall be and remain one of independent contractors, and
neither Party will at any time or in any way represent itself as being a dealer,
agent or other representative of the other Party or as having authority to
assume or create obligations or act in any manner on behalf of the other Party.
Further, it is understood and agreed that the Parties to this Agreement are not
partners or joint venturers.
63.0 INDEPENDENT AGREEMENT - Breach by a Party of any other agreement between
the Parties shall not constitute a breach of this Agreement, unless the same
conduct independently breaches this Agreement. A breach of this Agreement shall
not constitute a breach
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of any other agreement between the Parties, unless the same conduct
independently breaches such other agreement.
64.0 COUNTERPARTS - This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed in duplicate by their respective authorized representatives.
BROADBAND TECHNOLOGIES, INC. LUCENT TECHNOLOGIES INC.
By: By:
Title: Title:
Date: Date:
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<PAGE>
ATTACHMENT A
MANUFACTURING AGREEMENT
ENGINEERING CHANGE CONTROL PROCEDURES
"Product Changes" shall be administered in accordance with Bell
Communications Research document GR 209 CORE, Issue 2, January 1996, titled
"Generic Requirements for Product Change Notices," which is incorporated herein
by reference.
Supplier may make changes to MATERIAL, modify drawings, or make changes to
manufacturing specifications, provided the changes, modifications, or
substitutions DO NOT have an impact on the performance, reliability, Form, Fit,
or Function of the MATERIAL without prior notification to Company. Supplier
shall maintain written records of all such changes, and make these records
available for Company's review upon request.
For such changes or modifications which DO have an impact on performance,
reliability, Form, Fit, or Function, Supplier shall identify each such change or
modification in accordance with the classifications contained in the above Bell
Communications Research document via a Product Change Notification (PCN) form.
The Company shall immediately acknowledge receipt of the PCN to the
address/contact as stated on the PCN form and shall have thirty (30) calendar
days to advise Supplier if the proposed change or modification is unacceptable.
If Company notifies Supplier as required herein, that the proposed change or
modification is unacceptable, Supplier shall not implement such change or
modification. Company may reject any MATERIAL offered by Supplier which has been
changed or modified in a manner unacceptable to Company.
If Company has not notified Supplier that the change or modification is
unacceptable within thirty (30) calendar days following issuance of the Change
Notification, Supplier shall implement the change or modification as described
in the Change Notification.
If during the review of a proposed PCN, which has a classification of
either A or AC, issued by Supplier during the Warranty period of the affected
MATERIAL, the Company determines that implementation of the PRODUCT CHANGE will
cause the Company to incur "unreasonable expenses" such as, but not limited to,
expenses resulting from escorting Supplier's personnel to numerous Company
locations containing affected MATERIAL or repeated product changes to the same
item of MATERIAL within a one (1) year time period, the Company shall so notify
Supplier, in writing, prior to the implementation of such PRODUCT CHANGE.
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Upon such notification, the Company and Supplier shall jointly determine
the implementation procedure which will utilize the Supplier's and/or Company's
personnel in the most cost effective manner.
If Supplier and the Company conclude the agreed to implementation
procedure will probably cause the Company to incur "unreasonable expenses", the
Company and Supplier shall jointly determine the likely extent of such expenses
and agree, in writing, to a "not to exceed" estimate for such expenses. In no
event shall such estimate exceed the Company's purchase price for the MATERIAL
to be changed. The Company shall track and record all such expenses associated
with the PRODUCT CHANGE. Upon completion of its efforts, the Company shall
submit to Supplier, for reimbursement by Supplier, an invoice of the Company's
"unreasonable expenses" within forty-five (45) calendar days after the Company's
receipt of such invoice.
Issuing a Class A or AC product Change Notification shall not constitute
an agreement to provide such a change, but shall be construed as a
recommendation by the Supplier that the change is absolutely necessary.
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EXHIBIT 10.7
**-Certain information omitted and filed separately with the Commission pursuant
to a confidential treatment request under Rule 24b-2 of the Commission.
BROADBAND TECHNOLOGIES OEM SUPPLY AGREEMENT
LUCENT TECHNOLOGIES INC. BROADBAND TECHNOLOGIES, INC.
600 MOUNTAIN AVENUE 4024 STIRRUP DRIVE
MURRAY, HILL, NEW JERSEY 07974 DURHAM, NC 27709-3737
BROADBAND TECHNOLOGIES OEM SUPPLY AGREEMENT
LUCENT TECHNOLOGIES INC. BROADBAND TECHNOLOGIES, INC.
600 Mountain Avenue 4024 Stirrup Drive
Murray, Hill, New Jersey 07974 Durham, NC 27709-3737
This Agreement, which is effective as of February 4, 1998 (the "Effective Date")
is by and between Lucent Technologies Inc. ("Company") and BroadBand
Technologies, Inc., ("Supplier") (collectively the "Parties").
WHEREAS, Company wishes to purchase certain Material of Supplier's manufacture
for resale to Company's customers and upon completion of certain research and
development work, Company may supplement the list of Material subject to this
Agreement; and
WHEREAS, Company may provide Company proprietary information and technology to
Supplier to enable the design and manufacture of the Materials; and
WHEREAS, Supplier desires to produce and sell such Materials to Company for
Company's use, including resale to Company's customers.
NOW THEREFORE, the Parties agree as follows:
1. Introduction
1.1 ATTACHMENTS - The following Attachments are hereby made part of this
Agreement:
Attachment 1 Definitions
Attachment 2 Engineering Change Control Procedures
1.2 DEFINITIONS - The terms set out in Attachment 1 which are used in
capitalized form in this Agreement, whether in the singular and/or plural form,
shall have the meanings set forth in Attachment 1. Additionally, any term
defined in the body of this Agreement, which appears in capitalized form, and
whether in the singular and/or plural form, shall have the meaning so set out in
this Agreement
1.3 EFFECTIVE PERIOD OF AGREEMENT - The term of this Agreement shall commence on
the Effective Date and shall, except as otherwise provided in this Agreement,
continue in effect for five (5) years.
1.4 MATERIAL - Material is hereby offered for sale by Supplier and may be
purchased by Company in accordance with the terms and conditions stated in this
<PAGE>
Agreement. This Agreement is a non-commitment agreement and Material shall be
furnished by Supplier on an as-ordered basis. The Parties will from time to time
identify Material to be sold under this Agreement in Product Letters, which
shall identify the Materials, specifications, prices and discounts, packing and
labeling requirements, forecast commitment periods and other specific terms
regarding the product or component involved. A Product Letter shall not be
effective until it is agreed to in writing by both Parties. In the event of a
conflict between the terms of a Product Letter and the terms of this Agreement,
the terms of the Product Letter shall govern.
1.5 SPECIFICATIONS OR DRAWINGS - The technical specifications set out in Product
Letters (referred to herein as "Technical Specifications" or "Specifications")
shall govern the Material to be purchased pursuant to this Agreement.
(a) In accordance with the notification requirements outlined in
Section 11.12, Supplier shall provide Company with at least thirty (30) days
prior written notice of any change affecting conformance with the Technical
Specifications proposed to be made by Supplier in the Material furnished
pursuant to said Technical Specification under this Agreement. Company shall
have a reasonable period of time to determine if the Material that will
incorporate the changed specifications will comply with the original
specifications for the ordered Material.
(b) If Company, in its sole discretion, does not agree to the change
proposed by Supplier, then in addition to all other rights and remedies at law
or equity or otherwise, and without any cost to or liability or obligation of
Company, Company shall have the right to terminate any or all purchase orders
for Material affected by such change.
1.6 DISCONTINUANCE
(a) Supplier shall continue to supply Material to Company pursuant to
the Technical Specification for the term of the Agreement and for one year after
the expiration of this Agreement. If Supplier is unable to continue to thus
supply or discontinues manufacture of Material, Company shall be entitled to one
year's advance notice and Company shall have the following options: (i) Company
may enter into good faith discussions with Supplier concerning continued supply
of Material, which discussions may include identification of any possible
purchaser of the product line from Supplier so that Company can pursue continued
supply from any such purchaser; (ii) the opportunity for Company to offer to
purchase the product line in the event Supplier seeks to sell; and/or (iii) the
opportunity for Company to place an end of life purchase order for the
discontinued Material, which Supplier will accept during the notice period.
"Discontinuance" includes, but is not limited to, changes in the Form, Fit or
Function of the Material. Supplier will accept delivery schedules for such
Material extending up to six months after such end of life purchase order has
been submitted.
(b) Supplier shall offer for sale to Company during the term of this
Agreement and until 5 years after the earlier of discontinuance of the relevant
Material or of expiration or termination of this Agreement, maintenance,
replacement and repair parts
2
<PAGE>
("Parts") which are functionally equivalent and identical in Form, Fit and
Function to the Material covered by this Agreement. The price for the Material
and Parts shall be the price set forth in Supplier's then current agreement with
Company for said Material or Parts or, if no such agreement exists, a price
agreed upon by Company and Supplier. If the Parties fail to agree on a price,
the price shall be a reasonably competitive price for said Material or Parts at
the time for delivery. The Material and Parts shall be warranted as set forth in
Section 4.1.
2. Orders and Payment
2.1 INVOICING FOR GOODS - Supplier shall: (1) render an original invoice, or as
otherwise specified in this Agreement, which shows the order number, through
routing and weight; (2) render separate invoices for each shipment within
twenty-four (24) hours after shipment; and (3) mail invoices with copies of
bills of lading and shipping notices to the address shown on this Agreement or
the order. If prepayment of transportation charges is authorized, Supplier shall
include the transportation charges from the FOB point to the destination as a
separate item on the invoice stating the name of the carrier used.
2.2 MARKING - All material furnished under this Agreement shall be marked for
identification purposes in accordance with the Specifications set forth in this
Agreement and as follows:
(a) with Supplier model/serial number; and
(b) with month and year of manufacture.
In addition, Supplier shall add any other identification which might be
requested by Company such as but not limited to indicia conforming to Company's
serialization Plan. Charges, if any, for such additional identification marking
shall be as agreed upon by Supplier and Company. This Section does not reduce or
modify Supplier's obligations under Section 11.6.
2.3 PACKING, LABELING AND SERIALIZATION - Material purchased, repaired, replaced
or refurbished under this Agreement shall be packed, labeled and serialized by
Supplier at no additional charge in accordance with Product Letters .
2.4 PAYMENT TERMS - Payment shall be net 30 days from the later of the date of
delivery or the date of invoicing for the Material by Company.
2.5 PRICE AND DISCOUNTS - Prices and discounts for Material are set forth in the
applicable Product Letters and they shall remain in effect during the term of
this Agreement or for the period specified in the applicable Product Letters.
2.6 FORECASTS - Company shall provide Supplier with six (6) month rolling
forecasts of Material it believes it will purchase from Supplier. However, said
forecasts
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are only provided to assist Supplier in planning its manufacturing activities
and they do not commit or bind Company to purchase or the Supplier to supply any
Materials, or any quantity of Materials. A forecast only becomes binding upon
the Parties when a Purchase Order, as set forth below, is forwarded by Company
to Supplier and Supplier duly accepts it and the agreed upon delivery schedule
for such Purchase Order is within ninety (90) days, except that such 90-day
forecast commitment period may be altered by mutual agreement of the Parties for
particular Material described in Product Letters. At such time, any changes to
the volume of Materials committed to by the Parties shall be governed by
Sections 2.7, 2.8 and 2.9 below.
2.7 PURCHASE ORDERS - Purchase orders issued under this Agreement shall be sent
to the following address:
BroadBand Technologies, Inc.
P.O. Box 13737
4024 Stirrup Drive
Durham, North Carolina 27709-3737
ATTN: Customer Logistics Department
This Agreement shall incorporate the typed or written provisions on
Company's orders issued pursuant to this Agreement. Printed provisions on
Company's orders (except as specified otherwise in this Agreement), boilerplate
provisions in electronic orders and all provisions on Supplier's forms shall be
deemed deleted. Estimates or forecasts furnished by Company shall not constitute
commitments, except as otherwise set forth in this Agreement.
Purchase orders shall specify: (a) description of Material, inclusive
of any numerical/alphabetical identification referenced in the price list in
this Agreement, (b) delivery date, (c) applicable price, (d) location to which
the Material is to be shipped and (e) location to which invoices shall be sent
for payment.
Orders consistent with the Company forecast and requesting delivery
more than ninety (90) days (or the alternate forecast commitment period
specified for particular Material in the applicable Product Letter) from the
date the order is received by Supplier will be accepted or rejected by Supplier
in writing within five (5) business days from receipt of the order. Orders
requesting delivery in less than ninety days and which exceed the forecast shall
be deemed accepted unless Supplier provides written notice to the contrary
within ten (10) business days from receipt of the order.
Company may at any time subsequent to the issuance of a purchase order
under this Agreement change the purchase order quantity at no charge in
accordance with the schedule below:
Number of Days Prior to Allowable Increase/Decrease
Scheduled Shipment Date (% of P.O. Quantity)
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0-90 (or 0-alternate forecast 0% 0%
commitment period)
91-greater (or alternate forecast 100% 100%
commitment period-greater)
Company will make reasonable efforts to provide forecasts and purchase orders
for Material that avoid sharp increases or decreases in production.
2.8 SHIPPING - Supplier shall: (1) ship the Material covered by this Agreement
or order complete unless instructed otherwise; (2) ship to the destination
designated in the Agreement or order; (3) ship according to routing instructions
given by Company; (4) refer to this Agreement and the order number on all
subordinate documents; (5) enclose a packing memorandum with each shipment and,
when more than one package is shipped, identify the package containing the
memorandum; and (6) mark the Agreement and order number on all packages and
shipping papers. Adequate protective packing shall be furnished at no additional
charge. Shipping and routing instructions may be furnished or altered by Company
without a writing. All deliveries will be FOB Supplier's factory. If Supplier
does not comply with Company's written shipping or routing instructions,
Supplier authorizes Company to deduct from any invoice of Supplier (or to charge
back to Supplier), any increased costs incurred by Company as a result of
Supplier's noncompliance.
2.9 SHIPPING INTERVAL - The delivery schedule applicable to each purchase order
will be set forth in the purchase order.
If Supplier does not deliver by the delivery date specified in the
applicable purchase order, then in addition to all other rights and remedies at
law or equity or otherwise, and without any liability or obligation of Company,
Company shall have the right to: (a) cancel such purchase order following the
expiration of a five (5) business day grace period, or (b) extend such delivery
date to a later date, subject, however, to the right to cancel as in (a)
preceding if delivery is not made or performance is not completed on or before
such extended delivery date. If Company elects to extend such delivery date,
Supplier shall absorb the difference between the charges to ship normal
transportation and the charges to ship premium overnight.
If a purchase order is canceled by Company pursuant to the above,
Company shall have the right to retain or return any or all material received by
or paid for by Company under such purchase order. Within fifteen (15) days of
Supplier's receipt of returned material, Supplier shall reimburse Company for
the reasonable costs of shipping the material returned to Supplier and for any
amounts, including shipping costs, previously paid by Company for the Material.
Company shall pay for any Material it retains at the prices set forth in the
applicable Product Letters, less applicable discounts which shall be applied on
the basis of the quantity specified in the purchase order.
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If, during the course of this Agreement, Supplier determines that
Supplier will no longer be able to ship within the above interval, Supplier
shall immediately notify Company's buyer to that effect. Supplier shall also
notify Company's buyer, as soon as it becomes apparent, if Supplier is unable to
meet the delivery date for an order. However, nothing contained in this
paragraph shall waive Company's rights as set forth above in this Section.
2.10 TITLE AND RISK OF LOSS - Title and risk of loss and damage to Material
purchased by Company under this Agreement shall vest in Company when the
Material has been delivered at the FOB point. If this Agreement or an order
issued pursuant to this Agreement calls for additional services to be performed
after delivery, Supplier shall retain title and risk of loss and damage to the
Material until the additional services have been performed. If Supplier is
authorized to invoice Company for Material upon shipment or prior to the
performance of additional services, title to Material shall vest in Company upon
payment of the invoice, but risk of loss and damage shall pass to Company when
the additional services have been performed.
2.11 TITLE TO MATERIAL FURNISHED BY COMPANY -In the event that Company provides
components to Supplier for use in Material ("Components"), or provides Supplier
with capital equipment, such as a test facility ("Capital Goods") Supplier
acknowledges and agrees that Company has and shall have at all times all right,
title and interest in Components or Capital Goods furnished directly or
indirectly to Supplier by Company under this Agreement. Supplier shall, within
ten (10) days of receipt of the Components or Capital Goods, notify Company in
writing of any claims for quantity variation or quality problems in the
Components or Capital Goods furnished to Supplier. Supplier assumes
responsibility for any loss or damage to such Components or Capital Goods and
shall be liable for the full and actual value of the Components or Capital
Goods. Supplier shall store the Components or Capital Goods safely, indoors in
protected areas approved by Company at Supplier's facility. If Supplier removes
all or any part of the Components or Capital Goods from one building to another,
Supplier shall continue to be responsible for loss and damage and Supplier shall
give Company at least ten (10) business days advance notice, in writing, of the
removal except when the removal is required during Supplier's manufacturing
process or to protect the Components or Capital Goods from damage or loss.
Company may inspect, inventory and authenticate the account of the
Components or Capital Goods during Supplier's normal business hours. Supplier
shall provide Company access to the premises wherein all such Components or
Capital Goods are located. The Components shall be kept segregated in an area
marked "PROPERTY OF LUCENT TECHNOLOGIES". For purposes of this Section, the term
" Lucent Technologies " shall be deemed to mean Lucent Technologies Inc. or the
Lucent Technologies Inc. affiliated or associated company which owns the
Components or Capital Goods, as applicable.
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Supplier shall use the Components or Capital Goods only in the
manufacture of Material furnished to Company or otherwise in performing under
this Agreement.
Supplier shall not allow any security interest, lien, tax lien or other
encumbrance (collectively referred to as "Encumbrance") to be placed on any
Components or Capital Goods. Supplier shall give Company immediate written
notice should any third party attempt to place or place an Encumbrance on such
Components or Capital Goods. Supplier shall indemnify and hold Company harmless
from any such Encumbrance. Supplier shall, at Company's request, promptly
execute a "protective notice" UCC-1 form and all other documents reasonably
necessary to enable Company to protect its interest in such Components or
Capital Goods. The Parties agree that this Agreement shall constitute the
security agreement required by the UCC of the appropriate state.
The obligations assumed by Supplier with respect to the Components or
Capital Goods are for the protection of Company's property. If Supplier defaults
in carrying out Supplier's obligations under this Agreement, then, at no cost to
Company and upon five (5) working days notice to Supplier, Company may cancel
this Agreement with regard to affected Materials or withdraw all or any part of
the Components or Capital Goods, or both. Supplier shall, at Company's option,
return to Company or hold for Company's disposition any and all of such
Components or Capital Goods (including any scrap produced as a by-product) in
Supplier's possession at (a) the completion of the order, (b) expiration,
cancellation or termination of this Agreement, or (c ) the withdrawal of
Components or Capital Goods, as provided above
3. Services
3.1 SERVICES - Visits by Supplier's representatives or its suppliers'
representatives for inspection, adjustment or other similar purposes in
connection with Material purchased under this Agreement shall for all purposes
be deemed "Work under this Agreement" and shall be at no charge to Company
unless otherwise agreed in writing between the Parties.
3.2 TECHNICAL SUPPORT AND TRAINING - At the time a purchase order is entered
into by the Parties, they shall determine, negotiating in good faith, the level
and extent of technical support appropriate for the Material ordered. However,
the Parties hereby agree that the Company shall be entitled to a mutually agreed
upon level of ongoing technical support, which shall include field service and
assistance, and they further agree that the availability or performance of this
technical support service shall not be construed as altering or affecting
Supplier's obligations as set forth in Section 4.1 or elsewhere provided for in
this Agreement. Further, Supplier shall provide instructors and the necessary
instructional material to provide a mutually agreed upon level of training
sufficient to train Company's instructors in the installation, planning and
practices, operation, maintenance and repair of the Material.
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4. Warranty and Limitation of Liability
4.1 WARRANTY - Supplier warrants to Company and Customer, as defined in this
Section, that hardware, including firmware, furnished hereunder will be new,
free from defects in design, material and workmanship and will conform to and
perform in accordance with the Specifications for a period of *********** after
delivery, and that software furnished will conform to and perform in all
material respects with the Specifications for a period of ************* after
delivery; provided, however, that if significant software defects are
discovered, equating to Severity Levels 1 or 2, Company may require a software
fix from Supplier for up to ***************** from delivery.
If Material furnished contains one or more manufacturer's warranties
that are assignable, Supplier hereby assigns such warranties to Company and
Customers. Supplier warrants that at the time of delivery to Company such
Material shall be free of any security interest or any other lien or any other
encumbrance whatsoever. All warranties shall survive inspection, acceptance and
payment. Different warranty periods may be specified in the applicable Product
Letters.
Defective or non-conforming Material will, at Supplier's option, either
be returned to Supplier for repair or replacement, at no cost to Company, with
risk of in-transit loss and damage borne by Supplier and freight paid by
Supplier, or be repaired or replaced by Supplier on Company's or Company's
customers' site or another site designated by Company at no cost to Company.
Unless otherwise agreed upon by Supplier and Company, Supplier shall complete
repairs and ship the repaired Material within ten (10) working days of receipt
of defective or non- conforming Material, or at Company's option, ship
replacement Material within ten (10) working days after verbal notification is
given Supplier by Company.
If Material returned to Supplier or made available to Supplier on site
for repair as provided for in this Section is determined to be beyond repair,
Supplier shall promptly so notify Company and, unless otherwise agreed to in
writing by Supplier and Company, ship replacement Material without charge within
ten (10) days of such notification.
Replacement Material shall be warranted as set forth above in Section
4.1. Any Material which is repaired, modified, or otherwise serviced by Supplier
shall be warranted as provided in Section 4.1 for the remainder of the warranty
period (based upon the date repair, modification or other service is completed
and accepted by Company) or ninety (90) days after the Material is returned to a
customer of Company, whichever is later.
EXCEPT AS SET FORTH ABOVE, SUPPLIER DISCLAIMS ALL WARRANTIES, EXPRESS AND
IMPLIED, INCLUDING BUT NOT LIMITED TO THE IMPLIED WARRANTIES OF MERCHANTABILITY
AND/OR FITNESS FOR A PARTICULAR PURPOSE.
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4.2 LIMITATION OF LIABILITY - NEITHER PARTY SHALL BE LIABLE FOR ANY INDIRECT,
INCIDENTAL OR CONSEQUENTIAL DAMAGES, OR FOR LOSS OF PROFITS, REVENUE OR DATA,
WHETHER IN AN ACTION IN CONTRACT, TORT, STRICT LIABILITY, OR OTHERWISE, EVEN IF
ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
5. Quality
5.1 EPIDEMIC CONDITION - If, during the term of this Agreement and for five
years after the last shipment date of Material under this Agreement, Company
notifies Supplier that Material shows evidence of an "Epidemic Condition,"
Supplier shall prepare and propose a Corrective Action Plan ("CAP") with respect
to such Material within ten (10) working days of such notification, addressing
implementation and procedure milestones for remedying such Epidemic
Condition(s). An extension of this time-frame is permissible upon mutual written
agreement of the Parties.
Upon notification of the Epidemic Condition to Supplier, Company shall
have the right to postpone all or part of the shipments of unshipped Material
exhibiting the epidemic condition, by giving written notice of such postponement
to Supplier, pending correction of the Epidemic Condition. Such postponement
shall temporarily relieve Supplier of its shipment liability and Company of its
shipment acceptance liability. Should Supplier not agree to the existence of an
Epidemic Condition or should Company not agree to the CAP, then Company shall
have the right to suspend all or part of its unshipped orders without liability
to Company until such time as a mutually acceptable solution is reached.
An Epidemic Condition will be considered to exist when one or more of
the following conditions occur:
(1) Failure reports or statistical samplings show that four (4) percent or
more of Material installed or four (4) percent or more of Material
shipped during any two consecutive months, or four (4) percent or more
of the Material tracked by Company's Field Quality Engineering contain
a potential safety hazard (such as personal injury or death, fire,
explosion, toxic emissions, etc.), or exhibit a highly objectionable
symptom (such as emissions of smoke, loud noises, deformation of
housing) or other disconcerting symptoms of this type.
(2) Reliability plots of relevant data indicate that the Material has
actual Mean Time Between Failures (MTBF) of less than 80% of the MTBF
stipulated in the Technical Specification. The MTBF parameter of
Material is defined as the total operating or power-on time of any
population under observation ("T"), in hours, divided by the total
number of critical failures ("n") that have occurred during the
observed period. A critical failure is defined as a failure to operate
per the requirements of the Technical Specification. The total
operating time of a population is the summation of operating time of
individual units in that
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population. MTBF is expressed as MTBF = T/n. An Epidemic Condition
shall exist when data derived from populations being tracked confirms
the condition with 80% confidence.
(3) Material Dead on Arrival (DOA) failures exceed the Epidemic DOA
failure rate which is defined as 1.2 x DOA rate specified in the
applicable Product Letter.
Only major functional and visual/mechanical/appearance defects are
considered for determining Epidemic Condition. Material can be either sampled
or, at Company's option, 100% audited at Company warehouses, factories or
Company's customers' locations. If Material is sampled, the data must have 80%
or better statistical confidence.
For the purpose of this Agreement, functional DOA shall be defined as
any Material that during the test, installation or upon its first use fails to
operate as expected or specified. Visual/mechanical/appearance DOA is defined as
any Material containing one or more major defects that would make the Material
unfit for use or installation.
An Epidemic Condition shall not include failures due to customer
misapplication, utilization of parts not approved by Supplier, or chain failures
induced by internally or externally integrated subassemblies.
