Exhibit
10.10


 


Confidential
Treatment Requested


 


 


Base
Agreement # 4902RL1317


 


This Base
Agreement (“Base Agreement”) dated as of November 1, 2002 (“Effective
Date”), between International Business Machines Corporation (“Buyer”)
and Overland Storage, Inc. (“Supplier”), establishes the basis for a
multinational procurement relationship under which Supplier will provide Buyer
the Products and Services described in SOWs issued under this Base
Agreement.  Products and Services acquired
by Buyer on or after the Effective Date will be covered by this Base
Agreement.  This Base Agreement will
remain in effect until terminated.


 


1.0          Definitions


 


“Affiliates” means
entities that control, are controlled by, or are under common control with, a
party to this Agreement.


“Agreement” means
this Base Agreement and any relevant Statements of Work (“SOW”), Work Authorizations (“WA”),
and other attachments or appendices specifically referenced in this Agreement.


“Bulk Pull Indicator”
means whether Pull Notifications will be sent to Supplier singly (designated by
an “S”) or in groups such that such Pull Notifications cumulate to a Product
quantity of at least one pallet (designated by a “G”).


“Epidemic Defects”
shall mean Products that experience one of more of the following: (a) the same
or similar defect at a rate of one percent (1%) or more (or other rate that may
be specified in an SOW) in any given sixty (60) day period, (b) the same or
similar defect at a rate of one percent (1%) or more (or other rate that may be
specified in an SOW) of total purchases, (c) recalls, or (d) safety defects.


“Lead Time”
means the minimum length of time prior to a specific delivery date that
Supplier must receive a WA from Buyer to ensure delivery by such date.


“Liability Horizon”
means the period of time as specified in the Pull Product Profile used to
calculate the maximum liability for a given Pull Product.


“Liability Horizon Quantity”
means the quantity of Pull Products specified in the Planning Schedule
contained within the Liability Horizon.


“Overage” means the
quantity of Pull Products by which the Liability Horizon Quantity specified in
a Planning Schedule exceeds the quantity of Pull Products committed to in Pull
Notifications.


“Participation Agreement”
or “PA”
means an agreement signed by one or more Affiliates which incorporates by
reference the terms and conditions in this Base Agreement, any relevant SOW,
and other attachments or appendices specifically referenced in the PA.


“Personnel” means
agents, employees or subcontractors engaged or appointed by Buyer or Supplier.


“Planning Schedule”
means Buyer’s most recent forecast of requirements for Pull Products, as
derived from the forecasting process set forth in the SOW.


“Prices” means the
agreed upon payment and currency for Products and Services, including all
applicable fees, payments and taxes, as specified in the relevant SOW and/or
WA.


“Process Time”
means the time required for Buyer, subject to the Bulk Pull Indicator, to issue
a Pull Notification once Product has been pulled from the hub.


“Products” means
items that Supplier prepares for or provides to Buyer as described in a SOW.


“Pull Buffer” means
a quantity of Pull Products which is held in inventory by Supplier.


“Pull Products”
means Products specified in a Pull Product Profile.


“Pull Product Profile”
means the section of the SOW, or other document provided by Buyer, describing
Pull Products.


“Pull Purchase Order”
means a logistical processing document used for invoicing, receiving and
forecasting purposes which does not represent a WA nor bind Buyer to any
quantity or delivery date.


 


 


THIS
EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST.  REDACTED MATERIAL IS MARKED
WITH A *** AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.


 

















 


“Pull Notification”
means Buyer’s only authorization (WA) for Supplier to deliver a specified
quantity of Pull Products.


“Response Time”
means the time required for the Supplier to manufacture Product.


“Rounding Indicator”
means the minimum quantity of Products that Buyer may pull at any time.


“Taxes”
means any and all applicable taxes, charges, fees, levies or other assessments
imposed or collected by any governmental entity worldwide or any political
subdivision thereof and however designated or levied on sales of Products or
Services, or sales, use, transfer, goods and services or value added tax or any
other duties or fees related to any payment made by Buyer to Supplier for
Product and/or Service provided by Supplier to Buyer under or pursuant to this
Agreement; exclusive, however, of taxes imposed upon the net income or capital
of Supplier or taxes in lieu of such net income taxes or such other taxes which
are to be borne by the Supplier under law. 
Supplier shall also bear sole responsibility for all taxes, assessments,
or other levies on its own leased or purchased property, equipment or software.


“Transit Time”
means the Lead Time less the Response Time.


“Services” means
work that Supplier performs for Buyer as described in a SOW.


“Statement of Work”
or “SOW”
means any document that:


1.  identifies itself as a statement of work;


2.  is signed by both parties;


3.  incorporates by reference the terms and
conditions of this Base Agreement; and


4.  describes the Products and Services,
including any requirements, specifications or schedules.


“Upside Flexibility”
means a percentage of Pull Products specified in the Pull Product Profile in
excess of the Liability Horizon Quantity.


“Work Authorization”
or “WA”
means Buyer’s authorization in either electronic or tangible form for Supplier
to conduct transactions under this Agreement in accordance with the applicable
SOW (i.e., a purchase order, bill of lading, or other Buyer designated
document).  A SOW is a WA only if
designated as such in writing by Buyer.


 


2.0          Statement
of Work


 


Supplier will
provide the Products or Services as specified in the relevant SOW only when
specified in a WA.  Supplier will begin
work only after receiving a WA from Buyer. 
Buyer may request changes to a SOW and Supplier will submit to Buyer the
impact of such changes.  Changes
accepted by Buyer will be specified in an amended SOW or change order signed by
both parties.  Supplier will maintain
the capability to supply agreed upon Products, including parts of Products, for
a period of time as required by law and any additional periods of time
specified in the relevant SOW.  Supplier
will notify Buyer of its intent to withdraw any Product and will continue to
deliver such withdrawn Products for the periods as specified in the relevant
SOW.


 


3.0          Pricing


 


Supplier will
provide Products and Services to Buyer for the Prices.  Prices for Products and Services specified
in a SOW and/or WA and accepted by Buyer plus the payment of applicable Taxes
will be the only amount due to Supplier from Buyer. The relevant SOW or WA
shall contain Prices for each country receiving Products and Services under
this Agreement.


