EXHIBIT 10.1
 
***Text Omitted and Filed Separately
with the Securities and Exchange Commission.
Confidential Treatment Requested
Under 17 C.F.R. Sections 200.80(b)(4)
and 240.24b-2
MANUFACTURING AGREEMENT
     THIS MANUFACTURING AGREEMENT (the “Agreement”) is entered into by and
between Dot Hill Systems Corporation, a Delaware corporation, with its principal
place of business located at 2200 Faraday Avenue, Suite 100, Carlsbad,
California, 92008 (“Dot Hill”), MiTAC International Corporation, an entity
organized under the laws of the Republic of China, with its principal place of
business located at No. 200, Wen Hwa 2nd Road, Kwei Shan Hsiang, Taoyuan,
Taiwan, Republic of China (hereinafter referred to as “Mitac”) and SYNNEX
Corporation, an entity organized under the laws of Delaware, with its principal
place of business located 44201 Nobel Drive, Fremont, California 94538
(hereinafter referred to as “Synnex”). For purpose of interpretation of this
Agreement, and in accordance with an interpretation provided in a manner set
forth in Section 12.21 below, Mitac and Synnex may collectively or separately be
referred to as Supplier, as the case may be.
RECITALS
     WHEREAS, this Agreement governs Dot Hill’s purchase of parts, materials,
components and/or finished products from Supplier.
     WHEREAS, the general terms and conditions comprising the body of this
Agreement shall set forth the provisions which apply to all purchases of parts,
materials, components and/or finished products by Dot Hill from Supplier; and
     WHEREAS, a separate Award Letter will be executed by the parties for
particular parts, materials, components and/or finished products and set forth
any additional provisions that apply thereto, such as, without limitation,
prices, order quantities and lead times, together with any changes or other
revisions to any of the general terms and conditions that they apply to such
particular parts, materials, components and/or finished products.
     NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged by each of the parties, the parties
hereby agree as follows:
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AGREEMENT COMPONENTS
     The parties agree to be bound by this Agreement, which consists of this
signature page, the general terms and conditions and the following exhibits,
together with any Product Supplement/Award Letter that is executed by the
parties:

  þ   Exhibit A (Electronic Data Interchange)     þ   Exhibit B (Customer
Support)     þ   Exhibit B-1 (Supplier’s Repair Facilities)     þ   Exhibit B-2
(NTF Charges)     þ   Exhibit B-3 (Out of Warranty Repair)     þ   Exhibit C
(Supplier’s Quality Program)     þ   Exhibit C-1 (Customer Support Quality
Requirements)

     IN WITNESS WHEREOF, the parties have caused this Agreement to be signed by
and through their duly authorized representatives to become effective on the
last signature date (the “Effective Date”) set forth below.

                  Dot Hill Systems Corporation   MiTAC International Corporation
 
 
               
By:
  /s/ Dana W. Kammersgard   By:   /s/ Riley J. Ho    
 
               
Name:
  Dana W. Kammersgard   Name:   Riley J. Ho    
 
               
Title:
  CEO   Title:   President    
 
               
Date:
  2/20/07   Date:   1.19.2007    
 
               
 
                        SYNNEX Corporation    
 
               
 
      By:   /s/ Simon Y. Leung    
 
          Simon Y. Leung    
 
      Name:   Simon Y. Leung    
 
               
 
      Title:   General Counsel & Corporate Secretary    
 
               
 
      Date:   Jan. 23, 2007    
 
               

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GENERAL TERMS AND CONDITIONS
1. DEFINITIONS. Solely for purposes of this Agreement, the following terms and
their grammatical variations shall have the meanings set forth hereinafter:
     1.1 “Affiliate” means an entity that is controlled by a party hereto, where
“control” means the direct or indirect beneficial ownership of more than fifty
percent (50%) of the outstanding voting interests of such entity by a party
hereto, but only for so long as such entity continues to meet this requirement.
     1.2 “Award Letter” means a document executed by Dot Hill and Supplier that
sets out the particular commitments of the parties with respect to prices and
other terms relative to the purchase of specific Products pursuant to the terms
and conditions of this Agreement. The execution of an Award Letter shall not
constitute or imply any commitment to purchase any particular quantity of
Products.
     1.3 “Components” means those components purchased by Supplier for use in
Products that are to be provided to Dot Hill within the Material Leadtimes
initially set forth in an attachment to an Award Letter and updated quarterly,
and purchased only in accordance with Dot Hill’s Approved Vendor Listing
(“AVL”), as may be modified at any time and from time to time by Dot Hill.
     1.4 “Confidential Information” means information of a party, which
information is conspicuously marked with “Confidential” or “Proprietary” or
other similar legend. If Confidential Information is orally disclosed it shall
be identified as such at the time of disclosure and a brief written
non-confidential description of the information and confirmation of the
confidential nature of the information shall be sent to the recipient within
thirty (30) days after the disclosure. Quantities and schedules shall be
considered Confidential Information of Dot Hill hereunder regardless of whether
disclosed orally or in writing, or whether or not marked “Confidential” or
“Proprietary.” Pricing of Products to Dot Hill shall be considered Confidential
Information of Dot Hill regardless of whether disclosed orally or in writing, or
whether or not marked “Confidential” or “Proprietary” and shall not be disclosed
to any third party by Supplier. Confidential Information does not include
information that: (a) was in the possession of, or was known by, the receiving
party prior to its receipt from the disclosing party, without an obligation to
maintain its confidentiality; (b) is or becomes generally known to the public
without violation of this Agreement; (c) is obtained by the receiving party from
a third party, without an obligation to keep such information confidential; or
(d) is independently developed by the receiving party without access to and use
of Confidential Information.
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     1.5 “Demand Replenishment Program” means the program agreed to by the
parties which provides for Supplier-owned Product located at Supplier’s
facilities or Supplier-designated third party hub locations to be delivered to
Dot Hill designated location(s) within the timeframe(s) such Product is required
by Dot Hill and which shall be provided to Supplier by means of a Demand
Trigger.
     1.6 “Demand Trigger” means the mechanism, whether written or by electronic
means, by which Dot Hill communicates to Supplier the required delivery
timeframes, quantities, delivery locations, and delivery timeframes under one or
more Dot Hill purchase orders. If Products are subject to Demand Trigger, the
frequency of releases will be specified in an Award Letter.
     1.7 “Dot Hill Contractor” means a third party supplier to Dot Hill, or a
limited number of third party suppliers to Dot Hill, which are authorized by Dot
Hill in writing to purchase Products from Supplier.
     1.8 “Dot Hill Background Intellectual Property” means the following items
which have been authored, conceived, created or developed on or before the
Effective Date by or for Dot Hill: (i) all information, inventions, technology,
technical documentation, designs (including circuit designs and the Dot Hill
product specifications), materials and know-how; (ii) all patents, patent
applications, copyrights and other intellectual property rights pertaining to
the foregoing, but excluding any trademarks, trade names, service marks and/or
service names of Dot Hill.
     1.9 “Dot Hill-unique Components” means those Components which Supplier has
purchased and is unable to mitigate under the provisions of this Agreement.
     1.10 “Economic Order Quantity” or “EOQ” means a quantity of Dot Hill-unique
Components or Dot Hill-unique raw materials ordered by Supplier and used in the
manufacture of the Products, pursuant to a written document with Dot Hill, as
amended from time to time by the parties, that will allow Supplier to take
advantage of cost savings and which quantity exceeds the normal quantity
required to build Products for Dot Hill pursuant to Dot Hill’s proposed delivery
schedules.
     1.11 “Effective Date” means the date of last signature by Supplier and Dot
Hill on the Manufacturing Agreement for which these General Terms and Conditions
apply.
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     1.12 “Improvements” shall mean all upgrades, enhancements and improvements
to one or more Product(s) which are derived from or based upon Dot Hill
Background Intellectual Property or Supplier Background Intellectual Property,
and authored, conceived, created or developed therefrom during the term of this
Agreement. The term “Improvements” shall, however, not include any Work Product,
Dot Hill Background Intellectual Property and Supplier Background Intellectual
Property.
     1.13 “Jointly Developed Intellectual Property” shall mean any intellectual
property rights that are developed, conceived or reduced to practice by one or
more employees of Dot Hill with one or more employees of Supplier as a result of
a material contribution by one or more employees of both Dot Hill and Supplier
in connection with the performance of the development activities under this
Agreement.
     1.14 “Long Lead Time Components” or “LLTC” means those Components used in
the manufacture of the Products, whose lead times are longer than the Purchase
Order lead time specified in the applicable Award Letter. If said Purchase Order
lead time is not specified in the applicable Award Letter, Long Lead Time
Components shall mean those Components whose lead times are longer than
[...***...].
     1.15 “Material Leadtime” means the number of days from placement of an
order for raw materials to be used in a Product to the time of delivery of such
raw materials to Supplier.
     1.16 “Notice” means giving of notice in the manner described in
Section 12.2.
     1.17 “NRE” means non-recurring engineering charges.
     1.18 “Pre-Production and/or Prototype” shall mean Product which is
manufactured prior to the beginning of production manufacturing and which may or
may not be fully qualified and tested, as directed by Dot Hill. A Pre-Production
and/or Prototype version of a Product includes a preliminary, unqualified
version of a Product under development by Dot Hill that is not intended for
resale.
     1.19 “Product” means a part, materials, component or finished good
specifically described in one or more applicable Award Letters.
     1.20 “Product Leadtime” means the number of hours or days from placement of
a Purchase Order or Demand Trigger to the timeframe of delivery to the specified
delivery location.
*** Confidential Treatment Requested
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     1.21 “Specifications” means the applicable product specifications/assembly
drawings for the Products provided by Dot Hill to Supplier, as amended from time
to time by Dot Hill in accordance with this Agreement, initially set out in the
Award Letter.
     1.22 “Statement of Work” means a document that has been executed by the
authorized representatives of Supplier and Dot Hill and which summarizes the
scope of design or development services that are to be provided by Supplier to
Dot Hill, any deliverables arising out of such services which are to be provided
by Supplier to Dot Hill, dates and timeframes within which such services are to
be rendered and any deliverables provided by Supplier to Dot Hill, amounts that
are to be paid by Dot Hill to Supplier for such services and when such payments
shall be due, and other supplementary or additional terms and conditions
applicable to such services.
     1.23 “Sub-tier Supplier” means a third party who provides parts, materials
and/or components related to Products directly to Supplier.
     1.24 “Supplier Guidelines” means Dot Hill’s document confirmed by Supplier
which includes, without limitation, the areas of quality, qualification,
compliance, connectivity, cost, supply and performance and may include
auto-swap, co-planning, demand replenishment certification, direct ship,
resident Supplier program, supplier performance management and other
initiatives.
     1.25 “Supplier Background Intellectual Property” means the following items
which have been authored, conceived, created or developed on or before the
Effective Date by or for Supplier: (i) all information, inventions, technology,
technical documentation, designs, materials and know-how; (ii) all patents,
patent applications, copyrights and other intellectual property rights
pertaining to the foregoing, but excluding any trademarks, trade names, service
marks and/or service names of Supplier.
     1.26 “Supplier Part” means a part, material or component that is:
(a) manufactured by Supplier or any of its Affiliates for Dot Hill or a third
party; and (b) incorporated by Supplier or any of its Affiliates into the
Products.
     1.27 “Upside Support” means the percentage increase in the quantity of
Products that Dot Hill may purchase and Supplier shall sell, manufacture and
ship to Dot Hill, without incurring additional charges, in excess of the
quantities in Dot Hill’s outstanding purchase orders or forecasts, as the case
may be.
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     1.28 “Work Product” means all (i) Product designs, inventions or
improvements and any and all discoveries, products, computer programs (including
source code and firmware), tooling, procedures, improvements, developments,
drawings, works of authorship, specifications, data, memoranda, notes,
documents, manuals, information and other items identified in a Statement of
Work that are made, authored, conceived or developed for Dot Hill, alone by
Supplier or jointly by Supplier with others, for the Products during the term of
this Agreement, to the extent that Supplier has the right to transfer to Dot
Hill ownership rights in such items, and (ii) intellectual property (excluding
Supplier Background Intellectual Property) therefor, to the extent that Supplier
has the right to transfer to Dot Hill ownership rights in such intellectual
property. Both parties shall execute a Statement of Work for respective projects
and finalize/amend the respective definition of Work Product in such Statement
of Work for such respective projects.
2. SCOPE OF AGREEMENT
     2.1 Master Agreement Structure. These general terms and conditions cover
the potential purchase by Dot Hill of various Products from Supplier, but do not
by themselves constitute a purchase commitment by Dot Hill or a supply
commitment by Supplier. Dot Hill will be committed to purchase Products only if
and when both parties have entered into an Award Letter covering such Products
and a purchase order has been issued by Dot Hill to acquire Products set forth
in such Award Letter. Notwithstanding the foregoing, Dot Hill acknowledges its
responsibility for liability associated with the procurement by Supplier of
long-lead time and/or unique Components necessary to support the manufacture of
Products by Supplier, as such liability is further described in this Agreement.
Such Components will be detailed in an Award Letter for each of the Products,
together with their Material Leadtimes and their Dot Hill-approved vendor list.
Any issued and accepted purchase orders shall be subject to all the terms and
conditions of the signature page, these general terms and conditions and
exhibits described in the signature page, the applicable Award Letter for
ordered Products and the attachments listed on that Award Letter.
     2.2 Design and Development Work. In the event that Dot Hill desires for
Supplier to perform any design and development work, the parties will confer on
the scope of design or development services that are to be provided by Supplier
to Dot Hill, any deliverables arising out of such services which are to be
provided by Supplier to Dot Hill, dates and timeframes within which such
services are to be rendered and any deliverables provided by Supplier to Dot
Hill, amounts that are to be paid by Dot Hill to Supplier for such services and
when such payments shall be due, and other
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supplementary or additional terms and conditions applicable to such services. If
the parties reach agreement on these items, they will document them in a
Statement of Work that will be executed by the authorized representatives of the
parties. Upon such execution, the Statement of Work shall become a part of this
Agreement.
2.3 Applicable Parties
          2.3.1 This Agreement applies with respect to all current and future
locations and operations of Supplier, wherever those may be located, and which
are listed in an addendum to this Agreement. This Agreement shall not apply to
any Affiliates of Supplier unless Supplier guarantees in writing their
performance under this Agreement in a separate document prepared by Dot Hill.
          2.3.2 Subject to Dot Hill’s provision to Supplier of a guarantee of
performance of the responsibilities of an applicable Affiliate of Dot Hill under
this Manufacturing Agreement, such Dot Hill Affiliate may issue a written
confirmation letter to Supplier stating its willingness to be bound by this
Agreement, and issue purchase orders for the purchase of and also purchase
Products and services pursuant to this Agreement, which in such event the rights
and obligations set forth in this Agreement with respect to such purchase shall
be between the Affiliate of Dot Hill that has purchased such Products and
services and either Supplier or the Affiliate of Supplier that has provided such
Products and services.
          2.3.3 Upon written request of Dot Hill, Supplier also agrees to sell
Products to Dot Hill Contractors provided, however, that such Dot Hill
Contractors shall issue written confirmation letters to Supplier stating its
willingness to be bound by this Agreement, and have credit that is reasonably
acceptable to Supplier, which credit approval shall not be unreasonably
withheld, delayed or conditioned. Supplier shall use commercially reasonable
efforts to enter into an agreement with Dot Hill Contractor(s) that extends the
same or substantially similar terms and conditions to Dot Hill Contractors as
set forth herein and the corresponding sections of any Award Letter(s) with
respect to pricing, Product Leadtimes, on-time delivery, allocation, Upside
Support, shipping point, rescheduling, cancellation, forecasting, warranties,
indemnity, acceptance and Product quality, but which agreement will include,
without limitation, that Dot Hill Contractor(s) shall [...***...]. Supplier
shall extend to such Dot Hill Contractor(s) payment terms that are customary and
reasonable. Any such agreement shall be subject to approval by Supplier of
reasonable credit limits. All purchases made by Dot Hill Contractors shall be
added to Dot Hill’s cumulative volume of Products purchased for the purpose of
determining any applicable volume
*** Confidential Treatment Requested
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discounts. Dot Hill shall be liable to pay only for Products ordered by and
invoiced directly to Dot Hill and shall not be liable to pay for any Products
ordered by Dot Hill Contractors.
     2.4 Tooling. Dot Hill shall [...***...]. Additional terms and conditions
related to such tooling will be set forth in a separate Tooling Agreement that
is to be executed by the parties.
3. ENGAGEMENT PROCESS
     3.1 Award Letters. Supplier will provide manufacturing services and
Products to Dot Hill under the terms and conditions of this Agreement and the
applicable Award Letter. From time to time Dot Hill may issue a request for
quotation, request for proposal or otherwise initiate discussions regarding a
potential Product. Supplier agrees to respond to such requests and engage in any
follow-up discussions reasonably requested by Dot Hill. Unless otherwise agreed
in writing, [...***...]. In the event that Dot Hill, at its sole discretion,
believes that it may, at some time in the future, desire to purchase such a
Product from Supplier, Dot Hill will issue and deliver to Supplier for execution
a separate Award Letter incorporating the terms and conditions governing any
such purchase. Supplier shall review the Award Letter and, if it is acceptable,
execute it.
     3.2 Purchase Orders. If Dot Hill elects to purchase Products from Supplier,
Dot Hill shall issue and deliver purchase orders for such Products to Supplier.
Supplier shall accept Dot Hill’s purchase orders to the extent that such
purchase orders are consistent with Dot Hill’s then-current forecast that has
been accepted by Supplier in accordance with the provisions of Section 3.6
below. The parties agree that purchase orders may be issued and shall be deemed
received in the manner provided in Exhibit A.
     3.3 Pricing. All prices in each Award Letter and purchase orders shall be
in U.S. Dollars and determined in accordance with the following provisions:
          3.3.1 Product Pricing and Elements. The initial pricing for the
Products shall be set forth in the Award Letter. The itemized pricing elements
of Products (including [...***...]) and estimates for the following
*** Confidential Treatment Requested
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six (6) quarters shall be provided by Supplier to Dot Hill on the Effective
Date, and updated by Supplier and provided to Dot Hill on a quarterly basis, or
more frequently if reasonably requested in writing by Dot Hill. Notwithstanding
anything to the contrary, Supplier shall not [...***...] provided to Dot Hill
under this Agreement for [...***...] after its first customer shipment date by
Dot Hill provided that (i) there are no significant changes in the actual
volumes purchased by Dot Hill from Supplier as compared to the volumes for which
prices had been previously quoted to Dot Hill by Supplier, or (ii) the
[...***...], which in such event, through mutual discussions and understanding,
both parties will find the way to solve this issue; for example, [...***...]
Also, Supplier shall, upon mutual agreement, [...***...] in its sales of
Products to Dot Hill’s third party customers.
          3.3.2 Non-approved Charges. Dot Hill shall not be liable to Supplier
for any overtime charges, freight charges or component product price variances
incurred by Supplier, or its employees, agents, subcontractors or Sub-tier
Suppliers, due to component purges and stop-shipments if the cause of the
component purge or stop-shipment is attributable to Supplier and/or its
employees, agents, subcontractors and/or Sub-tier Suppliers. The provision in
the immediately preceding sentence shall not apply to any circumstance beyond
the reasonable control of Supplier and/or its employees, agents, subcontractors
and/or Sub-tier Suppliers. If the component purge or stop-shipment is the result
of a Dot Hill design change or otherwise due to Supplier’s conformance with Dot
Hill’s requirements, then Dot Hill will bear the replacement costs of scrapped
or unusable components and materials and will reimburse Supplier for all other
costs incurred. Supplier will use all commercially reasonable efforts to provide
an estimate of costs to be incurred due to a component purge or stop-shipment to
Dot Hill prior to the purge or stop-shipment. Each party will use commercially
reasonable efforts to work together with each other to minimize costs which may
be incurred due to any component purges and stop-shipments.
          3.3.3 Cost Reductions. Supplier will work actively and aggressively to
achieve cost reductions on all materials, labor, overhead and processes
(including, without limitation, costs associated with assembly and test)
associated with Products. Supplier will provide on an ongoing basis, but no less
than on a quarterly basis, to Dot Hill an anticipated six (6)-quarter cost
reduction profile and a value chain analysis for each of the Products. This
analysis shall include the existing and anticipated bill of materials during the
upcoming six (6) quarters for each of the Products, together with
*** Confidential Treatment Requested
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all other costs, such as labor and overhead, which are associated with the
manufacture, delivery, service and support thereof. Supplier will suggest to Dot
Hill changes to materials/processes, however small, if Supplier believes they
will result in improved performance, reliability or yield of Products. Supplier
will pass through (i) [...***...] of the benefits of all cost reductions
achieved to the Products during the first six (6) months after their
implementation and (ii) [...***...] at all times thereafter. Notwithstanding
anything to the contrary in this Agreement, all cost reductions which are either
(a) achieved through the efforts of Dot Hill or any of its customers or
(b) received by Supplier based on pricing that is established by Dot Hill or any
of its customers with third party suppliers of any materials, parts, labor,
services or components (including, without limitation, drives, controllers
and/or power suppliers), shall be passed through [...***...] by Supplier to Dot
Hill for those units of Products for which such cost reductions have been
implemented.
          3.3.4 [...***...] Prices. Supplier represents and warrants that the
[...***...]. Notwithstanding the foregoing, the parties agree that differences
in [...***...] by Supplier to Dot Hill pursuant to this Section 3.3.4.
          3.3.5 Documentation and Other Information. Promptly upon request by
Dot Hill, Supplier will provide to Dot Hill a full-costed bill of materials,
including, without limitation, complete regarding overhead, assembly, test,
profit and non-recurring engineering costs, for each Product (“BOM”). This BOM
will include all [...***...]. Upon request from Dot Hill, and to the extent not
prevented by any confidentiality obligations that Supplier has to any third
party, Supplier will provide to Dot Hill: [...***...]. To the extent not
prevented by any confidentiality obligations that Supplier has to any third
party, Supplier will disclose all
*** Confidential Treatment Requested
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[...***...].
          3.3.6 Dot Hill Changes. Dot Hill may [...***...]. If Dot Hill desires
to make any such change, it will be documented in and provided to Supplier
through Dot Hill’s Agile system. This notification shall include documentation
to effectively support an investigation of the impact of the engineering change.
Supplier will review the engineering change and provide initial evaluation to
Dot Hill within [...***...]. Such changes may include changes to applicable
drawings, designs or specifications; required method of shipment or packing; or
place of delivery. If the change causes an increase or decrease in the cost or
the time required by Supplier for performance of any purchase order issued under
an Award Letter and Supplier so notifies Dot Hill in writing within [...***...]
of Supplier’s receipt of the change order notice, then, if Dot Hill still wishes
such change to be made, the parties shall negotiate a reasonable adjustment to
the price or delivery schedule or both. Any such change must be (i) agreed upon
in writing by an authorized representative(s) of Dot Hill and (ii) documented in
Dot Hill’s Agile system. Promptly after execution of this Agreement, Dot Hill
will notify Supplier in writing of the names of such authorized
representative(s), which names may be changed by Dot Hill at any time and from
time to time upon written notice to Supplier that is provided in accordance with
the provisions of Section 12.2 of this Agreement. In the event Dot Hill requests
through its Agile system that a change be implemented by Supplier prior to
Supplier’s evaluation of pricing and schedule impact, Supplier will undertake
commercially reasonable efforts to perform as directed and Dot Hill will be
liable for all actual costs associated with such implementation, including
excess and obsolete components, unless the change was required due to Supplier’s
failure to manufacture Product according to Specifications. Dot Hill shall not
be responsible for any changes made to Products that are not documented and
approved through the use of Dot Hill’s Agile system.
          3.3.7 Packaging. All prices must include packaging in accordance with
Dot Hill’s packaging specifications provided to Supplier. Dot Hill encourages
the use of reusable packaging to reduce waste and therefore cost to the Product.
          3.3.8 Labeling. All pricing will includes the costs of labeling to be
implemented in accordance with Dot Hill’s labeling specifications (system level
labels, FRU labels, packaging labels, customer information sheets, etc.)
provided to Supplier.
*** Confidential Treatment Requested
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          3.3.9 Taxes, Duties and Tariffs. [...***...], this Agreement or any
purchase order issued thereunder. The term “Delivery Point” shall mean the
location to which Products are transported to Dot Hill (or location otherwise
agreed by both parties) by Supplier or a common carrier. The Delivery Point and
related logistics for delivery of Products to Dot Hill shall be set forth in an
attachment to an Award Letter that applies to such Products.
          3.3.10 NRE Charges. [...***...] for non-recurring engineering costs
and expenses [...***...]. If not otherwise agreed in writing by an authorized
representative of [...***...].
     3.4 Payment Terms; Extension of Credit; Payment Disputes
          3.4.1 Payment Terms. All payments will be made in U.S. dollars (unless
otherwise specified in the Award Letter) and be due within [...***...] after the
date of invoice (“Payment Due Date”). For this purpose, the date of invoice
shall not be earlier than the date of delivery of Products to Dot Hill (unless
Dot Hill agrees in writing otherwise).
          3.4.2 Extension of Credit. Provided that there is no material adverse
change in Dot Hill’s ability to make payments due to Supplier under this
Agreement, Supplier shall extend, without charge to Dot Hill and throughout the
term of this Agreement, credit to Dot Hill to the extent reasonably necessary
for Dot Hill to purchase Products and services under this Agreement and to
fulfill orders for Products and services from Dot Hill’s customers.
          3.4.3 Payment Disputes. Dot Hill shall not be required to pay the
disputed portion of any invoice which arises out of or results from an invoice
discrepancy or a breach of the RMA process provisions with respect to the
Products or services to be provided by Supplier to Dot Hill under this
Agreement, pending resolution of such invoice discrepancy or breach; provided,
however that notice of the invoice discrepancy or breach has been forwarded to
Supplier prior to the Payment Due Date. Payment of an invoice does not
constitute acceptance of Products or services. Upon prior written agreement by
Supplier, which will not be unreasonably withheld, delayed or conditioned,
invoices will be subject to adjustment for errors, shortages and/or rejected
Products.
*** Confidential Treatment Requested
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          3.4.4 Return for Credit. Supplier will provide Dot Hill with a credit
memo within [...***...] after Dot Hill’s return of Products that have been
returned for re-certification and inclusion in new or equivalent-to-new finished
goods inventory. Those Products returned for credit at the current purchase
price will be subject to a reasonable mutually agreed service fee in those
circumstances where such Products need to be repackaged and reworked by Supplier
to a different sku, due to no fault of Supplier.
          3.4.5 Invoices. Information on Supplier’s invoices shall include,
without limitation, the following: purchase order number, Dot Hill Product or
part numbers, quantities, unit value and freight charges (if applicable), each
stated separately. Invoices will be addressed to Dot Hill’s Accounts Payable
Department at 2200 Faraday Avenue, Suite 100, Carlsbad, California 92008, or at
such other address as Dot Hill may designate to Supplier. For U.S. imports, the
information on Supplier’s invoice shall conform to the requirements in the U.S.
Code of Federal Regulations.
     3.5 Delivery and Logistics
          3.5.1 Delivery Point. Supplier will deliver Products to the Delivery
Point (as defined in Section 3.3.9 above).
          3.5.2 Risk of Loss or Damage. Supplier shall be responsible for any
loss or damage to Products due to Supplier’s failure to preserve, package or
handle Products in accordance with Dot Hill’s specifications. Notwithstanding
any prior inspection, Supplier will bear all risk of loss, damage or destruction
to Products [...***...].
          3.5.3 Transportation for Late Deliveries. If it should reasonably be
expected that a shipment of Products will not be delivered on an agreed delivery
date, Supplier shall notify Dot Hill of such delay. Upon Dot Hill’s request,
Supplier shall, [...***...] use commercially reasonable means of transportation
to deliver Products at the earliest possible date to a Dot Hill-designated
delivery location. The provision in the immediately preceding sentence shall not
apply to any circumstance beyond the reasonable control of Supplier and/or its
employees, agents, subcontractors and/or Sub-tier Suppliers.
          3.5.4 Delivery Performance
          