In the event that Supplier develops a remedy for the defect(s) that
caused the Epidemic Condition and Company agrees in writing that the remedy is
acceptable, Supplier shall:
(a) Incorporate the remedy in the affected Material in accordance with
Company's Engineering Change Control procedures as set forth in
Attachment 2;
(b) Ship all subsequent Material incorporating the required modification
correcting the defect(s) at no additional charge to Company; and
(c) Repair and/or replace Material that caused the Epidemic Condition. In
the event that Company incurs costs due to such repair and/or
replacement, including but not limited to labor and shipping costs,
Supplier shall reimburse Company for such reasonable costs. Supplier
shall bear risk of in transit loss and damage for such repaired and/or
replaced Material.
Supplier and Company shall mutually agree in writing as to the remedy's
implementation schedule. Supplier shall use its best efforts to implement the
remedy in accordance with the agreed-upon schedule.
If Supplier is unable to develop a mutually agreeable remedy, or does
not adequately take into account the business interests of Company, as
reasonably agreed by the Parties, Company may (1) develop and implement such
remedy and, in such case, reasonable implementation costs and risk of in-transit
loss and damage shall be allocated
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between the Parties as set forth in this Section, and/or (2) cancel postponed
orders without liability and return all Material affected by such Epidemic
Condition for full refund, payable by Supplier within thirty (30) days after
receipt of returned Material (with risk of loss or in-transit damage borne by
Supplier).
5.2 INSPECTION, ACCEPTANCE TESTING, AND QUALITY CONTROL STANDARDS
(a) Ongoing Inspection and Testing. All Material shall be subject, at
either Supplier's manufacturing facility or at Company premises, to
further inspection, acceptance testing, and review for conformance to
ongoing quality control standards as may be established in the
Specifications.
(b) Acceptance Inspection and Acceptance Testing. All Material shall be
subject to acceptance inspection and testing by Company, at Company's
election, on Supplier's premises, during normal business hours and
following a reasonable notice to Supplier , on Company's premises, or
at a location selected by Company (including the premises of any
customer of Company). When conducted on Supplier's premises by
Supplier, copies of all documents prepared by Supplier indicating the
results of such inspection and testing shall be provided to Company at
Company's request. Inspection and testing at Company's facilities or
locations designated by Company shall be commenced for Material within
a period of not more than thirty (30) days after delivery thereof.
Company's failure to notify Supplier of a defect within such thirty
(30) day period shall be deemed to constitute acceptance. The
inspection and testing shall be in accordance with the quality control
procedures and tests agreed upon by the Parties.
(c ) Facility Surveys. Company reserves the right to review, during
regular business hours and following reasonable notice to Supplier,
Supplier's physical facilities and Supplier's quality control
procedures, both prior to first Material deliveries and periodically
thereafter, in order to assure compliance with the Specifications and
other standard industry practices and procedures. Supplier shall
maintain quality control procedures mutually agreed upon by Company and
Supplier as a result of such facility survey. In the event that Company
determines in good faith, during any facilities survey, that Supplier's
procedure is insufficient to insure consistent acceptable quality,
Company shall so advise Supplier, specifying the deficiency Company
believes exists and reasonable proposals for correction. In the event
that Supplier shall fail to effect the suggested correction or
reasonably satisfy Company as to the lack of need for such correction
within thirty (30) days, Company may terminate this Agreement with
regard to affected Materials and cancel all then-outstanding Purchase
Orders for Materials without liability or consequence.
(d) Acceptance Testing Results. Company shall provide notification to
Supplier upon completion of acceptance testing setting forth the
specific date of acceptance or rejection of Material included in the
notification. If any Material is rejected,
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Supplier shall thereafter proceed forthwith to correct the defects
indicated by Company, either by repairing the defective Material at the
point of delivery or within Supplier's facility, if possible, or by
supplying a new Material. The cost associated with any such repair or
replacement, including transportation charges for return to Supplier
and subsequent return to Company, shall be borne by Supplier. The
transportation costs will be borne by Company if it is determined that
the Material was improperly rejected. Material for which acceptance
tests are not completed within thirty (30) days after delivery to the
FOB point shall be deemed to have been accepted by Company as of such
time.
(e) Failure to Meet Minimum Standards. If, during either qualification or
acceptance testing, Company determines that the Materials are not
defect-free or cannot comply with minimum quality standards or as
otherwise established between the Parties, this Agreement may be
terminated with respect to such Materials at Company's option and
Company may cancel without liability or consequence any Purchase Order
previously issued.
(f) Supplier Personnel. Supplier shall provide, at Company's request and at
locations selected by Company, and at no charge to Company, technically
competent personnel of Supplier, chosen by Supplier, to assist in the
identification and resolution of any performance problems which may
jeopardize the progress of the first installation of Material. Supplier
shall also provide, at Company's request, any performance information
available from any source which could aid Company in evaluation of
Material performance.
(g) No Waiver of Warranty. In no event shall the inspection, qualification,
and acceptance of any Material, or the payment for any such Material by
Company, in any way impair or reduce Company's rights under Section 4.1
of this Agreement, or Company's rights to further inspection or
testing.
5.3 QUALITY -
(A) Supplier commits to attaining and maintaining "acceptable " ratings
(or equivalent) on all quality system elements per a Quality System Audit (QSA)
as periodically performed by Company.
(B) Supplier commits to ensure that all Supplier manufacturing and
design operations which contribute to the design, development, production, and
service of material are ISO 9001 and 9002 certified.
(C) Supplier commits to establish an end of the line Quality Assurance
audit on Material by a date to be set forth in relevant Product Letters. The
focus of this audit shall be to replicate user application of Material as
specified by Company's customer. Test and examination of Material under the
quality audit shall be at a system level, and shall
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include but is not limited to a system for continuous monitoring of all primary
and ancillary product functions and fault detection of the Material while under
this test.
Supplier shall continuously review customer return data to ensure that
the scope of the product quality audit function includes the
requirement(s)/condition(s) under which the return failed. Supplier shall
perform a detailed failure mode analysis of all Material found defective through
the end of the line product quality audit in line with the requirements and
process outlined in paragraph E below.
(D) Supplier commits to establishing a program of tracking return
rates. Material which has been in operation for any period of time up to, and
including, one full year shall be considered part of this tracking program. For
the purpose of this Article, the term "circuit pack" shall be used to define the
lowest replaceable unit of material supplied to Company.
For the purpose of calculating the return rate, the population shall be
all circuit packs shipped during a quarter. The returns shall be those circuit
packs shipped during the quarter that are returned/received during the time
period beginning three (3) months after the end of the quarter being measured,
and ending after fifteen (15) months following said quarter.
All returns will be included in the calculation of the return rate
including, but not limited to, failures, no trouble founds and recalls. The
return rate is to be calculated using the following equation:
10,000 x returns (from Qtr. pop.) during months 3-15 post target Qtr.
- ---------------------------------------------------------------------
Population of target Qtr.
This calculation shall be made for product manufactured during each fiscal
quarter of this Agreement.
Supplier shall measure and report return rates on a quarterly basis to
Company and comply with the return rate requirement in accordance with the
following schedule:
Manufactured Return Rate Annual
Date Requirement Measurement Due
- --------------------------------------------------------------------
Jan.- Dec. *********** April
The Annual Measurement will be the summation of the number of returns
received during the defined time period of each quarter of the year divided by
the summation of the populations of each quarter times ten thousand.
(E) Supplier commits to establishing a system for tracking and
analyzing all Material returned by Company to it, as well as any Material
failures which occur through Company's end of the line Quality Assurance audit.
For all Material in the above two
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categories, Supplier shall perform a failure mode analysis, which at a minimum
will be down to the component level. Component level failure modes will be
recorded and failed components found defective will be accumulated for the
purpose of determining repetitive occurrences.
Material shall be considered defective if it fails to meet the warranty
Specifications under this Agreement (including performance and appearance
Specifications) or if during testing, installation or use, the Material fails to
operate as expected or specified.
Supplier shall continuously monitor, and analyze, data on material
returned by Company to it, as well as Material found through the end of the line
Quality Assurance Audit, for the purpose of determining: (a) return rates in
excess of expectations as outlined in paragraph (D) of this Article; or (b)
repetitive occurrences of the same component level problem. Supplier shall
provide to Company on a quarterly basis, written summary reports of said
analysis.
If Supplier determines instances where Material return rate is in
excess of the requirements as outlined in paragraph (D) , then Supplier shall
provide a written Corrective Action Report to Company, explaining in detail the
nature of the problem detected, and the step(s) Supplier proposes to correct the
problem. This completed report is to be provided to Company no later than thirty
(30) days following the occurrence or detection of the condition which required
the corrective action.
As part of the plan to correct the problem, it is agreed that Supplier shall:
a) Incorporate the remedy in affected material in accordance with the
change control procedures set forth in Supplier's change control
process.
b) Ship all subsequent material incorporating the required
modification correcting the problem at no additional charge to
Company; and
c) Repair and/or replace previously shipped material that may contain
the same problem trend. In the event that Company incurs costs due
to such repair and/or replacement, including but not limited to
labor and shipping costs, Supplier shall reimburse Company for
such reasonable costs. Supplier shall bear risk of in transit loss
and damage for such repaired and/or replaced material.
Supplier and Company shall mutually agree in writing as to the
implementation schedule of the corrective action plan. Supplier shall use its
best efforts to implement the plan in accordance with the agreed upon schedule.
Company shall be entitled to postpone, at no charge to Company, further
deliveries of orders until such time as the remedy is implemented consistent
with this Article.
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(F) If Supplier 1) fails to meet the customer return rate established
in paragraph (D) during any period of three months or more; or 2) fails to issue
Corrective Action Reports as required in paragraph (E); or 3) fails to implement
a correction action in a manner and time frame agreed to by Company, then
Company may, in addition to any other remedies it may have: 1) develop and
implement such remedy for already purchased Material, the reasonable cost of
which will be borne by Supplier; 2) cancel or postpone other orders without
liability and return all Material affected by the problem for full refund,
payable by Supplier within thirty (30) days after receipt of returned material
(with risk of loss or in transit damage borne by Supplier).
(G) As part of a program of continuous improvement, Supplier shall
establish annually, improvement goals for a series of key quality objectives.
These goals should include, but are not limited to: a) customer return rates as
specified in paragraph (D), b) Quality Assurance product quality audit defect
rates, and c) final system test yields. Supplier shall track these goals on a
monthly basis and to commit the resources necessary for the attainment of these
goals.
5.4 REPAIRS NOT COVERED UNDER WARRANTY - In addition to repairs provided for in
Section 4.1, Supplier shall provide repair service on all Material ordered under
this Agreement for a period of five (5) years after the discontinuation of
manufacture of Material, as set forth in Specifications. Material to be repaired
under this Section will be returned to a location designated by Supplier, and
unless otherwise agreed upon by Supplier and Company, Supplier shall ship the
repaired Material which meets the Specifications set forth in the applicable
Product Letters within fifteen (15) days of receipt at Supplier's location.
If Material is returned to Supplier for repair as provided for in this
Section and is determined to be beyond repair, Supplier shall so notify Company.
If requested by Company, Supplier will sell to Company a replacement at the
price set forth in Supplier's then current agreement with Company for said
Material or, if no such agreement exists, at a price agreed upon by Supplier and
Company. If the Parties fail to agree on a price, the price shall be a
reasonably competitive price for such Material at the time for delivery.
Further, if requested by Company, Supplier shall take the necessary steps to
dispose of the unrepairable Material and pay to Company the salvage value, if
any.
Replacement and repaired Material shall be warranted as set forth in
Section 4.1.
This Agreement does not grant Supplier an exclusive privilege to repair
any or all of the Material purchased under this Agreement for which Company may
require repair; and Company may perform the repairs or contract with others for
these services. In addition, Supplier authorizes Company and any qualified
repairer with whom Company may contract to perform repairs on all Material
purchased under this Agreement.
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All transportation costs and in transit risk of loss and damage to
Material returned to Supplier for repair under this Section will be borne by
Company and all transportation costs of and in transit risk of loss and damage
to such repaired or replacement Material returned to Company will be borne by
Company.
5.5 REPAIR PROCEDURES - Company shall furnish the following information with
Material returned to Supplier for repair: (a) Company's name and complete
address; (b) name(s) and telephone numbers(s) of Company's employee(s) to
contact in case of questions about the Material to be repaired; (c) ship-to
address for return of repaired Material if different than (a); (d) a complete
list of Material returned; (e) the nature of the defect or failure if known; and
(f) whether or not returned Material is in warranty. Supplier shall, within ten
(10) days of the execution of this Agreement, provide a written notice to
Company specifying (i) the name(s) and telephone number(s) of the individual(s)
to be contacted concerning any questions that may arise concerning repair, and
(ii) if required, any special packing of Material which might be necessary to
provide adequate in-transit protection from transportation damage.
Material repaired by Supplier shall have the repair completion date
stenciled or otherwise identified in a permanent manner at a readily visible
location on the Material and the repaired Material shall be returned with a tag
or other papers describing the repairs which have been made.
All invoices originated by Supplier for repair services must be clearly
identified as such, and must contain: (1) a reference to Company's purchase
order for these repair services, (2) a detailed description of repairs made by
Supplier and the need therefor, and (3) an itemized listing of parts and labor
charges, if any. Replaced parts will, upon request, be available for inspection
by or returned to Company. Further, the provisions of Sections 2.1 (Invoicing)
and 2.8 (Shipping) , other than provisions relating to transportation charges
with respect to material repaired under warranty, shall apply to Supplier's
return to Company of repaired material.
5.6 RIGHT OF ENTRY - Each Party shall have the right to enter the premises of
the other party during normal business hours with respect to the performance of
this Agreement including an inspection or a Quality Review, subject to all plant
rules and regulations, clearances, security regulations and procedures as
applicable. Each party shall provide safe and proper facilities for such
purpose.
5.7 VARIATION IN QUANTITY - Company assumes no liability for Material produced,
processed or shipped in excess of the amount specified in this Agreement or in
an order issued pursuant to this Agreement.
6. Termination
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6.1 BANKRUPTCY AND TERMINATION FOR FINANCIAL INSECURITY- If a proceeding is
commenced under any provision of the United States Bankruptcy Code, voluntary or
involuntary, by or against either Party, and this Agreement has not been
terminated, the non-debtor party may file a request with the bankruptcy court to
have the court set a date within sixty (60) days after the commencement of the
case, by which the debtor party will assume or reject this Agreement, and the
debtor party shall cooperate and take whatever steps are necessary to assume or
reject the Agreement by such date. If a bankruptcy proceeding results in a
Change In Control, the provisions in this Agreement pertaining to Change In
Control shall govern.
6.2 TERMINATION FOR CHANGE IN CONTROL - In the event of a Change in Control of
Supplier or a reasonable expectation of a Change in Control of Supplier, the
Supplier shall provide notice to Company of such actual or expected Change in
Control event within ten (10) business days of the knowledge or reasonable
expectation of the Change in Control event. Upon the effective date of a Change
in Control, Company shall have the right to terminate this Agreement by giving
Supplier written notice of its intention to terminate at least ninety (90) days
prior to the termination date specified in the termination notice. The Parties
understand and agree that if Company elects to exercise its right to terminate,
then such termination shall apply on a going forward basis, but shall not apply
to past purchase orders that are completed or to current purchase orders that
are firm and binding commitments of Company.
6.32 MATERIAL DEFAULT - If Supplier shall be in Material Default of any of the
terms, conditions or covenants of this Agreement or of any purchase order, then,
in addition to all other rights and remedies which Company may have at law or
equity or otherwise, Company shall have the right to cancel any purchase orders
placed by Company with regard to affected Material without any charge to or
obligation or liability of Company.
7. Intellectual Property
7.1 SOFTWARE - Material includes any software (operating program in machine
readable form and related documentation or firmware) and storage media normally
furnished with or embedded in the Material. Title to software, including
copyright, shall remain in Supplier, and title to the software storage media
shall follow title to the remainder of the Material. For the life of the
Material listed in this Agreement, Supplier grants to Company and any subsequent
purchaser a nonexclusive license to use said software on the Material on which
it was delivered. Company and any subsequent purchaser may reproduce and use the
software only in connection with use on the Material with which the software was
originally delivered and for archival purposes, and shall not otherwise
knowingly reproduce the original software or distribute copies of the software
to others. Company and any subsequent purchaser may not add to, delete from or
modify the software in any manner without the written consent of Supplier, and
shall
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not decompile, disassemble or reverse engineer the software. No changes,
however extensive, shall alter Supplier's title to such original software.
7.2 CONFIDENTIALITY - All Information ("Information" means proprietary
specifications, designs, plans, drawings, software, data, prototypes or other
business and /or technical information) provided by either Party to the other
under this Agreement shall be held in confidence by the receiving Party; shall
be used only for the purpose of performing acts and obligations required by this
Agreement; shall be reproduced only to the extent necessary for that purpose;
and shall not be disclosed by the receiving Party without the prior written
approval of the disclosing Party. The receiving Party may, however, disclose the
Information to its employees, consultants and contractors with a need to know;
provided, that the receiving Party binds those employees, consultants and
contractors to terms at least as restrictive as those stated herein, advises
those employees, consultants and contractors of their confidentiality
obligations, and indemnifies the disclosing Party for any breach of those
obligations. Information shall be subject to the restrictions in this section if
it is in writing or other tangible form, only if clearly marked as proprietary
when disclosed to the receiving Party; or, if not in tangible form, is of a
nature that a reasonable person would conclude is confidential Information, and
the Information is reduced to writing clearly marked as proprietary, with a copy
of the writing being furnished to the receiving Party within thirty (30) days of
the disclosure of the intangible information, and with the writing containing a
notice that the information was previously provided in intangible form. These
restrictions on the use or disclosure of Information shall not apply to any
Information: (i) which is independently developed by or for the receiving Party;
(ii) which is lawfully received free of restriction from another source; (iii)
after it has become generally available to the public without breach of this
Agreement by the receiving party; (iv) which at the time of disclosure to the
receiving Party was known to that Party free of restriction as evidenced by
documentation in that Party's possession; (v) which the disclosing Party agrees
in writing is free of such restrictions; or (vi) which the receiving Party is
required to disclose under applicable laws, rules and regulations, provided that
the receiving Party shall first notify the disclosing Party of such required
disclosure and afford the disclosing party the opportunity to seek a protective
order relating to such disclosure. All Information shall remain the property of
the disclosing Party and shall be returned upon written request or upon the
receiving Party's determination that it no longer has a need for such
Information. The receiving Party may retain one copy of all written materials
returned to provide an archive record of the disclosure.
7.3 INFRINGEMENT - Supplier shall indemnify and save harmless Company, its
affiliates and their customers, officers, directors, and employees (all referred
to in this Section as "Company") from and against any losses, damages,
liabilities, fines, penalties, and expenses (including reasonable attorneys'
fees) that arise out of or result from any and all claims (1) of infringement of
any patent, copyright, trademark or trade secret right, or other intellectual
property right, private right, or any other proprietary or personal interest,
and (2) related by circumstances to the existence of this Agreement or
performance under
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or in contemplation of it (an Infringement Claim). If the Infringement Claim
arises solely from Supplier's adherence to Company's written instructions
regarding services or tangible or intangible goods provided by Supplier (Items)
and if the Items are not (1) commercial items available on the open market or
the same as such items, or (2) items of Supplier's designated origin, design or
selection, Company shall indemnify Supplier. Company shall notify Supplier
promptly upon learning of such claim and Supplier shall have the right to defend
the claim. Supplier shall not be liable for any settlement made without
Supplier's written approval. Supplier (at Company's request) shall defend or
settle, at its own expense any demand, action or suit on any Infringement Claim
for which it is indemnitor under the preceding provisions and each shall timely
notify the other of any assertion against it of any Infringement Claim and shall
cooperate in good faith with the other to facilitate the defense of any such
Claim.
8. Environmental
8.1 HEAVY METALS AND/OR CFC IN PACKAGING - Supplier warrants to Company that no
lead, cadmium, mercury or hexavalent chromium have been intentionally added to
any packaging or packaging component (as defined under applicable laws) to be
provided to Company under this Agreement and that packaging materials were not
manufactured using and do not contain chlorofluorocarbons. Supplier further
warrants to Company that the sum of the concentration levels of lead, cadmium,
mercury and hexavalent chromium in the package or packaging component provided
to Company under this Agreement does not exceed 100 parts per million. Upon
request, Supplier shall provide to Company Certificates of Compliance certifying
that the packaging and/or packaging components provided under this Agreement are
in compliance with the requirements set forth above in this Section.
8.2 OZONE DEPLETING CHEMICALS - Supplier hereby warrants that it is aware of
international agreements and pending legislation in several nations, including
the United States, which would limit, ban and/or tax importation of any product
containing, or produced using ozone depleting chemicals ("ODCs"), including
chloroflurocarbons, halons and certain chlorinated solvents. Supplier hereby
warrants that the material furnished to Company will conform to all applicable
requirements established pursuant to such agreements, legislation and
regulations, and the material furnished to Company will be able to be imported
and used lawfully (and without additional taxes associated with ODCs not
reported to Company by Supplier as set forth in this Section) under all such
agreements, legislation and requirements. Supplier also warrants that it is
currently reducing, or if Supplier is not the manufacturer of the material, is
currently causing the manufacturing vendor to reduce and will, in an expeditious
manner, eliminate, or, as applicable, have its manufacturing vendor eliminate
the use of ODCs in the manufacture of the material.
8.3 OZONE DEPLETING SUBSTANCES LABELING - Supplier warrants and certifies that
all products, including packaging and packaging components, provided to Company
under this Agreement have been accurately labeled, in accordance with the
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requirements of 40 CFR Part 82 entitled "Protection of Stratospheric Ozone,
Subpart E - The Labeling of Products Using Ozone Depleting Substances."
If the material furnished by Supplier under this Agreement is manufactured
outside the United States, Supplier shall, upon execution of this Agreement, and
at any time that new products are added to this Agreement or changes are made to
the material furnished under this Agreement, complete, sign and return to
Company the attached ODC Content Certification. The ODC Content Certification
must be signed by Supplier's facility manager, corporate officer or his
delegate.
The term "ODC content" on the ODC Content Certification means the total pounds
of ODC used directly in the manufacture of each unit of material. This includes
all ODCs used in the manufacturing and assembly operations for the material plus
all ODCs used by Supplier's vendors and any other vendors in producing
components or other products incorporated into the material sold to Company.
Supplier is responsible to obtain information on the ODC content of all
components and other products acquired to manufacture the material and to
incorporate such information into the total ODC content reported to Company;
provided however, that Supplier should not include in the ODC content those
components or other products which are manufactured in the United States.
Supplier hereby warrants to Company that all information furnished by Supplier
on the ODC Content Certification is complete and accurate and that Company may
rely on such information for any purpose, including but not limited to providing
reports to government agencies or otherwise complying with applicable laws.
Supplier shall defend, indemnify and hold Company harmless of and from any
claims, demands, suits, judgments, liabilities, fines, penalties, costs and
expenses (including additional ODC taxes as provided for in paragraph one of
this Section and reasonable attorney's fees) which Company may incur under any
applicable federal, state, or local laws or international agreements, and any
and all amendments thereto by reason of Company's use of reliance on the
information furnished to Company by Supplier on the ODC Content Certification or
by reason of Supplier's breach of this Section. Supplier shall cooperate with
Company in responding to any inquiry concerning the use of ODCs to manufacture
the material or components thereof and to execute without additional charge any
documents reasonably required to certify the absence or quantity of ODCs used to
manufacture the material or components thereof.
8.4 TOXIC SUBSTANCES AND PRODUCT HAZARDS - Supplier hereby warrants to Company
that, except as expressly stated elsewhere in this Agreement, all material
furnished by Supplier as described in this Agreement is safe for its foreseeable
use, is not defined as a hazardous or toxic substance or material under
applicable federal, state or local law, ordinance, rule, regulation or order
(hereinafter collectively referred to as "law" or "laws"), and presents no
abnormal hazards to persons or the environment. Supplier also warrants that it
has no knowledge of any federal, state or local law, that prohibits the disposal
of the material as normal refuse without special precautions except as expressly
stated elsewhere in this Agreement. Supplier also warrants that where
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required by law, all material furnished by Supplier is either on the EPA
Chemical Inventory compiled under Section 8 (a) of the Toxic Substance Control
Act, or is the subject of an EPA-approved pre manufacture notice under 40 CFR
Part 720. Supplier further warrants that all material furnished by Supplier
complies with all use restrictions, labeling requirements and all other health
and safety requirements imposed under federal, state, or local laws. Supplier
further warrants that, where required by law, it shall provide to Company, prior
to delivery of the material, a Material Safety Data Sheet which complies with
the requirements of the Occupational Safety and Health Act of 1970 and all rules
and regulations promulgated thereunder.
Supplier shall defend, indemnify and hold Company harmless for any expenses
(including, but not limited to, the cost of substitute material, less
accumulated depreciation) that Company may incur by reason of the recall or
prohibition against continued use or disposal of material furnished by Supplier
as described in its Agreement whether such recall or prohibition is directed by
Supplier or occurs under compulsion of law. Company shall cooperate with
Supplier to facilitate and minimize the expense of any recall or prohibition
against use or disposal of material directed by Supplier or under compulsion of
law.
Supplier further shall defend, indemnify and hold Company harmless of and
from any claims, demands, suits, judgments, liabilities, costs and expenses
(including reasonable attorney's fees) which Company may incur under any
applicable federal, state or local laws, and any and all amendments thereto,
including but not limited to the Comprehensive Environmental Response,
Compensation and Liability Act of 1980; the Consumer Product Safety Act of 1972;
the Toxic Substance Control Act; Fungicide, Rodenticide Act; the Occupational
Safety and Health Act; and the Atomic Energy Act; and any and all amendments to
all applicable federal, state, or local laws, by reason of Company's
acquisition, use, distribution or disposal of material furnished by Supplier
under this Agreement.