 


4.0          Payments
and Acceptance


 


Terms for payment
will be specified in the relevant SOW and/or WA.  Payment of invoices will not be deemed acceptance of Products or
Services, but rather such Products or Services will be subject to 


 


2

















 


inspection, test,
acceptance or rejection by Buyer until successful integration into Buyer’s
products, or for a period as specified in the relevant SOW, whichever occurs
first.  Buyer may, at its option, either
reject Products or Services that do not comply with the specifications and
requirements for a refund plus any inspection, test and transportation charges
paid by Buyer, or require prompt correction or replacement of such Products
upon Buyer’s written instruction.  Buyer
may reject entire lots of Products which do not meet quality levels as
specified in the relevant SOW and/or WA.


 


5.0          Electronic Commerce


To the extent
permitted by local law, the parties will conduct transactions using an
electronic commerce approach under which the parties will electronically
transmit and receive legally binding purchase and sale obligations, including
electronic credit entries transmitted by Buyer to the Supplier account
specified in the relevant SOW and/or WA. 
The parties will enter into a separate agreement governing the
transmission of such electronic transactions and associated responsibilities of
the parties.


 


6.0                               Warranties


 


6.1          Ongoing Warranties


Supplier makes the
following ongoing representations and warranties:


1.  it has the right to enter into this
Agreement and its performance of this Agreement will comply, at its own
expense, with the terms of any contract, obligation, law, regulation or
ordinance to which it is or becomes subject;


2.  no claim, lien, or action exists or is
threatened against Supplier that would interfere with Buyer’s use or sale of
the Products;


3.  Products and Services do not infringe any
intellectual property right of a third party;


4.  all authors have agreed not to assert their
moral rights (personal rights associated with authorship of a work under
applicable law) in the Products, to the extent permitted by law;


5.  Products are free from defects in material
and workmanship and will conform to the warranties, specifications and
requirements, including but not limited to quality requirements in this
Agreement for the time period as specified in the relevant SOW and/or WA;


6.  Products are free of defects in design
(except for written designs provided by Buyer unless the defects in Buyer’s
designs are based on Supplier’s specifications);


7.  Products are safe for use consistent with
and will comply with the warranties, specifications and requirements in this
Agreement;


8.  Products and Services which interact in any
capacity with monetary data are euro ready such that when used in accordance
with their associated documentation they are capable of correctly processing
monetary data in the euro denomination and respecting the euro currency
formatting conventions (including the euro sign);


9.  none of the Products contain nor are any of
the Products manufactured using ozone depleting substances such as halons,
chlorofluorocarbons, hydrochlorofluorocarbons, methyl chloroform and carbon
tetrachloride as defined by the Montreal Protocol , and as also specified in
the relevant SOW and/or WA;


10.  Products are new and do not contain used or
reconditioned parts, unless otherwise specified in the relevant SOW and/or WA;


11.  to the extent Products include software code
(including without limitation firmware, BIOS, and device drivers), Products
contain no harmful code;


12.  all Products and all parts of Products,
including, but not limited to parts that may be identified as field replacement
units, customer replacement units, spare parts, and/or parts that have any
floppy disk controller functions and other storage devices shall not experience
any measurable loss of data, and shall conform with any other related
requirements specified in the relevant SOW and/or WA;


 


3

















 


13.  all Products will process date data
correctly (including, without limitation, correctly processing, providing,
receiving, and displaying date data within and between the twentieth and
twenty-first centuries), and are designed to exchange date data accurately and
correctly with other products (including, without limitation, hardware, code,
other software, and firmware) when used with products which are designed to
exchange date data accurately and correctly;


14. it is
knowledgeable with, and is and will remain in full compliance with all
applicable export and import laws, regulations, orders, and policies
(including, but not limited to, securing all necessary clearance requirements,
export and import licenses and exemptions from, and making all proper filings
with appropriate governmental bodies and/or disclosures  relating to the release or
transfer to non U.S. nationals of technology and software in the U.S., or
outside the U.S., release or transfer of technology and software having U.S.
content or derived from U.S.-origin software or technology);


15. it will not
export, directly or indirectly, any technology, software or commodities of U.S.
origin or having U.S. content provided by Buyer or their direct product to any
of the countries or to nationals of those countries, wherever located,  listed
in U.S. Export Administration Regulations, as modified from time to time,
unless authorized by appropriate government license or regulations;


16. it will not
use, disclose, or transfer across borders any information that is processed for
Buyer that may identify an individual (“Personal Data”), except to the extent
necessary to perform under this Agreement; and


17. it will comply
with all applicable data privacy laws and regulations, will implement and
maintain appropriate technical and other protections for the Personal Data, and
will cooperate fully with Buyer’s requests for access to, correction of, and
destruction of Personal Data in Supplier’s possession.


 


6.2          Warranty
Redemption


If Products or
Services do not comply with the warranties in this Agreement, Supplier will
repair or replace Products (at the latest revision level) or re-perform Services,
or credit or refund the Price of Products or Services, such remedy at Buyer’s
reasonable discretion (provided that any remedy requested by Buyer in the
interests of maximizing customer satisfaction will always be deemed
reasonable).  For such Products,
Supplier will issue to Buyer a Return Material Authorization (“RMA”) within
five (5) days of Buyer’s notice.  If
Supplier fails to repair or replace Products or re-perform Services in a timely
manner, Buyer may do so and Supplier will reimburse Buyer for actual and
reasonable expenses.  Buyer may return
Products which do not conform to the warranties in this Agreement from any
Buyer location to the nearest authorized Supplier location at cost of Supplier
and Supplier will, at cost of Supplier, return any repaired or replaced Product
in a timely manner. SECTIONS 6.2, 6.4, AND 9.0 OF THE BASE AGREMENT, STATE
BUYER’S SOLE REMEDIES FOR ANY BREACH OF WARRANTY IN SECTION 6.1 OF THE BASE
AGREEMENT.


 


6.3          Post
Warranty Service


Supplier will
offer post warranty Services as specified in the relevant SOW or identify a
third party which will provide such Services. 
In the event a third party or Buyer will provide such Services, Supplier
will provide the designated party with the information required for the
performance of the Services.


 


6.4          Epidemic
Defects


For Epidemic
Defects, Supplier will, at Buyer’s discretion: (a) refund or credit the Product
Price, or replace or repair the Products at no charge in a timely manner, and
(b) reimburse Buyer for all actual and reasonable expenses incurred by Buyer
related to Epidemic Defects, including, without limitation, costs associated
with repair or replacement, field costs, problem diagnosis, and field and
finished goods inventory related costs.  
Supplier will commence such performance within five (5) calendar days of
Buyer’s notice to Supplier of an Epidemic Defect. SECTIONS 6.2, 6.4, AND 9.0 OF
THE BASE 


 


4

















 


 


AGREMENT, STATE
BUYER’S SOLE REMEDIES FOR ANY BREACH OF WARRANTY IN SECTION 6.1 OF THE BASE
AGREEMENT.