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               3.5.4.1.1 Supplier shall ensure that units of Products in
Purchase Orders are available for delivery to Dot Hill upon the issuance by Dot
Hill of Demand Triggers in accordance with the provisions of the applicable
Award Letter and any Attachments thereto. Supplier shall also ensure that units
of Products maintained for Upside Support are available for delivery to Dot Hill
in accordance with the provisions of the applicable Award Letter and any
Attachments thereto.
               3.5.4.1.2 If Supplier anticipates that it will be unable to
deliver the total quantity of Products ordered on the scheduled delivery date,
Supplier shall notify Dot Hill promptly. Dot Hill may, at its sole option,
accept partial delivery of the total quantity of Products ordered. If Dot Hill
chooses to accept partial delivery, Dot Hill may, at its sole option and
discretion (i) reschedule the delivery of other units not included in Supplier’s
delivery or (ii) if such partial delivery is due to fault of Supplier and Dot
Hill loses customer orders as a result of such delay, cancel the affected
portion of the order without any further obligation to Supplier. Subsection
(ii) in the immediately preceding sentence shall not apply to any circumstance
beyond the reasonable control of Supplier. Any partial deliveries shall be
separately invoiced by Supplier.
               3.5.4.1.3 In the event that Supplier fails to meet Dot Hill’s
delivery requirements contained in any Purchase Orders or fails to deliver
committed Upside Support that Supplier is obligated to maintain for Dot Hill
under the applicable Award Letter due to causes attributable to any acts or
omissions by Supplier, its employees or any of its direct or indirect
subcontractors or suppliers, then Supplier agrees to take measures, [...***...].
     3.6 Forecasts. Dot Hill shall provide Supplier with a four (4)-quarter,
monthly rolling forecast of its intended purchases under each Award Letter in
the form of a Dot Hill supply plan, updated at least monthly and subsequent
updates as needed. Each such forecast shall be reviewed by Supplier and, if
acceptable, accepted in writing by Supplier no later than [...***...] after its
receipt. Such forecast is for Supplier’s convenience only and will in no way
create an obligation on Dot Hill’s part to acquire any Products.
          3.6.1 On a monthly basis, Dot Hill will provide a forecast so as to
maintain a minimum of four (4) quarter, monthly rolling forecast of its
projected orders
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for Products. Such forecasts are made as an accommodation for planning purposes
and authorization for Supplier’s purchase of long lead materials as identified
in the costed BOMs which accompany Supplier’s price quotation. Dot Hill’s
liability for such Components and other non-cancelable and non-returnable
materials is as stated in the Award Letter.
          3.6.2 Purchase Orders and Releases. Dot Hill shall issue purchase
orders to Supplier for Products that are to be released for shipment. Supplier
shall also build Products to finished goods pursuant to specified quantities or
otherwise based on individual purchase orders. Dot Hill shall use commercially
reasonable efforts to issue purchase orders on a daily basis to Supplier for
individual orders of Products which are to be shipped within agreed leadtimes
for such Products. Dot Hill may transmit purchase orders and releases in writing
by facsimile or other means of electronic transfer agreed to by the parties.
     3.7 Certain Manufacturing Obligations. In accordance with the applicable
Award Letter and purchase order, Supplier shall do the following:
          3.7.1 Manufacture, assemble, debug and test each Pre-Production
version of Product, pursuant to and in accordance with the Specifications and
applicable schedules;
          3.7.2 Manufacture, assemble, debug, test and deliver Products in
accordance with the Agreement;
          3.7.3 Provide all necessary process design technology, labor,
material, tooling, facilities and other resources for the timely and
satisfactory completion and delivery of the Product and any Pre-Production
version;
          3.7.4 Commit and use sufficient and qualified personnel to support the
requirements of this Agreement;
          3.7.5 Provide sufficient resources for testing the Product to ensure
compliance with the Specifications;
          3.7.6 Provide Dot Hill with reasonably detailed written progress
reports as reasonably requested by Dot Hill and mutually agreed to by Dot Hill
and Supplier;
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          3.7.7 Notify Dot Hill promptly (not to exceed [...***...] after its
awareness) of any factor, occurrence or event coming to its attention that may
materially adversely affect Supplier’s ability to meet any of its obligations
hereunder or that is likely to occasion any material delay in delivery of any of
the deliverables due hereunder. For example, but not by way of limitation, such
notice shall be given in the event of any loss or reassignment of key personnel,
threat of strike, or major material equipment failure;
          3.7.8 Deliver to Dot Hill packaged and tested Pre-Production versions
of each Product in the quantity agreed, tested by Supplier. The goal shall be to
provide Pre-Production versions that conform to all aspects of the finally
agreed upon test requirements; and
          3.7.9 Promptly repair or replace all pre-production Products returned
for rework after notice from Dot Hill. All returned pre-production Products
which are not repaired and delivered to Dot Hill within [...***...] after
Supplier’s receipt (or such other timeframe that may be agreed to in writing by
the parties) must be delivered to Dot Hill as the then most-current version of
such Products. [...***...] unless otherwise agreed to in writing by Dot Hill.
     3.8 Compliance with Supplier Guidelines. Dot Hill shall make the most
current version of the applicable Supplier Guidelines available to Supplier for
Supplier’s confirmation during the term hereof. Supplier acknowledges that from
time to time Dot Hill may issue and revise such Supplier Guidelines and further
provide it to Supplier for Supplier’s confirmation, and Supplier will review
each revision of the Supplier Guidelines provided by Dot Hill within [...***...]
of receipt. If Supplier has reason to believe it may not be able to comply with
the then most current version, Supplier shall immediately notify Dot Hill and
the parties will negotiate in good faith to promptly resolve any reasonable
objections that Supplier raised regarding its compliance with the Supplier
Guidelines.
     3.9 Additional Obligations of Supplier
          3.9.1 Material Procurement and Inventory Management. Supplier will
ensure that the amount of finished goods inventory, work in process, and Dot
Hill-unique raw materials (“Inventory”) is limited to that amount required to
support the agreed upon lead times and Upside, unless otherwise agreed to in
writing by Dot Hill.
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The costs associated with any excess Inventory not purchased by Supplier under
provisions within this Agreement or otherwise authorized in writing by Dot Hill
will be borne by Supplier. Within ninety (90) days after the Effective Date and
a quarterly basis thereafter, Supplier will provide a detailed list by Product
of ABC components included in each Product and a plan to require vendors that
supply components to Supplier for the Products to be part of a vendor managed
inventory program. Supplier will use commercially reasonable efforts to drive
key suppliers into a vendor managed inventory program, and Dot Hill will provide
reasonable cooperation and appropriate involvement in such efforts. In order to
meet Dot Hill forecasted requirements, purchase orders, and the flexibility
requirements agreed upon by the parties, Supplier is authorized to purchase
materials and make commitments to vendors on the Approved Vendor List (“AVL”)
and other Dot Hill approved suppliers using standard purchasing practices
including, but not limited to, acquisition of material recognizing supplier lead
times, ABC order policy, supplier-imposed minimum order quantities (“MOQ”),
minimum build quantities, economic order quantities, component overfill policy,
and agreed to inventory buffers. Supplier may maintain at Dot Hill’s request a
buffer of raw components and/or finished goods, which will be utilized to
support Upside Support flexibility. Buffers may be maintained at Dot Hill’s
request by Supplier or suppliers. Buffer stock levels may be reviewed
periodically.
          3.9.2 Sub-tier Supplier Management. Supplier will manage its Sub-tier
Suppliers in accordance with the guidelines provided in Supplier Guidelines.
          3.9.3 Co-Planning. Supplier agrees to use its commercially reasonable
efforts to participate at an early stage in Dot Hill’s planning cycle, to the
extent that Dot Hill requests such participation in writing. Without limiting
the generality of the foregoing, such participation may include jointly
developing supply plans with Dot Hill and refining forecasts.
          3.9.4 Direct Ship. Supplier agrees to support processes that provide
for shipment of Product from Supplier’s point of manufacture directly to Dot
Hill’s point of consumption, e.g., Dot Hill manufacturing sites, channels,
consolidation points and direct end-users.
          3.9.5 Demand Replenishment Program. Supplier agrees to support and
implement a Demand Replenishment Program for each Product. The terms and
conditions related to each Demand Replenishment Program for a Product shall be
set forth as an Attachment to the applicable Award Letter for such Product.
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          3.9.6 Supplier Performance Management. Supplier agrees to support Dot
Hill’s Supplier Performance Management process which is used to measure
Supplier’s ongoing performance.
          3.9.7 Testing and Qualification Activities. Supplier certifies that it
will perform all system-level qualification and safety agency testing which is
applicable to Products sold to Dot Hill as provided in the Specifications. Dot
Hill may request at any time, and Supplier shall provide, evidence of such
testing within three (3) days after Dot Hill’s written request.
          3.9.8 Recordkeeping. Supplier will implement and maintain
recordkeeping practices consistent with Supplier’s then-current practices. Upon
reasonable notice, Dot Hill shall be allowed to audit Supplier’s manufacturing
process.
          3.9.9 Audit Rights. In addition to any audit rights set forth
elsewhere in this Agreement or in any Award Letter, Dot Hill reserves the right,
for itself and its customers where Dot Hill has contractual requirements from
its customers, to enter Supplier’s premises or other facilities where the
Products are being manufactured, upon reasonable notice and during normal
working hours, to: (i) audit and inspect the quality of the manufacturing and
testing procedures utilized and the resulting Products, (ii) verify that the
Products conform to the requirements of the Specification, (iii) audit and
inspect the use by Supplier of any Confidential Information that Dot Hill
provides to Supplier under the provisions of this Agreement, and (iv) audit
Supplier’s adherence to its obligations under Section 3.3.4 relating to
[...***...] Prices, Section 3.3.1 relating to Product Pricing and Elements,
and/or Section 3.3.5 relating to Documentation and Other Information. In
performing an audit, Dot Hill acknowledges and agrees that Supplier may choose
not to provide confidential information of third parties. Supplier will use
commercially reasonable efforts to close actions raised, together with any
concerns raised with Supplier’s suppliers. Upon request by Dot Hill, Supplier
will also facilitate inquiries by Dot Hill or customers of Dot Hill into the
Supplier’s supply chain.
          3.9.10 Certifications. All shipping containers will list the country
of origin for all Products supplied, and must be in both text and scanned bar
code formats. Upon request, Supplier will also provide promptly to Dot Hill all
reasonably requested information to enable Dot Hill to determine the country of
origin by part number.
          3.9.11 Initiatives. Supplier will negotiate in good faith with Dot
Hill regarding all Dot Hill Breakthrough Supply Chain (“BTSC”) initiatives,
including without limitation, Advanced Material Planning (“AMP”), Product Change
Notification (“PCN”) process and score-carding. If Supplier has reason to
believe it may not be able
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to comply with Dot Hill’s initiatives, Supplier shall immediately notify Dot
Hill and the parties will negotiate in good faith to promptly resolve any
reasonable objections that Supplier raised regarding its compliance with the
initiative.
          3.9.12 Dot Hill-Unique Features. [...***...] without Dot Hill’s
written consent.
          3.9.13 Compliance with Certain Standards
               3.9.13.1 [...***...] Supplier shall develop and make available to
Dot Hill manufacturing processes to produce Products which comply with Directive
2002/95/EC of the European Parliament and of the Council of 27 January 2003 on
the restriction of the use of certain hazardous substances in electrical and
electronic equipment (“RoHS Directive”) to the extent applicable to the
manufacturing process materials selected and used by Supplier in its
manufacturing processes for the Products. Supplier acknowledges and agrees that
compliance to the RoHS Directive to the extent applicable to the manufacturing
process materials selected and used by Supplier in its manufacturing processes
for the Products shall form a part of the Specifications for Products supplied
or to be supplied to Dot Hill.
               3.9.13.2 [...***...] Supplier will also implement processes for
the disposal of Products that are returned by Dot Hill to Supplier for disposal
in connection with Supplier’s warranty, service or epidemic failure
responsibilities, and in accordance with those instructions provided by Dot
Hill. These instructions will comply, where applicable, with Directive
2002/96/EC of the European Parliament and of the Council of 27 January 2003 on
waste electrical and electronic equipment (“WEEE Directive”). Supplier
acknowledges and agrees that compliance to the WEEE Directive shall form a part
of the Specification relative to disposal activities by Supplier in connection
with Supplier’s warranty, service or Epidemic Failure responsibilities for
Products supplied or to be supplied to Dot Hill.
               3.9.13.3 [...***...] Supplier will develop and make available to
Dot Hill manufacturing processes to produce Products which comply with federal
and state laws and regulations in the U.S. and other non-RoHS Directive
countries where the Products are supplied by Supplier to the extent applicable
to the manufacturing process materials selected and used by Supplier in its
manufacturing processes for the Product. Supplier acknowledges and agrees that
compliance to the such laws and regulations shall form a part of the
Specification relative to manufacturing processes used by Supplier to produce
Products supplied or to be supplied to Dot Hill.
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               3.9.13.4 [...***...] Supplier shall develop and implement
manufacturing processes to produce Products that comply with any new
environmental standards prior to the mandatory compliance date of such standards
and a mutually agreed implementation plan for any such new environmental
standards. Supplier acknowledges and agrees that compliance to any mutually
agreed implementation plan for any such new environmental standards shall form a
part of the Specification relative to manufacturing processes used by Supplier
to produce Products supplied or to be supplied to Dot Hill.
     3.10 Stop Production Notices and End of Life
          3.10.1 Stop Production Notices. Dot Hill may in writing direct
Supplier to stop the production of Products during any stage of the
manufacturing process (a “Stop Production Notice”). Dot Hill has the right to
direct Supplier to prepare Products up through a particular level of the
manufacturing process and to hold such partially completed Products pending
modifications to be implemented as a result of error correction activities. If
such a Stop Production Notice from Dot Hill is not due to Supplier’s negligence
or failure to perform its obligations under this Agreement, Dot Hill shall be
responsible for all actual and reasonable costs incurred by Supplier resulting
from a Stop Production Notice and for all actual and reasonable costs associated
with the holding of partially completed Products. If Pre-Production units of
Product ordered are not accepted by Dot Hill for commercial shipment due to a
fault attributable to Supplier as provided in section 6.1 below, Supplier will
make every reasonable effort to correct the non-compliance as provided in
section 6.2 below. If Supplier is unable to repair or replace the rejected
Product within a mutually agreed turnaround time, Dot Hill shall not be required
to pay any amount for such rejected Product.
          3.10.2 End of Life. Dot Hill shall use commercially reasonable efforts
to notify Supplier in writing at least [...***...] prior to Dot Hill ceasing to
purchase any Product or service parts due to a planned discontinuance of sale
thereof. Such Notice shall include Dot Hill’s purchase and schedule requirements
for such Product or service parts during an anticipated end of life (“EOL”)
period. Dot Hill shall have the EOL period specified in the Notice to take
delivery of EOL quantities or remaining quantities of the Product and/or service
parts, as the case may be.
     3.11 Purchase Order Cancellations. Dot Hill may, from time to time, cancel
all or any part of a purchase order prior to shipment of the Products which is
the subject of the purchase order. Dot Hill’s liability for cancellation charges
under Subsection 3.12.9
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which are associated with such cancellations shall not exceed: [...***...].
     3.12 Mitigation Efforts. In the event of a cancellation of a purchase order
in accordance with Section 3.11, Stop Production Notice in accordance with
Section 3.10.1, engineering change orders, purges, AVL disqualification, EOL
notice in accordance with Section 3.10.2 or forecast reduction, except as
otherwise specified in writing by Dot Hill to Supplier, Supplier shall take the
actions indicated in Sections 3.12.1 through 3.12.8 below:
          3.12.1 Immediately reduce/cancel its outstanding purchase orders for
components and raw materials by the quantities in excess of those needed to meet
Dot Hill’s requirements.
          3.12.2 Discontinue Upside Support positioning.
          3.12.3 Perform or have performed a physical inventory of materials
that Supplier may reasonably claim were required to comply with Dot Hill’s
delivery requirements and in-line with the appropriate quantity of Dot
Hill-unique Components, EOQs and LLTCs (“Supplier Inventory”). Dot Hill reserves
the right, at its option, to perform an audit of Supplier Inventory. Dot Hill’s
liability to pay, reimburse, or otherwise compensate Supplier for Supplier
Inventory shall not exceed the minimum Supplier Inventory that was reasonably
required to comply with the forecasted delivery schedule(s) and lead times
applicable to Dot Hill’s purchase orders.
          3.12.4 Use commercially reasonable efforts to return the components to
the supplier(s) at the same price at which they were purchased.
          3.12.5 Use commercially reasonable efforts to sell or transfer the
components to a third party subject to written approval by Dot Hill, at a price
acceptable to Dot Hill. Dot Hill shall reimburse Supplier for the difference
between Supplier’s purchase price and the Dot Hill-approved price at which it
sold the component to a third party. If the sales price exceeds Supplier’s
component purchase price, then the excess shall first be applied to offset any
obligation of Dot Hill under this paragraph and any excess thereafter shall be
retained by Supplier. Except as mutually agreed otherwise, Dot Hill agrees that
Supplier is not required to continue mitigation of
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Dot Hill material liabilities beyond a [...***...] period from the date of the
initial written notification from Supplier to Dot Hill of the potential material
liability.
          3.12.6 Rework Supplier Inventory, at Dot Hill’s request, at a mutually
agreed upon price and schedule.
          3.12.7 Perform a physical inventory of the remaining Supplier
Inventory within [...***...] after completion of Sections 3.12.1 through 3.12.6
above.
          3.12.8 Use commercially reasonable efforts to provide Dot Hill
documentation, reasonably satisfactory to Dot Hill, within [...***...] after
completion of mitigation activities indicating the quantities and kind of
Supplier Inventory that Supplier has not resold, reused or redirected to other
use, or is not able to resell or otherwise use. Such documentation shall include
mitigation activities undertaken by Supplier.
          3.12.9 Subsequent to Supplier’s efforts under Sections 3.12.1 through
3.12.8 above Dot Hill shall respond in detail regarding to Supplier’s claim for
reimbursement or compensation within [...***...] after receipt of the
documentation. Dot Hill shall pay any undisputed portion of Supplier’s claim
within [...***...] of receipt of the claim.
     3.13 Rescheduling. Dot Hill may, from time to time, reschedule for later
shipment those quantities of Products contained in previously submitted
forecasts or purchase orders and raw materials that are to be used to produce
Products. The impact of rescheduling is covered in one or more of three ways,
(1) rework charges associated with reworking configured product, (2) quarterly
PPV adjustments or (3) inventory holding charges relating to the agreement to
hold all inventory provided, however, Dot Hill shall not be assessed any
inventory holding charges for the first [...***...] after one or more originally
scheduled delivery dates.
     3.14 Allocation. Supplier will notify Dot Hill promptly whenever Supplier
identifies a reasonable likelihood that there is or will be a materials or
capacity constraint that may negatively or adversely affect Supplier’s ability
to meet Dot Hill’s then-existing or forecasted needs for Products (“Supply
Constraint”). During any period of Supply Constraint, Supplier agrees, at a
minimum, to allocate materials and capacity to Dot Hill under whichever of the
following formulas [...***...]
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[...***...].
     3.15 Business Continuity Plan. Supplier agrees to provide to Dot Hill,
prior to becoming a sole source for one or more Products, documented evidence of
a business continuity plan to ensure Supplier’s capability to provide the
Products in the agreed upon timeframe after an event which may materially and
adversely affect Supplier’s ability to deliver Products to Dot Hill as
scheduled. Supplier shall perform the responsibilities assigned to it in the
agreed business continuity plan for the Products. Dot Hill may provide a copy of
the business continuity plan to its customers.
     3.16 Right of Access. For any finished storage products that are or will
become ready for sale by Supplier to third party customers and for which
Supplier develops independently such products without access to or use of
Confidential Information of Dot Hill (the “Supplier-developed Storage
Products”), Supplier agrees, to the extent Supplier is legally entitled to do
so, to disclose promptly all reasonably requested information for such
Supplier-developed Storage Products to Dot Hill prior to the performance of any
manufacturing. Upon written request by Dot Hill, Supplier shall [...***...].
     3.17 Alternative Sources of Supply. Notwithstanding anything to the
contrary, Dot Hill shall have the right to establish, without any restrictions
or limitations, alternative or additional sources of supply for all Products at
any time and from time to time, and without any required notice to Supplier.
     3.18 Dedicated Personnel. At all times during the term of this Agreement,
Supplier shall dedicate toward servicing the Dot Hill account various
experienced, full-time, senior-level employees which are experienced in the
manufacturing and new product introduction of products. In this regard, Supplier
shall dedicate to service the Dot Hill account the following resources: Program
Manager, Project Engineer, Quality Engineer and Material Planner. Additional
personnel may be added toward servicing the Dot Hill account upon mutual
agreement by the parties.
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OWNERSHIP RIGHTS
     4.1 Work Product. Dot Hill will inform Supplier if Dot Hill desires for
Supplier to create or develop Work Product for Dot Hill. If Supplier is willing
to create or develop Work Product for Dot Hill, then a Statement of Work shall
be prepared detailing the scope of the work efforts to be performed, the scope
of Work Product, the NRE due from Dot Hill for such work efforts, any license
rights that Dot Hill may be willing to grant back to Supplier (subject, however,
to Supplier’s payment of any applicable fees or reduction in NRE due from Dot
Hill) and any other relevant terms. In determining upfront whether Supplier is
willing to create or develop Work Product for Dot Hill and funding that may be
required to be paid by Dot Hill for such Work Product, Supplier may consider
factors such as whether such Work Product is capable of being used generally
within planned products or may be developed as an industry standard. If Supplier
does not wish for an item to be deemed to constitute Work Product, then prior to
the performance of development work and the payment to Supplier by Dot Hill of
any funding, Supplier can choose upfront to negotiate with Dot Hill to exclude
such portion from the scope of Work Product. Upon execution by the Parties of
any agreed Statement of Work detailing such Work Product and subject to
[...***...]. However, if Supplier determines that such Work Product is capable
of being used generally within planned products, or may be developed as an
industry standard, and agrees to [...***...]. Notwithstanding anything to the
contrary, any intellectual property of Supplier that: (1) is or was
independently conceived, created and developed by Supplier without the use of
any technical Confidential Information of Dot Hill and funding received from Dot
Hill pursuant to a Statement of Work or (2) is independently conceived, created
and developed by Supplier without the use of technical Confidential Information
of Dot Hill and independent of any work required to be performed under this