9. Import/Export
9.1 COMPLIANCE WITH UNITED STATES CUSTOMS LAWS AND REGULATIONS - Supplier shall
ensure that its activities in performance of this Agreement shall not put
Company in violation of any United States Customs laws, statutes, or
regulations. Supplier agrees to assist Company in every way necessary to ensure
that Company can import the material into the United States in accordance with
all applicable customs laws, statutes, and regulations, and in support of this
assistance, Supplier agrees to follow Company's directives, if any, which may be
attached to and made part of this Agreement.
9.2 EXPORT CONTROL - Company will not use, distribute, transfer or transmit any
products, software or technical information (even if incorporated into other
products) provided under this Agreement except in compliance with U.S. export
laws and regulations (the "Export Laws"). Company will not, directly or
indirectly, export or re-
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export the following items to any country which is in the then current list of
prohibited countries specified in the applicable Export Laws: (a) software or
technical data disclosed or provided to Company by Company or Company's
subsidiaries or affiliates; or (b) the direct product of such software or
technical data. Company agrees to promptly inform Company in writing of any
written authorization issued by the U.S. Department of Commerce office of export
licensing to export or re-export any such items referenced in (a) or (b). The
obligations stated above in this Section will survive the expiration,
cancellation or termination of this Agreement or any other related agreement.
10. Disputes
10.1 DISPUTE RESOLUTION - (a) The following procedures shall apply to any
dispute or disagreement between the Parties or any of their Related Parties
arising out of this Agreement
(b) First:
(i) either Party may give written notification of such dispute or
disagreement to the other Party and
(ii) the Parties shall communicate with each other promptly with a
view to resolving such dispute or disagreement within 21 days (or such
extended period as the Parties agree is appropriate in any case) after such
written notification is given.
(c) The giving of any notice regarding any dispute or disagreement under
this Section 10.1 shall toll the running of all applicable statutes of
limitation until the later of (i) 90 days following the giving of such notice or
(ii) 30 days following the termination of discussions between the Parties
concerning such dispute or disagreement.
(d) Second, if at the end of the 21 day period referenced in Section
10.1(b) (as it may be extended) such dispute or disagreement has not been
resolved to the satisfaction of both parties, either Party may request in
writing that such dispute or disagreement be the subject of non-binding
mediation. Following such request, the Parties shall endeavor in good faith
promptly to identify a single person (who shall be a person with experience and
good reputation) who shall assist the Parties in discussing such dispute or
disagreement and in attempting to reach a mutually acceptable business
resolution. Such mediation process shall terminate not later than 30 days
following the request therefor (or such extended or shorter period as the
Parties agree is appropriate). All applicable statutes of limitation shall be
tolled during the period of mediation.
(e) Third, if at the end of the 30 day period referenced in Section 10.1(d)
(as it may be extended or shortened) such dispute or disagreement has not been
resolved to the satisfaction of both parties, either Party (the "complainant")
may commence binding arbitration by giving the other Party (the "respondent")
notice in writing (the "initiating notice") setting forth in reasonable detail
the nature of its claim and the relief requested stating that the complainant is
invoking the procedures set forth in this Section 10.1(e) and (f) and naming the
complainant's representative on the Arbitration Panel (as defined below). Within
21 days of receipt of an initiating notice, the respondent shall give the
complainant notice in writing (the "response") setting forth in reasonable
detail: (1) the
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basis of its response to the claim; (2) the nature of any counterclaim it has
against the complainant arising from the same set of facts and circumstances
that gave rise to the original claim; (3) any other counterclaim that Party
wishes to bring at that time (although the Party has no obligation to bring such
counterclaims at that time); (4) the relief requested; and (5) naming the
respondent's representative on the Arbitration Panel. The two representatives
shall select a third person who is mutually acceptable to them. If the
representatives fail to make such selection within 21 days, the complainant and
the respondent shall each replace its representative with a new representative
and the new representatives shall be subject to the preceding sentence and this
sentence. Once a third person is selected, such person together with the
representatives of the complainant and the respondent shall form the Arbitration
Panel. The date upon which the Arbitration Panel is formed shall be the
"Commencement Date".
(f) The Arbitration Panel shall conduct proceedings to determine the merits
under applicable law of the claims set forth in the initiating notice and the
response. The proceedings shall be administered by JAMS/Endispute in accordance
with its Comprehensive Arbitration Rules and Procedures in effect as of the
Effective Date, subject to the following additional rules:
(i) the proceedings shall take place in New York City;
(ii) the Arbitration Panel (including, if necessary, any
replacement(s) to the Arbitration Panel) shall be selected as set forth in
Section 10.1(e);
(iii) the available relief shall include damages, injunctive relief
and equitable relief to the extent allowed under the applicable law, this
Agreement and any other agreement between the parties;
(iv) the parties shall attempt in good faith promptly to agree on the
nature and extent of any discovery in connection with the arbitration,
provided that, in the absence of such agreement, discovery shall be
governed by JAMS/Endispute's Comprehensive Arbitration Rules and
Procedures. In addition, the applicable law with respect to privilege and
other protections from disclosure, including the work product doctrine,
shall apply;
(v) the final decision of the Arbitration Panel (the "Award") shall be
issued within six months of the Commencement Date (the date of issuance of
the Award being the "Award Date") and must be joined by at least two
members of the Arbitration Panel;
(vi) each party to the proceedings shall pay its own costs in
connection with the proceedings, including the costs and expenses of its
representative on the Arbitration Panel, and the parties shall share
equally the other costs of the proceedings, including the fees of the third
member of the Arbitration Panel, except that the prevailing party shall be
entitled to recover its attorneys' fees incurred in prosecution thereof.
(g) In accordance with the Federal Arbitration Act, 9 U.S.C. ss.1 et seq.,
the Award shall be final and binding and judgment thereon may be entered by any
state or federal court having jurisdiction thereof.
(h) Nothing in this Section 10.1 shall be construed to preclude either
party from seeking injunctive relief in a court of competent jurisdiction to
prevent imminent irreparable harm. The dispute resolution procedures set forth
herein shall be stayed
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pending disposition of any application for such relief. The Parties agree that a
court of competent jurisdiction may consider the merits of any claim that is
subject to the dispute resolution procedures set forth herein to the extent
necessary to resolve any permissible application for injunctive relief.
11. Miscellaneous
11.1 ASSIGNMENT - BBT shall not assign any right or interest under this
Agreement (excepting solely for moneys due or to become due) without the prior
written consent of Lucent. Subject to Lucent's right to terminate upon the
occurrence of a Change in Control, a merger or consolidation shall not be deemed
to be an assignment. BBT will provide Lucent with written notice of a merger or
consolidation within ten (10) business days after having knowledge or reasonable
expectation of the merger or consolidation.
11.2 CHOICE OF LAW - This Agreement and all transactions under it shall be
governed by the laws of the State of New Jersey excluding its choice of laws
rules. Each Party agrees to submit to the jurisdiction of any court in the
United States wherein an action is commenced against the other Party based on a
claim for which the first Party has agreed to indemnify the other Party under
this Agreement.
11.3 COMPLIANCE WITH LAWS - Supplier and all persons furnished by Supplier shall
comply at their own expense with all applicable laws, ordinances, regulations
and codes, including the identification and procurement of required permits,
certificates, licenses, insurance, approvals and inspections in performance
under this Agreement.
11.4 ENTIRE AGREEMENT - This Agreement shall constitute the entire agreement
between the Parties with respect to the subject matter of this Agreement and
shall not be modified or rescinded, except by a writing signed by Supplier and
Company. The provisions of this Agreement supersede all prior or contemporaneous
oral and prior written agreements, communications and/or understandings of the
Parties with respect to the subject matter of this Agreement.
11.5 FORCE MAJEURE - Neither party shall be held responsible for any delay or
failure in performance of any part of this Agreement to the extent such delay or
failure is caused by fire, flood, strike, civil, governmental or military
authority, act of God, or other similar causes beyond its control and without
the fault or negligence of the delayed or nonperforming party or its
subcontractors. Supplier's liability for loss or damage to Company's material in
Supplier's possession or control shall not be modified by this Section. When a
party's delay or nonperformance continues for a period of at least sixty (60)
days, the other party may terminate, at no charge, any purchase order under the
Agreement affected by such delay or nonperformance.
11.6 IDENTIFICATION - Supplier shall not, without Company's prior written
consent, engage in publicity related to this Agreement, or make public use of
any Identification in any circumstances related to this Agreement.
"Identification" means any
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semblance of any trade name, trademark, service mark, insignia, symbol, logo, or
any other designation or drawing of Lucent Technologies or its affiliates.
Supplier shall remove or obliterate any Identification prior to any use or
disposition of any material rejected or not purchased by Company. Company
recognizes that Supplier is a public company and that it may be required to make
disclosures per applicable laws or regulations.
11.7 IMPLEADER - Neither Party shall implead or bring an action against the
other Party based on any claim by any person for personal injury or death to an
employee of the other Party for which a Party has previously paid or is
obligated to pay worker's compensation benefits to such employee or claimant and
for which such employee or claimant could not otherwise bring legal action
against the other Party.
11.8 INDEMNITY - At one Party's request, the other Party agrees to indemnify,
defend and hold harmless the other Party, its affiliates, customers, employees,
successors and assigns (all referred to as "Party") from and against any losses,
damages, claims, fines, penalties and expenses (including reasonable attorney's
fees) that arise out of or result from: (1) injuries or death to persons or
damage to property, including theft, in any way arising out of or caused or
alleged to have been caused by the actions or omissions of one Party , or
Material provided by one Party or persons furnished by a Party ; (2) assertions
under Workers' Compensation or similar acts made by persons furnished by a
Party.
11.9 INSIGNIA - Upon Company's written request, "Insignia", including certain
trademarks, trade names, insignia, symbols, decorative designs or packaging
designs of Company, or evidences of Company's inspection will be properly
affixed by Supplier to the Material furnished or its packaging. Such Insignia
will not be affixed, used or otherwise displayed on the Material furnished or in
connection therewith without written approval by Company. The manner in which
such Insignia will be affixed must be approved in writing by Company in
accordance with standards established by Company. Company shall retain all
right, title and interest in any and all packaging designs, finished artwork and
separations furnished to Supplier. This Section does not reduce or modify
Supplier's obligations under Section 11.6.
11.10 INSURANCE - Supplier shall maintain and cause Supplier's subcontractors to
maintain during the term of this Agreement: (1) Workers' Compensation insurance
as prescribed by the law of the state or nation in which the Work is performed;
(2) employer's liability insurance with limits of at least $500,000 for each
occurrence; (3) automobile liability insurance if the use of motor vehicles is
required, with limits of at least $1,000,000 combined single limit for bodily
injury and property damage per occurrence; (4) Commercial General Liability
("CGL") insurance, ISO 1988 or later occurrence form of insurance, including
Blanket Contractual Liability and Broad Form Property Damage, with limits of at
least $1,000,000 combined single limit for bodily injury and property damage per
occurrence; and (5) if the furnishing to Company (by sale or otherwise) of
material or construction services is involved, CGL insurance endorsed to
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include products liability and completed operations coverage in the amount of
$5,000,000 per occurrence. All CGL and automobile liability insurance shall
designate Company, its affiliates, and its directors, officers and employees
(all referred to in this provision as "Company") as additional insured. All such
insurance must be primary and non-contributory and required to respond and pay
prior to any other insurance or self-insurance available. Any other coverage
available to Company shall apply on an excess basis. Supplier agrees that
Supplier, Supplier's insurer(s) and anyone claiming by, through, under or in
Supplier's behalf shall have no claim, right of action or right of subrogation
against Company and its customers based on any loss or liability insured against
under the foregoing insurance. Supplier will furnish Company copies of
certificates of such insurance, on request. In the event that Supplier changes
insurers, Supplier will notify Company of such change. Insurance companies
providing coverage under this Agreement must be rated by A-M Best with at least
an A- rating.
11.11 NON-EXCLUSIVE MARKET RIGHTS - This Agreement neither grants to Supplier an
exclusive right or privilege to sell to Company any or all products of the type
described in Section 1.4 which Company may require, nor requires the purchase of
any material or other products from Supplier by Company. Therefore, Company may,
and intends to, contract with other manufacturers and suppliers for the
procurement of comparable products, and the same products to the extend such can
be done without infringing Supplier's technology rights. In addition, Company
shall, at its sole discretion, decide the extent to which Company will market,
advertise, promote, support or otherwise utilize the Material. Purchases by
Company under this Agreement shall neither restrict the right of Company to
cease purchasing nor require Company to continue any level of such purchases.
11.12 NOTICES - Any notice or demand which under the terms of this Agreement or
under any statute must or may be given or made by Supplier or Company shall be
in writing and shall be given or made by confirmed facsimile, or similar
communication or by express mail or overnight courier addressed to the
respective Parties as follows:
To Company: Lucent Technologies Inc.
67 Whippany Road
Whippany, New Jersey 07981
Attention: Access Product Management Vice President
with a copy to:
Lucent Technologies Inc.
283 King George Road
Warren, New Jersey 07059
Attention: Corporate Counsel-Switching and Access
To: BroadBand Technologies, Inc.
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P.O. Box 13737
4024 Stirrup Drive
Durham, North Carolina 27709-3737
ATTN: Chief Financial Officer
with a copy to:
James F. Verdonik, Esq.
Kilpatrick Stockton LLP
P.O. Box 300004
Raleigh, North Carolina 27622
The effective dates of such notices shall be upon receipt. The above addresses
may be changed at any time by giving prior written notice as above provided.
11.13 PRODUCT DOCUMENTATION - Supplier shall furnish, at no charge, product
documentation, and any succeeding changes thereto, as described in the Technical
Specification. Company may use, reproduce, reformat, modify and distribute such
product documentation. Company shall reproduce Supplier's copyright notice
contained in any documentation reproduced without change by Company. For
documentation which is reformatted or modified by Company, Company shall place
Company's own copyright notice on the reformatted or modified documentation,
together with the copyright notices of Supplier and of any third parties which
appear on the original documentation. It is the intent of the Parties that
Company's copyright notice shall be interpreted to protect the underlying
copyright rights of Supplier to the documentation to the extent such underlying
rights are owned by Supplier.
11.14 SEVERABILITY - If any of the provisions of this Agreement shall be invalid
or unenforceable, such invalidity or unenforceability shall not invalidate or
render unenforceable this entire Agreement, but rather this entire Agreement
shall be construed as if not containing the particular invalid or unenforceable
provision or provisions, and the rights and obligations of the Parties shall be
construed and enforced accordingly.
11.15 INDEPENDENT AGREEMENT - Breach by a Party of any other agreement between
the Parties shall not constitute a breach of this Agreement, unless the same
conduct independently breaches this Agreement. A breach of this Agreement shall
not constitute a breach of any other agreement between the Parties, unless the
same conduct independently breaches such other agreement.
11.16 RELATIONSHIP OF PARTIES - The relationship of the Parties as established
under this Agreement shall be and remain one of independent contractors, and
neither Party will at any time or in any way represent itself as being a dealer,
agent or other representative of the other Party or as having authority to
assume or create obligations or act in any manner on behalf of the other Party.
Further, it is understood and agreed that the Parties to this Agreement are not
partners or joint venturers.
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11.17 SURVIVAL OF OBLIGATIONS - The obligations of the Parties under this
Agreement, which by their nature would continue beyond the termination,
cancellation or expiration of this Agreement, shall survive termination,
cancellation or expiration of this Agreement.
11.18 TAXES - Company shall reimburse Supplier only for the following tax
payments with respect to transactions under this Agreement unless Company
advises Supplier that an exemption applies: state and local sales and use taxes,
as applicable. Taxes payable by Company shall be billed as separate items on
Supplier's invoices and shall not be included in Supplier's prices. Company
shall have the right to have Supplier contest any such taxes that Company deems
improperly levied at Company's expense and subject to Company's direction and
control.
11.19 TIMELY PERFORMANCE - If Supplier has knowledge that anything prevents or
threatens to prevent the timely performance of the Work under this Agreement,
Supplier shall immediately notify Company's Representative thereof and include
all relevant information concerning the delay or potential delay.
11.20 COUNTERPARTS - This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
AGREED:
BROADBAND TECHNOLOGIES, LUCENT TECHNOLOGIES INC.
INC.
By: _____________________ By:_______________________
Name ___________________ Name _____________________
(Print) (Print)
Title:____________________ Title: ___________________
Date:____________________ Date:_____________________
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<PAGE>
ATTACHMENT 1
BBT OEM SUPPLY AGREEMENT
DEFINITIONS
The following terms shall have the meanings set out below:
"Change in Control" - A Change in Control occurs upon any one of the following
circumstances or events:
(i) The stockholders of a Party ("Acquired Party") approve a transaction,
including, without limitation, a merger or consolidation (however
denominated or effectuated), with an Acquiror, including, without
limitation, a merger or consolidation, or series of transactions with
the same Acquiror ("Combination"), and immediately after such
transaction(s) less than 60% of the combined voting power of the
then-outstanding securities of the Acquired Party or the Acquiror, will
be held in the aggregate by the holders of securities entitled,
immediately prior to such Combination, to vote generally in the
election of directors of the Acquired Party ("Voting Securities");
(ii) The stockholders of the Acquired Party approve the sale or transfer of
all or substantially all of its assets to any other Person or entity,
and less than 60% of the combined voting power of the then-outstanding
Voting Securities of such Acquiror immediately after such transaction
will be held in the aggregate by the holders of the Voting Securities
of the Acquired Party immediately prior to such sale;
(iii) An Acquiror acquires in one or a series of transactions beneficial
ownership of more than 40% of the outstanding shares of Voting
Securities of a Party;
(iv) The stockholders of a Party approve a plan of complete liquidation or
dissolution of the Party;
(v) Any Acquiror obtains direct or indirect Control (as herein defined)
over a party and, in Lucent's reasonable judgment, such Control may
threaten Lucent's interests. For the purposes of this subsection, the
term "Control" shall mean the possession directly or indirectly of the
power to direct or cause the direction of the management or policies of
a Party, whether through the ability to exercise voting power, by
contract or otherwise;
(vi) At any time, Continuing Directors (as herein defined) shall not
constitute at least 50% of the members of the Board ("Continuing
Director" means (i) each individual, who has been a director of the
Party for at least twelve (12) consecutive months before such time and
(ii) each individual who was nominated or elected to be a director of
the Party by at least a majority of the Continuing Directors at the
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<PAGE>
time of such nomination or election); or
(vii) Any other transaction which has the effect of causing the substantive
changes in the Acquired Party described in any of the preceding
paragraphs.
For the purposes of this Section, the term "Acquiror" shall mean one
person or entity, or two or more persons and/or entities constituting a
"group" for purposes of the Securities Exchange Act of 1934, as
amended.
"Fit" shall mean physical size or mounting arrangement (e.g., electrical or
mechanical connections) as set forth in the Specifications.
"Form" shall mean physical shape as set forth in the Specifications.
"Function" shall mean product features as set forth in the Specifications.
"Material" shall mean the Products, items and projects set forth in Product
Letters to be prepared pursuant to this Agreement.
"Material Default" shall be any failure to comply with the terms and conditions
of this Agreement, any purchase order or any Product Letter which is or becomes
a part of this Agreement, which is not cured by the Party that has failed to
perform within 30_days after written notice of such default is given to the
defaulting Party by the non defaulting Party.
"Product" shall mean a product as described in the Specifications set forth in
applicable Product Letters prepared by the Parties pursuant to Section 1.4 of
this Agreement, including any and all modifications, changes and improvements
made to such Product pursuant to applicable Product Letters.
"Product Letter" shall have the meaning set forth in Section 1.4 of this
Agreement.
"Part" - Any component, subassembly or other module of the Product.
"Purchase Order" or "Order" - Any purchase order issued by Company for the
purpose of ordering Products or Parts pursuant to this Agreement.
"Related Parties" shall mean, in respect of any Party, such Party's wholly owned
subsidiaries, and the respective divisions, heirs, successors and assigns of
such Party and its wholly owned subsidiaries.
"Severity Level 1" - This condition exists when the transmission system is
completely inoperative, and it is not usable by Customer. The inoperative
portion of the licensed software completely restricts the Customer's operation.
"Severity Level 2" - This condition exists when the transmission system is
partially inoperative, but it is still usable by Customer. The inoperative
portion of the licensed
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software severely restricts the Customer's operations, but has a less critical
effect than a Severity Level 1 condition.
"Specifications" - shall have the meaning set forth in Section 1.5 of this
Agreement.
"Technical Information" - All specifications, designs, plans, drawings,
software, data, prototypes, or other business and/or technical information
related to or associated with Products that is provided by Company to Supplier
to enable, assist or facilitate Supplier's performance under this agreement.
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ATTACHMENT 2
BBT OEM SUPPLY AGREEMENT
ENGINEERING CHANGE CONTROL PROCEDURES
"Product Changes" shall be administered in accordance with Bell
Communications Research document GR 209 CORE, Issue 2, January 1996, titled
"Generic Requirements for Product Change Notices," which is incorporated herein
by reference.
Supplier may make changes to MATERIAL, modify drawings, or make changes to
manufacturing specifications, provided the changes, modifications, or
substitutions DO NOT have an impact on the performance, reliability, Form, Fit,
or Function of the MATERIAL without prior notification to Company. Supplier
shall maintain written records of all such changes, and make these records
available for Company's review upon request.
For such changes or modifications which DO have an impact on performance,
reliability, Form, Fit, or Function, Supplier shall identify each such change or
modification in accordance with the classifications contained in the above Bell
Communications Research document via a Product Change Notification (PCN) form.
The Company shall immediately acknowledge receipt of the PCN to the
address/contact as stated on the PCN form and shall have thirty (30) calendar
days to advise Supplier if the proposed change or modification is unacceptable.
If Company notifies Supplier as required herein, that the proposed change or
modification is unacceptable, Supplier shall not implement such change or
modification. Company may reject any MATERIAL offered by Supplier which has been
changed or modified in a manner unacceptable to Company.
If Company has not notified Supplier that the change or modification is
unacceptable within thirty (30) calendar days following issuance of the Change
Notification, Supplier shall implement the change or modification as described
in the Change Notification.
If during the review of a proposed PCN, which has a classification of
either A or AC, issued by Supplier during the Warranty period of the affected
MATERIAL, the Company determines that implementation of the PRODUCT CHANGE will
cause the Company to incur "unreasonable expenses" such as, but not limited to,
expenses resulting from escorting Supplier's personnel to numerous Company
locations containing affected MATERIAL or repeated product changes to the same
item of MATERIAL within a one (1) year time period, the Company shall so notify
Supplier, in writing, prior to the implementation of such PRODUCT CHANGE.
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Upon such notification, the Company and Supplier shall jointly determine
the implementation procedure which will utilize the Supplier's and/or Company's
personnel in the most cost effective manner.
If Supplier and the Company conclude the agreed to implementation procedure
will probably cause the Company to incur "unreasonable expenses", the Company
and Supplier shall jointly determine the likely extent of such expenses and
agree, in writing, to a "not to exceed" estimate for such expenses. In no event
shall such estimate exceed the Company's purchase price for the MATERIAL to be
changed. The Company shall track and record all such expenses associated with
the PRODUCT CHANGE. Upon completion of its efforts, the Company shall submit to
Supplier, for reimbursement by Supplier, an invoice of the Company's
"unreasonable expenses" within forty-five (45) calendar days after the Company's
receipt of such invoice.
Issuing a Class A or AC product Change Notification shall not constitute an
agreement to provide such a change, but shall be construed as a recommendation
by the Supplier that the change is absolutely necessary.
33
Exhibit 10.8
**Certain information omitted and filed separately with the Commission pursuant
to a confidential treatment request under Rule 24b-2 of the Commission.
LUCENT TECHNOLOGIES OEM SUPPLY AGREEMENT
LUCENT TECHNOLOGIES INC. BROADBAND TECHNOLOGIES, INC.
600 Mountain Avenue 4024 Stirrup Drive
Murray, Hill, New Jersey 07974 Durham, NC 27709-3737
This Agreement, which is effective on February 4, 1998 (the "Effective Date") is
by and between BroadBand Technologies, Inc. ("Company") and Lucent Technologies
Inc. ("Supplier") (collectively the "Parties").
WHEREAS, Company wishes to purchase certain Materials of Supplier's manufacture
for resale to Company's customers;
WHEREAS, Company may provide Company proprietary information and technology to
Supplier to enable the manufacture of the Materials; and
WHEREAS, Supplier desires to design, produce and sell such Materials to Company
for Company's use, including resale to customers.
NOW THEREFORE, the Parties agree as follows:
1. INTRODUCTION
1.1 ATTACHMENTS - The following Attachments are hereby made part of this
Agreement:
Attachment 1 Definitions
Attachment 2 Engineering Change Control Procedures
1.2 DEFINITIONS - The terms set out in Attachment 1 which are used in
capitalized form in this Agreement, whether in the singular and/or plural form,
shall have the meanings set forth in Attachment 1. Additionally, any term
defined in the body of this Agreement, which appears in capitalized form, and
whether in the singular and/or plural form, shall have the meaning so set out in
this Agreement.
1.3 EFFECTIVE PERIOD OF AGREEMENT - The term of this Agreement shall
commence on the Effective Date and shall, except as otherwise provided in this
Agreement, continue in effect for five (5) years.
1.4 MATERIAL - Material is hereby offered for sale by Supplier and may
be purchased by Company in accordance with the terms and conditions stated in
this Agreement. This Agreement is a non-commitment agreement and Material shall
be furnished by Supplier on an as-ordered basis. The Parties will from time to
time identify Material to be sold under this Agreement in Product Letters, which
shall identify the Materials, specifications, prices and discounts, packing and
labeling requirements,
<PAGE>
forecast commitment periods and other specific terms regarding the Product or
component involved. A Product Letter shall not be effective until it is agreed
to in writing by both Parties. In the event of a conflict between the terms of a
Product Letter and the terms of this Agreement, the terms of the Product Letter
shall govern.