 


7.0                               Delivery


 


7.1          Delivery Logistics


Delivery under
this Agreement means delivery to the Buyer location and delivery point as
specified in the relevant SOW and/or WA. 
Buyer may cancel or reschedule the delivery date or change the delivery
point as specified in the relevant SOW and/or WA.  The term of sale will be specified in a SOW or WA.  Buyer may issue a twelve (12) month rolling
forecast for quantities of Products that may be required, and Supplier’s
obligations of maintaining sufficient inventory to satisfy Buyer’s requirements
for the Product are conditioned upon Buyer providing such forecast to
Supplier.  Supplier will only deliver
the Products specified in a WA.  ANY PRODUCT
QUANTITIES CITED IN OR PURSUANT TO THIS AGREEMENT, EXCEPT FOR QUANTITIES CITED
IN A WA AS FIRM, ARE PRELIMINARY AND NON-BINDING ONLY.  BUYER MAKES NO REPRESENTATION OR WARRANTY AS
TO THE QUANTITY OF PRODUCTS THAT IT WILL PURCHASE, IF ANY.


 


7.2          On-Time
Delivery


The Lead Time for
Buyer to issue a WA prior to delivery will be specified in a SOW.  Products specified in a WA for delivery with
such Lead Time will be delivered on time. 
Supplier will use reasonable efforts when Buyer requests delivery with a
shorter Lead Time.  If Supplier cannot
comply with a delivery commitment, Supplier will promptly notify Buyer of a
revised delivery date and Buyer may:


1.  cancel without charge Products or Services
not yet delivered;


2.  ***; and


3.  exercise all other remedies provided at law,
in equity and in this Agreement.


 


7.3          Replenishment


Buyer will issue a
Pull Purchase Order for any Pull Products that it may include in Pull
Notifications. Notwithstanding the Pull Purchase Order, Supplier will only
deliver Pull Products that are specified in a Pull Notification, and will make
such delivery on the delivery date(s) specified in the relevant Pull
Notification. Other than the Liability Horizon Quantity, Buyer makes no
representation or warranty and assumes no liability regarding the quantity of
Pull Products that it will purchase. 
Buyer assumes no liability for materials procured or products built in
excess of the Liability Horizon Quantity. 
Supplier will apply Overages towards future Pull Notifications and the
parties will agree to a reconciliation amount and a disposition of Overages, if
any.  Such reconciliation amount will be
reduced by any amount realized by Supplier for Pull Products (including raw
materials or works-in-progress) used, returned or sold to any party other than
Buyer, and any other reductions agreed to by the parties.


 


8.0          Intellectual Property


 


Supplier grants
Buyer all intellectual property rights licensable by Supplier which are
necessary for Buyer to use and sell the Products.  This Agreement does not grant either party the right to use the other
party’s or their Affiliates’ trademarks, trade names or service marks.


 


5

















 


9.0          Supplier Liability for Third Party
Claims


 


9.1          General Indemnification


Supplier will
defend, hold harmless and indemnify, including legal fees, Buyer and Buyer
Personnel against third party claims and all governmental fines and penalties
that arise or are alleged to have arisen as a result of negligent or
intentional acts or omissions of Supplier or Supplier Personnel or breach by
Supplier of any term of this Agreement.


 


9.2          Intellectual
Property Indemnification


Supplier will
defend, or at Buyer’s option cooperate in the defense of, hold harmless and
indemnify, including legal fees, Buyer and Buyer Personnel from third party claims
that Supplier’s Products or Services infringe the intellectual property rights
of a third party.  In addition, if such
a claim is or is likely to be made, Supplier will, at its own expense, exercise
the first of the following remedies that is practicable:


1.  obtain for Buyer the right to continue to
use and sell the Products and Services consistent with this Agreement;


2.  modify the Products and Services so they are
non-infringing and in compliance with this Agreement;


3.  replace the Products and Services, with
non-infringing ones that comply with this Agreement; or


4.  at Buyer’s request (or where Supplier is
required by court order or law), cancel infringing Services and accept the
return of the infringing Products and refund any amount paid.


 


9.3          Exceptions
to Indemnification


Supplier will have
no obligation to indemnify Buyer or Buyer Personnel for claims that Supplier’s
Products or Services infringe the intellectual property rights of a third party
to the extent such claims arise as a result of:


1.  Buyer’s combination of Products or Services
with other products or services not reasonably foreseeable by Supplier and such
infringement or claim would have been avoided in the absence of such
combination;


2.  Buyer’s modification of the Products except
for Supplier intended modifications required for use of the Products and such
infringement or claim would have been avoided in the absence of such
modification; or,


3.  Supplier’s implementation of a Buyer
originated design and such infringement or claim would have been avoided in the
absence of such implementation.


Buyer will give Supplier prompt notice of third party
claims against Buyer, and cooperate in the investigation, settlement and
defense of such claims at Supplier’s expense. Buyer will allow Supplier to
control the defense and settlement of such claim, subject to Buyer’s consent to
any settlement, provided that Buyer may control the defense and settlement of
any claims to the extent such claims also cover products or services not
covered by this Agreement. If Buyer fails to perform its obligations under this
section, Supplier’s liability hereunder will be reduced only to the extent that
Supplier’s liability is increased by such failure to perform by Buyer.


 


10.0        Limitation of Liability


 


***


 


11.0        Supplier and Supplier Personnel


 


Supplier is an
independent contractor and this Agreement does not create an agency
relationship between Buyer and Supplier or Buyer and Supplier Personnel.  Buyer assumes no liability or responsibility
for Supplier Personnel.  Supplier will:


1.  ensure it and Supplier Personnel are in
compliance with all laws, regulations, ordinances, and licensing requirements;


 


6

















 


2.  be responsible for the supervision, control,
compensation, withholdings, health and safety of Supplier Personnel;


3.  inform Buyer if a former employee of Buyer
will be assigned work under this Agreement, such assignment subject to Buyer
approval; and


4.  ensure Supplier Personnel performing
Services on Buyer’s premises comply with the On Premises Guidelines and upon
request, provide Buyer, for export evaluation purposes, the country of
citizenship and permanent residence and immigration status of those
persons.  Buyer retains the right to
refuse to accept persons made available by Supplier for export control reasons.