Agreement (including, without limitation, any Award Letter to this Agreement or
a Statement of Work), shall remain the property of Supplier. [...***...]
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[...***...], as the parties may reasonably determine. Dot Hill shall have the
sole right to obtain and hold in its own name any copyrights, patents, patent
applications, mask work rights, trademark registrations, or other protections as
may be appropriate to the exclusive or joint ownership rights that it obtains in
such Work Product and any derivatives thereof. Dot Hill shall also have the sole
right to determine the method of protection for the exclusive or joint ownership
rights that it obtains in such Work Product, including the right to protect the
same as trade secrets, to use and disclose the same without the filing of any
patent applications, or to file any applications or registrations for copyright,
patents, mask work rights or trademarks in its own name, as Dot Hill deems
appropriate in its sole and absolute discretion.
     4.2 Dot Hill Background Intellectual Property. Supplier acknowledges and
agrees that, as between the parties and notwithstanding anything to the
contrary, Dot Hill is and will be the sole and exclusive owner of all right,
title, and interest in and to any Dot Hill Background Intellectual Property, and
that Supplier acquires no rights or interests under this Agreement to such Dot
Hill Background Intellectual Property or any intellectual property rights
therein, other than the limited rights and licenses granted to Supplier in
Section 9 of this Agreement.
     4.3 Supplier Background Intellectual Property. Dot Hill acknowledges and
agrees that, as between the parties and notwithstanding anything to the
contrary, Supplier is and will be the sole and exclusive owner of all right,
title, and interest in and to any Supplier Background Intellectual Property, and
that Dot Hill acquires no rights or interests under this Agreement to such
Supplier Background Intellectual Property or any intellectual property rights
therein, other than the limited rights and licenses granted to Dot Hill in
Section 9 of this Agreement.
     4.4 Improvements
          4.4.1 Supplier Improvements. Dot Hill acknowledges and agrees that, as
between the parties and subject, however, to any underlying ownership rights of
Dot Hill in any Dot Hill Background Intellectual Property, all Improvements that
are authored, conceived, created or developed by or for Supplier and without any
material contribution thereto from Dot Hill, shall be [...***...].
          4.4.2 Dot Hill Improvements. Supplier acknowledges and agrees that, as
between the parties and subject, however, to any underlying ownership rights of
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Supplier in any Supplier Background Intellectual Property, all Improvements that
are authored, conceived or developed by or for Dot Hill, and without any
material contribution thereto from Supplier, shall be [...***...].
     4.5 Further Assurances. Supplier shall do the following: (i) disclose
promptly in writing and deliver to Dot Hill all Work Product; and (ii) execute,
cooperate with and assist Dot Hill or Dot Hill’s designee to apply for any
applications and/or assignments reasonably necessary to obtain or perfect any
patent rights, mask work rights, copyrights, or other statutory protection,
anywhere in the world, for such Work Product in Dot Hill’s name, as Dot Hill
deems appropriate.
     4.6 Jointly Developed Intellectual Property. As between Supplier and Dot
Hill, [...***...] of (i) Supplier in and to any Supplier Background Intellectual
Property and Supplier Improvements described in Section 4.4.1, and (ii) Dot Hill
in and to any Dot Hill Background Intellectual Property and Dot Hill
Improvements described in Section 4.4.2. Notwithstanding the foregoing, the
authorized representatives of both of the parties may mutually agree during the
term of this Agreement that certain item(s) of Jointly Developed Intellectual
Property should be [...***...], as applicable, subject, however, to the
condition that such item(s) will be treated as a Supplier Improvement described
in Section 4.4.1 or a Dot Hill Improvement described in Section 4.4.2, as the
authorized representatives of the parties shall so designate and agree upon in a
written assignment, [...***...]. For Jointly Developed Intellectual Property,
neither party will have a duty to account to the other party, or to pay any
share of any revenue or compensation earned or received, as to its use or
exploitation; provided, however, if such Jointly Developed Intellectual
Property: [...***...]
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[...***...].
5. SUPPORT
     5.1 Technical Support. Supplier will provide Dot Hill with technical and
operations support for trouble-shooting quality and operational issues. Upon
request by Dot Hill, Supplier will also provide technical support, as needed,
during the development of new products. For those quality or operational issues
for Products that arise or result from a defect or problem in workmanship of the
Products, all reasonable costs associated with such technical support will be
borne by Supplier. Notwithstanding the foregoing, in no event shall Supplier be
obligated to provide any software related support to Dot Hill.
     5.2 Customer Support; Quality. Supplier will provide in-warranty and
out-of-warranty customer service and support in accordance with Exhibit B
attached hereto. Supplier shall comply with Supplier’s Quality Program attached
as Exhibit C to this Agreement and Customer Support Quality Requirements
attached hereto as Exhibit C-1. Dot Hill shall not be required to accept any
Product which is not in compliance with specifications provided by Dot Hill and
accepted by Supplier.
6. WARRANTIES
     6.1 General Warranties. Supplier represents and warrants that (i) it has
the right to enter into this Agreement; (ii) there are no prior commitments or
other obligations that prevent Supplier or Supplier’s Affiliates from fully
performing all its obligations in this Agreement; (iii) the services to be
provided by Supplier or Supplier’s Affiliates in connection with the manufacture
and sale of Products and Supplier Parts shall be performed in a first class,
professional and workmanlike manner by competent and qualified personnel;
(iv) at the time of delivery to Dot Hill and for a period of [...***...] (or
such lesser period for a Product that is set forth in an Award Letter) from the
date of delivery to Dot Hill, each Product (including each Supplier Part
included in Product, but excluding any consigned parts, components or materials
provided by Dot Hill to Supplier for use in the Products) will be free from
defects (excluding customer-induced damages, as mutually defined and agreed by
the parties) in materials and workmanship, conform in all respects to all of Dot
Hill’s specifications set forth in the applicable Award Letter and/or purchase
order (the “Specifications”) and be manufactured and provided in compliance with
all applicable laws, including, without limitation, any applicable environmental
laws and regulations, such as those European Directives relating to the
restriction on the use of hazardous substances in electrical and electronic
equipment, and collection, treatment, recycling
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and disposal of waste electrical and electronic equipment; and (v) Dot Hill will
receive good and marketable title to each Product free from liens or
encumbrances of any nature (except for any liens or encumbrances that may exist
on materials supplied by Dot Hill or Dot Hill’s agents). Supplier represents and
warrants to Dot Hill that to Supplier’s knowledge the Products (including, each
Supplier Part included in Products) do not contain any virus, worm, or other
harmful code. For parts that Dot Hill requests Supplier to acquire from certain
designated vendors (“Designated Parts”), Supplier will inform Dot Hill if it
turns out that the vendors of the Designated Parts cannot meet Dot Hill quality
specifications, in which event the parties will discuss in good faith regarding
an alternative source for the Designated Parts.
     6.2 Warranty Obligations. Upon identification that any Product (including
any Supplier Part) is non-compliant with any warranty set forth in Section 6.1
above, Supplier shall make every reasonable effort to immediately correct the
non-compliance. During the warranty period Supplier shall [...***...]. Dot Hill
shall [...***...]. If the parties have agreed that a particular Products or a
particular Supplier Part will be replaced in lieu of repair during the warranty
period, Supplier further agrees, for a period of not less than [...***...] after
the last delivery of production Products to Dot Hill, (the “Service Period”), at
Dot Hill’s option, to provide out of warranty repair services to Dot Hill and
Dot Hill’s authorized contractors during the Service Period.
6.3 Epidemic Failures
          6.3.1 For purposes of this Agreement, “Epidemic Failure” shall mean an
actual or potential Product failure (including any Supplier Part failure, but
excluding any failure caused by consigned parts, components, materials and/or
technical instructional requirements provided by Dot Hill to Supplier for use in
the Products) occurring in Products covered under the warranty above that (i) is
based on a root cause that is the same or substantially the same, (ii) impair
the use of the Products, (iii) is not based on a defect in a design or test
procedure that has been provided to Supplier by Dot Hill for use in the
manufacture of Products and (iv) is equal to or in excess of [...***...] of the
total units of Products (or any Supplier Part) obtained from any production lot
or delivered to Dot Hill during any [...***...] period (the “Epidemic Failure
Rate”). The then-current Epidemic Failure Rate for the Products
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will be reviewed by the parties at each quarterly business review. This Epidemic
Failure Rate may be adjusted downward at such quarterly business review to a
lower agreed rate based upon demonstrated product reliability and/or volume.
          6.3.2 In the event of a suspected Epidemic Failure, Dot Hill shall
notify Supplier, and Supplier shall provide the following information, if known
and as may then exist: (i) a description of the defect, (ii) the suspected lot
numbers, (iii) serial numbers or other identifiers, and (iv) the delivery dates
of defective Products (including any defective Supplier Parts). Dot Hill may
deliver or make available to Supplier, samples of the defective Products or
defective Supplier Parts for testing and analysis.
          6.3.3 Within [...***...] of receipt of notice from Dot Hill, Supplier
shall provide its preliminary findings regarding the cause of the failures.
Thereafter, Supplier shall promptly provide the results of its root cause
corrective analysis, its proposed plan for the identification of and the repair
and/or replacement of the affected Products (including any affected Supplier
Parts), and such other appropriate or desirable information. The parties shall
also cooperate and work together to expeditiously devise and implement a
corrective action program which identifies the defective units for repair or
replacement, and which minimizes disruption to the end users and Dot Hill’s
direct and indirect distribution channels.
          6.3.4 In the event of an Epidemic Failure, Supplier shall be
responsible for (a) as agreed in the corrective action plan or at Supplier’s
option, if not agreed in the corrective action plan: [...***...]. Supplier’s
foregoing obligations shall also extend to the larger product in which the
Product or the Supplier Part is incorporated if the Product or Supplier Part
cannot be separated without undue inconvenience or disruption to the end user.
Other costs not identified herein may be incurred by either party. The
reimbursement, if any, of these costs will be agreed by the parties.
     6.4 Warranty Pass Through. Supplier will be responsible for and provide to
Dot Hill the benefits of any and all warranties (including any protection
obtained for
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epidemic or unexpected failures or other quality failures of components included
in Products) obtained from its component or other suppliers for all parts,
components, materials and services included in or furnished for the Products.
Supplier shall provide, upon request by Dot Hill and to the extent not prevented
by any confidentiality obligations to a third party, all relevant information
regarding the third party, scope and terms of all such warranties. [...***...]
To the extent that Supplier may do so, Supplier hereby grants the right to Dot
Hill to enforce the warranties which are received by Supplier from other parties
for those parts, components and/or raw materials and included in the Products
that are supplied to Dot Hill under this Agreement if the Supplier fails to do
so in a prompt and reasonable manner.
     6.5 Warranty Disclaimer. EXCEPT FOR THE EXPRESS WARRANTIES STATED IN THIS
AGREEMENT, NEITHER PARTY MAKES ANY OTHER WARRANTIES, EXPRESS OR IMPLIED, AND, TO
THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, THE WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE ARE EXPRESSLY DISCLAIMED,
EVEN IF THE APPLICABLE PARTY HAS BEEN ADVISED THEREOF.
     6.6 Disqualification of Providers. Supplier reserves the right to
disqualify any provider of any key parts, components or materials that both
(A) Dot Hill requires Supplier to acquire such key parts, components or
materials from such provider for inclusion in the Products and (B) who does not
provide to Supplier protection against epidemic failures based on the use of
terms that are substantially similar or equivalent in all material respects to
those reflected in this Agreement, but applicable only to such key parts,
components or materials (the “Terms”). In such circumstance, Supplier shall:
(1) inform Dot Hill immediately in writing of any such situation and provide all
relevant details of the issues that Supplier has encountered with such provider,
including the name, part number, and a description of the key part, component or
material at issue and name of provider, and (2) to the extent that Supplier is
able to do so without violating any then-existing confidentiality obligations in
place with any such provider, provide all relevant details of the epidemic
failure terms extended by such provider to Supplier for such key part, component
or material at issue, and involve Dot Hill in any negotiations with such
provider over the details of such epidemic failure terms. If Supplier is
operating under a then-existing confidentiality obligation with a provider that
prevents the disclosure of such epidemic failure terms to Dot Hill, then
Supplier shall seek written approval from the provider for the disclosure of
such terms
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to Dot Hill. If the provider refuses to provide its written approval to Supplier
for this disclosure where a confidentiality obligation of Supplier exists, then
Supplier shall inform immediately Dot Hill of such refusal by such provider and
such provider shall be deemed to be disqualified to provide to Supplier the
applicable key part, component or material at issue for use in the Product to be
supplied by Supplier to Dot Hill under this Agreement. Notwithstanding anything
to the contrary, the provisions of this Section 6.6 shall not apply to any
parts, components or materials that Supplier recommends or requires Dot Hill to
use in or incorporate into the Products based on or as a result of any design,
development or other engineering work for the Products that Supplier has
performed for Dot Hill under this Agreement.
7. INDEMNIFICATION
     7.1 Supplier Obligations
          7.1.1 Supplier shall defend, indemnify and hold Dot Hill and Dot
Hill’s Affiliates, and each of their respective customers, agents, officers,
directors, employees, successors and assigns (collectively, the “Dot Hill
Indemnified Parties”), harmless for any losses, damage, expense, cost
(including, but not limited to, attorneys’ fees incurred in the enforcement of
this indemnity) or liabilities based upon: (A) any claim that Supplier’s
manufacturing process, process technology or methodology, and/or any parts,
components or materials purchased by Supplier for use or inclusion in the
Products (but excluding any consigned parts, components or materials provided by
Dot Hill to Supplier for use in the Products): (1) infringe or misappropriate
any patent, copyright, trade secret or other intellectual property right of any
third party, and/or (2) has caused personal injury (including bodily injury or
death) or damage to tangible or real property; (B) any violation of any
environmental or other applicable laws or regulations, including, without
limitation, RoHS and WEEE with respect to the manufacture of Products by
Supplier (but excluding any violation arising thereof based on any consigned
parts, components or materials provided by Dot Hill to Supplier for use in the
Products); and/or (C) any losses experienced by Dot Hill and/or its Affiliates
to the extent arising or resulting from errors and omissions of Supplier or
Product recall and/or Product liability that is due to the fault of Supplier,
but solely to the extent that Supplier receives sufficient protection against
such losses under any of its then-existing errors and omissions, product recall
and/or product liability insurance policies. Dot Hill will (i) give Supplier
prompt written notice of any third party claim that is covered under the scope
of the foregoing indemnity and made to Dot Hill in writing, (ii) cooperate with
Supplier, at Supplier’s expense, in the defense of such claim, and (iii) give
Supplier the right to control the defense and settlement of any such claim to
the extent covered by the indemnification provided herein. Supplier will:
(a) defend or
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settle, at its own expense, any such claim; (b) keep Dot Hill advised of the
status of any such claim and of its defense and/or negotiation efforts; and
(c) afford Dot Hill reasonable opportunity to review and comment on all
significant actions planned to be taken by Supplier on behalf of Dot Hill.
Supplier shall not enter into any settlement that materially adversely affects
Dot Hill’s rights or interests, without Dot Hill’s prior written approval.
Further, to the extent that Supplier may be able to do so, Supplier shall pass
through to Dot Hill all indemnification coverage provided by all parts,
component or materials vendors.
          7.1.2 Notwithstanding the foregoing provisions in Section 7.1.1,
Supplier will have no obligation to indemnify the Dot Hill Indemnified Parties
for claims that the Products infringe the intellectual property rights of a
third party to the extent such claims arise as a result of: (1) Dot Hill’s
combination of Products with other products (including devices, parts and
software) and such infringement claim would have been avoided in the absence of
such combination; (2) Supplier’s implementation of a Dot Hill-originated
electrical, mechanical, hardware (including firmware) and/or software
specifications or design, or manufacturing process requirement, that is required
by Dot Hill to be implemented in order to make Products, and such infringement
claim would have been avoided in the absence of such implementation; (3) Dot
Hill’s modification of the Products, except for modifications required for use
of the Products, and such infringement claim would have been avoided in the
absence of such modification; (4) any modification or addition made to the
Products by anyone other than Supplier or its subcontractors or Sub-tier
Suppliers; (5) except for combination infringement claims not excluded under
subsection (1) of this section, the use of such Products to practice any method
or process which does not occur wholly within the Products; or (6) any
components of such Products which are provided on a consignment basis by Dot
Hill to Supplier for inclusion in the Products.
          7.1.3 Disqualification of Providers. Supplier reserves the right to
disqualify any provider of any key parts, components or materials that both
(A) Dot Hill requires Supplier to acquire such key parts, components or
materials from such provider for inclusion in the Products and (B) who does not
provide indemnification protection to Supplier against third party claims of
intellectual property infringement for, or personal injury (including bodily
injury or death) or damage to tangible or real property which are caused by,
such key parts, components or materials, based on the use of terms that are
substantially similar or equivalent in all material respects to those
indemnification obligations of Supplier to Dot Hill in Subsection 7.1.1(A) (as
modified by Section 7.1.2) for such key parts, components or materials (the
“Provisions”). In such circumstance, Supplier shall: (1) inform Dot Hill
immediately in writing of any such situation and provide all relevant details of
the issues that Supplier has
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encountered with such provider, including the name, part number, and a
description of the key part, component or material at issue and name of
provider, and (2) to the extent that Supplier is able to do so without violating
any then-existing confidentiality obligations in place with any such provider,
provide all relevant details of the indemnification terms, if any, extended by
such provider to Supplier for such key part, component or material at issue, and
involve Dot Hill in any negotiations with such provider over such
indemnification terms. If Supplier is operating under a then-existing
confidentiality obligation with a provider that prevents the disclosure of such
indemnification terms to Dot Hill, then Supplier shall seek written approval
from the provider for the disclosure of such terms to Dot Hill. If the provider
refuses to provide its written approval to Supplier for this disclosure where a
confidentiality obligation of Supplier exists, then Supplier shall inform
immediately Dot Hill of such refusal by such provider and such provider shall be
deemed to be disqualified to provide to Supplier the applicable key part,
component or material at issue for use in the Product to be supplied by Supplier
to Dot Hill under this Agreement. Notwithstanding anything to the contrary, the
provisions of this Section 7.1.3 shall not apply to any parts, components or
materials that Supplier recommends or requires Dot Hill to use in or incorporate
into the Products based on or as a result of any design, development or other
engineering work for Products that Supplier performs for Dot Hill under this
Agreement.
     7.2 Dot Hill Obligations
          7.2.1 Dot Hill shall defend, indemnify and hold Supplier and
Supplier’s Affiliates, and each of their respective agents, officers, directors,
employees, successors and assigns (collectively, the “Supplier Indemnified
Parties”), harmless for any losses, damage, expense, cost (including, but not
limited to, attorneys’ fees incurred in the enforcement of this indemnity) or
liabilities based upon any claim that: (i) any consigned parts, components or
materials provided by Dot Hill to Supplier (the “Consigned Parts”) for use in
the Products (A)(1) infringe or misappropriate any patent, copyright, trade
secret or other intellectual property right of any third party and/or (2) has
caused personal injury (including bodily injury or death) or damage to tangible
or real property, and/or (B) violate any environmental or other applicable laws
or regulations, including, without limitation, RoHS and WEEE; and/or (ii) the
Products, to the extent manufactured by Supplier in compliance with Product
design specifications provided by Dot Hill to Supplier, infringe any third party
intellectual property right. Supplier will (1) give Dot Hill prompt written
notice of any third party claim that is covered under the scope of the foregoing
indemnity and made to Supplier in writing, (2) cooperate with Dot Hill, at Dot
Hill’s expense, in the defense of such claim, and (3) give Dot Hill the right to
control the defense and settlement of any such
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claim to the extent covered by the indemnification provided herein. Dot Hill
will: (a) defend or settle, at its own expense, any such claim; (b) keep
Supplier advised of the status of any such claim and of its defense and/or
negotiation efforts; and (c) afford Supplier reasonable opportunity to review
and comment on all significant actions planned to be taken by Dot Hill on behalf
of Supplier. Dot Hill shall not enter into any settlement that materially
adversely affects Supplier’s rights or interests, without Supplier’s prior
written approval.
          7.2.2 Notwithstanding the foregoing provisions in Section 7.2.1, Dot
Hill will have no obligation thereunder to indemnify the Supplier Indemnified
Parties for claims that the Consigned Parts infringe the intellectual property
rights of a third party to the extent that such claims arise as a result of
Supplier’s combination of Consigned Parts with other products in a manner that
is inconsistent with Dot Hill’s specifications for the Products.
     7.3 Injunctions. Should the manufacture, use, distribution or sale of the
Products, or any part thereof, or Supplier’s manufacturing process, process
technology or methodology be enjoined or become the subject of a claim of
infringement for which indemnity is provided under Section 7.1.1, Supplier
shall, [...***...].
8. LIMITATION OF LIABILITY. EXCEPT FOR ANY DAMAGES ARISING OR RESULTING FROM ALL
BREACHES AND VIOLATIONS OF ANY OF THE PROVISIONS OF THIS AGREEMENT RELATING TO
CONFIDENTIAL INFORMATION, LICENSE RESTRICTIONS, TOGETHER WITH ANY LIABILITIES
ARISING UNDER OR RESULTING FROM A PARTY’S INDEMNIFICATION OBLIGATIONS WHICH ARE
SET FORTH IN THIS AGREEMENT, NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR ANY
INDIRECT, INCIDENTAL, CONSEQUENTIAL, EXEMPLARY OR SPECIAL DAMAGES WHICH ARISE OR
RESULT FROM THIS AGREEMENT, DETERMINED REGARDLESS OF WHETHER SUCH PARTY WAS MADE
AWARE OR HAD KNOWLEDGE OF THE POSSIBILITY OF SUCH DAMAGES.
9. LICENSE RIGHTS
     9.1 Supplier License Grant. Subject to [...***...] that are set forth in an
Award
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Letter or Statement of Work, respectively, Supplier hereby grants, on behalf of
itself and its Affiliates, to Dot Hill a worldwide, irrevocable for those items
for which Dot Hill has paid to Supplier all such agreed amounts due, perpetual,
nontransferable and non-assignable (except as otherwise permitted under
Section 12.13), nonexclusive license, without the right to sublicense except to
Dot Hill’s Affiliates, under the Supplier Background Intellectual Property
Rights and Improvements created by or for Supplier to:

  (i)   [...***...];     (ii)   [...***...]; and     (iii)   [...***...]; and  
  (iv)   [...***...].

     9.2 Dot Hill License Grant. Dot Hill hereby grants, on behalf of itself and
its Affiliates, to Supplier a worldwide, revocable upon the expiration or
earlier termination of this Agreement, nontransferable and non-assignable
(except as otherwise permitted under Section 12.13), nonexclusive license,
without the right to sublicense except to Supplier’s Affiliates:
          (a) under the [...***...]:
               (i) [...***...]
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[...***...], and
               (ii) [...***...]; and
          (b) to affix the trademarks, trade names, service marks and service
names of Dot Hill and its customers to the Products and Product user
documentation to be supplied under this Agreement to Dot Hill, its Affiliates
and/or one or more Dot Hill-designated third party customers or partners that an
authorized representative of Dot Hill may direct in writing to so deliver
Products and Product user documentation to, in the manner and as directed by Dot
Hill and in accordance with the then-current trademark usage guidelines and
policies of Dot Hill and/or Dot Hill’s third party customers or partners, as the
case may be.
9.3 License Restrictions and Other Obligations
          9.3.1 No other, further or different license rights are hereby granted
or implied to any party beyond the license rights expressly provided for in
Sections 9.1 and 9.2 of this Agreement. The parties hereby acknowledge and agree
that the license rights granted herein are only for the limited scope specified
in Sections 9.1 and 9.2, and shall not include any other rights under any other
intellectual property rights.
          9.3.2 Supplier acknowledges the rights of Dot Hill and its customers
and partners in the trademarks, trade names, service marks and service names of
Dot Hill and its customers and partners, and agrees that any use of (i) the
trademarks, trade names, service marks and service names of Dot Hill by Supplier
shall inure to the sole benefit of Dot Hill, and (ii) use of the trademarks,
trade names, service marks and service names of Dot Hill’s customers and
partners shall inure to the sole benefit of such of Dot Hill’s customers and
partners that own such trademarks, trade names, service marks and service names.
Supplier agrees [...***...]
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[...***...]. Supplier agrees to attribute all trademarks, trade names, service
marks and service names of Dot Hill and its customers and partners to their
underlying source of the Products in a proper manner and as directed by Dot
Hill; provided, however, Dot Hill shall provided an authorization letter to
Supplier fully authorizing Supplier to do the above. Supplier also acknowledges
and agrees that Dot Hill and its customers and partners shall have the
unilateral right to establish such quality standards as they believe appropriate
and reasonably necessary concerning the use of their trademarks, trade names,
service marks and service names.
          9.3.3 Supplier will properly mark each Product and any accompanying
documentation with Dot Hill’s copyright and other proprietary rights notice, as
directed by Dot Hill, to indicate Dot Hill’s intellectual property ownership
rights in such Products.
     9.4 Future Desired Rights. If Supplier desires to obtain from Dot Hill
certain license rights to any Work Product that Supplier has developed for Dot
Hill, then Supplier will advise Dot Hill in writing of its desire to obtain the
same. Upon receipt of any such written request, Dot Hill will assess whether it
is willing to grant such license rights, subject to the payment by Supplier of
applicable royalties or fees for the use therefor. If Dot Hill is willing to
grant certain license rights to Supplier, then Dot Hill will advise Supplier as
to the specific license rights that Dot Hill is willing to grant and the license
limitations, restrictions, royalties and fees that would apply thereto. If
Supplier accepts Dot Hill’s proposal, then the parties will amend this Agreement
to reflect their agreement with respect to the license rights, license
limitations and restrictions, and the royalties and fees that apply to the grant
of license rights to Supplier for such Work Product. Unless and until this
Agreement has been amended to reflect such agreement, no license rights shall be
deemed to have been granted by Dot Hill to Supplier for such Work Product.
10. CONFIDENTIALITY
     10.1 Confidentiality Obligations. Each party shall protect the
confidentiality and secrecy of the other party’s Confidential Information and
shall prevent any improper disclosure or use thereof inconsistent with the
rights granted in this Agreement, by its employees, agents, contractors or
consultants, in the same manner
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and with the same degree of care (but in no event less than a reasonable degree
of care) as it uses in protecting its own information of a confidential nature
for a period of [...***...] from the date of such disclosure. Each party (the
“Recipient”) shall use all commercially reasonable efforts to enter into a
confidential disclosure agreement with its agents, contractors and/or
consultants which is at least as restrictive as this Article 10 to protect any
Confidential Information provided by the other party (the “Discloser”) to
Recipient in accordance with this Article 10 that is also provided to any such
third parties.
     10.2 Acknowledgment of Confidentiality Obligations. Each party must inform
its employees having access to the other’s Confidential Information of
restrictions required to comply with this Section. Each party agrees to provide
notice to the other immediately after learning of or having reason to suspect a
breach of any of the restrictions of this Article 10.
     10.3 Retention of Rights. Discloser retains for itself all proprietary
rights it possesses in and to all Discloser’s Confidential Information.
Accordingly, Discloser’s Confidential Information which Discloser may furnish to
Recipient will be in Recipient’s possession pursuant only to a restrictive,
nontransferable, nonexclusive license under which Recipient may use such
Discloser’s Confidential Information under the terms of this Agreement, solely
for the purposes of performing its obligations or exercising rights granted
under this Agreement.
     10.4 Independent Development. Each party understands that the party
receiving Confidential Information may now or in the future be developing
proprietary information internally, or receiving proprietary information from
third parties in confidence that may be similar to disclosed Confidential
Information. Nothing in this Agreement shall be construed as a representation or
inference that the receiving party will not develop products independently for
itself which may compete with the products, processes or systems contemplated by
disclosed Confidential Information.
     10.5 Return of Confidential Information. Within [...***...] following the
expiration or earlier termination of this Agreement, both parties shall, at the
option of the disclosing party, either return to the disclosing party or destroy
the other party’s Confidential Information and certify the same.
     10.6 Injunctive Relief. Each party acknowledges that any material violation
of the rights and obligations provided in this Article 10 may result in
immediate and irreparable injury to the other party, and hereby agrees that the
other party shall be entitled to seek immediate temporary, preliminary, and
permanent injunctive relief
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against any such continued violations upon adequate proof, as required by
applicable law.
11. TERM AND TERMINATION
     11.1 Term. This term of this Agreement shall commence upon the Effective
Date and, unless terminated earlier in accordance with Section 11.2, shall
continue in effect for a period of two (2) years. The term of this Agreement
shall automatically renew for additional twelve (12)-month terms (each, a
“Renewal Term”) unless either party has provided written notice to the other of
its planned non-renewal of this Agreement at least one (1)-year prior to the
commencement of any such Renewal Term. If any Award Letter is still in effect at
the time this Agreement terminates or expires, then this Agreement shall
continue in effect solely as to such Award Letter until such time as the Award
Letter is terminated or expires.
     11.2 Termination
          11.2.1 A party may, by written notice, terminate and/or suspend its
performance under this Agreement, or cancel any purchase order hereunder without
penalty, if:
                         (i) the other party fails to comply with any of the
material provisions of this Agreement and such condition is not remedied within
[...***...] after written Notice thereof; or
                         (ii) the other party becomes bankrupt or insolvent,
suffers a receiver to be appointed or makes an assignment for the benefit of
creditors.
          11.2.2 Intentionally left blank.
          11.2.3 Upon the expiration or earlier termination of this Agreement by
either party, Supplier shall take the following actions as soon as commercially
practicable upon being requested in writing to do so by Dot Hill: (i) return
freight collect, all equipment loaned from Dot Hill; (ii) return all copies of
Dot Hill-supplied Confidential Information; (iii) assign to Dot Hill all
purchase orders of Components and other components; and (iv) assign to Dot Hill
all Supplier purchase orders for repair service parts. Upon expiration or
earlier termination of this Agreement for any reason Dot Hill shall return all
copies of Supplier-supplied Confidential Information that are not necessary for
Dot Hill to continue to test, support, maintain, make, have made, produce and/or
have produced Products covered under this Agreement.
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          11.2.4 Upon expiration or earlier termination of this Agreement by
either party, Dot Hill shall purchase: (a) all conforming Components in
Supplier’s inventory at Supplier’s cost, provided that the quantity of such
Components does not exceed (i) the quantity required to produce the Products
forecasted or ordered by Dot Hill, and (ii) the quantity of LLTCs required to
fulfill Dot Hill’s forecasts, and (b) completed conforming Products not yet
delivered, or any partially completed Products (which conform to the extent
completed) at a price not to exceed the Product price that Supplier has acquired
for the performance of this Agreement in accordance with Dot Hill’s purchase
orders. In addition, at Dot Hill’s option upon termination, Dot Hill may
purchase any or all additional conforming Components which are in Supplier’s
inventory, in which event such inventory will be delivered to Dot Hill within
[...***...] after Supplier’s receipt of payment. Upon Dot Hill’s request,
Supplier will complete any or all partially completed Products and deliver the
same to Dot Hill within [...***...] after termination. Payment by Dot Hill to
Supplier will be made in accordance with the payment terms above.
     11.3 No Damages Solely for Expiration or Termination. In the event of the
expiration or termination of this Agreement in accordance with its provisions,
neither party shall be liable to the other, solely because of such expiration or
termination, for any compensation, reimbursement or damages on account of the
loss of prospective profits or anticipated sales or for any expenditures,
inventory, investments, leases or commitments made in connection with the
business or goodwill of either party. The expiration or termination of this
Agreement shall not relieve either party of any obligations incurred under this
Agreement prior to such expiration or termination, including without limitation
any obligation to make payment.
     11.4 Survival. The provisions of Articles 1, 2, 4, 6, 7, 8, 9.1, 9.3, 10,
11.2, 11.3, 11.4, 12.2 through 12.22, Exhibit A, Exhibit B, Exhibit C and
Exhibit C-1, shall survive the expiration or earlier termination of this
Agreement, and the enforcement thereof shall not be subject to any condition
precedent.
12. MISCELLANEOUS
     12.1 Insurance
          12.1.1 Mitac Commitment. At all times during the term of this
Agreement, Mitac, [...***...] shall carry and maintain the following insurance
coverage issued by insurance companies which are (a) licensed to conduct
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business where the Products and services are provided and (b) major providers of
insurance in the jurisdictions within subsection (a) above.
                         12.1.1.1 Comprehensive commercial general liability
insurance covering all operations of the Mitac, including, but not limited to,
Products/completed operations, broad form property damage and blanket
contractual liability against claims for personal and bodily injury and property
damage liability with a limit of not less than five million U.S. dollars (U.S.
$5,000,000) per occurrence/aggregate, and shall contain cross liability and
severability of interest provisions. This policy shall name Dot Hill, its
officers, directors and employees as additional insured’s and shall stipulate
that such insurance shall apply as primary and non-contributory to any insurance
placed by Dot Hill.
                         12.1.1.2 All insurance coverage required by Mitac’s
country’s local laws or statutes, including workers compensation insurance to
cover full liability under workers compensation laws of any jurisdiction in
which the work is performed. This insurance must (a) provide coverage for all of
Mitac’s employees who perform work or provide services under this Agreement and
(b) include a Waiver of Subrogation for the benefit of Dot Hill, Dot Hill’s
Affiliates, and their respective successors and assigns, to the extent covering
matters under such coverage where Mitac is at fault.
                         12.1.1.3 Cargo transit insurance providing all risk
style coverage for all goods, merchandise, machinery, equipment, inventory, and
supplies incidental to Mitac’s business, moving at the risk of Mitac, subject to
a minimum limitation of one million U.S. dollars (U.S. $1,000,000) per incident.
                         12.1.1.4 All risk style property insurance covering all
real and personal property and inventory, including Dot Hill’s Products in the
care, custody and/or control of Mitac, for all risks of physical loss, theft or
damage, subject to a minimum limitation of actual value of the property at risk.
This insurance must cover (a) equipment owned, leased or used by Mitac to
perform work or provide services under this Agreement and (b) property in the
care, custody and/or control of Mitac that is owned by Dot Hill or its
customers. This insurance must provide coverage on a replacement cost basis.
                         12.1.1.5 Mitac will provide protection for its
facilities under the applicable insurance policies above in accordance with
contemporary highly protected risk and business standards as defined by the
local laws and regulations of the country where such facilities are located.
Mitac will permit Dot Hill and its
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insurance company or insurance consultants to visit and inspect Mitac’s
facilities on a periodic basis, and will reasonably rectify any material
deficiencies that may be found in security and protection systems.
                         12.1.1.6 Each of the insurance policies required to be
maintained by Mitac under this Agreement shall name Dot Hill as a loss payee
with respect to any loss or damage to Dot Hill property. Mitac shall provide Dot
Hill with a certificate of insurance prior to or at inception of this Agreement
evidencing that the above insurance policies are in full force and effect, and
also within five (5) days after the annual renewal of each insurance policy.
Mitac shall require each insurer to give Dot Hill thirty (30) days written
notice before any of the coverages under the foregoing insurance policies are
canceled or materially altered. The foregoing requirements concerning the types
and limits of insurance coverage to be maintained by Mitac, and any approval or
waiver of said insurance by Dot Hill, is not intended to and shall not in any
manner limit or qualify Mitac’s liabilities and obligations whether imposed by
law or assumed pursuant to this Agreement, including but not limited to the
provisions concerning indemnification.
          12.1.2 Synnex Commitment. At all times during the term of this
Agreement, Synnex, at its sole cost and expense, shall carry and maintain the
following insurance coverage issued by insurance companies which are
(a) licensed to conduct business where the Products or services are provided and
(b) rated no lower than A-, VII (i.e., A minus, 7) by International A.M. Best.
                         12.1.2.1 Comprehensive commercial general liability
insurance covering all operations of Synnex, including, but not limited to,
Products/completed operations, broad form property damage and blanket
contractual liability against claims for personal and bodily injury and property
damage liability with a limit of not less than ten million U.S. dollars (U.S.
$10,000,000) per occurrence/aggregate, and shall contain cross liability and
severability of interest provisions. This policy shall name Dot Hill, its
officers, directors and employees as additional insured’s and shall stipulate
that such insurance shall apply as primary and non-contributory to any insurance
placed by Dot Hill.
                         12.1.2.2 All insurance coverage required by Synnex’s
country’s local laws or statutes, including workers compensation insurance to
cover full liability under workers compensation laws of any jurisdiction in
which the work is performed. This insurance must (a) provide coverage for all of
Synnex’s employees who perform work or provide services under this Agreement and
(b) include a Waiver of Subrogation for the benefit of Dot Hill and Dot Hill’s
Affiliates, and each of their
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respective directors, officers, employees, agents, successors and assigns, with
respect to for the benefit of Dot Hill, Dot Hill’s Affiliates, and their
respective successors and assigns, to the extent covering matters under such
coverage where Synnex is at fault.
                         12.1.2.3 Automobile liability insurance covering bodily
injury and property damage liability arising out of the use by or on behalf of
the Synnex, its agents and employees of any owned, non-owned or hired automobile
with combined single limit of not less than one million U.S. dollars (U.S.
$1,000,000) per occurrence.
                         12.1.2.4 Cargo transit insurance providing all risk
style coverage for all goods, merchandise, machinery, equipment, inventory, and
supplies incidental to Synnex’s business, moving at the risk of Synnex, subject
to a minimum limitation of one million U.S. dollars (U.S. $1,000,000) per
incident.
                         12.1.2.5 All risk style property insurance covering all
real and personal property and inventory, including Dot Hill’s Products in the
care, custody and/or control of Synnex, for all risks of physical loss, theft or
damage, including Synnex’s business interruption and boiler and machinery
breakdown, subject to a minimum limitation of actual value of the property at
risk. This insurance must cover (a) equipment owned, leased or used by Synnex to
perform work or provide services under this Agreement and (b) property in the
care, custody and/or control of Synnex that is owned by Dot Hill or its
customers. This insurance must provide coverage on a replacement cost basis.
                         12.1.2.6 Synnex will provide protection for its
facilities under the applicable insurance policies above in accordance with
contemporary highly protected risk and business standards as defined by federal,
state and local laws and regulations where such facilities are located. Synnex
will permit Dot Hill and its insurance company or insurance consultants to visit
and inspect Synnex’s facilities on a periodic basis, and will reasonably rectify
any material deficiencies that may be found in security and protection systems.
                         12.1.2.7 Each of the insurance policies required to be
maintained by Synnex under this Agreement shall name Dot Hill as a loss payee
with respect to any loss or damage to Dot Hill property. Synnex shall provide
Dot Hill with a certificate of insurance prior to or at inception of this
Agreement evidencing that the above insurance policies are in full force and
effect, and also within five (5) days after the annual renewal of each insurance
policy. Mitac shall require each insurer to give Dot Hill thirty (30) days
written notice before any of the coverages under the foregoing insurance
policies are canceled or materially altered. The foregoing requirements
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concerning the types and limits of insurance coverage to be maintained by
Synnex, and any approval or waiver of said insurance by Dot Hill, is not
intended to and shall not in any manner limit or qualify Synnex’s liabilities
and obligations whether imposed by law or assumed pursuant to this Agreement,
including but not limited to the provisions concerning indemnification.
     12.2 Notice. All written Notices required by this Agreement must be
delivered in person or by means evidenced by a delivery receipt or
acknowledgement to the address specified in the Award Letter and will be
effective upon receipt.
     12.3 Governmental Compliance. Supplier and Dot Hill shall comply with all
laws and regulations applicable to the manufacture and sale of the Products,
including, by way of example and not limitation, Executive Order 11246 as
amended by Executive Order 11375 (non-discrimination in employment), the U.S.
Clean Air Act of 1990. Supplier shall not use any ozone depleting substances
listed in annexes A and B of the Montreal Protocol, including but not limited to
chlorofluorocarbons, in the manufacture of Products. Dot Hill reserves the right
to reject any Products manufactured by Supplier using such materials if Dot Hill
has not previously been notified in writing of the same. Supplier shall also,
without limitation, comply with (i) the Directive 2002/95/EC of the European
Parliament and of the Council on the restriction on the use of hazardous
substances in electrical and electronic equipment, (ii) any Directive of the
European Parliament and of the Council on the collection, treatment, recycling
and disposal of waste electrical and electronic equipment, and (iii) any U.S.
Federal, state, foreign and local environmental laws and regulations, to the
extent that they are applicable to the Products manufactured by Supplier under
this Agreement.
     12.4 Import and Export Control. All technical data, services and products
delivered under this Agreement are subject to U.S. export control laws and may
be subject to export or import regulations in other countries. Supplier and Dot