1.5 SPECIFICATIONS OR DRAWINGS - The technical specifications set out
in Product Letters (referred to herein as "Technical Specification" or
"Specification") shall govern the Material to be purchased pursuant to this
Agreement.
(a) In accordance with the notification requirements outlined in
Section 11.12, Supplier shall provide Company with at least thirty (30)
days prior written notice of any change affecting conformance with the
Technical Specifications proposed to be made by Supplier in the
Material furnished pursuant to said Technical Specification under this
Agreement. Company shall have a reasonable period of time to determine
if the Material that will incorporate the changed specifications will
comply with the original specifications for the ordered Material
(b) If Company, in its sole discretion, does not agree to the change
proposed by Supplier, then in addition to all other rights and remedies
at law or equity or otherwise, and without any cost to or liability or
obligation of Company, Company shall have the right to terminate any or
all purchase orders for Material affected by such change.
1.6 DISCONTINUANCE
(a) Supplier shall continue to supply Material to Company pursuant to
the Technical Specification for the term of the Agreement and for one
year after the expiration of this Agreement. If Supplier is unable to
continue to thus supply or discontinues manufacture of Material,
Company shall be entitled to one year's advance notice and Company
shall have the following options: (i) Company may enter into good faith
discussions with Supplier concerning continued supply of Material,
which discussions may include identification of any possible purchaser
of the product line from Supplier so that Company can pursue continued
supply from any such purchaser; (ii) the opportunity for Company to
offer to purchase the product line in the event Supplier seeks to sell;
and/or (iii) the opportunity for Company to place an end of life
purchase order for the discontinued Material, which Supplier will
accept during the notice period. "Discontinuance" includes, but is not
limited to, changes in the Form, Fit or Function of the Material.
Supplier will accept delivery schedules for such Material extending up
to six months after such end of life purchase order has been submitted.
(b) Supplier shall offer for sale to Company during the term of this
Agreement and until 5 years after the earlier of discontinuance of the
relevant Material or of expiration or termination of this Agreement,
maintenance, replacement and repair parts ("Parts") which are
functionally equivalent and
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identical in Form, Fit and Function to the Material covered by this Agreement.
The price for the Material and Parts shall be the price set forth in Supplier's
then current agreement with Company for said Material or Parts or, if no such
agreement exists, a price agreed upon by Company and Supplier. If the Parties
fail to agree on a price, the price shall be a reasonably competitive price for
said Material or Parts at the time for delivery. The Material and Parts shall be
warranted as set forth in Section 4.1.
2. ORDERS AND PAYMENT
2.1 INVOICING FOR GOODS - Supplier shall: (1) render an original
invoice, or as otherwise specified in this Agreement, which shows the order
number, through routing and weight; (2) render separate invoices for each
shipment within twenty-four (24) hours after shipment; and (3) mail invoices
with copies of bills of lading and shipping notices to the address shown on this
Agreement or the order. If prepayment of transportation charges is authorized,
Supplier shall include the transportation charges from the FOB point to the
destination as a separate item on the invoice stating the name of the carrier
used.
2.2 MARKING - All material furnished under this Agreement shall be
marked for identification purposes in accordance with the Specifications set
forth in this Agreement and as follows:
(a) with Supplier model/serial number; and (b) with month and year of
manufacture.
In addition, Supplier shall add any other identification which might be
requested by Company such as but not limited to indicia conforming to Company's
serialization plan. Charges, if any, for such additional identification marking
shall be as agreed upon by Supplier and Company. This Section does not reduce or
modify Supplier's obligations under Section 11.6.
2.3 PACKING, LABELING AND SERIALIZATION - Material purchased, repaired,
replaced or refurbished under this Agreement shall be packed, labeled and
serialized by Supplier at no additional charge in accordance with Product
Letters.
2.4 PAYMENT TERMS - Payment shall be net 30 days from the later of the
date of delivery or invoicing for the Material by Company.
2.5 PRICE AND DISCOUNTS - Prices and discounts for Material will be set
forth in Product Letters and they shall remain in effect during the term of this
Agreement or for the period specified in the applicable Product Letters.
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2.6 FORECASTS - Company shall provide Supplier with six (6) month
rolling forecasts of Material it believes it will purchase from Supplier.
However, said forecasts are only provided to assist Supplier in planning its
manufacturing activities and they do not commit or bind Company to purchase or
the Supplier to supply any Materials, or any quantity of Materials. A forecast
only becomes binding upon the Parties when a Purchase Order, as set forth below,
is forwarded by Company to Supplier and Supplier duly accepts it and the agreed
upon delivery schedule for each Purchase Order is within ninety (90) days,
except that such 90-day forecast commitment period may be altered by mutual
agreement of the Parties for particular Material described in the Product
Letters. At such time, any changes to the volume of Materials committed to by
the Parties shall be governed by Sections 2.7, 2.8 and 2.9 below.
2.7 PURCHASE ORDERS - Purchase Orders issued under this Agreement shall
be sent to the Lucent address specified on firm price quotes from Lucent to BBT
This Agreement shall incorporate the typed or written provisions on Company's
orders issued pursuant to this Agreement. Printed provisions on Company's orders
(except as specified otherwise in this Agreement), boilerplate provisions in
electronic orders and all provisions on Supplier's forms shall be deemed
deleted. Estimates or forecasts furnished by Company shall not constitute
commitments, except as otherwise set forth in this Agreement.
Purchase Orders shall specify: (a) description of Material, inclusive
of any numerical/alphabetical identification referenced in the price list in
this Agreement, (b) delivery date, (c) applicable price, (d) location to which
the Material is to be shipped and (e) location to which invoices shall be sent
for payment.
Orders consistent with the Company forecast and requesting delivery
more than ninety (90) days (or the alternate forecast commitment period
specified for particular Material in the applicable Product Letter) from the
date the order is received by Supplier will be accepted or rejected by Supplier
in writing within five (5) business days of receipt of the order. Orders
requesting delivery in less than ninety days or which exceed the forecast shall
be deemed accepted unless Supplier provides written notice to the contrary
within ten (10) business days from receipt of the order.
Company may at any time subsequent to the issuance of a Purchase Order
under this Agreement change the Purchase Order quantity at no charge in
accordance with the schedule below:
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Number of Days Prior to Allowable Increase/Decrease
Scheduled Shipment Date (% of P.O. Quantity)
0-90 (or 0-alternate forecast 0% 0%
commitment period)
91-greater (or alternate
forecast commitment
period-greater) 100% 100%
Company will make reasonable efforts to provide forecasts and purchase orders
for Material that avoid sharp increases or decreases in production.
2.8 SHIPPING - Supplier shall: (1) ship the Material covered by this
Agreement or order complete unless instructed otherwise; (2) ship to the
destination designated in the Agreement or order; (3) ship according to routing
instructions given by Company; (4) refer to this Agreement and the order number
on all subordinate documents; (5) enclose a packing memorandum with each
shipment and, when more than one package is shipped, identify the package
containing the memorandum; and (6) mark the Agreement and order number on all
packages and shipping papers. Adequate protective packing shall be furnished at
no additional charge. Shipping and routing instructions may be furnished or
altered by Company without a writing. All deliveries will be FOB Supplier's
factory. If Supplier does not comply with Company's written shipping or routing
instructions, Supplier authorizes Company to deduct from any invoice of Supplier
(or to charge back to Supplier), any increased costs incurred by Company as a
result of Supplier's noncompliance.
2.9 SHIPPING INTERVAL - The delivery schedule applicable to each
Purchase Order will be set forth in the Purchase Order.
If Supplier does not deliver by the delivery date specified in the
applicable Purchase Order, then in addition to all other rights and remedies at
law or equity or otherwise, and without any liability or obligation of Company,
Company shall have the right to: (a) cancel such Purchase Order following the
expiration of a five (5) business day grace period, or (b) extend such delivery
date to a later date, subject, however, to the right to cancel as in (a)
preceding if delivery is not made or performance is not completed on or before
such extended delivery date. If Company elects to extend such delivery date,
Supplier shall absorb the difference between the charges to ship normal
transportation and the charges to ship premium overnight.
If a Purchase Order is canceled by Company pursuant to the above,
Company shall have the right to retain or return any or all material received by
or paid for by Company under such purchase order. Within fifteen (15) days of
Supplier's receipt of returned material, Supplier shall reimburse Company for
the reasonable costs of shipping
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the material returned to Supplier and for any amounts, including shipping costs,
previously paid by Company for the Material. Company shall pay for any Material
it retains at the prices set forth in the applicable Product Letters, less
applicable discounts which shall be applied on the basis of the quantity
specified in the Purchase Order.
If, during the course of this Agreement, Supplier determines that
Supplier will no longer be able to ship within the above interval, Supplier
shall immediately notify Company's buyer to that effect. Supplier shall also
notify Company's buyer, as soon as it becomes apparent, if Supplier is unable to
meet the delivery date for an order. However, nothing contained in this
paragraph shall waive Company's rights as set forth above in this Section.
2.10 TITLE AND RISK OF LOSS - Title and risk of loss and damage to
Material purchased by Company under this Agreement shall vest in Company when
the Material has been delivered at the FOB point. If this Agreement or an order
issued pursuant to this Agreement calls for additional services to be performed
after delivery, Supplier shall retain title and risk of loss and damage to the
Material until the additional services have been performed. If Supplier is
authorized to invoice Company for Material upon shipment or prior to the
performance of additional services, title to Material shall vest in Company upon
payment of the invoice, but risk of loss and damage shall pass to Company when
the additional services have been performed.
2.11 TITLE TO MATERIAL FURNISHED BY COMPANY - In the event that Company
provides components to Supplier for use in Material ("Components"), or provides
Supplier with capital equipment, such as a test facility ("Capital Goods"),
Supplier acknowledges and agrees that Company has and shall have at all times
all right, title and interest in Components or Capital Goods furnished directly
or indirectly to Supplier by Company under this Agreement. Supplier shall,
within ten (10) days of receipt of the Components or Capital Goods, notify
Company in writing of any claims for quantity variation or quality problems in
the Components or Capital Goods furnished to Supplier. Supplier assumes
responsibility for any loss or damage to such Components or Capital Goods and
shall be liable for the full and actual value of the Components or Capital
Goods. Supplier shall store the Components or Capital Goods safely, indoors in
protected areas approved by Company at Supplier's facility. If Supplier removes
all or any part of the Components or Capital Goods from one building to another,
Supplier shall continue to be responsible for loss and damage and Supplier shall
give Company at least ten (10) business days advance notice, in writing, of the
removal except when the removal is required during Supplier's manufacturing
process or to protect the Components or Capital Goods from damage or loss.
Company may inspect, inventory and authenticate the account of the
Components or Capital Goods during Supplier's normal business hours. Supplier
shall provide Company access to the premises wherein all such Components or
Capital Goods are located. The Components or Capital Goods shall be kept
segregated in an area marked "PROPERTY OF BROADBAND TECHNOLOGIES." For purposes
of this Section, the
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term " BroadBand Technologies " shall be deemed to mean BroadBand Technologies
Inc. or the BroadBand Technologies Inc. affiliated or associated company which
owns the Components or Capital Goods, as applicable.
Supplier shall use the Components or Capital Goods only in the
manufacture of Material furnished to Company or otherwise in performing under
this Agreement.
Supplier shall not allow any security interest, lien, tax lien or other
encumbrance (collectively referred to as "Encumbrance") to be placed on any
Components or Capital Goods. Supplier shall give Company immediate written
notice should any third party attempt to place or place an Encumbrance on such
Components or Capital Goods. Supplier shall indemnify and hold Company harmless
from any such Encumbrance. Supplier shall, at Company's request, promptly
execute a "protective notice" UCC-1 form and all other documents reasonably
necessary to enable Company to protect its interest in such Components or
Capital Goods. The Parties agree that this Agreement shall constitute the
security agreement required by the UCC of the appropriate state.
The obligations assumed by Supplier with respect to the Components or
Capital Goods are for the protection of Company's property. If Supplier defaults
in carrying out Supplier's obligations under this Agreement, then, at no cost to
Company and upon five (5) working days notice to Supplier, Company may cancel
this Agreement with regard to affected Materials or withdraw all or any part of
the Components or Capital Goods, or both. Supplier shall, at Company's option,
return to Company or hold for Company's disposition any and all of such
Components or Capital Goods (including any scrap produced as a by-product) in
Supplier's possession at (a) the completion of the order, (b) expiration,
cancellation or termination of this Agreement, or (c ) the withdrawal of
Components or Capital Goods, as provided above.
3. SERVICES
3.1 SERVICES - Visits by Supplier's representatives or its suppliers'
representatives for inspection, adjustment or other similar purposes in
connection with Material purchased under this Agreement shall for all purposes
be deemed "Work under this Agreement" and shall be at no charge to Company
unless otherwise agreed in writing between the Parties.
3.2 TECHNICAL SUPPORT AND TRAINING - At the time a purchase order is
entered into by the Parties, they shall determine, negotiating in good faith,
the level and extent of technical support appropriate for the Material ordered.
However, the Parties hereby agree that the Company shall be entitled to a
mutually agreed upon level of ongoing technical support, which shall include
field service and assistance, and they further agree that the availability or
performance of this technical support service shall not be construed as altering
or affecting Supplier's obligations as set forth in Section 4.1 or elsewhere
provided for in this Agreement. Further, Supplier shall provide instructors and
the necessary instructional material to provide a mutually agreed upon level of
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training sufficient to train Company's instructors in the installation, planning
and practices, operation, maintenance and repair of the Material.
4. WARRANTY AND LIMITATION OF LIABILITY
4.1 WARRANTY - Supplier warrants to Company and Company's customers, as
defined in this Section, that hardware, including firmware, furnished will be
new, free from defects in design, material and workmanship and will conform to
and perform in accordance with the Specifications for a period of ***********
after delivery, and that software furnished will conform to and perform in all
material respects with the Specifications for a period of ************** after
delivery; provided however, that if significant software defects are discovered,
equating to Severity Levels 1 or 2, Company may require a software fix from
Supplier for up to ***************** from delivery.
If Material furnished contains one or more manufacturer's warranties
that are assignable, Supplier hereby assigns such warranties to Company and
Customers. Supplier warrants that at the time of delivery to Company such
Material shall be free of any security interest or any other lien or any other
encumbrance whatsoever. All warranties shall survive inspection, acceptance and
payment. Different warranty periods may be specified in the applicable Product
Letters.
Defective or non-conforming Material will, at Supplier's option, either
be returned to Supplier for repair or replacement, at no cost to Company, with
risk of in-transit loss and damage borne by Supplier and freight paid by
Supplier, or be repaired or replaced by Supplier on Company's or Company's
customers' site or another site designated by Company at no cost to Company.
Unless otherwise agreed upon by Supplier and Company, Supplier shall complete
repairs and ship the repaired Material within ten (10) working days of receipt
of defective or non- conforming Material, or at Company's option, ship
replacement Material within ten (10) working days after verbal notification is
given Supplier by Company.
If Material returned to Supplier or made available to Supplier on site
for repair as provided for in this Section is determined to be beyond repair,
Supplier shall promptly so notify Company and, unless otherwise agreed to in
writing by Supplier and Company, ship replacement Material without charge within
ten (10) days of such notification.
Replacement Material shall be warranted as set forth above in Section
4.1. Any Material which is repaired, modified, or otherwise serviced by Supplier
shall be warranted as provided in this Section 4.1 for the remainder of the
warranty period (based upon the date repair, modification or other service is
completed and accepted by Company) or ninety (90) days after the Material is
returned to a customer of Company, whichever is later.
EXCEPT AS SET FORTH ABOVE, SUPPLIER DISCLAIMS ALL WARRANTIES, EXPRESS AND
IMPLIED, INCLUDING BUT NOT LIMITED TO THE IMPLIED
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WARRANTIES OF MERCHANTABILITY AND/OR FITNESS FOR A PARTICULAR PURPOSE.
4.2 LIMITATION OF LIABILITY - NEITHER PARTY SHALL BE LIABLE FOR ANY
INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES, OR FOR LOSS OF PROFITS, REVENUE
OR DATA, WHETHER IN AN ACTION IN CONTRACT, TORT, STRICT LIABILITY, OR OTHERWISE,
EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
5. QUALITY
5.1 EPIDEMIC CONDITION - If, during the term of this Agreement and for
five years after the last shipment date of Material under this Agreement,
Company notifies Supplier that Material shows evidence of an "Epidemic
Condition," Supplier shall prepare and propose a Corrective Action Plan ("CAP")
with respect to such Material within ten (10) working days of such notification,
addressing implementation and procedure milestones for remedying such Epidemic
Condition(s). An extension of this time-frame is permissible upon mutual written
agreement of the Parties.
Upon notification of the Epidemic Condition to Supplier, Company shall
have the right to postpone all or part of the shipments of unshipped Material
exhibiting the Epidemic Condition, by giving written notice of such postponement
to Supplier, pending correction of the Epidemic Condition. Such postponement
shall temporarily relieve Supplier of its shipment liability and Company of its
shipment acceptance liability. Should Supplier not agree to the existence of an
Epidemic Condition or should Company not agree to the CAP, then Company shall
have the right to suspend all or part of its unshipped orders without liability
to Company until such time as a mutually acceptable solution is reached.
An Epidemic Condition will be considered to exist when one or more of
the following conditions occur:
(1) Failure reports or statistical samplings show that four (4) percent or
more of Material installed or four (4) percent or more of Material
shipped during any two consecutive months, or four (4) percent or more
of the Material tracked by Company's Field Quality Engineering contain
a potential safety hazard (such as personal injury or death, fire,
explosion, toxic emissions, etc.), or exhibit a highly objectionable
symptom (such as emissions of smoke, loud noises, deformation of
housing) or other disconcerting symptoms of this type.
(2) Reliability plots of relevant data indicate that the Material has
actual Mean Time Between Failures (MTBF) of less than 80% of the MTBF
stipulated in the Technical Specification. The MTBF parameter of
Material is defined as the total operating or power-on time of any
population under observation ("T"), in hours, divided by the total
number of critical failures ("n") that have occurred during the
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observed period. A critical failure is defined as a failure to operate
per the requirements of the Technical Specification. The total
operating time of a population is the summation of operating time of
individual units in that population. MTBF is expressed as MTBF = T/n.
An Epidemic Condition shall exist when data derived from populations
being tracked confirms the condition with 80% confidence.
(3) Material Dead on Arrival (DOA) failures exceed the Epidemic DOA
failure rate which is defined as 1.2 x DOA rate specified in the applicable
Product Letter.
Only major functional and visual/mechanical/appearance defects are
considered for determining Epidemic Condition. Material can be either sampled
or, at Company's option, 100% audited at Company warehouses, factories or
Company's customers' locations. If Material is sampled, the data must have 80%
or better statistical confidence.
For the purpose of this Agreement, functional DOA shall be defined as
any Material that during the test, installation or upon its first use fails to
operate as expected or specified. Visual/mechanical/appearance DOA is defined as
any Material containing one or more major defects that would make the Material
unfit for use or installation.
An Epidemic Condition shall not include failures due to customer
misapplication, utilization of parts not approved by Supplier, or chain failures
induced by internally or externally integrated subassemblies.
In the event that Supplier develops a remedy for the defect(s) that
caused the Epidemic Condition and Company agrees in writing that the remedy is
acceptable, Supplier shall:
(a) Incorporate the remedy in the affected Material in accordance with
Company's Engineering Change Control procedures as set forth in
Attachment 2;
(b) Ship all subsequent Material incorporating the required modification
correcting the defect(s) at no additional charge to Company; and
(c) Repair and/or replace Material that caused the Epidemic Condition. In
the event that Company incurs costs due to such repair and/or
replacement, including but not limited to labor and shipping costs,
Supplier shall reimburse Company for such reasonable costs. Supplier
shall bear risk of in transit loss and damage for such repaired and/or
replaced Material.
Supplier and Company shall mutually agree in writing as to the remedy's
implementation schedule. Supplier shall use its best efforts to implement the
remedy in accordance with the agreed-upon schedule.
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If Supplier is unable to develop a mutually agreeable remedy, or does
not adequately take into account the business interests of Company, as
reasonably agreed by the Parties, Company may (1) develop and implement such
remedy and, in such case, reasonable implementation costs and risk of in-transit
loss and damage shall be allocated between the Parties as set forth in this
Section, and/or (2) cancel postponed orders without liability and return all
Material affected by such Epidemic Condition for full refund, payable by
Supplier within thirty (30) days after receipt of returned Material (with risk
of loss or in-transit damage borne by Supplier).
5.2 INSPECTION, ACCEPTANCE TESTING, AND QUALITY CONTROL STANDARDS
(a) Ongoing Inspection and Testing. All Material shall be subject, at either
Supplier's manufacturing facility or at Company premises, to further inspection,
acceptance testing, and review for conformance to ongoing quality control
standards as may be established in the Specifications.
(b) Acceptance Inspection and Acceptance Testing. All Material shall be subject
to acceptance inspection and testing by Company, at Company's election, on
Supplier's premises, during normal business hours and following a reasonable
notice to Supplier, on Company's premises, or at a location selected by Company
(including the premises of any customer of Company). When conducted on
Supplier's premises by Supplier, copies of all documents prepared by Supplier
indicating the results of such inspection and testing shall be provided to
Company at Company's request. Inspection and testing at Company's facilities or
locations designated by Company shall be commenced for Material within a period
of not more than thirty (30) days after delivery thereof. Company's failure to
notify Supplier of a defect within such thirty-day period shall be deemed to
constitute acceptance. The inspection and testing shall be in accordance with
the quality control procedures and tests agreed upon by the Parties.
(c ) Facility Surveys. Company reserves the right to review, during regular
business hours and following reasonable notice to Supplier, Supplier's physical
facilities and Supplier's quality control procedures, both prior to first
Material deliveries and periodically thereafter, in order to assure compliance
with the Specifications and other standard industry practices and procedures.
Supplier shall maintain quality control procedures mutually agreed upon by
Company and Supplier as a result of such facility survey. In the event that
Company determines in good faith, during any facilities survey, that Supplier's
procedure is insufficient to insure consistent acceptable quality, Company shall
so advise Supplier, specifying the deficiency Company believes exists and
reasonable proposals for correction. In the event that Supplier shall fail to
effect the suggested correction or reasonably satisfy Company as to the lack of
need for such correction within thirty (30) days, Company may terminate this
Agreement with regard to affected Materials and cancel all then-outstanding
Purchase Orders for Materials without liability or consequence.
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(d) Acceptance Testing Results. Company shall provide notification to Supplier
upon completion of acceptance testing setting forth the specific date of
acceptance or rejection of Material included in the notification. If any
Material is rejected, Supplier shall thereafter proceed forthwith to correct the
defects indicated by Company, either by repairing the defective Material at the
point of delivery or within Supplier's facility, if possible, or by supplying a
new Material. The cost associated with any such repair or replacement, including
transportation charges for return to Supplier and subsequent return to Company,
shall be borne by Supplier. The transportation costs will be borne by Company if
it is determined that the Material was improperly rejected. Material for which
acceptance tests are not completed within thirty (30) days after delivery to the
FOB point shall be deemed to have been accepted by Company as of such time.
(e) Failure to Meet Minimum Standards. If, during either qualification or
acceptance testing, Company determines that the Materials are not defect-free or
cannot comply with minimum quality standards or as otherwise established between
the Parties, this Agreement may be terminated with respect to such Materials at
Company's option and Company may cancel without liability or consequence any
Purchase Order previously issued.
(f) Supplier Personnel. Supplier shall provide, at Company's request and at
locations selected by Company, and at no charge to Company, technically
competent personnel of Supplier, chosen by Supplier, to assist in the
identification and resolution of any performance problems which may jeopardize
the progress of the first installation of Material. Supplier shall also provide,
at Company's request, any performance information available from any source
which could aid Company in evaluation of Material performance.
(g) No Waiver of Warranty. In no event shall the inspection, qualification, and
acceptance of any Material, or the payment for any such Material by Company, in
any way impair or reduce Company's rights under Section 4.1 of this Agreement,
or Company's rights to further inspection or testing.
5.3 QUALITY -
(A) Supplier commits to attaining and maintaining "acceptable " ratings
(or equivalent) on all quality system elements per a Quality System Audit (QSA)
as periodically performed by Company.
(B) Supplier commits to ensure that all Supplier manufacturing and
design operations which contribute to the design, development, production, and
service of material are ISO 9001 and 9002.
(C) Supplier commits to establish an end of the line Quality Assurance
audit on Material by a date set forth in the relevant Product Letters. The focus
of this audit shall be to replicate user application of Material as specified by
Company's customer. Test and examination of material under the quality audit
shall be at a system level, and shall
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include but is not limited to a system for continuous monitoring of all primary
and ancillary product functions and fault detection of the Material while under
this test.
Supplier shall continuously review customer return data to ensure that
the scope of the product quality audit function includes the
requirement(s)/condition(s) under which the return failed. Supplier shall
perform a detailed failure mode analysis of all Material found defective through
the end of the line product quality audit in line with the requirements and
process outlined in paragraph E below.
(D) Supplier commits to establishing a program of tracking return
rates. Material which has been in operation for any period of time up to, and
including, one full year shall be considered part of this tracking program. For
the purpose of this Article, the term "circuit pack" shall be used to define the
lowest replaceable unit of Material supplied to Company.
For the purpose of calculating the return rate, the population shall be
all circuit packs shipped during a quarter. The returns shall be those circuit
packs shipped during the quarter that are returned/received during the time
period beginning three (3) months after the end of the quarter being measured,
and ending after fifteen (15) months following said quarter.
All returns will be included in the calculation of the return rate
including, but not limited to, failures, no trouble founds and recalls. The
return rate is to be calculated using the following equation:
10,000 x returns (from Qtr. pop.) during months 3-15 post target Qtr.
- ---------------------------------------------------------------------
Population of target Qtr.
This calculation shall be made for product manufactured during each fiscal
quarter of this Agreement.