 


12.0        Insurance


 


Supplier will
maintain at its expense:


1.  commercial general or public liability
insurance with a minimum limit per occurrence or accident of 1,000,000 USD (or
local currency equivalent); and,


2.  workers’ compensation or employer’s
liability insurance as required by local law, such policies waiving any
subrogation rights against Buyer; and,


Insurance required
under clause (1) will name Buyer as an additional insured with respect to
Buyer’s insurable interest, will be primary or non-contributory regarding
insured damages or expenses, and will be purchased from insurers with an AM
Best Rating of B+ or better and a financial class rating of 11 or better.


 


13.0                        Term and Termination


 


13.1        Termination of this Base Agreement


Either party may
terminate this Base Agreement, without any cancellation charge, for a material
breach of this Agreement by the other party or if the other party becomes
insolvent or files or has filed against it a petition in bankruptcy (“Cause”),
to the extent permitted by law.  Such
termination will be effective at the end of a thirty (30) day written notice
period if the Cause remains uncured.  Either
party may terminate this Base Agreement without Cause when there are no
outstanding SOWs or WAs.


 


13.2        Termination
of a SOW or WA


Buyer may, upon written notice to
Supplier, terminate a SOW or WA with Cause effective thirty (30) days after
such written notice or a period of time as specified in such notice, provided
the Cause remains uncured on the effective date of such termination. Buyer may,
upon written notice to Supplier, terminate a SOW or WA without Cause effective
sixty (60) days after such written notice or a period of time as specified in
such notice. In the event Buyer terminates a SOW or WA without Cause, Buyer
will compensate Supplier for the actual and reasonable costs incurred by
Supplier for work in process up to and including the date of termination,
provided that Supplier uses reasonable efforts to mitigate Buyer’s liability
under this subsection by, among other actions, accepting the return of,
returning to its suppliers, selling to others, or otherwise using the canceled
Products (including raw materials or works in process), and provided that such
expenses do not exceed the Prices. Upon termination, in accordance with Buyer’s
written direction, Supplier will immediately: 
(i) cease work; (ii) prepare and submit to Buyer an itemization of all
completed and partially completed Products and Services; (iii) deliver to Buyer
Products satisfactorily completed up to the date of termination at the agreed
upon Prices in the relevant SOW and/or WA; and (iv) deliver upon Buyer’s
request any work in process.


 


7

















 


14.0        General


 


14.1        Amendments


This Agreement may
only be amended by a writing specifically referencing this Agreement which has
been signed by authorized representatives of the parties.


 


14.2        Assignment


Neither party will
assign their rights or delegate or subcontract their duties under this
Agreement to third parties or Affiliates without the prior written consent of
the other party, such consent not to be withheld unreasonably, except that
either party may assign this Agreement in conjunction with the sale of a
substantial part of its business utilizing this Agreement.  Any unauthorized assignment of this
Agreement is void.


 


14.3        Choice
of Law and Forum; Waiver of Jury Trial; Limitation of Action


This Agreement and
the performance of transactions under this Agreement will be governed by the
laws of the country where the Buyer entering into the relevant agreement or PA
is located, except that the laws of the State of New York applicable to
contracts executed in and performed entirely within that State will apply if
any part of the transaction is performed within the United States.  The United Nations Convention on Contracts
for the International Sale of Goods does not apply.  The parties expressly waive any right to a jury trial regarding
disputes related to this Agreement. 
Unless otherwise provided by local law without the possibility of
contractual waiver or limitation, any legal or other action related to this
Agreement must be commenced no later than two (2) years from the date on which
the cause of action arose.


 


14.4        Communications


All communications
between the parties regarding this Agreement will be conducted through the
parties’ representatives as specified in the relevant SOW, or other Personnel
as specified by the parties.


 


14.5        Counterparts


This Agreement may
be signed in one or more counterparts, each of which will be deemed to be an
original and all of which when taken together will constitute the same
agreement.  Any copy of this Agreement
made by reliable means (for example, photocopy or facsimile) is considered an
original.


 


14.6        Exchange
of Information


All information
exchanged is non confidential.  If
either party requires the exchange of confidential information, it will be made
under a separate signed confidentiality agreement between the parties.  The parties will not publicize the terms of
this Agreement, or the relationship, in any advertising, marketing or
promotional materials without prior written consent of the other party except
as may be required by law, provided the party publicizing obtains any
confidentiality treatment available. 
Supplier will use information regarding this Agreement only in the
performance of this Agreement.  For any business personal information
relating to Supplier Personnel that Supplier provides to Buyer, Supplier has
obtained the agreement of the Supplier Personnel to release the information to
Buyer and to allow Buyer to use such information in connection with this
Agreement.


 


14.7        Freedom
of Action


This Agreement is
nonexclusive and either party may design, develop, manufacture, acquire or
market competitive products or services. 
Buyer will independently establish prices for resale of Products or
Services and is not obligated to announce or market any Products or Services and
does not guarantee the success of its marketing efforts, if any.


 


8

















 


14.8        Force
Majeure


Neither party will
be in default or liable for any delay or failure to comply with this Agreement
due to any act beyond the control of the affected party, excluding labor
disputes, provided such party immediately notifies the other.


 


14.9        Obligations
of Affiliates


Affiliates will
acknowledge acceptance of the terms of this Agreement through the signing of a
PA before conducting any transaction under this Agreement.


 


14.10      Prior
Communications and Order of Precedence


This Agreement
replaces any prior oral or written agreements or other communication between
the parties with respect to the subject matter of this Agreement, excluding any
confidential disclosure agreements.  In
the event of any conflict in these documents, the order of precedence will be:


1.  the Pull Product Profile
contained in the relevant SOW;


2.  the quantity, payment and
delivery terms of the relevant WA;


3.  the remaining provisions of
the relevant SOW;


4.  this Base Agreement; and


5.  the remaining terms of the relevant WA.


 


14.11      Record
Keeping and Audit Rights


Supplier will
maintain (and provide to Buyer upon request) relevant business and accounting
records to support invoices under this Agreement and proof of required permits
and professional licenses, for a period of time as required by local law, but
not for less than three (3) years following completion or termination of the
relevant SOW and/or WA.  All accounting
records will be maintained in accordance with generally accepted accounting
principles.


 


14.12      Severability


If any term in
this Agreement is found by competent judicial authority to be unenforceable in
any respect, the validity of the remainder of this Agreement will be unaffected,
provided that such unenforceability does not materially affect the parties’
rights under this Agreement.