Hill agree to comply strictly with all such laws and regulations and
acknowledges that they have the responsibility to obtain such license to export,
re-export or import as may be required and as may be permitted under the scope
of this Agreement. Supplier shall provide all information under its control
which is necessary or useful for Dot Hill to obtain any export or import
licenses required for Dot Hill to ship or receive Products, including, but not
limited to, U.S. Customs Certificates of Delivery, Certificates of Origin and
U.S. Federal Communications Commissions (“FCC”) identifier. When requested by
Dot Hill, Supplier shall provide the following Import-related documentation to
Dot Hill by certified mail within fifteen (15) days after shipment of Product to
Dot Hill: (i) Manufacturer’s Certificate of Origin and FCC identifier, DHHS/FDA
Accession Number to permit Dot Hill to import Product; (ii) U.S. Customs
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Certificates of Delivery, attention: Dot Hill’s Import Administration
Department, Dot Hill Systems Corporation, 2200 Faraday Avenue, Suite 100,
Carlsbad, California 92008. The parties agree not to export or re-export, or
cause to be exported or re-exported, the Product, any technical data of any kind
received hereunder, or the direct product of such technical data, without
complying with the laws of the United States, regulating the same.
     12.5 Publicity. Neither party shall publicize nor disclose the existence of
or the terms and conditions of this Agreement, without the prior written consent
of the other party; provided, however, that each party may, without obtaining
the other party’s written consent, disclose terms and conditions of this
Agreement (i) as required by law, statute or regulation, or any court or other
governmental body, (ii) in confidence to legal counsel of a party, (iii) in
confidence to a the accountants, banks and financing sources of a party, and its
advisors, (iv) to the extent necessary to enforce a party’s rights under this
Agreement, and (v) in confidence in connection with an actual or proposed
merger, acquisition or other similar transaction. In connection with any filing
of this Agreement with the Securities and Exchange Commission or other
regulatory body pursuant to the provisions in Subsection 12.5(i) above, the
parties will work together and in good faith to request promptly, and in a
manner consistent with a party’s then-existing filing obligations to permit such
filing to occur on a timely basis, confidential treatment for appropriate
sections of this Agreement that qualify for such confidential treatment.
Prohibited publicity shall include, without limitation, any identification of
the other party in client lists, press releases, promotional materials, sales
presentations and advertisements.
     12.6 Relationship of the Parties. This Agreement is not intended to create
a partnership, franchise, joint venture, agency, or a fiduciary or employment
relationship. Neither party may bind the other party or act in a manner which
expresses or implies a relationship other than that of independent contractor.
     12.7 Governing Law. This Agreement will be governed by, interpreted and
construed in all respects solely and exclusively in accordance with the laws of
[...***...]. The parties specifically agree that the United Nations Convention
on Contracts for the International Sale of Goods shall not apply to this
Agreement.
     12.8 Dispute Escalation. The parties shall attempt in good faith to resolve
any dispute, controversy or claim (a “Dispute”) arising under or relating to
this Agreement informally according to the following procedure. If any such
Dispute is not resolved
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within [...***...] by the parties, then either party may escalate the Dispute to
the Chief Executive Officers of the parties for potential resolution. Upon any
such escalation, the Chief Executive Officers of the parties shall gather all
relevant information and then meet or confer, either in person, by phone or by
email, in an effort to attempt to resolve such Dispute. If the Chief Executive
Officers of the parties fail to resolve such Dispute within [...***...] after
its initial escalation to them, then such Dispute shall, upon the written
request of a party, be submitted to arbitration that is to be conducted in
accordance with the provisions of Section 12.9 below. By agreeing to the
foregoing dispute resolution provisions, the parties do not intend to
(i) deprive any party from seeking any pre-dispute resolution injunction or
other equitable remedy or (ii) prevent either party from exercising any
termination rights it may have under this Agreement.
     12.9 Arbitration. If the parties fail to resolve a Dispute in accordance
with the provisions of Section 12.8 above, a Dispute (including but not limited
a dispute or controversy over the scope of the agreement to arbitrate) shall,
upon request of a party, be submitted to and finally settled by arbitration in
accordance with the International Commercial Arbitration Rules of the United
Nations Commission on International Trade Law (“UNCITRAL”) that are applicable
at the time of submission of the Dispute to arbitration. Promptly upon any
request for arbitration that is made by a party under this Agreement, the
representatives of the parties shall attempt to agree immediately upon the
appointment of a single arbitrator. If the parties can not agree upon such
appointment within one (1) week after a request for arbitration is made, then
the American Arbitration Association (the “AAA”) shall appoint the single
arbitrator. The arbitration proceeding shall be administered by the AAA in
accordance with its “Procedures for Cases Under the UNCITRAL Rules.” (the
“Rules”). Any and all arbitration proceedings shall be held in [...***...]. The
decision of the arbitrator shall be final and binding on the parties, be the
exclusive remedy between the parties for the Dispute presented to the
arbitration tribunal to the extent fully enforceable against the losing party to
a Dispute, and be non-appealable by either party to the fullest extent allowed
by law. Judgment on any award may be entered into any court having jurisdiction
thereof, and for the purpose of enforcing any such arbitration award made
pursuant to the provisions of this Agreement, each party irrevocably and
unconditionally submits to the jurisdiction of any court sitting where any of
such party’s material assets may be found. By agreeing to these arbitration
provisions, the parties do not intend to (i) deprive either party from seeking
any pre-dispute resolution injunction or other equitable remedy or (ii) prevent
either party from exercising any termination rights it may have under this
Agreement. Without prejudice to any provisional remedies in aid of arbitration
as may be available under the
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jurisdiction of a court, the arbitration tribunal shall have full authority to
request a court to grant provisional remedies and to award damages for any
failure of a party to respect the arbitration tribunal’s orders to that effect.
Any amounts subject to a Dispute that are ultimately awarded to a party shall
bear interest at a rate determined by the arbitrator and will be set forth in
any arbitration award.
     12.10 Attorney’s Fees. The prevailing party in any arbitration or legal
proceeding to enforce an arbitration award shall be entitled to recover its
reasonable attorneys’ fees and costs incurred therewith.
     12.11 Severability. If any provision, or part thereof, in this Agreement,
is held to be invalid, void or illegal, it shall be severed from the Agreement
or any Award Letter, and shall not affect, impair, or invalidate any other
provision, or part thereof, and it shall be replaced by a provision which comes
closest to such severed provision, or part thereof, in language and intent,
without being invalid, void or illegal.
     12.12 Construction. The headings and titles of the sections of this
Agreement are for convenience only and will not in any way affect the
interpretation of any section or of the Agreement itself. As used in this
Agreement, the word “including” means “including but not limited to.” Each party
represents that it has had an opportunity to participate in the preparation of
this Agreement, and any rule of construction to the effect that ambiguities are
to be resolved against the drafting party shall not be applied in connection
with the construction or interpretation of this Agreement. For purposes of this
Agreement, the word “will” shall be equivalent in meaning to the word “shall,”
both of which describe an act or forbearance that is mandatory under this
Agreement. The word “may” describes an act or forbearance that is optional under
this Agreement.
     12.13 No Assignment. This Agreement and the rights, duties and obligations
of either party under this Agreement may not be assigned or transferred, in
whole or in part or by operation of law or otherwise, without the express prior
written consent of the other party, which consent will not be unreasonably
withheld, delayed or conditioned in connection with a request made by a party
for an assignment of the Agreement as part of a merger, purchase, sale or other
reorganization with a potential successor-in-interest with respect to all or
substantially all of such party’s assets or voting securities. Any attempted
assignment or transfer of any rights, duties or obligations hereunder in
derogation of the foregoing provision shall be null and void ab initio. This
Agreement shall be binding on the parties and their respective permitted
successors and assigns.
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     12.14 Force Majeure. Neither party shall be liable for any delay or failure
in performance hereunder which is caused by acts of God, worldwide component
shortages not within a party’s reasonable control or any other causes which are
beyond a party’s reasonable control, if the party gives prompt Notice and makes
all commercially reasonable efforts to mitigate its effects and also to perform.
Any such excuse from performance shall continue in effect only for the period
during which such delay or failure exists.
     12.15 Amendments and Waivers. No modification of this Agreement will be
binding, unless in writing and signed by an authorized representative of each
party. Any waiver or failure to exercise promptly any right under this Agreement
will not create any continuing waiver or expectation of non-enforcement.
     12.16 Order of Precedence. If there is any conflict or inconsistency
between the documents comprising this Agreement, the order of precedence as to
any such conflicting or inconsistent provisions shall be as follows: (i) the
provisions in an Award Letter for the Products covered under such Award Letter,
including any Attachments incorporated therein; (ii) the provisions in the base
terms of this Agreement; and (iii) the provisions in any Exhibits to the base
terms of this Agreement.
     12.17 Counterparts; Execution. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original and all of which
when taken together shall constitute one instrument. The parties agree that
signature pages of this Agreement may be delivered by a party via facsimile
transmission or electronically in a pdf file, and such delivery shall have the
same force and effect as if such pages had been delivered manually by such
party.
     12.18 Advice of Legal Counsel. Each party acknowledges and represents that,
in executing this Agreement, it has had the opportunity to seek advice regarding
its legal rights from counsel and that the person signing on its behalf has read
and understood the terms and conditions in this Agreement. The terms and
conditions in this Agreement shall not be construed against any party be reason
of its drafting or preparation thereof.
     12.19 Government Approvals. Supplier shall obtain promptly all approvals
and make all filings (other than intellectual property filings and
registrations) which are required by any national and local governments or
agencies with respect to the Supplier’s performance under this Agreement. Prior
to making any such filings, Supplier shall provide copies of thereof to Dot Hill
for its review and comment.
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Supplier will incorporate such filings any such reasonably requested edits that
Dot Hill suggests be made to any such filings that are to be made by Supplier.
     12.20 Enforceability. Each party represents and warrants, to its best
knowledge, that (i) the terms and conditions of this Agreement, and the rights
and obligations of the parties hereunder, are fully enforceable against it
within the jurisdictions in which it does business under this Agreement; and
(ii) any arbitration award obtained by the other party pursuant to the
provisions of this Agreement shall be fully enforceable against it within the
jurisdictions in which it does business under this Agreement.
     12.21 Applicability to Supplier. In entering into this Agreement, the
parties acknowledge and agree that wherever there are clauses referring to
rights and/or obligations of Supplier (the “Supplier Clauses”) under this
Agreement, such clauses shall, in accordance with below general rules in this
Section 12.21, apply to either Mitac or Synnex, or both Mitac and Synnex. In
determining whether the Supplier Clauses shall apply to Mitac or Synnex, or both
Mitac and Synnex, the following general rules of construction and interpretation
shall be used: (i) Supplier Clauses related to the fabrication of tooling and
the performance of development and NRE shall apply to Mitac and Synnex;
(ii) Supplier Clauses related to order acceptance, materials procurement,
manufacturing, fulfillment, upside support, allocation, delivery,
indemnification shall apply to the entity that receives a purchase order from
Dot Hill under this Agreement, i.e., Mitac or Synnex as the case may be;
(iii) Supplier Clauses related to warranty (including epidemic failure
obligations) and warranty support for such purchase order placed by Dot Hill
shall apply to Mitac, except for return for credit matters specified in this
Agreement which will apply to Synnex; and (iv) unless otherwise provided for in
this Agreement, Supplier Clauses within Sections 3.3.1 (Product Pricing and
Elements), 3.3.4 ([...***...] Pricing), 3.3.5 (Documentation and Other
Information), 3.9.8 (Recordkeeping), 3.9.9 (Audit Rights), 3.15 (Business
Continuity Plan), 3.16 (Right of Access), 4 (Ownership Rights), 8 (Limitation of
Liability), 9 (License Rights), 10 (Confidentiality), 11 (Term and Termination)
and 12 (Miscellaneous) shall apply to both Mitac and Synnex; (v) Supplier
Clauses within Exhibit A (Electronic Data Interchange), Exhibit C (Supplier’s
Quality Program) shall apply to both Mitac and Synnex; and (vi) Supplier Clauses
within Exhibit B (Customer Support), Exhibit B-1 (Supplier’s Repair Facilities),
Exhibit B-2 (NTF Charges), Exhibit B-3 (Out-of-warranty Repair), Exhibit C-1
(Customer Support Quality Requirements), out-of-warranty service work for the
Products shall apply to Mitac only. The parties shall define further the rights
and obligations of Mitac and Synnex in each Award Letter to be entered into for
a Product.
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     12.22 Entire Agreement and Modification. This Agreement, together with any
executed Award Letters, constitutes the entire agreement between Supplier and
Dot Hill relating to its subject matter, supersedes all prior or contemporaneous
oral or written communications, proposals, term sheets and other correspondence
and prevails over any conflicting or additional terms or communications between
the parties relating to its subject matter. The preprinted terms of any purchase
orders and any terms in any purchase order acknowledgement shall be deemed
deleted and of no force or effect.
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EXHIBIT A
ELECTRONIC DATA INTERCHANGE
1. Definitions
     1.1. “EDI” means electronic data interchange.
     1.2. “Adopted Format” is the accepted method for the interchange of
Documents under this Agreement based on the EDIFACT or ANSI ASC X12 standards
for the presentation and structuring of the electronic transmission of
Documents, or other such format as may be agreed to in writing by the parties.
     1.3. “Document” is data structured in accordance with the Adopted Format
and transmitted electronically between the parties.
     1.4. “Test” means transmission of a Document during a testing period to
verify set ups in EDI-related software, network transmission and technical
support processes.
     1.5. “Provider” is a party or business entity that provides the service of
moving and routing EDI transmissions between parties.
2. Prerequisites
     2.1. Documents, Standards. Each party may electronically transmit to or
receive from the other party any Document which the parties have mutually agreed
to Test. The content of Test Documents will be considered dummy data unless
otherwise agreed to by the parties. All Documents which are intended to evidence
a transaction shall be transmitted in accordance with the Adopted Format.
     2.2. Providers. Documents will be transmitted electronically to each party
through any Provider with which either party may contract and/or the Internet.
The Provider for each party shall be communicated to the other party. Either
party may change its designated Provider upon thirty (30) days prior written
notice to the other party. Each party shall be responsible for the costs of any
Provider with which it contracts.
     2.3. System Operations. Each party, at its own expense, shall provide and
maintain the equipment, software, services and testing necessary to effectively
and reliably transmit and receive Documents. If Provider’s network is down and
this
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prevents either party from meeting the pickup or delivery frequency agreed to,
that party must notify the other party the [...***...].
     2.4. Security Procedures. Each party shall use security procedures which
are reasonably anticipated to: [...***...].
     2.5. Signatures. Each party may adopt as [...***...] (“Signatures”). Each
party agrees that any Signature of such party [...***...]. Each party will
transmit data using currently accepted transmission standards, which may or may
not involve Signatures.
3. Transmissions
     3.1. Proper Receipt. Documents shall not be deemed to have been properly
received, and no Document shall give rise to any obligation, until accessible to
the receiving party at such party’s electronic mailbox.
     3.2. Verification. Upon receipt of any Document, the receiving party shall
promptly and properly transmit a functional acknowledgement in return within
[...***...] after receipt of a Document.
     3.3. Acceptance. If a transmitted Document requires acceptance by the
receiving party, any such Document which has been properly received shall not
give rise to any obligation unless and until the party initially transmitting
such Document has properly received in return an acceptance Document.
     3.4. Garbled Transmissions. If any Document is received in an
unintelligible or garbled form, or otherwise contains evidence of faulty
transmission, the receiving party shall promptly notify the originating party
(if identifiable from the received Document) in a reasonable manner. In the
absence of such notice, the originating party’s records of the contents of such
Document shall control.
     3.5. Erroneous Transmissions. If either party receives a Document from the
other party which differs from the applicable terms and conditions, (e.g., an
order with a price, quantity or schedule different than that mutually agreed
upon), the receiving
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party shall promptly contact the sending party to confirm the accuracy of the
Document.
4. Transaction Terms
     4.1. Order Placement. Each Purchase Release electronically transmitted
shall reference the [...***...].
     4.2. Validity, Enforceability
          4.2.1 The parties acknowledge their mutual intent to create binding
purchase, sale and payment obligations by means of electronic transmission and
receipt of Documents specifying certain of the applicable terms. During the term
of the Agreement, all obligations concerning the delivery of such Documents in
written form may be satisfied by a transmission pursuant to the terms of this
exhibit.
          4.2.2 Either party shall have the option, at its discretion, to
transmit Documents in written form to the other party. Any Document properly
transmitted pursuant to these terms shall be deemed (“Signed Documents”) and
shall be considered, in connection with any transaction, to be a “writing” or
“in writing” and to have been “signed” and to constitute an “original” when
printed from electronic files or records established and maintained in the
normal course of business.
          4.2.3 The parties agree that the provisions of the Uniform Commercial
Code, Section 2-201 (“Formal Requirements: Statute of Frauds”), shall not apply
to Documents covered by this Exhibit since hard copies of Documents will not be
issued and the parties further agree that said Documents shall be deemed to
satisfy any statutory or legal formalities requiring that agreements be in
writing, including, but not limited to the Statute of Frauds. The conduct of the
parties pursuant to this exhibit, including the use of Signed Documents properly
transmitted, shall, for all legal purposes, evidence a course of dealing and a
course of performance accepted by the parties in furtherance of this Agreement
and Document.
          4.2.4 The parties agree not to contest the validity or enforceability
of Signed Documents under the provisions of any applicable law relating to
whether certain agreements are to be in writing or signed by the party to be
bound thereby. Signed Documents, if introduced as evidence on paper, in any
judicial, arbitration, mediation or administrative proceedings, will be
admissible as between the parties to the same extent and under the same
conditions as other business records originated and maintained in documentary
form. Neither party shall contest the admissibility of
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copies of Signed Documents under the business records exception to the hearsay
rule or the best evidence rule on the basis that the Signed Documents were not
originated or maintained in documentary form.
     5. Implementation. The parties will use commercially reasonable efforts to
implement EDI as soon as possible so as to permit the electronic interchange of
Documents and other information. Notwithstanding anything to the contrary, to
the extent said EDI implementation will not require material changes to
Supplier’s current IT system, [...***...] to the other party’s information
systems that are either necessary or useful to enable transmission of Documents
and other information to each other.
*** Confidential Treatment Requested
Dot Hill Confidential