Supplier shall measure and report return rates on a quarterly basis to
Company, and comply with the return rate requirement in accordance with the
following schedule:
Manufactured Return Rate Annual
Date Requirement Measurement Due
- -----------------------------------------------------------
Jan.-Dec. ********* April
The Annual Measurement will be the summation of the number of returns received
during the defined time period of each quarter of the year divided by the
summation of the populations of each quarter times ten thousand.
(E) Supplier commits to establishing a system for tracking and
analyzing all Material returned by Company to it, as well as any Material
failures which occur through Company's end of the line Quality Assurance audit.
For all Material in the above two
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categories, Supplier shall perform a failure mode analysis, which at a minimum
will be down to the component level. Component level failure modes will be
recorded and failed components found defective will be accumulated for the
purpose of determining repetitive occurrences.
Material shall be considered defective if it fails to meet the warranty
Specifications under this Agreement (including performance and appearance
Specifications) or if during testing, installation or use, the material fails to
operate as expected or specified.
Supplier shall continuously monitor, and analyze, data on material
returned by Company to it, as well as Material found through the end of the line
Quality Assurance Audit, for the purpose of determining: (a) return rates in
excess of expectations as outlined in paragraph (D) of this Article; or (b)
repetitive occurrences of the same component level problem. Supplier shall
provide to Company on a quarterly basis, written summary reports of said
analysis.
If Supplier determines instances where Material return rate is in
excess of the requirements as outlined in paragraph (D) , then Supplier shall
provide a written Corrective Action Report to Company, explaining in detail the
nature of the problem detected, and the step(s) Supplier proposes to correct the
problem. This completed report is to be provided to Company no later than thirty
(30) days following the occurrence or detection of the condition which required
the corrective action.
As part of the plan to correct the problem, it is agreed that Supplier
shall:
a) Incorporate the remedy in affected Material in accordance with the
change control procedures set forth in Supplier's change control
process.
b) Ship all subsequent Material incorporating the required modification
correcting the problem at no additional charge to Company; and
c) Repair and/or replace previously shipped Material that may contain
the same problem trend. In the event that Company incurs costs due to
such repair and/or replacement, including but not limited to labor and
shipping costs, Supplier shall reimburse Company for such reasonable
costs. Supplier shall bear risk of in transit loss and damage for such
repaired and/or replaced material.
Supplier and Company shall mutually agree in writing as to the
implementation schedule of the Corrective Action Plan. Supplier shall use its
best efforts to implement the plan in accordance with the agreed upon schedule.
Company shall be entitled to postpone, at no charge to Company, further
deliveries of orders until such time as the remedy is implemented consistent
with this Article.
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(F) If Supplier 1) fails to meet the customer return rate established
in paragraph (D) during any period of three months or more; or 2) fails to issue
Corrective Action Reports as required in paragraph (E); or 3) fails to implement
a correction action in a manner and time frame agreed to by Company, then
Company may, in addition to any other remedies it may have: 1) develop and
implement such remedy for already purchased Material, the reasonable cost of
which will be borne by Supplier; 2) cancel or postpone other orders without
liability and return all material affected by the problem for full refund,
payable by Supplier within thirty (30) days after receipt of returned Material
(with risk of loss or in transit damage borne by Supplier).
(G) As part of a program of continuous improvement, Supplier shall
establish annually, improvement goals for a series of key quality objectives.
These goals should include, but are not limited to: a) customer return rates as
specified in paragraph (D), b) Quality Assurance product quality audit defect
rates, and c) final system test yields. Supplier shall track these goals on a
monthly basis and to commit the resources necessary for the attainment of these
goals.
5.4 REPAIRS NOT COVERED UNDER WARRANTY - In addition to repairs
provided for in Section 4.1, Supplier shall provide repair service on all
Material ordered under this Agreement for a period of five (5) years after the
discontinuation of manufacture of Material, as set forth in Specifications.
Material to be repaired under this Section will be returned to a location
designated by Supplier, and unless otherwise agreed upon by Supplier and
Company, Supplier shall ship the repaired Material which meets the
Specifications set forth in the applicable Product Letters within fifteen (15)
days of receipt at Supplier's location.
If Material is returned to Supplier for repair as provided for in this
Section and is determined to be beyond repair, Supplier shall so notify Company.
If requested by Company, Supplier will sell to Company a replacement at the
price set forth in Supplier's then current agreement with Company for said
Material or, if no such agreement exists, at a price agreed upon by Supplier and
Company. If the Parties fail to agree on a price, the price shall be a
reasonably competitive price for such Material at the time for delivery.
Further, if requested by Company, Supplier shall take the necessary steps to
dispose of the unrepairable Material and pay to Company the salvage value, if
any.
Replacement and repaired Material shall be warranted as set forth in
Section 4.1.
This Agreement does not grant Supplier an exclusive privilege to repair
any or all of the Material purchased under this Agreement for which Company may
require repair; and Company may perform the repairs or contract with others for
these services. In addition, Supplier authorizes Company and any qualified
repairer with whom Company may contract to perform repairs on all Material
purchased under this Agreement.
All transportation costs and in transit risk of loss and damage to
Material returned to Supplier for repair under this Section will be borne by
Company and all transportation
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costs of and in transit risk of loss and damage to such repaired or replacement
Material returned to Company will be borne by Company.
5.5 REPAIR PROCEDURES - Company shall furnish the following information
with Material returned to Supplier for repair: (a) Company's name and complete
address; (b) name(s) and telephone numbers(s) of Company's employee(s) to
contact in case of questions about the Material to be repaired; (c) ship-to
address for return of repaired Material if different than (a); (d) a complete
list of Material returned; (e) the nature of the defect or failure if known; and
(f) whether or not returned Material is in warranty. Supplier shall, within ten
(10) days of the execution of this Agreement, provide a written notice to
Company specifying (i) the name(s) and telephone number(s) of the individual(s)
to be contacted concerning any questions that may arise concerning repair, and
(ii) if required, any special packing of Material which might be necessary to
provide adequate in-transit protection from transportation damage.
Material repaired by Supplier shall have the repair completion date
stenciled or otherwise identified in a permanent manner at a readily visible
location on the Material and the repaired Material shall be returned with a tag
or other papers describing the repairs which have been made.
All invoices originated by Supplier for repair services must be clearly
identified as such, and must contain: (1) a reference to Company's purchase
order for these repair services, (2) a detailed description of repairs made by
Supplier and the need therefor, and (3) an itemized listing of parts and labor
charges, if any. Replaced parts will, upon request, be available for inspection
by or returned to Company. Further, the provisions of Sections 2.1 (Invoicing)
and 2.8 (Shipping), other than provisions relating to transportation charges
with respect to Material repaired under warranty, shall apply to Supplier's
return to Company of repaired Material.
5.6 RIGHT OF ENTRY - Each Party shall have the right to enter the
premises of the other party during normal business hours with respect to the
performance of this Agreement including an inspection or a Quality Review,
subject to all plant rules and regulations, clearances, security regulations and
procedures as applicable. Each party shall provide safe and proper facilities
for such purpose.
5.7 VARIATION IN QUANTITY - Company assumes no liability for Material
produced, processed or shipped in excess of the amount specified in this
Agreement or in an order issued pursuant to this Agreement.
6. TERMINATION
6.1 BANKRUPTCY AND TERMINATION FOR FINANCIAL INSECURITY If a proceeding is
commenced under any provision of the United States Bankruptcy Code, voluntary or
involuntary, by or against either Party, and this Agreement has not been
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terminated, the non-debtor party may file a request with the bankruptcy court to
have the court set a date within sixty (60) days after the commencement of the
case, by which the debtor party will assume or reject this Agreement, and the
debtor party shall cooperate and take whatever steps are necessary to assume or
reject the Agreement by such date. If a bankruptcy proceeding results in a
Change In Control, the provisions in this Agreement pertaining to Change In
Control shall govern.
6.2 TERMINATION FOR CHANGE IN CONTROL - In the event of a Change in
Control of Company or a reasonable expectation of a Change in Control of
Company, Company shall provide notice to Supplier of such actual or expected
Change in Control event within ten (10) business days of the knowledge or
reasonable expectation of the Change in Control event. Upon the effective date
of a Change in Control, Supplier shall have the right to terminate this
Agreement by giving Company written notice of its intention to terminate at
least ninety (90) days prior to the termination date specified in the
termination notice. The Parties understand and agree that if Supplier elects to
exercise its right to terminate, then such termination shall apply on a going
forward basis, but shall not apply to past purchase orders that are completed or
to current purchase orders that are firm and binding commitments of Company.
6.3 MATERIAL DEFAULT - If Supplier shall be in Material Default of any
of the terms, conditions or covenants of this Agreement or of any purchase
order, then, in addition to all other rights and remedies which Company may have
at law or equity or otherwise, Company shall have the right to cancel any
purchase orders placed by Company with regard to affected Material without any
charge to or obligation or liability of Company.
7. INTELLECTUAL PROPERTY
7.1 Any purchase or sale of Materials under this Agreement, does not
transfer ownership rights in the underlying intellectual property of Supplier
which may be embodied in such Materials. Portions of the Materials that are
normally licensed (not sold) by Supplier will be provided to Company's end-users
pursuant to a sub-license consistent with the terms of Supplier's standard
end-user license and which identifies Company's licensors as third party
beneficiaries under such sub-license. Supplier grants to Company a license to
use and distribute firmware included or provided by Supplier in the Material,
solely for the purpose of marketing, distribution and support by Company of the
Materials purchased by Company under this Agreement.
7.2 CONFIDENTIALITY - All Information ("Information" means proprietary
specifications, designs, plans, drawings, software, data, prototypes or other
business and /or technical information) provided by either Party to the other
under this Agreement shall be held in confidence by the receiving Party; shall
be used only for the purpose of performing acts and obligations required by this
Agreement; shall be reproduced only to
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the extent necessary for that purpose; and shall not be disclosed by the
receiving Party without the prior written approval of the disclosing Party. The
receiving Party may, however, disclose the Information to its employees,
consultants and contractors with a need to know; provided, that the receiving
Party binds those employees, consultants and contractors to terms at least as
restrictive as those stated herein, advises those employees, consultants and
contractors of their confidentiality obligations, and indemnifies the disclosing
Party for any breach of those obligations. Information shall be subject to the
restrictions in this section if it is in writing or other tangible form, only if
clearly marked as proprietary when disclosed to the receiving Party; or, if not
in tangible form, is of a nature that a reasonable person would conclude is
confidential Information, and the Information is reduced to writing clearly
marked as proprietary, with a copy of the writing being furnished to the
receiving Party within thirty (30) days of the disclosure of the intangible
information, and with the writing containing a notice that the information was
previously provided in intangible form. These restrictions on the use or
disclosure of Information shall not apply to any Information: (i) which is
independently developed by or for the receiving Party; (ii) which is lawfully
received free of restriction from another source; (iii) after it has become
generally available to the public without breach of this Agreement by the
receiving party; (iv) which at the time of disclosure to the receiving Party was
known to that Party free of restriction as evidenced by documentation in that
Party's possession; (v) which the disclosing Party agrees in writing is free of
such restrictions; or (vi) which the receiving Party is required to disclose
under applicable laws, rules and regulations, provided that the receiving Party
shall first notify the disclosing Party of such required disclosure and afford
the disclosing party the opportunity to seek a protective order relating to such
disclosure. All Information shall remain the property of the disclosing Party
and shall be returned upon written request or upon the receiving Party's
determination that it no longer has a need for such Information. The receiving
Party may retain one copy of all written materials returned to provide an
archive record of the disclosure.
7.3 INFRINGEMENT - Supplier shall indemnify and save harmless Company,
its affiliates and their customers, officers, directors, and employees (all
referred to in this Section as "Company") from and against any losses, damages,
liabilities, fines, penalties, and expenses (including reasonable attorneys'
fees) that arise out of or result from any and all claims (1) of infringement of
any patent, copyright, trademark or trade secret right, or other intellectual
property right, private right, or any other proprietary or personal interest,
and (2) related by circumstances to the existence of this Agreement or
performance under or in contemplation of it (an "Infringement Claim"). If the
Infringement Claim arises solely from Supplier's adherence to Company's written
instructions regarding services or tangible or intangible goods provided by
Supplier ("Items") and if the Items are not (1) commercial items available on
the open market or the same as such items, or (2) items of Supplier's designated
origin, design or selection, Company shall indemnify Supplier. Company shall
notify Supplier promptly upon learning of such claim and Supplier shall have the
right to defend the claim. Supplier shall not be liable for any settlement made
without Supplier's written approval. Supplier (at Company's request) shall
defend or settle, at its own expense any demand, action or
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suit on any Infringement Claim for which it is indemnitor under the preceding
provisions and each shall timely notify the other of any assertion against it of
any Infringement Claim and shall cooperate in good faith with the other to
facilitate the defense of any such Infringement Claim.
8. ENVIRONMENTAL
8.1 HEAVY METALS AND/OR CFC IN PACKAGING - Supplier warrants to Company
that no lead, cadmium, mercury or hexavalent chromium have been intentionally
added to any packaging or packaging component (as defined under applicable laws)
to be provided to Company under this Agreement and that packaging materials were
not manufactured using and do not contain chlorofluorocarbons. Supplier further
warrants to Company that the sum of the concentration levels of lead, cadmium,
mercury and hexavalent chromium in the package or packaging component provided
to Company under this Agreement does not exceed 100 parts per million. Upon
request, Supplier shall provide to Company Certificates of Compliance certifying
that the packaging and/or packaging components provided under this Agreement are
in compliance with the requirements set forth above in this Section.
8.2 OZONE DEPLETING CHEMICALS - Supplier hereby warrants that it is
aware of international agreements and pending legislation in several nations,
including the United States, which would limit, ban and/or tax importation of
any product containing, or produced using ozone depleting chemicals ("ODCs"),
including chloroflurocarbons, halons and certain chlorinated solvents. Supplier
hereby warrants that the material furnished to Company will conform to all
applicable requirements established pursuant to such agreements, legislation and
regulations, and the material furnished to Company will be able to be imported
and used lawfully (and without additional taxes associated with ODCs not
reported to Company by Supplier as set forth in this Section) under all such
agreements, legislation and requirements. Supplier also warrants that it is
currently reducing, or if Supplier is not the manufacturer of the material, is
currently causing the manufacturing vendor to reduce and will, in an expeditious
manner, eliminate, or, as applicable, have its manufacturing vendor eliminate
the use of ODCs in the manufacture of the material.
8.3 OZONE DEPLETING SUBSTANCES LABELING - Supplier warrants and
certifies that all products, including packaging and packaging components,
provided to Company under this Agreement have been accurately labeled, in
accordance with the requirements of 40 CFR Part 82 entitled "Protection of
Stratospheric Ozone, Subpart E - The Labeling of Products Using Ozone Depleting
Substances."
If the material furnished by Supplier under this Agreement is manufactured
outside the United States, Supplier shall, upon execution of this Agreement, and
at any time that new products are added to this Agreement or changes are made to
the material furnished under this Agreement, complete, sign and return to
Company an ODC Content Certification.
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The ODC Content Certification must be signed by Supplier's facility manager,
corporate officer or his delegate.
The term "ODC content" on the ODC Content Certification means the total pounds
of ODC used directly in the manufacture of each unit of material. This includes
all ODCs used in the manufacturing and assembly operations for the material plus
all ODCs used by Supplier's vendors and any other vendors in producing
components or other products incorporated into the material sold to Company.
Supplier is responsible to obtain information on the ODC content of all
components and other products acquired to manufacture the material and to
incorporate such information into the total ODC content reported to Company;
provided however, that Supplier should not include in the ODC content those
components or other products which are manufactured in the United States.
Supplier hereby warrants to Company that all information furnished by Supplier
on the ODC Content Certification is complete and accurate and that Company may
rely on such information for any purpose, including but not limited to providing
reports to government agencies or otherwise complying with applicable laws.
Supplier shall defend, indemnify and hold Company harmless of and from any
claims, demands, suits, judgments, liabilities, fines, penalties, costs and
expenses (including additional ODC taxes as provided for in paragraph one of
this Section and reasonable attorney's fees) which Company may incur under any
applicable federal, state, or local laws or international agreements, and any
and all amendments thereto by reason of Company's use of reliance on the
information furnished to Company by Supplier on the ODC Content Certification or
by reason of Supplier's breach of this Section. Supplier shall cooperate with
Company in responding to any inquiry concerning the use of ODCs to manufacture
the material or components thereof and to execute without additional charge any
documents reasonably required to certify the absence or quantity of ODCs used to
manufacture the material or components thereof.
8.4 TOXIC SUBSTANCES AND PRODUCT HAZARDS - Supplier hereby warrants to
Company that, except as expressly stated elsewhere in this Agreement, all
material furnished by Supplier as described in this Agreement is safe for its
foreseeable use, is not defined as a hazardous or toxic substance or material
under applicable federal, state or local law, ordinance, rule, regulation or
order (hereinafter collectively referred to as "law" or "laws"), and presents no
abnormal hazards to persons or the environment. Supplier also warrants that it
has no knowledge of any federal, state or local law, that prohibits the disposal
of the material as normal refuse without special precautions except as expressly
stated elsewhere in this Agreement. Supplier also warrants that where required
by law, all material furnished by Supplier is either on the EPA Chemical
Inventory compiled under Section 8 (a) of the Toxic Substance Control Act, or is
the subject of an EPA-approved pre manufacture notice under 40 CFR Part 720.
Supplier further warrants that all material furnished by Supplier complies with
all use restrictions, labeling requirements and all other health and safety
requirements imposed under federal, state, or local laws. Supplier further
warrants that, where required by law, it shall provide to Company, prior to
delivery of the material, a Material Safety Data Sheet which
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complies with the requirements of the Occupational Safety and Health Act of 1970
and all rules and regulations promulgated thereunder.
Supplier shall defend, indemnify and hold Company harmless for any
expenses (including, but not limited to, the cost of substitute material, less
accumulated depreciation) that Company may incur by reason of the recall or
prohibition against continued use or disposal of material furnished by Supplier
as described in its Agreement whether such recall or prohibition is directed by
Supplier or occurs under compulsion of law. Company shall cooperate with
Supplier to facilitate and minimize the expense of any recall or prohibition
against use or disposal of material directed by Supplier or under compulsion of
law.
Supplier further shall defend, indemnify and hold Company harmless of
and from any claims, demands, suits, judgments, liabilities, costs and expenses
(including reasonable attorney's fees) which Company may incur under any
applicable federal, state or local laws, and any and all amendments thereto,
including but not limited to the Comprehensive Environmental Response,
Compensation and Liability Act of 1980; the Consumer Product Safety Act of 1972;
the Toxic Substance Control Act; Fungicide, Rodenticide Act; the Occupational
Safety and Health Act; and the Atomic Energy Act; and any and all amendments to
all applicable federal, state, or local laws, by reason of Company's
acquisition, use, distribution or disposal of material furnished by Supplier
under this Agreement.
9. IMPORT/EXPORT
9.1 COMPLIANCE WITH UNITED STATES CUSTOMS LAWS AND REGULATIONS -
Supplier shall ensure that its activities in performance of this Agreement shall
not put Company in violation of any United States Customs laws, statutes, or
regulations. Supplier agrees to assist Company in every way necessary to ensure
that Company can import the material into the United States in accordance with
all applicable customs laws, statutes, and regulations, and in support of this
assistance, Supplier agrees to follow Company's directives, if any, which may be
attached to and made part of this Agreement.
9.2 EXPORT CONTROL - Company will not use, distribute, transfer or
transmit any products, software or technical information (even if incorporated
into other products) provided under this Agreement except in compliance with
U.S. export laws and regulations (the "Export Laws"). Company will not, directly
or indirectly, export or re-export the following items to any country which is
in the then current list of prohibited countries specified in the applicable
Export Laws: (a) software or technical data disclosed or provided to Company by
Company or Company's subsidiaries or affiliates; or (b) the direct product of
such software or technical data. Company agrees to promptly inform Company in
writing of any written authorization issued by the U.S. Department of Commerce
office of export licensing to export or re-export any such items referenced in
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(a) or (b). The obligations stated above in this Section will survive the
expiration, cancellation or termination of this Agreement or any other related
agreement.
10. DISPUTES
10.1 DISPUTE RESOLUTION -
(a) The following procedures shall apply to any dispute or disagreement between
the Parties or any of their Related Parties arising out of this Agreement.
(b) First:
(i) either Party may give written notification of such dispute
or disagreement to the other Party and
(ii) the Parties shall communicate with each other promptly
with a view to resolving such dispute or disagreement within 21 days
(or such extended period as the Parties agree is appropriate in any
case) after such written notification is given.
(c) The giving of any notice regarding any dispute or disagreement
under this Section 10.1 shall toll the running of all applicable statutes of
limitation until the later of (i) 90 days following the giving of such notice or
(ii) 30 days following the termination of discussions between the Parties
concerning such dispute or disagreement.
(d) Second, if at the end of the 21 day period referenced in Section
10.1(b) (as it may be extended) such dispute or disagreement has not been
resolved to the satisfaction of both parties, either Party may request in
writing that such dispute or disagreement be the subject of non-binding
mediation. Following such request, the Parties shall endeavor in good faith
promptly to identify a single person (who shall be a person with experience and
good reputation) who shall assist the Parties in discussing such dispute or
disagreement and in attempting to reach a mutually acceptable business
resolution. Such mediation process shall terminate not later than 30 days
following the request therefor (or such extended or shorter period as the
Parties agree is appropriate). All applicable statutes of limitation shall be
tolled during the period of mediation.
(e) Third, if at the end of the 30 day period referenced in Section
10.1(d) (as it may be extended or shortened) such dispute or disagreement has
not been resolved to the satisfaction of both parties, either Party (the
"complainant") may commence binding arbitration by giving the other Party (the
"respondent") notice in writing (the "initiating notice") setting forth in
reasonable detail the nature of its claim and the relief requested stating that
the complainant is invoking the procedures set forth in this Section 10.1(e) and
(f) and naming the complainant's representative on the Arbitration Panel (as
defined below). Within 21 days of receipt of an initiating notice, the
respondent shall give the complainant notice in writing (the "response") setting
forth in reasonable detail: (1) the basis of its response to the claim; (2) the
nature of any counterclaim it has against the complainant arising from the same
set of facts and circumstances that gave rise to the original claim; (3) any
other counterclaim that Party wishes to bring at that time (although the Party
has no obligation to bring such counterclaims at that time); (4) the relief
requested; and (5) naming the respondent's representative on the Arbitration
Panel. The two representatives shall select a third person who is mutually
acceptable to them. If the representatives fail to make such selection within 21
days, the complainant and the respondent shall each replace its representative
with a new representative and the
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new representatives shall be subject to the preceding sentence and this
sentence. Once a third person is selected, such person together with the
representatives of the complainant and the respondent shall form the Arbitration
Panel. The date upon which the Arbitration Panel is formed shall be the
"Commencement Date".
(f) The Arbitration Panel shall conduct proceedings to determine the
merits under applicable law of the claims set forth in the initiating notice and
the response. The proceedings shall be administered by JAMS/Endispute in
accordance with its Comprehensive Arbitration Rules and Procedures in effect as
of the Effective Date, subject to the following additional rules:
(i) the proceedings shall take place in New York City;
(ii) the Arbitration Panel (including, if necessary, any
replacement(s) to the Arbitration Panel) shall be selected as set forth
in Section 10.1(e);
(iii) the available relief shall include damages, injunctive
relief and equitable relief to the extent allowed under the applicable
law, this Agreement and any other agreement between the parties;
(iv) the parties shall attempt in good faith promptly to
agree on the nature and extent of any discovery in connection with the
arbitration, provided that, in the absence of such agreement, discovery
shall be governed by JAMS/Endispute's Comprehensive Arbitration Rules
and Procedures. In addition, the applicable law with respect to
privilege and other protections from disclosure, including the work
product doctrine, shall apply;
(v) the final decision of the Arbitration Panel (the "Award")
shall be issued within six months of the Commencement Date (the date of
issuance of the Award being the "Award Date") and must be joined by at
least two members of the Arbitration Panel;
(vi) each party to the proceedings shall pay its own costs in
connection with the proceedings, including the costs and expenses of
its representative on the Arbitration Panel, and the parties shall
share equally the other costs of the proceedings, including the fees of
the third member of the Arbitration Panel, except that the prevailing
party shall be entitled to recover its attorneys' fees incurred in
prosecution thereof.
(g) In accordance with the Federal Arbitration Act, 9 U.S.C.
ss.1 ET SEQ., the Award shall be final and binding and judgment thereon
may be entered by any state or federal court having jurisdiction
thereof.
(h) Nothing in this Section 10.1 shall be construed to
preclude either party from seeking injunctive relief in a court of
competent jurisdiction to prevent imminent irreparable harm. The
dispute resolution procedures set forth herein shall be stayed pending
disposition of any application for such relief. The Parties agree that
a court of competent jurisdiction may consider the merits of any claim
that is subject to the dispute resolution procedures set forth herein
to the extent necessary to resolve any permissible application for
injunctive relief.
11. MISCELLANEOUS
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11.1 ASSIGNMENT - BBT shall not assign any right or interest under this
Agreement (excepting solely for moneys due or to become due) without the prior
written consent of Lucent. Subject to Lucent's right to terminate upon the
occurrence of a Change in Control, a merger or consolidation shall not be deemed
to be an assignment. BBT will provide Lucent with written notice of a merger or
consolidation within ten (10) business days after having knowledge or reasonable
expectation of the merger or consolidation.
11.2 CHOICE OF LAW - This Agreement and all transactions under it shall
be governed by the laws of the State of New Jersey excluding its choice of laws
rules . Each Party agrees to submit to the jurisdiction of any court in the
United States wherein an action is commenced against the other Party based on a
claim for which the first Party has agreed to indemnify the other Party under
this Agreement.