 


14.13      Survival


The provisions set
forth in the following Sections and Subsections of this Base Agreement will
survive after termination or expiration of this Agreement and will remain in
effect until fulfilled:  “Ongoing
Warranties”, “Epidemic Defects”, “Warranty Redemption”, “Intellectual
Property”, “Supplier Liability for Third Party Claims”, “Limitation of
Liability”, “Record Keeping and Audit Rights”, “Choice of Law and Forum; Waiver
of Jury Trial; Limitation of Action”, “Exchange of Information”, and “Prior
Communications and Order of Precedence”.


 


14.14      Waiver


An effective
waiver under this Agreement must be in writing signed by the party waiving its
right.  A waiver by either party of any
instance of the other party’s noncompliance with any obligation or
responsibility under this Agreement will not be deemed a waiver of subsequent
instances.


 


9

















 


	
  ACCEPTED AND AGREED TO:

  	
  ACCEPTED AND AGREED TO:

  
	
  BUYER

  	
  SUPPLIER

  
	
  By:  /s/ Kevin J. Beichner

  	
  11/20/02

  	
   

  	
   

  	
  By:  /s/ Robert J. Scroop

  	
  11/25/02

  	
   

  	
   

  
	
  Buyer
  Signature

  	
  Date

  	
   

  	
   

  	
  Supplier
  Signature

  	
  Date

  	
   

  	
   

  
	
  Kevin J.
  Beichner

  	
   

  	
   Robert
  J. Scroop

  	
   

  
	
  Printed Name

  	
   

  	
  Printed Name

  	
   

  
	
   GCM
  Removable Storage

  	
   

  	
  VP & GM
  Storage Resource Business Unit

  	
   

  
	
  Title &
  Organization

  	
   

  	
  Title &
  Organization

  	
   

  



 


10

















 


Confidential
Treatment Requested


 


STATEMENT OF WORK # 4902RL1340


 


This Statement of Work  # 4902RL1340 (“SOW”) adopts and incorporates
by reference the terms and conditions of the Base Agreement  # 4902RL1317 (“BA”) between International
Business Machines Corporation (“Buyer”) and Overland Storage, Inc.
(“Supplier”).  This SOW is effective beginning
on November 1, 2002 and will remain in effect until November 1, 2005.  Transactions performed under this SOW will
be conducted in accordance with and be subject to the terms and conditions of
this SOW, the BA and any applicable Work Authorizations (“WAs”).  Any provisions of this SOW that by their
nature extend beyond its termination or expiration will remain in effect until
fulfilled, and apply to respective successors and assignees. This SOW is not a
WA. Product Unique Attachments (as defined below) must be signed by both
parties or incorporated by reference into a document signed by both parties,
and the terms of a Product Unique Attachment will apply only to the Products
identified in such Product Unique Attachment. The initial Product Unique Attachment
is attached hereto as “Product Unique Attachment # 1” and incorporated herein
by reference. Subsequent Product Unique Attachments or changes to existing
Product Unique Attachments will take effect on the effective date provided
therein and will be incorporated herein upon execution by the parties.


 


1.0                               DEFINITIONS


 


“APAR” means
the form used to report suspected Problems to Supplier, and to request their
resolution.


“APAR Closing Codes” means the established
set of codes used to denote the final resolution of an APAR.


“APAR Correction Times” means the
objectives that Supplier will achieve for resolution of Problems.


•                  “Severity 1”
Problems will be resolved by Supplier within *** days of its receipt of
the APAR, and Supplier will use best efforts to provide relief to affected
Customers within *** hours of Supplier’s receipt of the APAR.


•                  “Severity 2”
Problem will be resolved by Supplier within *** days of its receipt of
the APAR;


•                  “Severity 3”
Problem will be resolved by Supplier within *** days of its receipt of
the APAR; and


•                  “Severity 4”
Problem will be resolved by Supplier within *** days of its receipt of
the APAR.


“Certified Service
Product” or “CSP” means Repaired Products.
Notwithstanding the relevant “Ongoing Warranties” provision in the BA, CSP may
contain used or reconditioned part(s), provided that such part(s) are properly
marked as “SERVICEABLE USED PART(S)” as further described in this SOW.


“Consigned Material”
means materials that Buyer owns and continues to own that are entrusted to Supplier.


“Customer(s)”
mean Buyer’s customer(s).


“Developer Test Systems” means a
configuration of installed hardware and software that Supplier maintains which
is representative of typical Customer installations for the Product and, at a
minimum, contains current and current minus 1 level of the Product and any
prerequisite and co-requisite hardware and software specified by Buyer.


“Emergency Order”
or “EO”
means a WA placed by Buyer for FRUs with a Lead Time not to exceed ***.


“End of Service”
or “EOS”
means date when Buyer officially discontinues Customer service and support for
a Product. EOS dates are only addressed for the purposes of defining the date
through which Supplier will make Repair Services available for Products, and do
not affect Supplier’s obligations with respect to FRU or other Product
availability.


“Engineering Change”
or “EC”
means any change(s) to Product.


“Field Replaceable
Unit” or “FRU” means a Product, Product component,
Product subassembly, Product documentation, Product code, or other Product part
used to service a Customer system.


“Lead Time” means
the minimum length of time prior to a specific delivery date that Supplier must
receive a WA from Buyer to ensure delivery by such date.


 


THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A
CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL IS MARKED WITH A *** AND HAS
BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.


 


1

















 


“Maintenance Level Service” means the
service provided, as set forth below, when a Customer identifies a Problem:


•                  “Level 1” is initial service in response to
Customer’s request for support in connection with a suspected Problem;


•                  “Level 2” is service provided to diagnose
and resolve or assist Level 3 in resolving Problems identified by Level 1; and,


•                  “Level 3” is service provided to develop
final resolutions for Problems not resolved by Level 1 and Level 2.


“Problem” means any Product defect,
including, without limitation, any defects arising as a result
of the failure of the Products to function in accordance with their
specifications and other requirements, or other failures
or errors.


“Problem Management Record” or “PMR”
means a record documenting support actions taken in response to a Customer’s
request for support in connection with a suspected Problem.


“Product Unique Attachment”  is a document entitled Product Unique
Attachment which contains the terms and conditions unique to a specific
Product.