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EXHIBIT B
CUSTOMER SUPPORT
1.0 Purpose. To define Supplier’s responsibilities to Dot Hill for in-warranty
and out-of-warranty repair and support. This document shall be used in
conjunction with Exhibit C and Exhibit C-1.
2.0 Scope. This exhibit, in conjunction with Exhibit C and Exhibit C-1,
describes Dot Hill Enterprise Services’ requirements for worldwide Product
support either by Supplier or by any of Supplier’s authorized third parties. Dot
Hill’s goal is to receive Product 100% on time and that such Product meets the
quality requirements defined in Exhibit C-1.
3.0 Definitions
     3.1 Bill of Material (“BOM”) shall mean a list of parts or sub-assemblies
used to manufacture a Product.
     3.2 Depot Repairable Unit (“DRU”) shall mean a subassembly of Product sent
by a Dot Hill Third Party Repair Supplier (“TPRS”) to a Supplier’s depot for
repair and/or replacement.
     3.3 Distribution Center (“DC”) shall mean a third party designated by Dot
Hill who processes Product returns on Dot Hill’s behalf. The DC’s consist of 2
types:
          Type A: Performs various services for Dot Hill but does not have a
financial relationship with Supplier.
          Type B: Performs various services for Dot Hill, issues purchase orders
and pays invoices for materials purchased for use in the maintenance of Dot Hill
Products. A ‘Type B’ DC has a financial relationship with Supplier.
     3.4 Engineering Change Order (“ECO”) shall mean the mechanism by which a
party notifies the other party of a change to the Product.
     3.5 Field Replaceable Unit (“FRU”) shall mean a Product or subassemblies
thereof which can be replaced at the customer site.
     3.6 First Customer Ship (“FCS”) shall mean the initial production shipment
of Product by Supplier to Dot Hill.
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     3.7 No Trouble Found (“NTF”) shall mean Product which Dot Hill has returned
as defective but which passes Supplier’s standard test process (as approved by
Dot Hill). NTF does not include Product which incurred any ECO upgrades and/or
adjustments by Supplier.
     3.8 Product shall mean the Products and FRUs/DRUs, including any third
party products incorporated therein, as well as new Product later released and
confirmed in writing by Supplier via electronic mail or updated price list.
     3.9 Product Specification shall mean the written performance
representations, mechanical dimensions and descriptions, electrical and timing
requirements, component information, and configuration for the Product purchased
by Dot Hill, whether generated by Dot Hill or Supplier, which have been agreed
to in writing by the parties.
     3.10 Regional Stocking Location (“RSL”) shall mean Dot Hill or third party
facilities designated by Dot Hill which are responsible for storing and
processing FRUs.
     3.11 Repair Service shall mean minor adjustments to Product, repair of
defective Product, or provision of Repair or Replacement Product.
     3.12 Repaired or Replacement Product shall mean Product of the same model
and part number, but not necessarily the same serial number, used to replace
defective Products. This Product can be either new or of a like new condition.
     3.13 Return Material Authorization (“RMA”) shall mean the formal
authorization from Supplier under which Dot Hill returns Product for repair or
replacement.
     3.14 Dot Hill Office shall mean a Dot Hill facility.
     3.15 Dot Hill shall mean Dot Hill Enterprise Services for the purpose of
this Exhibit B.
     3.16 Supplier Corrective Action Request (“SCAR”) shall mean Dot Hill’s
formal request mechanism for corrective action issued to Supplier.
     3.17 Third Party Repair Supplier shall mean a third party who performs
repair services for Dot Hill designated by Dot Hill.
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4.0 Repair Services and Requirements
     4.1 At a minimum, Supplier shall use its best efforts to maintain, directly
or through agents, the fully equipped and staffed facilities specified in
Exhibit B-1 to a level sufficient to meet the agreed performance targets as
provided in Dot Hill’s four (4)-quarter, monthly rolling FRU forecast. On at
least a monthly basis, Dot Hill and Supplier shall review the management of the
FRU pool, and make any appropriate agreed upon changes thereto. Notwithstanding
anything to the contrary, [...***...].
     4.2 Supplier will provide FRU support as follows:
          4.2.1 Supplier must [...***...] of the Effective Date.
          4.2.2 Supplier agrees that all of its Product FRUs meet Dot Hill’s
requirements for the Dot Hill FRU ID program.
          4.2.3 FRUs are required on a worldwide basis, with volumes dependent
on Dot Hill’s four (4)-quarter, monthly rolling FRU forecast.
     4.3 After receipt of Dot Hill’s RMA request Supplier shall ship a Repaired
or Replacement Product FRU to Dot Hill no later than the next business day (the
“Next Day Shipment Obligation”). In situations where the RMA requests exceed the
then-existing mutually agreed upon FRU pool, then Supplier shall not be bound by
Next Day Shipment Obligation; however, Supplier shall use its best efforts to
cause Replacement Product FRU’s to be delivered to Supplier on an expedited
basis from its suppliers utilizing overnight carriers. Supplier shall take all
necessary and reasonable actions to ensure replenishment of the FRU pool and
reestablishment of the next day RMA performance requirements set forth herein.
In the event that such RMA performance requirements can not be met due to the
potential or actual depletion of the FRU pool, Supplier shall immediately notify
Dot Hill in writing by an agreed upon method (i.e., email, fax, etc.). In
performing its responsibilities hereunder, Supplier may provide FRUs from an
exchange pool which meet the Product Specifications provided, however, that they
are free from defects.
     4.4 If Supplier has not received a Product back from Dot Hill for
in-warranty
*** Confidential Treatment Requested
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repair within [...***...] after receipt of a fulfillment RMA request for such
Product, Supplier will notify Dot Hill in writing that Supplier has not received
such applicable Product. If Dot Hill fails to return such Product to Supplier
within [...***...] after receipt of written notification thereof from Supplier,
then Supplier may generate an invoice and charge Dot Hill the applicable sales
price for a Product if Supplier has previously provided to Dot Hill a comparable
Product without charge as part of in-warranty repair service. This Section 4.4
shall not affect the provisions of Section 4.3 in any manner.
     4.5 Dot Hill goal is [...***...]. Such goal shall be verified and confirmed
by Supplier. Supplier agrees to meet these goals for FRUs and all repairs. To
ensure accurate field data tracking all returned FRUs will be tested and results
documented within one (1) month after receipt.
          4.5.1 For purposes of this exhibit, “Epidemic Failure” shall have the
same meaning as set forth in the base terms of the Agreement; however, the
application thereof shall occur at the FRU level as opposed to at a higher
level.
          4.5.2 In the event of a suspected Epidemic Failure, Dot Hill shall
promptly notify Supplier, and shall provide the following information, if known
and as may then exist: a description of the defect, and the suspected lot
numbers, FRU IDs or other identifiers, and delivery dates of the defective FRUs.
Dot Hill shall also deliver or make available to Supplier, samples of the
defective Products for testing and analysis. Within [...***...] of receipt of
Notice from Dot Hill, Supplier shall provide its preliminary findings regarding
the cause of the failures. Thereafter, Supplier shall promptly provide the
results of its root cause corrective analysis, its proposed plan for the
identification of and the repair and/or replacement of the affected FRUs, and
such other appropriate or desirable information.
          4.5.3 The parties shall also cooperate and work together to
expeditiously devise and implement a corrective action program which identifies
the defective units for repair or replacement, and which minimizes disruption to
the end user.
          4.5.4 In the event of an Epidemic Failure, Supplier shall be
responsible for (a) (i) [...***...]
*** Confidential Treatment Requested
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[...***...].
     4.6 For a period of [...***...] after the last delivery of each production
Product to Dot Hill, (the “Service Period”) Supplier agrees to provide Repair
Services to Dot Hill, Dot Hill authorized TPRS’s and DC’s during the entire
Service Period.
     4.7 If Supplier elects to discontinue Repair Service after the expiration
of the Service Period, Supplier agrees to provide Dot Hill a minimum of
[...***...] advance written notice of Supplier’s intent to discontinue Repair
Service.
     4.8 Product will be shipped to Dot Hill in a configuration defined by the
Product Specifications and BOMs.
     4.9 Repaired or Replacement Product will be upgraded by Supplier to the
then current Product revision level or to a revision level as documented and
agreed upon by Dot Hill and Supplier and at the price set forth in Appendix B-4.
     4.10 Replacement in Lieu of Return. During the warranty period of disk
drives included in Products, in the event that Dot Hill is not permitted to
return such defective disk drives for repair that are located within restricted
government facilities, Supplier will provide replacement disk drives to Dot
Hill, as required, at no charge to Dot Hill and without a demand for the return
of such defective disk drives by Dot Hill provided that the applicable end user
of such defective disk drives complies with the then-current “black hole” policy
of Dot Hill. If a hard drive vendor does not have a “black hole” policy, then
Supplier will invoice Dot Hill for the costs of replacement disk drives.
5.0 Intentionally left blank.
6.0 Price
     6.1 Unless otherwise provided in the Manufacturing Agreement, there shall
[...***...].
*** Confidential Treatment Requested
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     6.2 All costs for out of warranty repair prices, including but not limited
to labor, material, testing and packaging, are as shown in
Exhibit B-3.
     6.3 The out-of-warranty repair price will be reviewed annually and remain
constant for a [...***...] period after such review. Any subsequent change in
pricing shall require written notification to Dot Hill. Any increase will
require notification at least [...***...] prior to the effective date thereof
and can only be made if Supplier provides a reasonable justification for the
increase.
7.0 Payment
     7.1 Dot Hill shall be liable to pay only for Repair Services, FRUs and DRUs
ordered by and invoiced directly to Dot Hill. Dot Hill shall not be liable to
pay for any Repair Services, FRUs and DRUs ordered by DC’s or TPRS’s. Supplier
shall determine the creditworthiness of any named DC or TPRS and, with price,
quality, warranty and Leadtimes determined by this Agreement, shall arrange
credit and other terms directly with such DC’s or TPRS’s. Repair Services
ordered by DC’s or TPRS’s for Products shall be added to Dot Hill’s cumulative
volume of Repair Services.
     7.2 [...***...] or other required reference numbers shall be clearly
identified on all correspondence, shipment, and invoice documentation associated
with Repair Services.
8.0 Freight and Import/Export Fees
     8.1 Freight and Import/Export Fees for all In-Warranty and Out-of-Warranty
Products. [...***...] shall pay all freight charges, duty, taxes, customs and/or
brokerage fees for shipment of the defective Product to Supplier. [...***...] is
responsible for freight charges associated with shipment of repaired or
Replacement Products to Dot Hill. Repaired Product will be shipped by the method
indicated in Exhibit C.
     8.2 Expedited Transportation. All Product, whether in or out of warranty,
which is past due (to the extent attributable to Supplier’s delay) from the date
established by the RMA and tracked in the purchase order shall be shipped by the
most expeditious method at [...***...] expense.
9.0 Repair Warranty
     9.1 Supplier agrees to provide repairs on all Products and FRUs, for at
least [...***...] after the last delivery of production Products.
*** Confidential Treatment Requested
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     9.2 All Repaired or Replacement Products and FRUs shall be warranted by
Supplier to perform in accordance with the applicable Product Specification or
portion thereof, and shall be free from occurrence of same failure/defect in
materials and workmanship with same symptom and root cause for a period of
[...***...] from the date shipped from Supplier to Dot Hill (or for Repaired or
Replacement Products and FRUs to be delivered to Dot Hill for sale or
distribution to Sun, [...***...] from the date shipped from Supplier to Dot
Hill) or for [...***...], whichever period is longer. Dot Hill shall inform
Supplier by FRU number of those Repaired or Replacement Products and FRUs that
are to be provided to Sun Microsystems, Inc. or Sun Microsystems International
B.V.
     9.3 Repairs on Products or FRUs shall be handled in accordance with the
terms of this Exhibit B.
     9.4 Supplier shall provide Dot Hill with applicable repair costs,
replacement costs, lead times, changes in MTBF data and other pertinent data
points.
10.0 NTF’s
     10.1 No Trouble Found (“NTF”) — In Warranty and Out of Warranty. NTF
charges will be set forth in Exhibit B-2. NTF charges set forth in Exhibit B-2
will apply only in the event that the number of units determined to be NTF
exceeds [...***...] of the total units returned to Supplier for repair each
month that are found to be NTF for a specific Product.
     10.2 Regardless of whether or not a Product is determined to be NTF or
repaired, it must be upgraded to a revision level accepted by Dot Hill. NTF
charges do not include [...***...].
11.0 Inventory Management
     11.1 Supplier shall follow adequate procedures for the proper control of
Dot Hill inventory. Record keeping shall include, but not be limited to, the
maintenance of accurate, updated records of the Dot Hill inventory and the use
of an inventory tracking system that measures physical inventories, cycle
counting, and other adjustments to maintain accuracy.
*** Confidential Treatment Requested
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     11.2 Cycle count results shall be reported by Supplier to Dot Hill within
[...***...] after Dot Hill’s initial request.
     11.3 Supplier shall be responsible for all Dot Hill owned Product inventory
variances in Suppliers’ possession. If Supplier is unable to reconcile any
inventory variance for Products in Supplier’s possession, Supplier shall be
[...***...].
     11.4 Supplier shall be responsible and bear the risk of loss for
[...***...]. Supplier shall use its best efforts to provide Dot Hill with a list
of all its requirements for equipment unique to Dot Hill’s Products [...***...]
prior to initiating Product repair support.
*** Confidential Treatment Requested
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EXHIBIT B-1
SUPPLIER’S REPAIR FACILITIES
MiTAC US Service Center info.:

[...***...]
MiTAC UK Service Center info.:

[...***...]
MiTAC Taiwan Service Center Info. ( project management )

[...***...]
*** Confidential Treatment Requested
Dot Hill Confidential

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EXHIBIT B-2
NTF CHARGES
The NTF per unit charge is: [...***...].
*** Confidential Treatment Requested
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EXHIBIT B-3
OUT OF WARRANTY REPAIR
The charge for out-of-warranty repair services performed under this Agreement
is: [...***...]. The TBD labor charge to Dot Hill for any out-of-warranty repair
services which are requested to be performed by Dot Hill [...***...].
If Supplier offers or makes available [...***...], then Supplier shall
immediately [...***...].
*** Confidential Treatment Requested
Dot Hill Confidential

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EXHIBIT C
SUPPLIER’S QUALITY PROGRAM
1.0 Purpose. This exhibit defines Dot Hill’s requirements for Supplier’s quality
program (“Quality Program”) and Supplier’s responsibilities for manufacturing,
inspecting, testing and supplying production Products to Dot Hill. Additional
Customer Support quality requirements are set forth in Exhibit C-1 attached
hereto.
2.0 Scope. This exhibit describes Dot Hill’s requirements for the Quality
Program for the manufacture of Products for Dot Hill. Products covered under
this Exhibit C are fabricated materials and assemblies and electrical-mechanical
turnkey assemblies (“Enclosure Products”). The term “quality” as used herein
means conformance to the Specification for the Product (Dot Hill’s Engineering
document) and all other applicable Dot Hill process and Product specifications
as they may be amended from time to time by Dot Hill Engineering Change Orders
(“ECOs”). Specification shall mean the applicable Product specification for the
Products, which may be changed from time to time by written agreement of the
parties.
     2.1 Objective. Dot Hill’s objective is to achieve ship to stock status for
all Products shipped to Dot Hill as a result of Supplier consistently meeting
the Quality Program defined in this exhibit.
     2.2 Applicable Documents

  •   Dot Hill’s process and Product specifications     •   Supplier’s Product
Specification     •   Supplier Scorecard Procedure     •   ISO 9000     •  
Supplier Engineering: Mass Storage Group Supplier Certification Process     •  
Additional Documents (applicable to Enclosure Products):     •   Dot Hill’s
Color Specifications     •   Dot Hill’s Paint Specifications     •   Dot Hill’s
Global Cosmetics Quality and Workmanship Standards     •   First
Article Procedure

3.0 Precedence of Documents. In the event of a conflict between the terms and
conditions of this Agreement, Dot Hill’s Specification, Dot Hill’s process and
Product specifications, and this Exhibit C, the order of precedence shall be as
follows: (1) this Agreement, (2) Dot Hill’s Specification, (3) Dot Hill’s
process and Product specifications, (4) this Exhibit C.

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4.0 Supplier Process Requirements. Supplier shall adhere to a
quality/manufacturing plan (including a data collection/tracking/reporting
system) (the “Process”) that will ensure compliance with the requirements and
terms and conditions of this Exhibit C, the Agreement, and ISO 9000. The Process
and procedures developed by Supplier shall be documented. Dot Hill will review
this Process during the Process Certification period (see Section 5.5 of this
exhibit). Supplier is responsible for the quality of Products and/or components
procured or manufactured for Dot Hill. Approval of Supplier’s Process by Dot
Hill does not relieve Supplier of this responsibility. Supplier shall develop
and implement a process for initial and ongoing/periodic process certification
of internal and external suppliers for components and all major subassemblies.
Supplier will provide copies of certification results/reports to Dot Hill upon
request.
     4.1 Process Flow Charts. Supplier shall provide a general process flowchart
for the Products and major subassemblies as agreed to by Dot Hill and Supplier
and shall identify all assembly, test, and inspection sub-processes.
     4.2 Data Collection Systems. Supplier shall implement a Weekly Value Chain
Quality Chain Reporting System. The Data Collection System will show where
failure data is collected and detailed process yield targets. Supplier shall
provide on-going reports (via electronic or web-based method) of current yields,
the top [...***...] pareto failures per critical process, failure analysis
(“FA”) and corrective action (“CA”) documenting continuous improvement and
Ongoing Reliability Testing (“ORT”), at Dot Hill’s option. This will be reviewed
by Dot Hill during the Process Certification. Dot Hill will provide to Supplier
an ORT plan for every Product covered by an Award Letter.
     4.3 Configuration Control. Supplier must develop and implement a Dot Hill
Configuration DPM Goal Quality Assurance Plan prior to production start, as
mutually agreed upon by the parties, which will include, but not be limited to,
the following DPM, which means “Defects Per Million.”

  •   FA plan     •   Reporting methodology/format     •   Closed loop CA plan  
  •   Individuals and/or team identified as owners of the plan     •   Process
to include alert levels and trigger points     •   Specifications required
maximum time for actions to be completed, escalation and review process.

*** Confidential Treatment Requested
Dot Hill Confidential

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  •   Statistical DPM measurement method     •   Dot Hill Supplier Engineering:
Quality Demonstration Test Plan

     4.4 Quality Assurance Plan. Supplier must develop and implement a Dot Hill
Configuration DPM Quality Assurance Plan prior to production start, as mutually
agreed upon by the parties, which will include, but not be limited to, the
following:

  •   FA plan     •   Reporting methodology/format

[...***...] unless agreed otherwise:

  •   Yield/DPM report (all critical stations, including pareto with FA/CA for
the top [...***...] pareto items with targets);     •   Outgoing Quality
Test/Audit DPM report with FA/CA for all failures;     •   DPM Improvement Plan
if greater than Dot Hill goal (updates [...***...]);     •   Corrective Action
Report (“CAR”) Tracking Log;     •   Dot Hill site first level FA reports;     •
  FA/CA reports; and     •   CAR tracking report.

Frequency of the reports below will be [...***...]:

  1.   Quality Demonstration Test (“QDT”) DPM report with FA/CA for all
failures;     2.   ORT/Periodic Reliability Sequential Test (“PRST”) chart with
FA/CA for all failures;     3.   Test Demo/QDT reports for beginning of program
(one time — reference Process Certification Test);     4.   Annualized Failure
Rate (“AFR”) report (Dot Hill’s and other comparable customers’ monthly data and
5 month rolling average) ([...***...]); and     5.   Turn-around time (“TAT”)
tracking reports:

  •   Closed loop CA plan,     •   Individuals and/or team identified as owners
of the plan,     •   Process to include alert levels and trigger points,     •  
Specifications required, maximum time for actions to be completed, escalation
and review process,  

*** Confidential Treatment Requested
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  •   Statistical DPM measurement methodology process to proactively inform Dot
Hill of any Products suspect of not meeting Dot Hill’s quality or reliability
requirements along with risk assessment, and     •   Dot Hill Supplier
Engineering: Quality Demonstration Test Plan.

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     4.5 Control of Purchases. Supplier will have a Quality Program that
provides a reliable means of determining the quality and reliability levels of
all purchased supplies, material, and components used in the manufacture of
Products. In the event Supplier desires to change the vendor or selected source
of a component used in the manufacturing of Products, Supplier shall collect
quality/evaluation data to support and justify the change ([...***...]). The
quality data will be made available to Dot Hill at least [...***...] prior to
implementation by Supplier. Section 4.8 below details what source changes
require prior notification. In the event that a problem is identified in the
availability or quality of purchased supplies, materials or components used in
the manufacture of Products, upon Dot Hill’s request, Supplier agrees to permit
Dot Hill to participate in the development of a Corrective Action plan, which
may include Dot Hill personnel accompanying Supplier’s personnel to vendor sites
to perform process and design audits and view CAs. Supplier is responsible for
all inspections/tests of Sub-tier Supplier-purchased or Supplier-produced parts
to ensure conformance to the Specification. Supplier will develop and implement
a plan for the tracking of individual components by production lot for at least
[...***...] from the date of delivery by Supplier of Products that consist of or
contain such components. Supplier will use commercially reasonable efforts to
implement any such plan prior to the date on which Supplier makes available, in
volume, Products to Dot Hill. Supplier shall not use any non-conforming
purchased or produced parts.
     4.6 Defect-Free Program/Corrective Actions. Dot Hill’s goal is to receive
Products that are defect-free. Supplier shall document and implement a
defect-free program as part of the Process which constantly reduces the defect
rate of its Products. Dot Hill shall not be obligated to accept any defective
Products shipped by Supplier. Supplier will establish a program to ensure the
performance of effectiveness CAs. This program will be based upon information
derived from failure reporting and analysis and will ensure that parts,
components or assemblies are corrected so as to properly perform their intended
function. Supplier shall maintain records of CAs indicating [...***...].
     4.7 Changes in Manufacturing Process, Product or Manufacturing Locations.
In the event that Supplier desires to change the Product or its fundamental
manufacturing process, Supplier shall notify Dot Hill in writing within a
reasonable period (no less than [...***...] unless such shorter period is agreed
to by Dot
*** Confidential Treatment Requested
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Hill in advance based on the critical nature of implementation of the change,
which agreement will not be unreasonably withheld, delayed or conditioned) prior
to the effective date of the proposed change and provide Supplier deviation,
Engineering Change Request (“ECR”)/ECO) or process change notification
document(s) to Dot Hill for formal review/approval. [...***...], and/or will
have a negative impact on Product quality or reliability. Examples of changes
which require notification include, but are not limited to, the following:

  •   [...***...].

Supplier shall supply Dot Hill copies of all ECOs affecting the Product.
Supplier agrees to provide verbal notification to the appropriate Dot Hill SE of
all other process changes which do not affect form, fit, function,
serviceability, or safety. Supplier shall implement such changes in the process
only if [...***...].
     4.8 Re-Qualification. Major changes in manufacturing process will require
re-qualification and/or process re-certification to the Specification, except to
the extent Dot Hill waives this requirement by providing written consent, which
consent will not be unreasonably withheld, delayed or conditioned. Dot Hill may
require, at its sole discretion, that Supplier perform reliability tests if
applicable to Product to confirm an equivalent or improved reliability of the
Products. Supplier shall coordinate notification of planned major changes with
Dot Hill. At Dot Hill’s request, Supplier shall run a pilot production. All
Product and process changes affecting form, fit,
*** Confidential Treatment Requested
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function, quality or reliability require Supplier to submit a completed
Qualification Data Package, reference Quality Data Package Expectation provided
by Dot Hill to Supplier. The Quality Data Package must be completed and supplied
to Dot Hill at least [...***...] prior to implementation of the change.
Reimbursement for costs associated with the above requirements will be as
mutually agreed prior to any re-qualification
5.0 Product Qualification Program. This section describes a series of reviews
and tests that Supplier must accomplish during the product development and pilot
build of its Products.
     5.1 Process Certification
          5.1.1 Products. Supplier will conduct PCTs prior to the start of Dot
Hill production. The purpose of these tests is to have Supplier demonstrate that
its manufacturing process is stable and capable of producing high quality
product in volume. Required documentation will include, but not be limited to,
the following: [...***...]. Pareto, as defined herein, shall mean a list of
failures. At Dot Hill’s option, a representative of Dot Hill may be sent to
Supplier’s factory to observe the build.
          5.1.2 DF* (Design for Manufacturability, Design for Testability,
etc.). Supplier will implement all DF* recommendations as identified by Dot
Hill, Supplier’s “Open Bug GAP Report”, and External Manufacturer(s)
recommendations prior to any build. Supplier will review all fixes with Dot Hill
Operations Engineering prior to DF* implementation. Any additional gaps that are
identified by Supplier during pre-production or production volume phase
throughout the entire supply chain will be subject to review by Dot Hill
Operations Engineering. Any gaps identified by Dot Hill Operations Engineering
will be communicated to Supplier for review/verification and implementation in a
timely fashion.
          5.1.3 Design/Compliance Verification. Dot Hill Operations Engineering
will review all Supplier Product design verification test plans and results
against Dot Hill’s best practices. Any gaps identified will be reviewed with
Supplier for applicable modifications.
*** Confidential Treatment Requested
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          5.1.4 Supplier Assembly Tooling and Enclosure Products Tool/Process
Qualification. No data or samples will be submitted for Dot Hill’s approval
until Supplier has inspected the mutually agreed upon quantity of parts and has
ensured that the tool/process satisfies Dot Hill production level drawing and
engineering specifications. This requirement also applies to any re-submission
that may be required. Submission of gauge Reproducibility and Repeatability
reports to Dot Hill is required for all critical assembly tooling prior to
production of a part/assembly for Dot Hill. For Supplier-developed Dot Hill
tooling, Supplier shall provide complete tool design drawings to Dot Hill for
its approval prior to construction of Dot Hill tooling. Tool Approval/First
Article Inspection. Supplier shall provide to Dot Hill, for its approval, data
obtained from a 100% inspection of all dimensions/specifications of the initial
parts produced to evaluate the tooling and set-up. These parts shall be run
under production conditions (e.g. correct speed and proper temperature). Each
cavity of a multi-cavity mold must be inspected and approved. If heat treating
and/or plating or coating is specified, the parts must be re-evaluated and
additional data collected after these processes have been completed. Dot Hill
reserves the option to verify and validate any and all First Article results.
Reimbursement, if any, of those costs associated with qualification, inspection,
design and creation of tooling will be as mutually agreed.
          5.1.5 Process Capability. Supplier shall produce a Process Capability
Study which analyzes the information and data for the variable characteristics
of all processes in a mutually agreed upon format. Supplier shall adjust
processes as indicated by the Process Capability Study results to achieve
targeted quality goals. Supplier shall develop X/R charts or comparable
information to evaluate the capabilities of the processes. All critical
dimensions or features of parts called out in Dot Hill’s drawings shall meet a
Cpk index of 1.33 (industry standard measurement).
     5.2 Quality Systems Requirements. Supplier must maintain a defined Quality
System for Product measurement and evaluation throughout the manufacturing
process. The Quality System shall monitor incoming material control,
work-in-process and final Product and packaging. The Quality System shall
include:
     (a) [...***...]
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     (g) [...***...]
     5.3 Packaging Requirements. Specific packaging requirements beyond the
standard process will be supplied by Dot Hill as required. In all cases
packaging and outer packaging must be provided to ensure all material arrives at
Dot Hill undamaged.
     5.4 Dot Hill Quality Levels. Supplier’s quality levels for Product are
measured in DPMs and shall cover the entire manufacturing process, Supplier post
pack audit and customer DOAs. Failures will be attributed to Supplier’s process
or Product unless Dot Hill and Supplier mutually agree that such a failure was
not caused by Supplier. Maximum DPM rates during production are set forth below.
Beyond month one of production, all Product failures in excess of the DPM
requirements below will be required to have a documented improvement plan. Where
required by Dot Hill, this plan will also contain action plans such as
pre-screening. Dot Hill also reserves the right to place Products which exceed
the DPM requirements on stop-ship.
Failure rates = # of verified failures divided by the # of units used (by Dot
Hill and/or Dot Hill contractors) multiplied by 1,000,000.
OEM Storage DPM Goals:

      Production Items   Quality Quarterly Goals
[...***...]
  [...***...]
[...***...]
  [...***...]
[...***...]
  [...***...]
[...***...]
  [...***...]
[...***...]
  [...***...]