11.3 COMPLIANCE WITH LAWS - Supplier and all persons furnished by
Supplier shall comply at their own expense with all applicable laws, ordinances,
regulations and codes, including the identification and procurement of required
permits, certificates, licenses, insurance, approvals and inspections in
performance under this Agreement.
11.4 ENTIRE AGREEMENT - This Agreement shall constitute the entire
agreement between the Parties with respect to the subject matter of this
Agreement and shall not be modified or rescinded, except by a writing signed by
Supplier and Company. The provisions of this Agreement supersede all prior or
contemporaneous oral and prior written agreements, communications and/or
understandings of the Parties with respect to the subject matter of this
Agreement.
11.5 FORCE MAJEURE - Neither party shall be held responsible for any
delay or failure in performance of any part of this Agreement to the extent such
delay or failure is caused by fire, flood, strike, civil, governmental or
military authority, act of God, or other similar causes beyond its control and
without the fault or negligence of the delayed or nonperforming party or its
subcontractors. Supplier's liability for loss or damage to Company's material in
Supplier's possession or control shall not be modified by this Section. When a
party's delay or nonperformance continues for a period of at least sixty (60)
days, the other party may terminate, at no charge, any purchase order under the
Agreement affected by such delay or nonperformance.
11.6 IDENTIFICATION - Supplier shall not, without Company's prior
written consent, engage in publicity related to this Agreement, or make public
use of any Identification in any circumstances related to this Agreement.
"Identification" means any semblance of any trade name, trademark, service mark,
insignia, symbol, logo, or any other designation or drawing of Lucent
Technologies or its affiliates. Supplier shall remove or obliterate any
Identification prior to any use or disposition of any material rejected or not
purchased by Company. Company recognizes that Supplier is a public company and
that it may be required to make disclosures per applicable laws or regulations.
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11.7 IMPLEADER - Neither Party shall implead or bring an action against
the other Party based on any claim by any person for personal injury or death to
an employee of the other Party for which a Party has previously paid or is
obligated to pay worker's compensation benefits to such employee or claimant and
for which such employee or claimant could not otherwise bring legal action
against the other Party.
11.8 INDEMNITY - At one Party's request, the other Party agrees to
indemnify, defend and hold harmless the other Party, its affiliates, customers,
employees, successors and assigns (all referred to as "Party") from and against
any losses, damages, claims, fines, penalties and expenses (including reasonable
attorney's fees) that arise out of or result from: (1) injuries or death to
persons or damage to property, including theft, in any way arising out of or
caused or alleged to have been caused by the actions or omissions of one Party,
or Material provided by one Party or persons furnished by a Party; (2)
assertions under Workers' Compensation or similar acts made by persons furnished
by a Party.
11.9 INSIGNIA - Upon Company's written request, "Insignia", including
certain trademarks, trade names, insignia, symbols, decorative designs or
packaging designs of Company, or evidences of Company's inspection will be
properly affixed by Supplier to the Material furnished or its packaging. Such
Insignia will not be affixed, used or otherwise displayed on the Material
furnished or in connection therewith without written approval by Company. The
manner in which such Insignia will be affixed must be approved in writing by
Company in accordance with standards established by Company. Company shall
retain all right, title and interest in any and all packaging designs, finished
artwork and separations furnished to Supplier. This Section does not reduce or
modify Supplier's obligations under Section 11.6.
11.10 INSURANCE - Supplier shall maintain and cause Supplier's
subcontractors to maintain during the term of this Agreement: (1) Workers'
Compensation insurance as prescribed by the law of the state or nation in which
the Work is performed; (2) employer's liability insurance with limits of at
least $500,000 for each occurrence; (3) automobile liability insurance if the
use of motor vehicles is required, with limits of at least $1,000,000 combined
single limit for bodily injury and property damage per occurrence; (4)
Commercial General Liability ("CGL") insurance, ISO 1988 or later occurrence
form of insurance, including Blanket Contractual Liability and Broad Form
Property Damage, with limits of at least $1,000,000 combined single limit for
bodily injury and property damage per occurrence; and (5) if the furnishing to
Company (by sale or otherwise) of material or construction services is involved,
CGL insurance endorsed to include products liability and completed operations
coverage in the amount of $5,000,000 per occurrence. All CGL and automobile
liability insurance shall designate Company, its affiliates, and its directors,
officers and employees (all referred to in this provision as "Company") as
additional insured. All such insurance must be primary and non-contributory and
required to respond and pay prior to any other insurance or self-insurance
available. Any other coverage available to Company shall apply on an excess
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<PAGE>
basis. Supplier agrees that Supplier, Supplier's insurer(s) and anyone claiming
by, through, under or in Supplier's behalf shall have no claim, right of action
or right of subrogation against Company and its customers based on any loss or
liability insured against under the foregoing insurance. Supplier will furnish
Company copies of certificates of such insurance, on request. In the event that
Supplier changes insurers, Supplier will notify Company of such change.
Insurance companies providing coverage under this Agreement must be rated by A-M
Best with at least an A- rating.
11.11 NON-EXCLUSIVE MARKET RIGHTS - This Agreement neither grants to
Supplier an exclusive right or privilege to sell to Company any or all products
of the type described in the Section 1.4 which Company may require, nor requires
the purchase of any Material or other products from Supplier by Company.
Therefore, Company may, and intends to, contract with other manufacturers and
suppliers for the procurement of comparable products, and the same products to
the extent such can be done without infringing Supplier's technology rights. In
addition, Company shall, at its sole discretion, decide the extent to which
Company will market, advertise, promote, support or otherwise utilize the
Material. Purchases by Company under this Agreement shall neither restrict the
right of Company to cease purchasing nor require Company to continue any level
of such purchases.
11.12 NOTICES - Any notice or demand which under the terms of this
Agreement or under any statute must or may be given or made by Supplier or
Company shall be in writing and shall be given or made by confirmed facsimile,
or similar communication or by express mail or overnight courier addressed to
the respective Parties as follows:
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To:Lucent Technologies Inc.
67 Whippany Road
Whippany, New Jersey 07981
Attention: Access Product Management Vice President
with a copy to:
Lucent Technologies Inc.
283 King George Road
Warren, New Jersey 07059
Attention: Corporate Counsel-Switching and Access
To: BroadBand Technologies, Inc.
P.O. Box 13737
4024 Stirrup Drive
Durham, North Carolina 27709-3737
ATTN: Chief Financial Officer
with a copy to:
James F. Verdonik, Esq.
Kilpatrick Stockton LLP
P.O. Box 300004
Raleigh, North Carolina 27622
The effective dates of such notices shall be upon receipt. The above addresses
may be changed at any time by giving prior written notice as above provided.
11.13 PRODUCT DOCUMENTATION - Supplier shall furnish, at no charge,
product documentation, and any succeeding changes thereto, as described in the
Technical Specification. Company may use, reproduce, reformat, modify and
distribute such product documentation. Company shall reproduce Supplier's
copyright notice contained in any documentation reproduced without change by
Company. For documentation which is reformatted or modified by Company, Company
shall place Company's own copyright notice on the reformatted or modified
documentation, together with the copyright notices of Supplier and of any third
parties which appear on the original documentation. It is the intent of the
Parties that Company's copyright notice shall be interpreted to protect the
underlying copyright rights of Supplier to the documentation to the extent such
underlying rights are owned by Supplier.
11.14 SEVERABILITY - If any of the provisions of this Agreement shall
be invalid or unenforceable, such invalidity or unenforceability shall not
invalidate or render unenforceable this entire Agreement, but rather this entire
Agreement shall be construed
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as if not containing the particular invalid or unenforceable
provision or provisions, and the rights and obligations of the Parties shall be
construed and enforced accordingly.
11.15 INDEPENDENT AGREEMENT - Breach by a Party of any other agreement
between the Parties shall not constitute a breach of this Agreement, unless the
same conduct independently breaches this Agreement. A breach of this Agreement
shall not constitute a breach of any other agreement between the Parties, unless
the same conduct independently breaches such other agreement.
11.16 RELATIONSHIP OF PARTIES - The relationship of the Parties as
established under this Agreement shall be and remain one of independent
contractors, and neither Party will at any time or in any way represent itself
as being a dealer, agent or other representative of the other Party or as having
authority to assume or create obligations or act in any manner on behalf of the
other Party. Further, it is understood and agreed that the Parties to this
Agreement are not partners or joint venturers.
11.17 SURVIVAL OF OBLIGATIONS - The obligations of the Parties under
this Agreement, which by their nature would continue beyond the termination,
cancellation or expiration of this Agreement, shall survive termination,
cancellation or expiration of this Agreement.
11.18 TAXES - Company shall reimburse Supplier only for the following
tax payments with respect to transactions under this Agreement unless Company
advises Supplier that an exemption applies: state and local sales and use taxes,
as applicable. Taxes payable by Company shall be billed as separate items on
Supplier's invoices and shall not be included in Supplier's prices. Company
shall have the right to have Supplier contest any such taxes that Company deems
improperly levied at Company's expense and subject to Company's direction and
control.
11.19 TIMELY PERFORMANCE - If Supplier has knowledge that anything
prevents or threatens to prevent the timely performance of the work under this
Agreement, Supplier shall immediately notify Company thereof and include all
relevant information concerning the delay or potential delay.
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11.20 COUNTERPARTS - This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
AGREED:
LUCENT TECHNOLOGIES INC. BROADBAND TECHNOLOGIES, INC.
By: _____________________ By:__________________________
Name ___________________ Name ________________________
(Print) (Print)
Title:____________________ Title: ________________________
Date: ____________________ Date:_________________________
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ATTACHMENT 1
LUCENT OEM SUPPLY AGREEMENT
DEFINITIONS
The following terms shall have the meanings set out below:
"Change in Control" - A Change in Control occurs upon any one of the following
circumstances or events:
(i) The stockholders of a Party ("Acquired Party") approve a transaction,
including, without limitation, a merger or consolidation (however
denominated or effectuated), with an Acquiror, including, without
limitation, a merger or consolidation, or series of transactions with the
same Acquiror ("Combination"), and immediately after such transaction(s)
less than 60% of the combined voting power of the then-outstanding
securities of the Acquired Party or the Acquiror, will be held in the
aggregate by the holders of securities entitled, immediately prior to such
Combination, to vote generally in the election of directors of the Acquired
Party ("Voting Securities");
(ii) The stockholders of the Acquired Party approve the sale or transfer of all
or substantially all of its assets to any other Person or entity, and less
than 60% of the combined voting power of the then-outstanding Voting
Securities of such Acquiror immediately after such transaction will be held
in the aggregate by the holders of the Voting Securities of the Acquired
Party immediately prior to such sale;
(iii) An Acquiror acquires in one or a series of transactions beneficial
ownership of more than 40% of the outstanding shares of Voting Securities of a
Party;
(iv) The stockholders of a Party approve a plan of complete liquidation or
dissolution of the Party;
(v) Any Acquiror obtains direct or indirect Control (as herein defined) over a
party and, in Lucent's reasonable judgment, such Control may threaten Lucent's
interests. For the purposes of this subsection, the term "Control" shall mean
the possession directly or indirectly of the power to direct or cause the
direction of the management or policies of a Party, whether through the ability
to exercise voting power, by contract or otherwise;
(vi) At any time, Continuing Directors (as herein defined) shall not constitute
at least 50% of the members of the Board ("Continuing Director" means (i) each
individual, who has been a director of the Party for at least twelve (12)
consecutive months before such time and (ii) each individual who was nominated
or elected to be a director of the Party by at least a majority of the
Continuing Directors at the time of such nomination or election); or
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(vii) Any other transaction which has the effect of causing the substantive
changes in the Acquired Party described in any of the preceding
paragraphs.
For the purposes of this Section, the term "Acquiror" shall mean one person
or entity, or two or more persons and/or entities constituting a "group"
for purposes of the Securities Exchange Act of 1934, as amended.
"Fit" shall mean physical size or mounting arrangement (E.G., electrical or
mechanical connections) as set forth in the Specifications.
"Form" shall mean physical shape as set forth in the Specifications.
"Function" shall mean product features as set forth in the Specifications.
"Material" shall mean the Products, items and projects set forth in Product
Letters to be prepared pursuant to this Agreement.
"Material Default" shall be any failure to comply with the terms and conditions
of this Agreement, any Purchase Order or any Product Letter which is or becomes
a part of this Agreement, which is not cured by the Party that has failed to
perform within 30_days after written notice of such default is given to the
defaulting Party by the non defaulting Party.
"Product" - Shall mean a product as described in the Specifications set forth in
applicable Product Letters prepared by the Parties pursuant to Section 1.4 of
this Agreement, including any and all modifications, changes and improvements
made to such Product pursuant to applicable Product Letters.
"Product Letter" shall have the meaning set forth in Section 1.4 of this
Agreement.
"Part" - Any component, subassembly or other module of a Product.
"Purchase Order" or "Order" - Any purchase order issued by Company for the
purpose of ordering Products or Parts pursuant to this Agreement.
"Related Parties" shall mean, in respect of any Party, such Party's wholly owned
subsidiaries and the respective divisions, heirs, successors and assigns of such
Party and its wholly owned subsidiaries.
"Severity Level 1" - This condition exists when the transmission system is
completely inoperative, and it is not usable by Customer. The inoperative
portion of the licensed software completely restricts the Customer's operation.
"Severity Level 2" - This condition exists when the transmission system is
partially inoperative, but it is still usable by Customer. The inoperative
portion of the licensed
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software severely restricts the Customer's operations, but has a less critical
effect than a Severity Level 1 condition.
"Specifications" - The specifications shall be set forth in the Product Letters
for specific products pursuant to Section 1.5 of this Agreement.
"Technical Information" - All specifications, designs, plans, drawings,
software, data, prototypes, or other business and/or technical information
related to or associated with Products that is provided by Company to Supplier
to enable, assist or facilitate Supplier's performance under this agreement.
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ATTACHMENT 2
LUCENT OEM SUPPLY AGREEMENT
ENGINEERING CHANGE CONTROL PROCEDURES
"Product Changes" shall be administered in accordance with
Bell Communications Research document GR 209 CORE, Issue 2, January
1996, titled "Generic Requirements for Product Change Notices," which
is incorporated herein by reference.
Supplier may make changes to MATERIAL, modify drawings, or
make changes to manufacturing specifications, provided the changes,
modifications, or substitutions DO NOT have an impact on the
performance, reliability, Form, Fit, or Function of the MATERIAL
without prior notification to Company. Supplier shall maintain written
records of all such changes, and make these records available for
Company's review upon request.
For such changes or modifications which DO have an impact on
performance, reliability, Form, Fit, or Function, Supplier shall
identify each such change or modification in accordance with the
classifications contained in the above Bell Communications Research
document via a Product Change Notification (PCN) form. The Company
shall immediately acknowledge receipt of the PCN to the address/contact
as stated on the PCN form and shall have thirty (30) calendar days to
advise Supplier if the proposed change or modification is unacceptable.
If Company notifies Supplier as required herein, that the proposed
change or modification is unacceptable, Supplier shall not implement
such change or modification. Company may reject any MATERIAL offered by
Supplier which has been changed or modified in a manner unacceptable to
Company.
If Company has not notified Supplier that the change or
modification is unacceptable within thirty (30) calendar days following
issuance of the Change Notification, Supplier shall implement the
change or modification as described in the Change Notification.
If during the review of a proposed PCN, which has a
classification of either A or AC, issued by Supplier during the
Warranty period of the affected MATERIAL, the Company determines that
implementation of the PRODUCT CHANGE will cause the Company to incur
"unreasonable expenses" such as, but not limited to, expenses resulting
from escorting Supplier's personnel to numerous Company locations
containing affected MATERIAL or repeated product changes to the same
item of MATERIAL within a one (1) year time period, the Company shall
so notify Supplier, in writing, prior to the implementation of such
PRODUCT CHANGE.
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Upon such notification, the Company and Supplier shall jointly
determine the implementation procedure which will utilize the
Supplier's and/or Company's personnel in the most cost effective
manner.
If Supplier and the Company conclude the agreed to
implementation procedure will probably cause the Company to incur
"unreasonable expenses", the Company and Supplier shall jointly
determine the likely extent of such expenses and agree, in writing, to
a "not to exceed" estimate for such expenses. In no event shall such
estimate exceed the Company's purchase price for the MATERIAL to be
changed. The Company shall track and record all such expenses
associated with the PRODUCT CHANGE. Upon completion of its efforts, the
Company shall submit to Supplier, for reimbursement by Supplier, an
invoice of the Company's "unreasonable expenses" within forty-five (45)
calendar days after the Company's receipt of such invoice.
Issuing a Class A or AC product Change Notification shall not
constitute an agreement to provide such a change, but shall be
construed as a recommendation by the Supplier that the change is
absolutely necessary.
34
Exhibit 10.9
**-Certain information omitted and filed separately with the Commission pursuant
to a confidential treatment request under Rule 24b-2 of the Commission.
RESEARCH AND DEVELOPMENT SERVICES AGREEMENT
LUCENT TECHNOLOGIES INC. BROADBAND TECHNOLOGIES,
600 Mountain Avenue 4042 Stirrup Drive
Murray Hill, New Jersey 07974 Durham, NC 27709-3737
Lucent Technologies Inc. ("Lucent") agrees to fund, and BroadBand Technologies,
Inc. ("BBT") (collectively the "Parties") agrees to perform research and
development projects to be further described on a project-by-project basis, in
accordance with the terms and conditions stated in this Agreement and any
attachments to this Agreement.
NOW, THEREFORE, in consideration of the mutual promises made herein, and other
good and valuable considerations, the parties agree as follows:
ARTICLE 1
DEFINITIONS
1.01 Effective Date means February 4, 1998.
1.02 BBT Information means any information developed by BBT or any of its
Subsidiaries prior to the effective date or outside of the scope of this
Agreement.
1.03 Lucent Information means Lucent ***************** Technology and Lucent
**************** Technology, collectively. The term also means and includes any
part, component, and associated information developed during a Project Period,
solely by Lucent or any of its Subsidiaries.
1.04 Lucent ***************** Technology means the information transferred or to
be transferred from Lucent to Licensee pursuant to this Agreement as identified
in Attachment 2.
1.05 Lucent ************** Technology means the information transferred or to be
transferred from Lucent to Licensee pursuant to this Agreement as identified in
Attachment 1.
1.06 BBT DLC PRODUCTS means any product of BBT which is designed and marketed by
BBT to be a component of a digital loop carrier system. The digital loop carrier
system would provide concentration from a central office to a traditional Remote
Terminal or a Remote Terminal deployed in an Optical Network Unit-like
configuration, with either a fiber or metallic interface.
1.07 Manufacturing Agreement means the Manufacturing Agreement between the
Parties executed on or about the Effective Date.
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1.08 *************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
************************
1.09 **************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
******************
1.10 A Change of Control occurs upon any one of the following circumstances or
events:
(i) The stockholders of a Party ("Acquired Party") approve a transaction,
including, without limitation, a merger or consolidation (however
denominated or effectuated), with an Acquiror, including, without
limitation, a merger or consolidation, or series of transactions with the
same Acquiror ("Combination"), and immediately after such transaction(s)
less than 60% of the combined voting power of the then-outstanding
securities of the Acquired Party or the Acquiror, will be held in the
aggregate by the holders of securities entitled, immediately prior to such
Combination, to vote generally in the election of directors of the
Acquired Party ("Voting Securities");
(ii) The stockholders of the Acquired Party approve the sale or transfer of all
or substantially all of its assets to any other Person or entity, and less
than 60% of the combined voting power of the then-outstanding Voting
Securities of such Acquiror immediately after such transaction will be
held in the aggregate by the holders of the Voting Securities of the
Acquired Party immediately prior to such sale;
(iii) An Acquiror acquires in one or a series of transactions beneficial
ownership of more than 40% of the outstanding shares of Voting Securities
of a Party;
(iv) The stockholders of a Party approve a plan of complete liquidation or
dissolution of the Party;
(v) Any Acquiror obtains direct or indirect Control (as herein defined) over a
party and, in Lucent's reasonable judgment, such Control may threaten
Lucent's interests. For the purposes of this subsection, the term
"Control" shall mean the possession directly or indirectly of the power to
direct or cause the direction of the management or policies of a Party,
whether through the ability to exercise voting power, by contract or
otherwise;
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(vi) At any time, Continuing Directors (as herein defined) shall not constitute
at least 50% of the members of the Board ("Continuing Director" means (i)
each individual, who has been a director of the Party for at least twelve
(12) consecutive months before such time and (ii) each individual who was
nominated or elected to be a director of the Party by at least a majority
of the Continuing Directors at the time of such nomination or election);
or
(vii) Any other transaction which has the effect of causing the substantive
changes in the Acquired Party described in any of the preceding
paragraphs.
For the purposes of this Section, the term "Acquiror" shall mean one
person or entity, or two or more persons and/or entities constituting a
"group" for purposes of the Securities Exchange Act of 1934, as amended.
1.11 Material Breach means a breach of this Agreement by BBT that arises from an
unauthorized use or disclosure by BBT of the Lucent Information or Developed
Information where such uncured breach, in Lucent's reasonable opinion, has or is
likely to result in material harm to Lucent and which cannot be cured by
damages, either because of the nature of the harm or BBT's financial inability
to pay damages, which breach is capable of being cured and remains uncured for
more than ten (10) days following notice of the breach from Lucent.
1.12 Developed Information means any newly developed product and technical
information relating to a Project which is developed by BBT pursuant to this
Agreement or a Project Letter. The term does not mean and does not include any
product or underlying information developed prior to the effective date of this
Agreement.
1.13 Joint Information means any newly developed product, technical information,
or inventions relating to a Project which is developed pursuant to this
Agreement with a substantial contribution by one or more of Lucent's employees,
agents or consultants jointly with a substantial contribution of or by one or
more of BBT's employees, agents or consultants during a Project Period. The term
does not mean and does not include any product or underlying information
developed prior to the effective date of this Agreement or during the term of
this Agreement solely by Lucent or BBT.
1.14 Project means a research and/or development project described in an
applicable Project Letter issued in accordance with the terms of this Agreement.
Each Project shall have a separate Project Letter mutually agreed to and
executed by representatives of Lucent and BBT.
1.15 Project Letter means the separate document to be issued pursuant to this
Agreement for each Project, which shall be executed by representatives of Lucent
and BBT, and which shall describe in detail the obligations, responsibilities,
and mutual agreement of Lucent and BBT in connection with the Project. Unless
otherwise mutually
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agreed by the parties, each Project Letter shall contain, at a minimum, the
elements of information set forth in Section 2.02(c) of this Agreement.
1.16 Project Period means, unless otherwise mutually agreed, the period
commencing on the effective date of a Project Letter and ending after the
delivery by BBT of the Deliverables due pursuant to such Project Letter or
earlier termination of the Project as provided herein.
1.17 Subsidiary of a company means a corporation or other legal entity (i) the
majority of whose shares or other securities entitled to vote for election of
directors (or other managing authority) is now or hereafter controlled by such
company either directly or indirectly; or (ii) which does not have outstanding
shares or securities but the majority of whose ownership interest representing
the right to manage such corporation or other legal entity is now or hereafter
owned and controlled by such company either directly or indirectly; but any such
corporation or other legal entity shall be deemed to be a Subsidiary of such
company only as long as such control or ownership and control exists.
1.18 Plug Compatible product means product which can be installed and operate
with another product so that both are fully functional, with no changes or with
only trivial and inexpensive modification or reconfiguration.
1.19 Severity 1 Defect means the condition which exists when the transmission
system is completely inoperative, and it is not usable by the customer. The
inoperative portion of the licensed software completely restricts the customer's
operation.
1.20 Severity 2 Defect means the condition which exists when the transmission
system is partially inoperative but it is still usable by the customer. The
inoperative portion of the licensed software severely restricts the customer's
operations, but has a less critical effect than a Severity 1 Defect.
ARTICLE 2
MANAGEMENT OF PROJECTS
2.01 As soon as practicable following execution and delivery of this Agreement,
the Parties shall agree on a preliminary list of possible Projects, and
associated fees payable by Lucent to BBT for such Projects, which the Parties
shall consider under this Agreement for performance under a suitable Project
Letter. The Parties recognize that the list of potential Projects on such list
is subject to additions and deletions, by mutual agreement, and shall not bind
either Party until an appropriate Project Letter for any given Project is
executed by both Parties. Except as agreed by BBT, the Projects that are
selected by the Parties shall all relate to the development of
********************* or *******************.
2.02 Project Letters
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(a) Lucent and BBT presently contemplate the future execution by them of
one or more written Project Letters. All transactions between Lucent and BBT
which relate to a Project shall be covered by the terms of this Agreement, as it
may be amended from time to time, and any applicable Project Letter unless the
parties agree otherwise in writing.
(b) Each duly executed Project Letter shall be deemed, upon its execution,
to be incorporated into this Agreement. If the Project Letter conflicts with the
terms and conditions of this agreement, the terms and conditions of the Project
Letter shall control.
(c) Lucent and BBT agree that each Project Letter, at a minimum, shall
specify the information outlined below:
i) A reference to this Agreement as "Lucent / BBT Research and
Development Services Agreement Effective February 4, 1998";
ii) The effective date of the Project Letter and the contemplated length
of the Project Period;
(iii) A detailed description of the Project in terms of the scope of work
for research and/or development services to be performed, including
a description (or "Specifications") of any information, product and
material that may be delivered pursuant thereto ("Deliverables");
(iv) A statement defining all Deliverables, milestones and their
associated due dates;
(v) The name, address, telephone and facsimile number of the Lucent's
and BBT's representatives assigned to administer the Project;
(vi) The period after delivery to Lucent of the Deliverables within which
Lucent shall accept or reject the Deliverables. The Parties agree
that such period will vary according to the needs of a particular
Project, but shall be kept as short as reasonably possible;
(vii) The maximum total Project cost (including major capital
expenditures) authorized by Lucent, which may not be changed without
the prior written agreement of the parties;
(viii) A statement defining the commencement and completion dates of the
Project Period;
(ix) The warranty period for the Deliverables of the Project, if such
warranty period shall be longer than the one year period specified
in Article 5; and
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(x) Signatures of representatives authorized by Lucent and BBT to
execute the Project Letter.