“Repair” or “Repaired” means all required
repair activity including, disassembly, failure analysis, testing, component
recovery, rework, warranty process, packaging, final testing, and all other
processes necessary to ensure Products, which are sent to Supplier for repair
within or outside of the relevant Product warranty, meet all the functional
performance requirements applicable to newly manufactured Products in
accordance with this SOW or relevant WA.


“Turn Around Time”
or “TAT”
means the elapsed time from the date of receipt acknowledgement of a Product
arriving at Supplier’s location for Repair until shipment notice of Repaired
Product back to Buyer.


“Yield” means the relationship between
Product sent to Supplier for Repair and the CSP returned to Buyer.


 


2.0                               PRODUCT
DEFINITION


 


2.1                               Product Description.


The Products are described in the Product Unique
Attachment(s). Products also include all FRUs, CSPs, Product code, and Product
documentation.


 


2.2                               Product Specifications & Certifications.


Products will comply with all the requirements set forth below:


•                  CS1-1121-015, IBM Corporate Standard
“Automatic Identification (AI) for Packaging, Distribution and Manufacturing —
Bar Coded Labels”


•                  GA21-9261-11a, “Packaging and
Handling - Supplier and Interplant Requirements”


•                  ISO 2859,
Sampling Procedures for Inspection by Attributes


•                  ISO 3951,
Sampling Procedures for Inspection by Variables


•                  EIA - 599 - A,
Continuous Improvement


•                  EIA - 659 - A,
Failure, Mechanism, Driven Reliability Monitoring


•                  EIA - 670,
Quality System Assessment


•                  EIA - 671- A,
Problem Analysis and Corrective Actions


•                  EIA - JESD - 38,
Standard for Failure Analysis Report Format


•                  EIA - JESD - 46,
Product Change Notice


•                  EIA - JESD - 50,
Maverick Product Elimination


•                  Supplier’s published specifications,
catalogs, marketing materials, and other documentation, including references in
such materials to future upgrades or performance


•                  FAA Certification, Supplier certifies
that Products and their packages do not contain explosives, hazardous
materials, incendiaries and/or destructive devices as defined by the FAA


 


2

















 


•                  All Product claims, descriptions,
specifications, and other requirements described in the Product bill of
material, elsewhere in this Agreement, and via other written or electronic
communications sent from or approved by Buyer.


 


2.3                               COO Product Certification.


Supplier certifies that the Products have the
country(ies) of origin specified in the Product Unique Attachment(s) to this
SOW.  If there are any changes to this
information, Supplier will notify Buyer by providing a new country of origin
certification signed by an authorized Supplier representative before shipping
any affected Products.  If any part
number has more than one country of origin, Supplier certifies that each country
of origin is specified in the Product Unique Attachment(s), and Supplier will
deliver to Buyer, instructions regarding how Buyer can distinguish each country
of origin for part numbers with more than one country of origin prior to
shipping the affected Products.


 


2.4                               Product
Modifications.


ECs submitted by Buyer will be implemented by Supplier
in a manner consistent with the Product’s original design (e.g., a missing “caution”
label will be replaced by the same type of label and in the same location as originally
specified).  Supplier will provide
documentation illustrating its performance of ECs upon Buyer’s request. If
Buyer places requirements or limitations on a particular Product that result in
an increase in Price as compared to the prices of similar products offered
without such requirements, then Supplier shall notify Buyer of the opportunity
to lower Price, and Buyer shall have the option of modifying the requirements
so that its Products can be purchased at this lower price.  Supplier will not make any changes
(including any changes affecting form, fit, function and safety) to the
Products or to processes supporting Products that have been certified by Buyer,
without Buyer’s prior written consent, such consent not to be withheld
unreasonably.  In the event such changes
are made without Buyer’s prior written consent, Supplier will, at Buyer’s
discretion, either:  (i) replace all
such products with products approved by Buyer and reimburse Buyer for all
actual and reasonable expenses incurred that are associated with such products
replacement (including expenses associated with problem diagnosis, testing, and
replacement of products in normal inventory, finished goods inventory,
distributors inventories, and with Customers); or (ii) credit or refund Buyer
the Price of the products. If Supplier improves the safety, function, cost, or
reliability of products that it builds for itself or for its other customers by
changing a design, component, part, supplier, or production process that may
also be used in or in connection with a Product that Supplier builds for Buyer,
then Supplier will inform Buyer of such improvement and implement changes to
Product as approved by Buyer to incorporate such improvement in Products.


 


2.5                               Product Software and Documentation.  


Supplier will
deliver, at the earlier of a date requested by Buyer or prior to its first
shipment of Product, (i) a fully completed and signed certificate of
originality (in a form to be specified by Buyer) for all Product code and
documentation, and (ii) all Product code (including all code in, or provided
for use with, Products), publications, and documentation in a format and media
as specified by Buyer.  Additionally,
Supplier will promptly deliver to Buyer all updates (hereinafter “Updates”,
such Updates to include, without limitation, all error corrections,
enhancements and new versions) to such Product code, publications, and
documentation in the same format and media as specified by Buyer. Supplier
grants Buyer a nonexclusive, worldwide, perpetual, irrevocable, fully paid up,
license to prepare and have prepared derivative works of Product code and
documentation and their Updates, and to use, have used, execute, reproduce,
transmit, display, perform, transfer, distribute and sublicense Product code
and documentation and their Updates and such derivative works, in any medium or
distribution technology, and to grant others the rights granted herein.  Buyer will not be obligated to preserve any
copyright management information included in the Product code or documentation,
or Updates.


 


3

















 


2.6                               Tamper Evident
Protection.


To the extent that
Supplier ships new Product in its final Customer ready form, Supplier shall
apply tamper evident protection on the finished Product packaging in the form
of an “IBM” logo tape in such a manner that if removed or tampered with, it
would be evident that the finished Product packaging has been opened. Supplier
will have controls to prevent unauthorized use or dissemination of “IBM” logo
tape (including tracking the purchase, internal use, application, and
destruction), and to limit access to such materials to only those responsible
for the tamper evident sealing on the Products.  Supplier will only use the “IBM” logo tape in connection with new
Product.


 


3.0                               PURCHASHING


 


3.1                               Electronic
Commerce.


Buyer may issue scheduling
documents (“Blanket Purchase Orders”) which may have the appearance of a normal
WA, but do not include a delivery date. Such Blanket Purchase Orders are issued
only as a logistical processing document to enable the use of electronic
purchase order communications and are not binding in any manner and shall not
be considered as WAs by the parties, regardless of quantities or prices that
may be included in such Blanket Purchase Orders. Unless previously submitted by
Supplier, in order to initiate electronic transfer of payments associated with
this SOW, Supplier will complete the form entitled “Authorization for
Electronic Funds Transfer” as provided to Supplier by Buyer and fax the
completed form to Accounts Payable at the number included on the form.