The parties will review the above DPM requirements every [...***...] after the
first quarter of production of the Products and reset the targets as mutually
agreed. It is anticipated that quality levels will continue to show improvements
from these baselines over time. As Dot Hill’s internal integration DPM rates
decrease, Dot Hill reserves the right to re-negotiate these DPM requirements
with Supplier.
     5.5 Actions Related to Excessive DPM Rates and/or Epidemic Failures. If the
Products fail to meet the DPM rates, Supplier will perform a root cause analysis
to attempt to identify problems that may have caused such failure. Dot Hill and
Supplier
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agree that in the event Product fails to meet the DPM rates set forth in
Section 5.4 above, and the cause is due to Supplier workmanship or Supplier
purchased materials, then Supplier shall implement immediate corrective actions,
at Supplier’s expense and in accordance with an plan and schedule that has been
agreed to by Dot Hill, to screen out the defects causing the yields to exceed
the requirements until long term corrective actions are implemented and proven
effective. Said corrective actions may include, but are not limited to, the
following:

  •   Extended component, sub-assembly and/or final assembly level burn-in to
remove any latent failures.     •   Special screening tests in Supplier’s
process.     •   Extend the test time of final/post-final function test(s).

6.0 Supplier Audit Programs. Supplier shall perform a series of monitoring tests
to ensure that Products conform to Dot Hill’s requirements. A brief description
of each test requirement follows.
     6.1 ORT. Supplier shall conduct ORT tests in accordance with mutually
agreed upon criteria. The testing will be conducted at Supplier’s site in a
manner mutually agreed upon between the parties. The ORT test results shall be
delivered to Dot Hill on a [...***...] basis and shall include details of any FA
and CAs taken to address any ORT failure. Supplier shall report ORT failures to
Dot Hill within [...***...] after occurrence.
     6.2 Field MTBF and AFR Reporting. Supplier will implement a process and
worldwide database to effectively track monthly field returns by Product
(model). Supplier will provide all data requested by Dot Hill by the
[...***...]. Data must be provided for Dot Hill population only and a separate
reporting for “Other Supplier Customers”. This data will also include a pareto
of failure symptoms found on failing FRUs by FRU part number, No Trouble Found
rates by FRU part number and any resulting corrective action activities.
     6.3 Ongoing Quality Audit. Dot Hill and Supplier shall agree to a
statistically valid method for estimating the ongoing quality level of every
shipment prior to delivery to Dot Hill. Any lots not meeting the agreed upon
quality level will be 100% screened by Supplier to ensure their conformance to
the Specification. At Dot Hill’s request, Supplier shall conduct Dot Hill
application-specific process monitoring tests. The purpose of this testing is to
monitor the ongoing performance of manufacturing processes and to identify
Supplier’s manufacturing process problems at Supplier’s site. Testing will be
conducted on equipment as specified by Dot Hill. Dot
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Hill shall provide procedures, equipment lists, and analysis of test results.
Supplier shall set up the test, maintain the equipment, analyze the root cause
of all failures and take appropriate CAs. Supplier shall maintain control of the
manufacturing process utilizing process capability charts. Supplier will notify
Dot Hill when the established control limits have been reached or exceeded.
Supplier shall submit to Dot Hill control charts and data for all controlled
dimensions or designated test and inspection processes outlined by Dot Hill at
intervals designated by the responsible SE.
     6.4 Periodic Specification Testing. Supplier shall re-test the Product to
the full Dot Hill Specification, including beyond spec margin testing and test
demonstration, on a periodic basis to confirm ongoing performance to the
Specification and to verify that there are no major changes to design margins.
The specific timing of this test will be determined by mutual agreement of the
parties prior to the start of production. Supplier shall provide a detailed plan
for Dot Hill’s approval at least once per quarter. If at any time any of the Dot
Hill quality metrics are triggered, PST and test demonstration Product
validation will be required. These triggers include, but are not limited to, the
following:

  •   Factory DPMs     •   Reliability     •   Defects on Arrival (“DOA”)     •
  Dot Hill customer escalations

Dot Hill ORT or PPA reimbursement, if any, of costs for the above will be
agreed.
7.0 Dot Hill Audit Programs. After Products are introduced into manufacturing,
Dot Hill may choose to conduct the following tests for conformance to the
Specification.
     7.1 Source Inspection. Dot Hill may elect to source inspect lots prior to
shipment from Supplier’s factory during the initial stages of production or
until a reasonable confidence level has been established. Source inspection may
be initiated or terminated at Dot Hill’s option. Supplier shall permit a Dot
Hill employee or representative to visit the factory to source inspect finished
lots. Inspection shall be performed and lot acceptance shall be determined in
accordance with a pre-agreed upon sample plan. Supplier shall assist the source
inspector in unpacking, staging, inspecting, testing, and re-packaging sample
units. Supplier shall screen rejected lots for discrepant parameter(s) and
re-submit them for source inspection. Acceptance at source inspection does not
limit Supplier’s responsibility for failures. Product quality and reliability is
at all times the responsibility of the Supplier. If source inspection is
required for more than [...***...]. Supplier shall
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provide dedicated office space at its facilities for Dot Hill personnel to work,
as needed.
     7.2 Supplier Process Audits. Dot Hill may conduct quality audits of
Supplier’s and Supplier’s sub-tiers facilities subject to [...***...] advance
notice, during normal business hours to determine Supplier’s compliance with Dot
Hill’s quality requirements. These audits will include review of all aspects of
the Process including without limitation FA. The Supplier will also have a
documented procedure including frequency of audits of its sub-tier suppliers by
Product manufacturing site and SQE.
     7.3 FA; Containment; CA Program
          (1) TAT will be measured from the date of receipt of Product at
Supplier’s facility until Supplier’s notification to Dot Hill of containment.
Containment is defined as the CA, interim or final, which prevents shipment of
those Products to Dot Hill that have a risk of reproducing problems found in FA.
In the event that Products which are analyzed are found to be NTF or are caused
by a random component failure, containment will be considered complete when Dot
Hill is notified, in writing, of the FA results. Component failures will be
documented by objective evidence of failure rate DPM history within Supplier’s
processes. If containment action is not the final CA, the final action will
occur within [...***...] after Supplier’s receipt of Product.
          (2) The TAT requirement hereunder is an average [...***...] from
receipt of Product at Supplier to notification to Dot Hill of containment. Dot
Hill agrees to expedite the return of Product requiring FA, with the intent that
Products being returned for FA will not be held for consolidation.
          (3) Supplier will be responsible for tracking TAT and issuing a weekly
summary report to Dot Hill. Supplier will also be responsible for issuing
quarterly summary reports which will be used by Dot Hill as supporting data for
FA responsiveness scorecard calculations.
          (4) Only Product FA that Dot Hill request will be used for TAT
calculations.
          (5) Dot Hill requires [...***...] on all Products failing in the
following processes, and will notify Supplier of the requirement when the Return
Material Authorization (“RMA”) is requested. An expedited returns path must be
identified for priority failures.

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  •   [...***...]

Supplier shall provide to Dot Hill full details of root cause corrective action
results. In the case of escalations, Supplier will need to work directly with
Dot Hill’s field support staff. For all of the above returns, priority FA is
required as follows: [...***...]. These Products will be included in the TAT
calculation. Dot Hill also requires FA on all trends found within Dot Hill’s
manufacturing process and critical worldwide customer failures. It is Dot Hill’s
responsibility to document and provide to Supplier, at the time of RMA request,
the serial numbers of Products which require FA.
     7.4 Dot Hill Process Yield/Pareto Reports. Dot Hill shall review monthly
yield and pareto reports from Supplier. Supplier shall at Dot Hill’s request,
review the reports and investigate any Product in-process for the top
[...***...] failures listed and advise Dot Hill of the results. Upon request by
Dot Hill, Supplier shall provide detailed root cause FA and Supplier pareto
information on a [...***...] basis. [...***...] meetings will be conducted to
review Supplier’s progress in improving its yields. Summaries of this
information will be distributed to management in both companies. Dot Hill will
use this information as a basis for awarding future business. Refer to
Attachment 1 for a detailed list of reports required.
8.0 Traceability Requirements. A list of all subassemblies and components that
are to be included in a Product shall be prepared by Supplier and Dot Hill.
Supplier shall implement systems and processes to permit all such subassemblies
and components on this list to be backward traceable in order to mitigate
against warranty and epidemic failure issues that could arise. This list will
include, without limitation, those subassemblies and critical devices which are
specifically designated by the Engineering and Operations technical teams of the
parties to have backwards traceability.

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EXHIBIT C-1
CUSTOMER SUPPORT QUALITY REQUIREMENTS
1.0 Purpose. This exhibit defines Dot Hill’s requirements for Supplier’s repair
quality program and Supplier’s responsibilities for testing and repairing
Products for Dot Hill. This document will be used in conjunction with the
Exhibit B and Exhibit C.
2.0 Scope. This exhibit describes Dot Hill’s quality requirements for worldwide
repair of Product either by Supplier or by Supplier’s authorized third parties.
Dot Hill’s goal is to receive Products from Supplier which are defect free.
Therefore Dot Hill will measure Supplier to an [...***...]. This exhibit
specifies the Supplier processes required in support of this goal.
3.0 Applicable Documents

  •   Global Cosmetics — Quality — Workmanship Standards     •   Engineering
Specification for Part Identification Label     •   Bar Code Marking Standard
for Field Replaceable Units     •   Labeling and Packaging Procedure for
Repaired FRUs     •   Mission Critical Repair Process     •   Supplier Repair
Data Reporting Specification (or applicable Auto Load Specification)     •  
Supplier Self-Surveillance Requirements

4.0 Dot Hill Audit Program
     4.1 Initial Facility Qualification. Dot Hill may require an initial
facility qualification audit prior to permitting shipment of Repaired Product.
This audit will cover all repair and business processes. Prior to the audit,
Supplier will be required to complete the Dot Hill Audit Questionnaire, which
will be provided by Dot Hill.
     4.2 Move and/or New Product Introduction Audit. If Supplier moves a repair
line, a repair facility, or starts up a new Product repair line in a previously
requested facility, Dot Hill will permit shipment of Repaired Product from that
facility only upon Dot Hill’s written approval, such approval not to be
unreasonably withheld, delayed or conditioned. In most cases, Dot Hill will
require an on site audit of the facility prior to providing approval.
     4.3 [...***...] Survey. Dot Hill may perform qualification audits of each
repair
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site [...***...]. This audit will cover all repair and business processes. Prior
to the audit, Supplier will be required to complete the Dot Hill Audit
Questionnaire, which will be provided by Dot Hill.
     4.4 Random Audits. Dot Hill may, with at least [...***...] prior written
notice for North America repair facility, and [...***...] prior written notice
to Supplier for all other repair facilities, at any time conduct an audit of
Supplier’s repair facilities during normal business hours to determine
compliance with Dot Hill’s requirements.
5.0 Supplier Process Requirements
     5.1 Functional Performance. Functional performance is defined in the
Specifications corresponding to the Dot Hill FRU part numbers identified in
Exhibit B-5 of Exhibit B or in the system level specifications.
     5.2 Process Commonality. Supplier shall have the capability to control and
make common across all repair locations, any and all processes that could affect
Product quality or the fulfillment of Dot Hill requirements. These processes may
include but are not limited to:

  •   [...***...].

     5.3 Multiple Returns. Multiple returns means Product identified by serial
and part number returned with a similar reproducible failure symptom [...***...]
or more times, unless otherwise specified, during any [...***...] period as
reported by Dot Hill or the Supplier’s testing. Supplier shall have the
capability to
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recognize, monitor, analyze and take corrective action on Multiple Returns
repaired by Supplier or Supplier authorized third parties. Dot Hill and Supplier
shall agree on a means to measure performance in this area and report as defined
in Article 8 below. Dot Hill and Supplier will mutually determine if the
returned Product should be repaired or replaced. Returns for ECO upgrade only
and not due to field failure will not be considered in the Multiple Return
count.
     5.4 Quality System. Supplier shall maintain a documented quality system
consistent with the requirements set forth in the ISO 9000 standards. The intent
of this quality system is to provide for business and repair processes which are
repeatable, sustainable and capable of meeting Dot Hill’s quality, cost and
delivery goals.
     5.5 Root Cause Failure Analysis. Supplier shall have the capability to
perform root cause and failure analysis and report findings in a timely manner,
as shown below or as stated in Dot Hill’s request, and to effectively capture
and route Product requiring root cause analysis from identified defects or
customer requests. Supplier shall maintain and track accurate and detailed
records of all such failure analysis performed. Measurement for Failure Analysis
(“FA”) response is based on the date of receipt of the defective unit requiring
FA by the supplier.
          5.5.1 Notification of the requirement for a root cause analysis may be
provided to Supplier by phone, email, voicemail or fax prior to or after the
return of the defective Product for repair.
          5.5.2 Reasonable requests for FA generated by Dot Hill’s Corrective &
Preventive Action System (“CPAS”) require complete FA and written response via
email or a mailed report within five (5) working days after Supplier’s receipt
of the defective unit.
Failure Analysis requirements:
     a. [...***...].
     5.6 Supplier Corrective Action Request (“SCAR”). Supplier shall maintain a
CLCA process for reactive events (defects) as well as continuous improvement
efforts. Any SCAR issued by Dot Hill must be addressed by Supplier within
Supplier’s CLCA
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process. SCARs may be issued as a result of events which include, but are not
limited to, an audit finding, quality defect or process failure. Supplier will
respond to SCARs in accordance with the time frames specified in the applicable
SCAR.
     5.7 Cosmetics. Supplier shall comply with the requirements specified in Dot
Hill’s Global Cosmetics — Quality — Workmanship specifications.
     5.8 Labeling/Packaging. Supplier shall comply with the requirements
specified in Dot Hill’s Engineering Specification for Part Identification Label;
Bar Code Marking Standard for Field Replaceable Units; and Labeling and
Packaging Procedure for Repaired FRUs, for all reworked/repaired FRUs or new
units shipped to replace FRU failures.
     5.9 Mission Critical. Products/FRUs which are Mission Critical will be
designated as such in Exhibit B-5 with the initials “MC” after the part number.
All parts designated as Mission Critical must be complaint with the Mission
Critical Process and report data provided by Supplier in the format specified in
Supplier Guidelines.
6.0 Supplier Notification Requirements
     6.1 Stop Ships and Purges. Supplier shall notify Dot Hill in writing of any
discrepancy in Product quality which may have a detrimental effect on previously
shipped Product or which may result in a stop ship or purge. Supplier will make
recommendations regarding the disposition of this material. and Supplier agrees,
at Dot Hill’s request, to sort and rework all material at Supplier locations.
Costs associated with stop ship and purge activity, [...***...]. Costs not
attributable to [...***...].
     6.2 Repair Process Change Notification. In the event the Supplier desires
to change the fundamental repair process in such a way that may impact form,
fit, function, quality, reliability, serviceability, or safety, Supplier shall
notify Dot Hill in writing within a reasonable period (no less than [...***...])
prior to the effective date thereof. Examples of changes which require
notification include, but are not limited to:

  •   Major test equipment or procedures,     •   Major repair processes,     •
  Burn-in time of environment,     •   Repair locations,     •   Final
acceptance criteria,

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  •   Packaging,     •   Re-layout or relocation of a repair line within a
facility, and     •   Cosmetic criteria.

Supplier agrees to provide verbal notification to the Dot Hill Supplier
Engineer, within [...***...] of all other significant repair process changes
that do not affect form, fit, function, serviceability or safety. Supplier shall
implement such changes in the process only if collected data verifies that
quality and reliability levels would be sustained or improved. Said data will be
made available for Dot Hill review upon request.
     6.3 ECOs. Supplier shall have the capability to manage ECOs throughout all
repair and stocking locations and implement such ECOs in a timely manner.
Supplier will integrate its ECO and field change/notification processes with
that of Dot Hill’s, for example Dot Hill’s ECO, FIN, and FCO processes, so that
all changes made to a Product are communicated to Dot Hill in a timely and
effective manner to a Dot Hill specified web site or alternative location in
accordance with the requirements of this Agreement. Upon Dot Hill’s request, and
at Dot Hill’s expense, Supplier will provide documentation, tools and parts
needed to implement ECOs at Dot Hill or Dot Hill’s TPRSs.
7.0 Quality Monitoring and Verification Requirements
     7.1 Self Surveillance. It is Dot Hill’s goal to implement Supplier
Self-Surveillance where feasible. The Supplier shall have a system of controls
in place which assures consistent high quality repair and handling of Dot Hill
Products. This will include a means of tracking, analyzing, and continuously
improving post process quality results. The Supplier Self-Surveillance
Requirements are outlined in the Supplier Guidelines.
     7.2 Incoming Inspection
          7.2.1 Self-Surveillance Implemented. Dot Hill may perform incoming
inspections and testing of Repaired Products consisting of a functional test
according to a Dot Hill test procedure and/or a visual/mechanical inspection.
The sample size may be adjusted at Dot Hill’s discretion and may be based upon
the Supplier’s Self-Surveillance quality level attained as described in the
Supplier Guidelines.
          7.2.2 Self-Surveillance Not Implemented. Dot Hill may utilize its
[...***...] incoming inspection results as the Supplier’s quality performance
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measurement. Acceptance at incoming inspection does not limit Supplier’s
responsibilities for Product failures.
          7.2.3 Supplier shall maintain an internal continuous improvement plan
to demonstrate how it will achieve the DPM goal set forth in Article 2 above.
     7.3 NTF Testing. All tests to be used for NTF testing will be those tests
used in the production process unless otherwise mutually agreed. The results of
these tests will be used to determine applicable NTF charges.
8.0 Reports and Data
     8.1 Monthly Quality Report. Supplier shall submit a [...***...] quality
report to Dot Hill covering three (3) distinct categories:

  •   [...***...].

Supplier is responsible for correlation analysis across the three (3) categories
in order to identify common issues. The report shall be summarized at the
worldwide level and delineated as appropriate to clearly identify areas
requiring corrective action.
     8.2 Repair Data Reporting. Supplier shall comply with the requirements
specified in Supplier Repair Data Reporting Specification.
     8.3 [...***...] Business Reporting. Supplier shall be able to generate and
provide to Dot Hill the following reports on a [...***...] basis.

  •   [...***...]

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  •   [...***...]

     8.4 [...***...] Business Reporting. Supplier shall be able to generate and
provide to Dot Hill the following reports on a [...***...] basis.

•   [...***...].

     8.5 Informational Updates. Supplier will provide updates to the following
items specifically as they relate to Repair Services as part of the regularly
scheduled meetings between Dot Hill and Supplier:

  a.   State of the Supplier’s business;     b.   Any planned expansions,
additions or moves;     c.   Any new state of the art processes being
implemented;     d.   Additional capabilities;     e.   ISO 9000 compliance plan
achievement; and     f.   Training for service, both internal and external
(Supplier’s contractors).

     8.6 Additional Information. If requested by Dot Hill, Supplier shall
provide within [...***...] on hand defective inventory status by Dot Hill part
number. If Supplier’s performance falls below [...***...], additional reports
may be required by Dot Hill. The format of such reports will be as mutually
agreed to by both parties.
9.0 Scrap. If scrap costs are [...***...]. All material that is pending
disposition shall be segregated from good stock and placed in a holding
location. Upon receipt of written instructions from Dot Hill as to whether Dot
Hill elects to exercise option (a) or (b) below, Supplier shall:
     (a) [...***...].
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