2.03 Project Management
(a) The responsibilities of the individuals identified by the
Parties to administer the various Projects shall be:
(i) Monitoring all Project activities, including processing of
information and other administrative details;
(ii) Taking the necessary action to achieve the milestone objectives in
accordance with the scheduled completion dates in the Project
Letters, including assigning identified problems to the responsible
organizations for resolution and changing the milestone dates or
Project Period, if required by the circumstances;
(iii) Providing information for reviewing and approving any interim
reports for the Projects;
(iv) Providing overall guidance and assistance in the event that changes
to the Project are required; and
(v) Preparing the format and reviewing and approving any final reports
of the Project as may be described in the relevant Project Letter.
(b) The individuals shall not discuss marketing or pricing of products
sold by Lucent or BBT.
2.04 BBT shall deliver to Lucent the Deliverables set forth in executed Project
Letters. The Parties anticipate that Deliverables may be changed after the time
of execution of this Agreement as the Parties discuss product, architecture,
capability and other technical issues. The Parties agree to make such changes in
good faith consistent with the discussions of their intentions prior to the
execution and delivery of this Agreement.
2.05 The Parties agree to work together diligently and in good faith to execute
Project Letters for approximately ********************************* within sixty
(60) days from the Effective Date; at least ******************************* more
by October 1, 1998; and the remaining ******************************* in Project
Letter work by October 1, 1999. In the event that the Parties are unable to
execute the Project Letters by that date, the Parties agree to initiate
accelerated arbitration to resolve all disputes that may be preventing agreement
on the Project Letters, using a single arbitrator, no discovery, and a period of
arbitration from initiation to completion of arbitration of no longer than
thirty (30) days.
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2.06 The Parties may at any time during this Agreement agree to additions,
deductions or deviations (all hereinafter referred to as a "Change") from the
Deliverables. No Change shall be considered as an addition, alteration or
deduction from the Deliverables, nor shall BBT be entitled to any additional
compensation for work done pursuant to or in contemplation of a Change, unless
made pursuant to a written instruction from Lucent ("Change Order") issued by
Lucent. BBT shall not be required to accept any Change, but agrees to consider
all Change Orders in good faith. In no event shall any Change decrease the
aggregate amount specified in Section 3.01(a) to be paid by Lucent under this
Agreement. Increases in the price to be paid by Lucent for any Change shall be
consistent with the method of pricing of the original Deliverables.
2.07 (a) Lucent shall evaluate each Deliverable furnished under this Agreement
for compliance with the Specifications and shall submit a written acceptance or
rejection to BBT within the period for acceptance/rejection specified in the
relevant Project Letter after the receipt by Lucent of the complete Deliverable.
Except as provided in this Section 2.07, Lucent may exercise its right to reject
any Deliverables or portions thereof only on account of the failure of the
Deliverables to meet the Specifications. Acceptance or rejection shall be made
only in writing by the Lucent Representative provided, however, that failure to
reject any Deliverables or portions thereof within the period for
acceptance/rejection specified in the relevant Project Letter shall constitute
acceptance. In no event shall early turnover of the Deliverable by BBT to Lucent
or use during the evaluation period of such Deliverable by Lucent or its
customers for business, profit, revenue or any other lawful use constitute
acceptance of such Deliverable by Lucent. Lucent shall have the right to accept
or reject portions of any Deliverable. Any rejection of a Deliverable or portion
thereof shall identify the failure to meeting Specifications in reasonable
detail sufficient to allow BBT to correct the deficiency.
(b) If a Deliverable evaluated pursuant to Section 2.07(a) is rejected, BBT
agrees to correct, at its expense, the failure to meet the Specifications for
the Deliverable (referred to herein collectively as "defect") leading to such
rejection and resubmit the corrected Deliverable to Lucent within sixty (60)
days after receipt of notice from Lucent of such defect or such longer period as
is consistent with industry practice for the identified defect (collectively
referred to herein as the "Corrective Period"). Lucent shall have thirty (30)
days (or such longer period as is consistent with industry practice) after the
resubmitting of such corrected Deliverable to accept or reject such Deliverable.
If the corrected deliverable complies with the Specifications, BBT shall
incorporate the corrections in the Deliverable.
(c) If the defects in a rejected Deliverable are not corrected within the
Corrective Period or if a resubmitted Deliverable re-tested or re-evaluated by
Lucent during the sixty (60) day re-evaluation period is again rejected, then
Lucent may at its option: (1) retain the Deliverable at an equitable adjustment
in price as may be agreed by the parties, in which case that deliverable shall
be deemed accepted; (2) afford BBT one or more correction extensions for a
period or periods to be specified by Lucent. Unless otherwise
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agreed, during such optional extension by Lucent, Lucent may terminate the
Project for Deliverable that has been rejected. BBT shall refund that portion of
the price of the Project previously paid to BBT which is in excess of its
equitable adjustment referred to above if the defects are not corrected prior to
termination by Lucent. Lucent may not terminate this Agreement.
(d) Lucent shall have no obligation to accept any Deliverable delivered more
than six months after the delivery date specified for such Deliverable in the
relevant Project Letter.
2.08 Work on any Deliverable shall not be performed outside the United States
without the consent of the Lucent, which shall not unreasonably be withheld.
2.09 (a) It is expressly understood and agreed that this Agreement does not
grant to BBT an exclusive right or privilege to develop for Lucent products of
the type described in this Agreement which Lucent may require. It is, therefore,
understood that Lucent may, and fully intends to, contract with other developers
for the procurement of comparable development. In addition, Lucent shall at its
sole discretion, decide the extent to which Lucent will market, advertise,
promote, support, or otherwise assist in further offerings of the products. BBT
understands and agrees that Lucent intends to and will have alternate and
supplemental sources for the development work set out in this Agreement.
Notwithstanding the foregoing, it is further understood and agreed that if
Lucent utilizes non-BBT sources for the same or similar development work, then
such shall not relieve Lucent of its commitments hereunder to pay BBT twenty-one
million dollars ($21,000,000).
(b) BBT agrees that this Agreement shall neither restrict the right of
Lucent to cease purchasing the Deliverables nor require Lucent to continue any
level of such purchases after payment by Lucent of twenty-one million dollars
($21,000,000) (subject to Section 6.02) pursuant to this Agreement.
2.10 If BBT or Lucent has knowledge that anything prevents or threatens to
prevent the timely delivery of any Deliverable under this Agreement, including
delays in transfer by Lucent of information BBT requires to perform this
Agreement, BBT or Lucent as the case may be, shall immediately notify the
Representative of the other party and include all relevant information
concerning the delay or potential delay.
2.11 If requested by Lucent, BBT will, without additional charge to Lucent: (a)
provide instructors and the necessary instructional material of BBT's standard
format to train Lucent's personnel in the installation, planning and practices,
operation, maintenance, and repair of Deliverables furnished under this
Agreement, with these classes to be conducted at reasonable intervals at
locations agreed upon by BBT and Lucent; or, at the option of Lucent (b) provide
to Lucent training modules or manuals as provided in the Project Letters and any
necessary assistance, covering those areas of interest outlined in (a) of this
clause, sufficient in detail, format, and quantity to allow Lucent to develop
and
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conduct a training program. It is understood and agreed that the training
anticipated above in (a) and/or (b) shall not exceed two thousand dollars
($2,000) per Project, such amount being included in, and not in addition to, the
contract amount set out in the Project Letter.
ARTICLE 3
PAYMENT
3.01 (a) Lucent and BBT agree that the Parties shall execute Project Letters for
Projects and Deliverables having an aggregate value of twenty-one million
dollars ($21,000,000.00). This sum shall exclude capital expenditures to be made
pursuant to any Project Letters, which shall be at Lucent's expense, and all
capital equipment purchased through such expenditures shall be owned by Lucent.
On the first day of each calendar quarter for the 12 calendar quarters after the
earlier to occur ofApril 1, 1998 or execution and delivery by both Parties of
the one or more Project Letters having a price of at least the amount of the
first installment, Lucent will pay BBT One Million Seven Hundred Fifty Thousand
Dollars ($1,750,000), unless the Parties mutually agree upon an adjustment to
that amount in view of the anticipated volume of activity during the calendar
quarter following the adjusted quarter. However, if mutually agreed upon
milestones have not been met by BBT through no fault of Lucent during any
previous quarter, then the advance payment for upcoming quarters will be
reasonably adjusted accordingly. BBT shall provide to Lucent, on a quarterly
basis, an accounting report which compares the dollar amount of completed
Deliverables to amounts paid by Lucent pursuant to the scheduled payments. Upon
the earlier of the termination of this Agreement or completion of the last
Project, the Parties shall make such payments to one another as shall cause the
aggregate amount paid by Lucent to equal the amount agreed to be paid under this
Section, subject to adjustment as provided in Sections 2.06, 2.07, and 6.02.
(b) The Parties will attempt in good faith to select projects related to
**************************************** which are useful to both Parties. Each
Project Letter shall include a "Reusability Value". Such Reusability Value shall
be the mutually agreed value of the Project Deliverables to BBT.****************
********************************************************************************
********************************************************************************
********************************************************************************
*********************************** and such aggregate Reusability Value. If
this Agreement is terminated prior to the third anniversary of the Effective
Date, the ******* *********************** amount shall be reduced pro rata based
on the percentage of the three (3) year period after the Effective Date that
occurred prior to the date of termination and Lucent shall pay to BBT, within
ninety (90) days of termination, an amount equal to the difference between the
pro rata reduced amount and the aggregate Reusability Value.
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3.02 The Deliverables shall be delivered free from all claims, liens, and
charges whatsoever. Lucent reserves the right to require proof that all third
parties furnishing labor and materials for the Deliverables have been paid.
3.03 Lucent shall reimburse BBT only for the following tax payments with respect
to transactions under this Agreement unless Lucent advises BBT that an exemption
applies: state and local sales and use taxes, as applicable. Taxes payable by
Lucent shall be billed as separate items on BBT's invoices and shall not be
included in BBT's prices. Lucent shall have the right to have BBT contest any
such taxes that Lucent deems improperly levied at Lucent's expense and subject
to Lucent's direction and control.
ARTICLE 4
GRANTS OF RIGHTS TO USE
INTELLECTUAL PROPERTY
4.01 Subject to Section 4.02, BBT grants to Lucent, a perpetual, fully paid up,
non-exclusive, nontransferable, and worldwide:
a) right to use BBT Information delivered with or included in a
Deliverable for the design, development, manufacture, marketing or maintenance
of Lucent's products other than products which are Plug Compatible with BBT
products, provided that this Section shall not convey to Lucent any right to
disclose the BBT Information to any entity other than its Subsidiaries, which
Subsidiaries shall hold such information under the same obligations of
confidentiality to BBT set forth in Article 7 hereof;
b) license under its copyrights on or covering any such BBT Information to
create derivative works, and to use, copy, and distribute the BBT Information
and any derivative works, but only in connection with the design, development,
manufacture, marketing or maintenance of Lucent's products other than products
which are Plug Compatible with BBT products, provided that this subsection shall
not convey to Lucent any right to disclose the BBT Information to any entity
other than its Subsidiaries, which Subsidiaries shall hold such information
under the same obligations of confidentiality to BBT set forth in Article 7
hereof;
c) license under any claim of any patent which BBT has a right to license
as of the effective date of this Agreement which would be infringed by a Lucent
product (other than products which are Plug Compatible with BBT products), to
the extent that such claim is necessarily infringed by the use of the
Deliverable; and
d) right to grant to a third party supplier, subject to suitable
confidentiality agreements, rights of the scope granted to Lucent under Sections
4.01(a), 4.01(b) and 4.01(c), but only to the extent reasonably necessary to
carry out activities of supplying Lucent with components of Lucent's products or
with such entire products for resale by Lucent;
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e) license under its copyrights to copy and distribute "Distributable
Versions" (as that term is defined in this Paragraph) of Lucent's products
(other than products which are Plug Compatible with BBT products) and associated
documentation. A Distributable Version of such products may include object code
compiled from the BBT Information and shall be limited to information
commercially reasonably necessary to distribute in connection with commercial
transfers of such products. A use shall be deemed to be commercially reasonably
necessary for purposes of this paragraph to the extent BBT distributes like
material with its own products. Products distributed to third-parties pursuant
to the right and license granted in this paragraph shall not be deemed to
include confidential information and such distribution shall not be deemed to be
a breach of Article 7 hereof.
4.02 In the event that Lucent elects to manufacture or have manufactured (by a
third party supplier listed on Attachment 3, which list may be expanded to
include additional suppliers with prior written consent of BBT) any
**************** which is based on a Deliverable which includes BBT Information
which is ************************************************** technology, Lucent
shall either:
(a) purchase such products from BBT pursuant to the terms of the
Manufacturing Agreement; or
(b) pay to BBT a royalty on each of such products manufactured by or for
Lucent, which royalty shall be specified in the relevant Project Letter for such
Deliverables.
4.03 Lucent grants to BBT, a limited, ************, non-exclusive, and
nontransferable license to use the Lucent *************** Technology and Lucent
**************** Technology, and any Lucent-owned copyright and patent on such
technology, solely for the purpose of design and development by BBT of an
**************************** ******* for Lucent.
4.04 All intellectual property rights to the Developed Information (other than
BBT Information) and to Joint Information, developed in the course of developing
Deliverables under this Agreement or any Project Letter and specifically for
inclusion in Deliverables under this Agreement, shall be jointly owned by Lucent
and BBT. It is understood that personnel of BBT may perform development for BBT
or third Parties that is not pursuant to this Agreement and Lucent shall have no
ownership rights to the results of such development work. Subject to Section
4.05, the rights of joint ownership in the Developed Information shall be rights
of full non-exclusive worldwide ownership, including rights to license and
transfer, subject to provisions of this Agreement, including the following:
(a) Each Party may exploit its rights to the Developed Information or
Joint Information independent of the other and may retain all economic benefits
thereof;
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(b) Neither Party shall have any obligation to account to the other for
profits derived from the Developed Information or Joint Information.
(c) Each Party shall have full rights to enforce the Developed Information
or Joint Information intellectual property rights against non-authorized users.
Each Party agrees to cooperate with the other in connection with enforcement of
intellectual property rights, if participation of both parties is required,
provided that the Party requesting cooperation shall pay the reasonable expenses
of the other Party; and.
(d) The Parties will cooperate in filing patent applications, copyright
registrations, and other formalities required to protect or enforce their joint
intellectual property rights in the Developed Information or Joint Information.
Neither Party shall be required, however, to incur any costs, such as patent
application costs, to which it has not agreed.
4.05 Lucent's and BBT's rights to use the Developed Information shall be
restricted as follows:
(a) Lucent shall not use the Developed Information, or any intellectual
property in such Developed Information, in the development or manufacture of a
product which is Plug Compatible with any BBT product, without the prior written
consent of BBT, and Lucent shall not license a third party to use the Developed
Information for such purpose.
(b) BBT shall use, or license others to use, the Developed Information
solely in connection with current and future BBT DLC PRODUCTS. BBT shall not use
the Developed Information, or any intellectual property in such Developed
Information, in the development or manufacture of a product which is Plug
Compatible with any Lucent product, without the prior written consent of Lucent,
and BBT shall not license a third party to use the Developed Information for
such purpose.
4.06 Each Party shall own separately, not jointly, any improvement or derivative
work to the Developed Information or Joint Information created by such Party,
except to the extent such improvement or derivative work also constitutes
Developed Information or Joint Information. Use and disclosure of improvements
or derivative works shall not be restricted by this Agreement except to the
extent the same utilizes Developed Information, Joint Information, BBT
Information or Lucent Information.
4.07 BBT agrees that BBT will disclose and furnish promptly to Lucent any and
all Developed Information, including technical information, computer or other
apparatus programs, specifications, drawings, records, documentation, works of
authorship or other creative works, ideas, knowledge or data, originated or
developed by BBT or by any of BBT's agents, employees, or contractors as a
result of activities performed under, or in anticipation of, this Agreement. BBT
also agrees to acquire from BBT's agents, employees, and contractors such
assignments, rights and covenants as required to assure that Lucent shall
receive the rights provided for in this Agreement.
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4.08 Lucent agrees to reproduce BBT's copyright notice contained in any
documentation reproduced without change by Lucent. For documentation which is
reformatted or modified by Lucent, Lucent shall have the right to place only
Lucent's own copyright notice on the reformatted or modified documentation,
except as prohibited by BBT's agreements with third party licensors. It is the
intent of the parties that Lucent's copyright notice shall be interpreted to
protect the underlying copyright rights of BBT and third party licensors to BBT
to the documentation to the extent such underlying rights are owned by .BBT or
such third party licensors.
4.09 Neither Party will use, distribute, transfer or transmit any products,
software or technical information (even if incorporated into other products)
provided under this Agreement except in compliance with U.S. export laws and
regulations (the "Export Laws"). Neither Party will, directly or indirectly,
export or re-export the following items to any country which is in the then
current list of prohibited countries specified in the applicable Export Laws:
(a) software or technical data disclosed or provided to such Party by the other
Party or such other Party's subsidiaries or affiliates; or (b) the direct
product of such software or technical data. The obligations stated above in this
clause will survive the expiration, cancellation or termination of this
Agreement or any other related agreement.
ARTICLE 5
WARRANTIES AND LIABILITIES
5.01 (a) Materials provided by BBT to Lucent in the course of development, for
testing or quality assurance purposes, are provided "as is" without any warranty
of performance or quality. The parties acknowledge and agree, however, that some
prototype products may be produced in quantity and supplied by BBT to Lucent for
installation at Customer sites on an "early release" or "beta" basis ("Installed
Prototypes"), where a limited warranty as provided in this clause is
appropriate.
(b) BBT warrants to Lucent that the final design for each Deliverable
provided by BBT to Lucent under this Agreement will be free of defects that
would cause the Deliverable produced according to that design to fail to meet
the Specifications for that Deliverable agreed by the parties. In addition, BBT
warrants to Lucent that final software for each Deliverable provided by BBT to
Lucent under this Agreement shall conform with the Deliverable performance
Specifications agreed by the Parties, and to BBT's knowledge will be free of
Severity 1 and Severity 2 Defects. These warranties, for the final design and
software provided under this Agreement for each Deliverable, shall continue for
a period of ******** after the final design and software for that Deliverable
are accepted by Lucent, or for such longer period specified in the relevant
Project Letter.
(c) With regard to Installed Prototypes, if Installed Prototypes furnished
contain one or more assignable manufacturer's warranties, BBT shall be deemed to
have assigned such warranties to Lucent and customers at delivery. BBT warrants
that at the time of
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delivery to Lucent, Installed Prototypes shall be free of any security interest
or any other lien or any other encumbrance whatsoever. All warranties shall
survive inspection, acceptance and payment.
(d) Defective or non-conforming Installed Prototypes will, at BBT's
option, either be returned to BBT for repair or replacement, at no cost to
Lucent, with risk of in-transit loss and damage borne by BBT and freight paid by
BBT, or be repaired or replaced by BBT on Lucent's or Lucent's customers' site
or another site designated by Lucent at no cost to Lucent. If the defect is
related to defective workmanship of materials or manufacture, BBT shall complete
repairs and ship the repaired material within ten (10) working days of receipt
of defective or non-conforming material, or at Lucent's option, ship replacement
material within ten (10) working days after verbal notification is given to BBT
by Lucent. If the defect is related to design or software, the parties will
agree on a schedule for correction.
(e) BBT's sole liability, and Lucent's exclusive remedy, for claims by
Lucent for defective or non-conforming materials made during the relevant
warranty period, shall be: (1) for designs or software, at no additional cost to
Lucent, correction of the design or software to make it conforming, and
providing a copy of the corrected design or software to Lucent; and (2) for
Installed Prototypes, at no additional cost to Lucent, correcting the defective
Installed Prototypes as provided in this clause.
(f) Replacement material shall be warranted as set forth above in this
section. Any Installed Prototype which is repaired, modified, or otherwise
serviced by BBT shall be warranted as provided in this section for the remainder
of the warranty period (based upon the date of repair, modification or other
service is completed and accepted by Lucent) or ninety (90) days after the
Installed Prototype is returned by BBT, whichever is later.
5.02 (a) BBT believes the BBT Information and Developed Information to be
furnished hereunder will be true and accurate. Except as provided in Sections
2.07 and 5.01, BBT and its Subsidiaries shall not be liable for errors or
omissions in the BBT Information or the Developed Information.
(b) BBT warrants that the BBT Information licensed to Lucent and the
Developed Information to be furnished to Lucent under this Agreement are and
will be the original work of BBT (or BBT has and will have a valid right to
license such property) and it has the power to grant the rights described in
this Agreement. BBT warrants and represents that upon Lucent's acceptance of the
Deliverables, such Deliverables shall be free of any security interest or any
other lien or any other encumbrance whatsoever.
5.03 BBT warrants that software will record, store, process and present calendar
dates falling on or after January 1, 2000, in the same manner and with the same
functionality as it performed before January 1, 2000. This maintenance will be
considered part of and
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covered under the maintenance provisions of the Agreement at no additional
charge to Lucent.
5.04 EXCEPT AS PROVIDED IN THIS ARTICLE, BBT MAKES NO REPRESENTATIONS OR
WARRANTIES, EXPRESS OR IMPLIED. BY WAY OF EXAMPLE BUT NOT OF LIMITATION, BBT AND
ITS SUBSIDIARIES MAKE NO REPRESENTATIONS OR WARRANTIES OF MERCHANTABILITY OR
FITNESS FOR ANY PARTICULAR PURPOSE, OR THAT THE USE OF THE BBT INFORMATION OR
THE DEVELOPED INFORMATION OR ANY PORTION OF IT WILL NOT INFRINGE ANY PATENT OF
ANY THIRD PARTY, AND IT SHALL BE THE SOLE RESPONSIBILITY OF LUCENT TO MAKE SUCH
DETERMINATION AS IS NECESSARY WITH RESPECT TO THE ACQUISITION OF LICENSES UNDER
PATENTS OF THIRD PARTIES. BBT AND ITS SUBSIDIARIES SHALL NOT BE HELD TO ANY
LIABILITY WITH RESPECT TO ANY PATENT INFRINGEMENT CLAIM MADE BY LUCENT OR ANY
THIRD PARTY ON ACCOUNT OF, OR ARISING FROM THE USE OF, THE BBT INFORMATION OR
DEVELOPED INFORMATION OR ANY PORTION OF IT.
5.05 At Lucent's request, BBT agrees to indemnify, defend and hold harmless
Lucent, its affiliates, customers, employees, successors and assigns (all
referred to as "Lucent") from and against any losses, damages, claims, fines,
penalties and expenses (including reasonable attorney's fees) that arise out of
or result from: (1) assertions under Workers' Compensation or similar acts made
by persons furnished by BBT; and (2) injuries or death to persons or damage to
property, including theft, in any way arising out of or caused or alleged to
have been caused by the Deliverable or activities performed by, or material
provided by BBT or persons furnished by BBT: (a) if the Deliverables do not meet
the specifications, except to the extent such injury or death to persons or
damage to property is caused by the negligence or willful or other wrongful act
or omission of Lucent or its employees; and (b) if the Deliverables meet the
Specifications, to the extent such injury or death to persons or damage to
property is caused by the negligence or willful or other wrongful act or
omission of BBT or its employees.
5.06 Neither Lucent nor BBT shall be liable for any loss, damage, delay or
failure of performance resulting directly or indirectly from any cause which is
beyond its reasonable control, including but not limited to acts of God,
extraordinary traffic conditions, riots, civil disturbances, wars, states of
belligerency or acts of the public enemy, strikes, work stoppages, or the laws,
regulations, acts or failure to act of any governmental authority. In the event
that performance under this Agreement is prevented for a continuous period of
two (2) months or longer by any of the foregoing causes, the Party which does
not receive the benefit of the performance of the other Party shall have the
right to terminate this Agreement by giving written notice to the other Party.
5.07 NOTWITHSTANDING ANY OTHER SECTIONS OF THIS AGREEMENT TO THE CONTRARY,
NEITHER PARTY SHALL BE LIABLE FOR
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INCIDENTAL OR CONSEQUENTIAL LOSS OR DAMAGES OF ANY NATURE, HOWEVER CAUSED.
ARTICLE 6
TERMINATION
6.01 Lucent may terminate this Agreement by notice in writing to BBT upon the
occurrence of (1) a Change of Control of BBT, or (2) a Material Breach by BBT.
With respect to a Change in Control, Lucent's right to terminate will expire
unless Lucent notifies BBT of its intention to exercise that right within thirty
(30) days (or such longer period as may be agreed to) of Lucent's receipt of
notice from BBT of a planned or actual Change in Control. A Change of Control of
BBT which results from bankruptcy proceedings shall be treated as a Change of
Control of BBT. In the event that this Agreement is terminated as a result of a
rejection of this Agreement by a Trustee in bankruptcy, Lucent shall have no
further obligations to make any payments pursuant to Section 3.01 following such
termination.
6.02 Upon termination of this Agreement pursuant to Section 6.01 hereof, all
obligations and rights of the Parties under this Agreement shall continue except
as follows:
(a) With regard to Projects for which a Project Letter has been executed by the
Parties, at Lucent's option, Lucent may:
(1) Pay the full fees stated in the Project Letter for such Project, in
which case BBT shall complete the Project and deliver the Deliverables per
the Project Letter; or
(2) Make no further payments under the Project Letter to BBT following
termination of the Agreement, in which case BBT shall be released of its
obligations under the Project Letter. BBT shall be entitled to keep any
payments made under the Project Letter prior to termination, and Lucent
shall be entitled to receive BBT's development work in process relative to
Deliverables specified in the Project Letter (including prototypes,
drawings, and the like). For purposes of clarification the Parties
recognize that each Party will have joint ownership in the Developed
Information and a joint right to receive copies of the development work in
process.