 


3.2                               WA
Issuance.


Buyer is under no obligation to purchase any Products
and/or Services, except as ordered in WAs and within the liability limits
addressed elsewhere in the Agreement, including those addressed in the Product
Unique Attachment(s) to this SOW. 
Supplier will comply with Buyer’s requested changes to delivery of
Products specified in a WA as described in the Product Unique Attachment(s) to
this SOW, without additional charge to Buyer. 
If Buyer decreases Product quantities specified in a WA outside of
allowances described in the Product Unique Attachment(s) to this SOW, Supplier
will use all efforts to mitigate Buyer’s liability.  The parties acknowledge that WAs may be placed on Supplier under
this SOW by entities other than the Buyer, but only to the extent expressly
authorized by Buyer and Supplier in writing, and Supplier agrees that for such
purchases that (a) the Buyer authorized third party purchaser under this SOW
shall have extended to it all the protections, rights, and other benefits of
the Agreement; (b) Buyer is a third party beneficiary and has the right to
enforce the terms of this Agreement on such purchases on a joint and several
basis; and (c) Buyer shall not be liable to either party with regard to such
purchase transactions.


 


3.3                               Invoices.


Terms for payment on all Supplier invoices will be net
***
days from receipt of an acceptable invoice by Buyer.  Supplier will not invoice Buyer, until after Product
delivery.  Invoices to Buyer must
include, at a minimum, the following: (i) applicable WA line item numbers; (ii)
SOW and WA numbers; (iii) terms of payment as provided herein; (iv) billing
period dates; (v) applicable Product unit Prices; (vi) total amount invoiced;
(vii) the Harmonized Tariff Code of the importing country for every Product;
and, (viii) Product descriptions with sufficient detail to enable verification
of associated Product categorical classifications.


 


3.4                               Acceptance
or Rejection


Buyer may inspect and
test all Product at Buyer’s facility prior to acceptance or rejection, and may
refuse to accept Product which does not conform to the specifications,
certifications, and other requirements referenced in the Agreement.  If Buyer rejects Product and requests a
replacement Product, Supplier shall replace the rejected Product within seven
(7) calendar days of Buyer’s request, and shall pay for the ***,
if required by Buyer, and all other expenses associated with the return of the
rejected Product.


 


4

















 


4.0                               SUPPLY
RESPONSIBILITIES


 


4.1                               Taxes and Duties


Supplier warrants that
the Prices do not include sales, use or similar taxes that do not apply to
Buyer as a reseller of Products and/or Services. In accordance with the
applicable delivery terms, Supplier will be responsible for all applicable
legal, regulatory and administrative requirements, in addition to all
associated duties and fees, associated with importation of Products (where applicable)
into the country where the Product is received by Buyer from Supplier.


 


4.2                               Spare
Parts Availability.


Supplier will maintain the
capability to supply, and shall provide Product spare parts (i.e., the entire
Product or portions of the Product as described herein or as may be
subsequently described by Buyer, including, without limitation all FRUs)
technical support for the Product as described in this SOW during the term of
this SOW and for a period of *** years thereafter (or longer
period as may be required by law upon Buyer or Supplier) under the terms and
conditions of the Agreement. Supplier will give Buyer a last time buy option at
the end of such *** year period,
and shall also offer any follow on products that are compatible with Products
herein. Supplier will notify Buyer prior to Supplier’s withdrawal of any
Product(s), and such withdrawal will not occur during the term of the SOW and
will not affect Supplier’s responsibilities under this section related to spare
parts availability or technical support.


 


4.3                               Use
of Subcontractors.


Supplier’s use of
subcontractors will not relieve Supplier of the responsibility for the
subcontractor’s performance, and Supplier’s responsibilities assumed under this
SOW will be equally applicable to such subcontractors, as must be agreed upon
between Supplier and such subcontractors. Buyer reserves the right to review
both the Supplier’s management system for the operations of its subcontractors
and to review with Supplier, their subcontractor’s management system for
operations for the purposes of this SOW. Buyer reserves the right to reject
Supplier’s use of a subcontractor in performance of this SOW for any reason.


 


5.0                               TECHNICAL
SUPPORT


 


Technical support
includes the Level 1, Level 2, and Level 3 responsibilities defined below,
Product code, documentation and updates arising out of technical support
responsibilities, and all Updates created or made available by Supplier.


 


5.1                               Level
1.


Supplier will provide
assistance by phone to Buyer, as required by Buyer, in performing the following
Level 1 support responsibilities:


•                  create the PMR;


•                  obtain from Customer a description of
the Problem;


•                  search for any known resolution(s)
relevant to the Problem;


•                  if a resolution to the Problem is
known, specify such resolution to Customer;


•                  if no resolution
to Problem is known, generate APAR, assign APAR Correction Time, forward APAR
to Level 2; and


•                  pass the PMR to Level 2, and update
the PMR documenting Level 1 actions.


 


5.2                               Level
2.


Supplier will provide
assistance by phone to Buyer, as required by Buyer, in performing the following
Level 2 support responsibilities:


•                  receive the PMR/APAR from Level 1;


 


5

















 


•                  analyze Problem symptoms and gather
additional data from Customer as required;


•                  recreate Problem on the Developer
Test System;


•                  determine if Problem is due to
improper installation of the Product by Customer;


•                  determine if Problem is due to
operationally related hardware or software at the Customer location;


•                  attempt a bypass or circumvention for
high impact Problems (i.e., Severity 1 and 2);


•                  create APAR record if no resolution
to Problem is attained; and


•                  update the PMR documenting Level 2
actions.


 


5.3                               Level
3.


Supplier will perform the
following Level 3 support responsibilities:


•                  receive the
APAR/PMR and supporting documentation and materials from Level 2;


•                  analyze Problem
symptoms and diagnose Problem;


•                  notify Level 2
if additional information, materials or documentation are required;


•                  attempt to
recreate Problem on the Developer Test System;


•                  assist Level 2
in developing a bypass or circumvention for high impact Problem (i.e., Severity
1 and 2);


•                  deliver
corrections to the Product and/or Product code to Buyer within the applicable
APAR Correction Times to fix Problems identified by Buyer;


•                  return all APARs
to Buyer with an APAR Closing Code assigned, including text describing the
resolution of Problem;


•                  confirm
resolution of Problem with Customer, and update PMR documenting Level 3
actions; and,


•                  answer any
questions from Buyer and/or Customer concerning the operation and use of
Products.