(b) Neither Party shall be obligated to execute any further Project Letters, and
Lucent shall have no obligation to make any payments under Section 3.01 not due
prior to the date of termination.
(c) Except in the case of Section 6.02(a)(1), BBT's license under Section 4.03
shall be terminated, upon which termination BBT shall immediately return to
Lucent all Lucent
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*************** Technology and Lucent **************** Technology. For purposes
of clarification, Termination under Section 6.01 shall not affect the rights of
the Parties with respect to Projects completed prior to the date of termination.
6.03 (a) If a voluntary or involuntary petition under applicable bankruptcy laws
is filed by or against BBT, unless BBT provides to Lucent reasonable assurances
that BBT will be able to comply with the confidentiality provisions of this
Agreement regarding intellectual property, Lucent may terminate the license
granted in Section 4.03 hereof. BBT shall immediately notify Lucent of the
filing of any bankruptcy petition by or against BBT. Notwithstanding the
foregoing, a Change in Control of BBT which results from bankruptcy proceeds
shall be treated as provided in Section 6.01.
(b) If a proceeding is commenced under any provision of the United States
Bankruptcy Code, voluntary or involuntary, by or against either party, and this
Agreement has not been terminated, the non-debtor party may file a request with
the bankruptcy court to have the court set a date within sixty (60) days after
the commencement of the case, by which the debtor party will assume or reject
this Agreement, and the debtor party shall cooperate and take whatever steps are
necessary to assume or reject the Agreement by such date.
6.04 In the event Lucent terminates any license right of BBT hereunder, any
obligation of BBT to Lucent which requires use of such terminated license, shall
immediately terminate. The rights of the Parties shall be governed by Section
6.02.
6.05 Upon termination of this Agreement, the Parties agree to provide full
cooperation in the orderly transition of the work to Lucent or its designee,
including, but not necessarily limited to packing and preparing for shipment any
materials or other inventory to be transferred, provision of reports, files and
similar media necessary for continuation of the work transferred, continuation
of work at reducing levels if necessary during a transition period and at
reduced levels if work is transferred in part. Prices for additional work such
as packing and preparation for shipment, and revision of prices resulting from
revised volumes, if necessary, shall be mutually agreed upon by the Parties.
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ARTICLE 7
CONFIDENTIALITY
7.01 Each party agrees:
(i) that it will not use the Lucent Information (in the case of BBT) or
the BBT Information (in the case of Lucent), except as expressly
provided herein;
(ii) that it shall keep the Lucent Information or the BBT Information, as
the case may be, confidential;
(iii) that it will not, without the other party's express written
permission, make or have made, or permit to be made, more copies of
any of the Lucent Information or the BBT Information, as the case
may be, than are necessary for its use hereunder;
(iv) that it will not, without the other party's express written
permission, (a) use in advertising, publicity, or otherwise any
trade name, trademark, trade device, service mark, symbol or any
other identification or any abbreviation, contraction or simulation
thereof owned or used by such other party or any of its
Subsidiaries, or (b) represent, directly or indirectly, that any
product or service produced in whole or in part with the use of any
of the Lucent Information or the BBT Information, as the case may
be, is a product or service of such other party or any of its
Subsidiaries or is made in accordance with or utilizes any
information or documentation of the other party or any of its
Subsidiaries; provided, however, that nothing in this Section 7.01
shall be construed as prohibiting a party from representing that it
is licensed with respect to such information; and
(v) that the Lucent Information or the BBT Information, as the case may
be, and all documents furnished hereunder are deemed to be and shall
remain the property of the furnishing party, and that upon
termination of this Agreement, each shall upon request deliver to
the other party all documents containing any of the Lucent
Information or the BBT Information, as the case may be, and all
copies thereof then under such party's or its supplier's control
(except to the extent such party is entitled hereunder to retain
such information).
7.02 It is recognized that during the performance of this Agreement, each
Party's personnel may unavoidably receive or have access to private or
confidential information of the other Party which is not the BBT Information or
the Lucent Information. Each
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Party agrees that all such information shall be treated for the purposes of the
provisions of this Agreement as if it were BBT Information or Lucent
Information, as the case may be.
7.03 (a) A party receiving proprietary or confidential information in connection
with this Agreement, including the Lucent Information and the BBT Information,
will (i) maintain it in confidence and will not disclose any part of it to
anyone except those of its employees, agents or advisors having a need to know
in order to accomplish the purposes of this Agreement and who are bound by terms
similar to those of this section, (ii) use at least the same degree of care to
maintain its secrecy as it uses in maintaining the secrecy of its own
confidential and trade secret information of equal importance, (iii) always use
at least a reasonable degree of care in maintaining its secrecy, and (iv) use it
only for the purpose of exercising its rights and performing its obligations
under this Agreement.
(b) Neither party will have any obligation (confidentiality or restriction
on use) concerning that part of the other's information which (i) at the time of
disclosure in writing is not marked with a legend identifying it as
"Proprietary", "Confidential" or a similar legend or, within thirty (30) days
after oral disclosure, is not so identified in writing, (ii) at the time of
disclosure to the receiving party was known to that party free of restriction as
evidenced by documentation in that party's possession, (iii) is lawfully
obtained from a third party under no obligation of confidentiality, (iv) is or
becomes publicly available other than as a result of an act or failure to act of
the receiving party, or (v) is independently developed by a party without use of
the other's confidential information.
(c) If any part of a party's confidential or proprietary information is
wrongfully disclosed or used, then, in addition to the remedies provided by this
Agreement or by law or in equity, the party which provides the information will
be entitled to an injunction preventing further disclosure of the information by
the other party or further disclosure or use of the information by any third
parties to whom the information has been wrongfully disseminated.
ARTICLE 8
MISCELLANEOUS
8.01 BBT shall not assign any right or interest under this Agreement (excepting
solely for moneys due or to become due) without the prior written consent of
Lucent. Subject to Lucent's right to terminate upon the occurrence of a Change
in Control, a merger or consolidation shall not be deemed to be an assignment.
BBT will provide Lucent with thirty (30) days prior written notice prior to the
closing of a merger or consolidation.
8.02 Each Party agrees that it will not employ, and will not directly or
indirectly solicit employment of, employees of the other Party during the term
of this Agreement and for two years thereafter. This restriction extends to and
includes the subsidiaries and
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affiliates of each Party. This restriction does not apply to any person who has
not been employed by the other party for at least six months.
8.03 BBT agrees to do the following with respect to property owned by Lucent
under BBT's possession (other than the Developed Information developed by BBT
pursuant to this Agreement):
(a) Deliver such property to Lucent upon demand, FOB BBT's plant without
additional charge for removal, packing, or crating.
(b) Except as set forth below in this clause, BBT shall not allow any security
interest, lien, tax lien or other encumbrance (collectively referred to as
"encumbrance") to be placed on any such Lucent property. BBT shall give Lucent
immediate written notice should any third party attempt to place or place an
encumbrance on such Lucent property. BBT shall indemnify and hold Lucent
harmless from any such encumbrance.
(c) Lucent may inspect, inventory, and authenticate the account of the Lucent
property during BBT's normal business hours. BBT shall provide Lucent access to
the premises where all such Lucent property is located. The obligations assumed
by BBT with respect to the Lucent property are for the protection of Lucent's
property. BBT shall, at Lucent's option, return to Lucent or hold for Lucent's
disposition any or all of such Lucent property in BBT's possession at (a) the
completion of the Project for which such Lucent property was acquired, or , (b)
expiration, cancellation or termination of this Agreement, or (c) the withdrawal
of the Lucent Property , as provided above.
8.04 This Agreement and all transactions under it shall be governed by the laws
of the State of New Jersey, without regard to conflicts of laws provisions. The
Parties agree to submit to the jurisdiction of any court wherein an action is
commenced against the other Party based on a claim for which one Party has
agreed to indemnify the other Party under this Agreement.
8.05 BBT and all persons furnished by BBT shall comply at their own expense with
all applicable laws, ordinances, regulations and codes, including the
identification and procurement of required permits, certificates, licenses,
insurance, approvals and inspections in performance under this Agreement.
8.06 This Agreement shall constitute the entire agreement between the parties
with respect to the subject matter of this Agreement and shall not be modified
or rescinded, except by a writing signed by BBT and Lucent. Estimates or
forecasts furnished by Lucent shall not constitute commitments. The provisions
of this Agreement supersede all contemporaneous and prior oral and written
communications and understandings of the parties with respect to the subject
matter of this Agreement.
8.07 Neither Party shall implead or bring an action against the other Party
based on any claim by any person for personal injury or death to an employee of
a Party for which the
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other Party has previously paid or is obligated to pay worker's compensation
benefits to such employee or claimant and for which such employee or claimant
could not otherwise bring legal action against the other Party.
8.08 All persons furnished by any Party shall be considered solely employees or
agents of that Party, who shall be responsible for payment of all unemployment,
social security and other payroll taxes, including contributions when required
by law.
8.09 The obligations of the Parties under this Agreement, which by their nature
would continue beyond the termination, cancellation or expiration of this
Agreement, shall survive termination, cancellation or expiration of this
Agreement.
8.10 BBT shall maintain and cause BBT's subcontractors to maintain during the
term of this Agreement: (1) Workers' Compensation insurance as prescribed by the
law of the state or nation in which the work is performed; (2) employer's
liability insurance with limits of at least five hundred thousand dollars
($500,000) for each occurrence; (3) automobile liability insurance if the use of
motor vehicles is required, with limits of at least one million dollars
($1,000,000) combined single limit for bodily injury and property damage per
occurrence; (4) Commercial General Liability ("CGL") insurance, ISO 1988 or
later occurrence form of insurance, including Blanket Contractual Liability and
Broad Form Property Damage, with limits of at least one million dollars
($1,000,000) combined single limit for bodily injury and property damage per
occurrence; (5) if the furnishing to Lucent (by sale or otherwise) of material
or construction services is involved, CGL insurance endorsed to include products
liability and completed operations coverage in the amount of three million
dollars ($3,000,000) per occurrence; and (6) Errors and Omissions or
Professional Liability insurance in the amount of at least one million dollars
($1,000,000) per claim with an aggregate of at least three million dollars
($3,000,000) inclusive of legal defense costs, to be maintained for a period of
at least one (1) year after completion of the Agreement. All CGL and automobile
liability insurance shall designate Lucent Technologies Inc., its affiliates,
and its directors, officers and employees (all referred to as "Lucent") as
additional insured. All such insurance must be primary and non-contributory and
required to respond and pay prior to any other insurance or self-insurance
available. Any other coverage available to Lucent shall apply on an excess
basis. BBT agrees that BBT, BBT's insurer(s) and anyone claiming by, through,
under or in BBT's behalf shall have no claim, right of action or right of
subrogation against Lucent and its customers based on any loss or liability
insured against under the foregoing insurance. BBT shall furnish Lucent copies
of certificates of insurance upon request by Lucent. In the event BBT changes
insurers, BBT shall notify Lucent of such change. Insurance companies providing
coverage under this Agreement must be rated by A-M Best with at least an A-
rating.
8.11 Each Party shall be responsible for its own labor relations with any labor
organization either representing or seeking to represent its employees and shall
negotiate and seek to adjust all disputes between it and its employees or any
union representing its employees. Except as otherwise provided in this clause,
and subject to the terms of this
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Agreement, either Party may freely enter into any contract with any union
representing employees employed by it to perform the duties contemplated by the
requirements of this Agreement. Neither Party shall enter into a contract that
purports to obligate the other Party to the union, either as successor or
assignee of such Party, or in any other way, on the termination of this
Agreement, or at any other time. Each Party warrants that it is not a party to
any existing union contract purporting so to obligate the other Party.
8.12 Any notice or demand which under the terms of this Agreement or under any
statute must or may be given or made by BBT or Lucent shall be in writing and
shall be given by U.S. Mail to the respective parties as follows:
To Lucent: Lucent Technologies Inc.
Address: 67 Whippany Road
Whippany, New Jersey 07981
Attn: Access Product Management Vice President
with a copy to:
Lucent Technologies Inc.
283 King George Road
Warren, New Jersey 07059
Attention: Corporate Counsel - Switching and Access
To: BroadBand Technologies, Inc.
Address: Post Office Box 13737
Research Triangle Park, NC 27709-3737
Attn: Chief Financial Officer
with a copy to:
James F. Verdonik
Kilpatrick Stockton LLP
Post Office Box 300004
Raleigh, North Carolina 27622
The effective dates of such notice shall be: (1) five (5) days following the
date mailed for certified or registered letters, and (2) two (2) days following
the date mailed for overnight letters. The above addresses may be changed at any
time by giving prior written notice as above provided.
8.13 If any of the provisions of this Agreement shall be invalid or
unenforceable, such invalidity or unenforceability shall not invalidate or
render unenforceable this entire Agreement, but rather this entire Agreement
shall be construed as if not containing the particular invalid or unenforceable
provision or provisions, and the rights and obligations of the parties shall be
construed and enforced accordingly.
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8.14 The failure of either Party at any time to enforce any right or remedy
available to it under this Agreement or otherwise with respect to any breach or
failure by the other Party shall not be construed to be a waiver of such right
or remedy with respect to any other breach or failure by the other Party.
8.15 (a) The following procedures shall apply to any dispute or disagreement
between the Parties or any of their Subsidiaries arising out of this Agreement.
(b) First:
(i) either Party may give written notification of such dispute or
disagreement to the other Party and
(ii) the Parties shall communicate with each other promptly with a
view to resolving such dispute or disagreement within 21 days (or such
extended period as the Parties agree is appropriate in any case) after
such written notification is given.
(c) The giving of any notice regarding any dispute or disagreement under this
Section 8.15 shall toll the running of all applicable statutes of limitation
until the later of (i) 90 days following the giving of such notice or (ii) 30
days following the termination of discussions between the Parties concerning
such dispute or disagreement.
(d) Second, if at the end of the 21 day period referenced in Section 8.15(b)(as
it may be extended) such dispute or disagreement has not been resolved to the
satisfaction of both parties, either Party may request in writing that such
dispute or disagreement be the subject of non-binding mediation. Following such
request, the Parties shall endeavor in good faith promptly to identify a single
person (who shall be a person with experience and good reputation) who shall
assist the Parties in discussing such dispute or disagreement and in attempting
to reach a mutually acceptable business resolution. Such mediation process shall
terminate not later than 30 days following the request therefor (or such
extended or shorter period as the Parties agree is appropriate). All applicable
statutes of limitation shall be tolled during the period of mediation.
(e) Third, if at the end of the 30 day period referenced in Section 8.15(d) (as
it may be extended or shortened) such dispute or disagreement has not been
resolved to the satisfaction of both parties, either Party (the "complainant")
may commence binding arbitration by giving the other Party (the "respondent")
notice in writing (the "initiating notice") setting forth in reasonable detail
the nature of its claim and the relief requested stating that the complainant is
invoking the procedures set forth in this Section 8.15(e) and (f) and naming the
complainant's representative on the Arbitration Panel (as defined below). Within
21 days of receipt of an initiating notice, the respondent shall give the
complainant notice in writing (the "response") setting forth in reasonable
detail: (1) the basis of its response to the claim; (2) the nature of any
counterclaim it has against the complainant arising from the same set of facts
and circumstances that gave rise to the original claim; (3) any other
counterclaim that Party wishes to bring at that time (although
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the Party has no obligation to bring such counterclaims at that time); (4) the
relief requested; and (5) naming the respondent's representative on the
Arbitration Panel. The two representatives shall select a third person who is
mutually acceptable to them. If the representatives fail to make such selection
within 21 days, the complainant and the respondent shall each replace its
representative with a new representative and the new representatives shall be
subject to the preceding sentence and this sentence. Once a third person is
selected, such person together with the representatives of the complainant and
the respondent shall form the Arbitration Panel. The date upon which the
Arbitration Panel is formed shall be the "Commencement Date".
(f) The Arbitration Panel shall conduct proceedings to determine the merits
under applicable law of the claims set forth in the initiating notice and the
response. The proceedings shall be administered by JAMS/Endispute in accordance
with its Comprehensive Arbitration Rules and Procedures in effect as of the
Effective Date, subject to the following additional rules:
(i) the proceedings shall take place in New York City;
(ii) the Arbitration Panel (including, if necessary, any replacement(s)
to the Arbitration Panel) shall be selected as set forth in Section
8.15(e);
(iii) the available relief shall include damages, injunctive relief and
equitable relief to the extent allowed under the applicable law,
this Agreement and any other agreement between the parties;
(iv) the parties shall attempt in good faith promptly to agree on the
nature and extent of any discovery in connection with the
arbitration, provided that, in the absence of such agreement,
discovery shall be governed by JAMS/Endispute's Comprehensive
Arbitration Rules and Procedures and the applicable law with respect
to privilege and other protections from disclosure, including the
work product doctrine;
(v) the final decision of the Arbitration Panel (the "Award") shall be
issued within six months of the Commencement Date (the date of
issuance of the Award being the "Award Date") and must be joined by
at least two members of the Arbitration Panel;
(vi) each party to the proceedings shall pay its own costs in connection
with the proceedings, including the costs and expenses of its
representative on the Arbitration Panel, and the parties shall share
equally the other costs of the proceedings, including the fees of
the third member of the Arbitration Panel, except that the
prevailing party shall be entitled to recover its attorneys' fees
incurred in prosecution thereof.
(g) In accordance with the Federal Arbitration Act, 9 U.S.C. ss.1 et seq., the
Award shall
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be final and binding and judgment thereon may be entered by any state or federal
court having jurisdiction thereof.
(h) Nothing in this Section 8.15 shall be construed to preclude either party
from seeking injunctive relief in a court of competent jurisdiction to prevent
imminent irreparable harm. The dispute resolution procedures set forth herein
shall be stayed pending disposition of any application for such relief. The
Parties agree that a court of competent jurisdiction may consider the merits of
any claim that is subject to the dispute resolution procedures set forth herein
to the extent necessary to resolve any permissible application for injunctive
relief.
8.16 This Agreement may be executed in one or more counterparts.
8.17 Breach by a Party of any other agreement between the Parties shall not
constitute a breach of this Agreement, unless the same conduct independently
breaches this Agreement. A breach of this Agreement shall not constitute a
breach of any other agreement between the Parties, unless the same conduct
independently breaches such other agreement.
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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be executed
in duplicate originals by its duly authorized representatives on the respective
dates entered below.
LUCENT TECHNOLOGIES INC.
By:________________________________
Title:_____________________________
Date:______________________________
BROADBAND TECHNOLOGIES, INC.
By:________________________________
David Orr
President & CEO
Date:______________________________
THIS AGREEMENT DOES NOT BIND OR OBLIGATE EITHER PARTY
IN ANY MANNER UNLESS DULY EXECUTED BY AUTHORIZED
REPRESENTATIVES OF BOTH PARTIES
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ATTACHMENT 1
Lucent **************** Technology
Lucent's **************** Technology means the following *********** information
owned by Lucent for Lucent's ***********************************************
******************************************************* :
Parts list (including part numbers and supplier lists)
Schematic diagrams
Board layout documentation
For purposes of clarity, the parties recognize that Lucent's **************
Technology shall not include any source code programs, read-only memory (ROM)
code, embedded protocols (interface specifications), or application specific
integrated circuit (ASIC) design information or schematics.
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ATTACHMENT 2
Lucent ********************** Technology
Lucent's ********************* Technology means the following ****************
information owned by Lucent for Lucent's *************************************
**********:
Parts list (including part numbers and supplier lists)
Schematic diagrams
Board layout documentation
Interface specifications
For purposes of clarity, the parties recognize that Lucent's
************************ Technology shall not include any source code programs,
read-only memory (ROM) code, or application specific integrated circuit (ASIC)
design information or schematics.
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ATTACHMENT 3
List of Approved Suppliers to Lucent
********************
********************
********************
********************
********************
********************
********************
********************
********************
********************
********************
********************
********************
********************
********************
********************
********************
********************
********************
********************
EXHIBIT 10.10
February 4, 1998
BroadBand Technologies, Inc.
4024 Stirrup Creek Drive
Durham, North Carolina 27709-3737
Attention: David E. Orr, Chief Executive Officer
Re: Element Manager Software
Dear David:
This will summarize our agreement respecting the potential use by BroadBand
Technologies, Inc. ("BBT") of Lucent Technologies' AnyMedia (TM) FAST Element
Manager Software platform ("EM Platform Software") as a basis for BBT's planned
development of application software for use with BBT's Digital Loop Carrier
("DLC") product ("EM Application Software").
Background
In connection with the development and marketing of its DLC product, BBT
plans to develop EM Application Software. The EM Application Software will
require an element manager software platform of a type which is currently
available for license in the marketplace. Based on our discussions to date,
however, BBT is interested in the possibility of using the EM Platform Software
for that platform should it be: (1) compatible with BBT's planned architecture,
required features and required software development tool environment; (2)
attractively priced with acceptable commercial terms and conditions; and (3)
available in an acceptable time frame.
Lucent Architecture Decision
As you know, the EM Platform Software is in the preliminary design stage at
this time and Lucent has not yet made some of the fundamental software
architecture decisions respecting the EM Platform Software which are an
understandable prerequisite to BBT's platform decision. Lucent will use
reasonable efforts to design this architecture in a manner which will
accommodate BBT's design criteria, as Lucent understands those criteria.
However, such a path may not be economically feasible and Lucent reserves the
right to advise BBT that it will not accommodate BBT's wishes. Lucent will
advise BBT in writing of that decision ("the Lucent Decision") as soon as
practicable but in no event more than sixty (60) days from the date of this
letter. Should Lucent decide not to attempt to accommodate BBT's criteria,
Lucent shall have no further obligations of any kind to BBT respecting the EM
Platform Software or the EM Application Software, except for the obligation to
pay BBT $2,000,000 as set forth below.
BBT Decision
<PAGE>
2
Should the Lucent Decision be to design the EM Platform Software to
accommodate BBT's criteria, Lucent will provide BBT with information regarding:
(1) the details and direction of the EM Platform Software architecture and
intended development; (2) an anticipated availability date for the EM Platform
Software; and (3) a maximum royalty fee it would charge BBT for each copy of the
EM Platform Software sublicensed by BBT to a BBT customer in connection with the
EM Application Software. Lucent will provide this information to BBT as soon as
practicable but in no event more than ninety (90) days from the date of this
letter. BBT will decide within thirty (30) days from its receipt of the above
information whether or not to use the EM Platform Software as the basis for its
EM Application Software development and will advise Lucent in writing of that
decision. Should BBT decision be to use the EM Platform Software solution, BBT
and Lucent shall promptly negotiate a License Agreement which will establish
BBT's rights with respect to the EM Platform Software. It is Lucent's
understanding that, should BBT choose the EM Platform Software solution, BBT
intends to develop the EM Application Software in parallel with Lucent's
development of the EM Platform Software; BBT understands the risks inherent in
relying on a software product prior to the existence of final specifications.
Payment to BBT
Within thirty (30) days of BBT's decision for or against using the EM
Platform Software or of a Lucent Decision not to accommodate BBT's design
criteria, whichever occurs first, Lucent will remit to BBT the sum of two
million dollars ($2,000,000) for BBT's use in connection with element manager
software.
Use of Information
During the time period prior to the Lucent Decision or the BBT Decision, it
will be necessary for BBT and Lucent or one or more of Lucent's subsidiaries to
share with one another information of a proprietary nature. The parties agree to
safeguard each other's information in accordance with the following:
All Information ("Information" means proprietary specifications, designs,
plans, drawings, software, data, prototypes or other business and /or technical
information) provided by either Party to the other shall be held in confidence
by the receiving Party, shall be used only in connection with the subject of
this letter agreement, shall be reproduced only to the extent necessary for that
purpose; and shall not be disclosed by the receiving Party without the prior
written approval of the disclosing Party. The receiving Party may, however,
disclose the Information to its employees, consultants and contractors with a
need to know; provided, that the receiving Party binds those employees,
consultants and contractors to terms at least as restrictive as those stated
herein, advises those employees, consultants and contractors of their
confidentiality obligations, and indemnifies the disclosing Party for any breach
of those obligations. Information shall be subject to the restrictions in this
section if it is in writing or other tangible form, only if clearly marked as
proprietary when disclosed to the receiving Party; or, if not in tangible form,
is of a nature that a reasonable person would conclude is confidential
Information, and the Information is reduced to writing clearly marked as
<PAGE>
3
proprietary, with a copy of the writing being furnished to the receiving Party
within thirty (30) days of the disclosure of the intangible information, and
with the writing containing a notice that the information was previously
provided in intangible form. These restrictions on the use or disclosure of
Information shall not apply to any Information: (i) which is independently
developed by or for the receiving Party; (ii) which is lawfully received free of
restriction from another source; (iii) after it has become generally available
to the public without breach of this Agreement by the receiving party; (iv)
which at the time of disclosure to the receiving Party was known to that Party
free of restriction as evidenced by documentation in that Party's possession;
(v) which the disclosing Party agrees in writing is free of such restrictions;
or (vi) which the receiving Party is required to disclose under applicable laws,
rules and regulations, provided that the receiving Party shall first notify the
disclosing Party of such required disclosure and afford the disclosing party the
opportunity to seek a protective order relating to such disclosure. All
Information shall remain the property of the disclosing Party and shall be
returned upon written request or upon the receiving Party's determination that
it no longer has a need for such Information. The receiving Party may retain one
copy of all written materials returned to provide an archive record of the
disclosure.
Please indicate your agreement with the above by signing a copy of this
letter in the space indicated below.
Sincerely yours,
LUCENT TECHNOLOGIES INC.
By ___________________________
Janet G. Davidson
AGREED AND ACCEPTED:
BROADBAND TECHNOLOGIES, INC.
By: _____________________________
David E. Orr
Its Chief Executive Officer