 


5.4                               Other
Technical Support Responsibilities.


Supplier will provide to
Buyer the name and phone numbers of Supplier Personnel to contact for all
technical support matters related to the Product. Supplier will provide all
training and tools required by Buyer to enable Buyer to perform technical
support functions for the Product and will keep Buyer informed of any known
Problems and their associated solutions. Supplier agrees to make such services
and support available during normal business hours in the form specified by
Buyer. At Buyer’s request, Supplier agrees to provide technical Supplier
Personnel at Customer sites. Notwithstanding anything to the contrary, Supplier
will not contact or work directly with Customers except as directed by Buyer.


 


6.0                               QUALITY


 


6.1                               Nonconforming
Product.


Supplier shall have
established, documented, and maintained procedures to ensure that Product,
which does not conform to the requirements of the Agreement, is prevented from
unintended use or shipment to the Buyer. Supplier must immediately notify Buyer
of any factors affecting Product quality. Supplier will not ship affected
Products to Buyer without prior written approval from Buyer. Within twenty-four
(24) hours of Supplier’s notification to Buyer pursuant to this section,
Supplier will provide Buyer a resolution plan including a description of the
factor affecting Product quality, documentation of the root cause analysis
performed by Supplier in response, a schedule of all actions for the
containment and correction of all affected Products, relevant traceability data
for the affected Products, and a process ensuring the effectiveness of the
actions to be taken hereunder.  If Buyer
expressly instructs Supplier to ship nonconforming Product to the Buyer, then
Supplier will describe the extent of such Product’s non-conformance in writing
and secure Buyer’s written agreement prior to any shipment of any such
non-conforming Product.


 


6.2                               ISO
Requirements.


For ISO compliance, the
Supplier represents and warrants that the Supplier is ISO 9001 compliant.
Compliance hereunder may be either by means of external accreditation or
self-declaration. For external


 


6

















 


accreditation,
Supplier will provide to Buyer, upon Buyer’s request, a copy of the Supplier’s
current registration, including the scope, Standard Industrial Classification
code or equivalent, all locations involved, and any restrictions or exclusions.  For self-declaration, Supplier will provide
to Buyer, upon Buyer’s request, a letter from Supplier’s chief executive
officer, chief operating officer, or other executive assuring that
self-declaration was performed with due diligence based upon a previously
executed internal audit report, and that such self-declaration has had
executive management review and approval.


 


6.3                               Document
Control and Records.


Supplier shall ensure
that all documents such as software/firmware, engineering drawings,
specifications, contracts, policies, procedures, manufacturing process flow
chart, and work instructions (including test procedures) are under revision
control and are available to all necessary Buyer and/or Supplier Personnel in
the manufacturing environment. Supplier shall a have a system for the effective
updating/removal of any obsolete documentation from all manufacturing areas.
Supplier will establish and maintain procedures for identification, collection,
indexing, filing, storage, maintenance, and disposition of all Product related
records, including but not limited to, Statistical Process Control data, test
and inspection records, customer pricing records, and all other records
required by Buyer. Supplier shall maintain a history file for all Products, by
part number, that tracks changes to the Product or Product component designs,
materials, and/or manufacturing source. Supplier shall track and retain, for at
least four (4) years after termination of this SOW, records which reflect,
among other things, any certificates required by law or under this Agreement,
all necessary and pertinent documentation that may substantiate pricing, as
well as, any other obligation hereunder, such as, not by way of limitation, the
date of Supplier’s purchase from a third party supplier, if any, quality test
data and Supplier’s source selection process documentation.


 


6.4                               Audits.


Upon prior written notice
to Supplier, Buyer or Buyer’s representative may conduct audits of any or all
Product and Product component facilities and any or all sites where work is
being performed or materials are being delivered to Supplier in performance of
Supplier’s work for Buyer. Supplier shall, at Buyer’s request and during normal
business hours, permit access to Buyer or Buyer’s representative to all manufacturing
operations for the Products. Such audits may relate to process control, quality
inspection test data, internal audit reports, and any other information related
to the Product being manufactured and sold to Buyer in compliance with all the
requirements of the Agreement. At Buyer’s request, Supplier shall provide Buyer
Product samples together with Product labels, code, documentation, agency
certifications, test results, packaging, carton labels, and other items, as
required by Buyer to conduct a thorough review of the Product’s conformance
with the requirements in the Agreement.


 


6.5                               Product
Traceability Requirements.


Supplier shall establish
and maintain procedures and processes for the identification and lot
traceability of critical Product items during all stages of production,
delivery, and installation per applicable ISO & EIA standards. Supplier
will maintain both forward and backward traceability capabilities and ensure
that its response time for traceability requests from Buyer does not exceed
twenty-four (24) hours.


 


6.6                               Periodic
Quality Reviews.


Supplier shall develop
and implement a process for continuous Product improvement. Buyer may conduct
reviews and/or hold meetings related to Supplier’s performance under the SOW,
including but not limited to the following respects, and may compare Supplier’s
performance with that of similarly situated suppliers:


•                  Supplier’s compliance with delivery
dates in support of WAs issued by Buyer;


•                  Supplier’s compliance with Emergency
Orders issued by Buyer hereunder;


•                  Supplier’s
compliance with the targeted Shipped Product Quality Level (SPQL) as set by the
parties on a monthly basis;


•                  Supplier’s
compliance with the targeted Incoming Product Quality Level (IPQL) as set by
the parties on a monthly basis;


 


7

















 


•                  Supplier’s compliance with the
targeted Field Replace Action Level (FRAL) as set by parties on a monthly
basis;


•                  Percentage of Products failing to
function properly upon delivery (also known as the Product DOA rate);


•                  Supplier’s speed in taking corrective
actions for any problems with Product identified by Buyer;


•                  Supplier’s implementation of lessons
learned in previous periodic quality reviews.


In any calendar month in
which Supplier shows poor performance with respect to the criteria set forth
above, Buyer may notify Supplier of such poor performance.  In such case, Supplier will respond to Buyer
with an agreed upon action plan within five (5) business days of notification
by Buyer demonstrating its ability to achieve the required measurements.
Supplier’s failure to successfully execute an action plan within an agreed upon
time frame shall be a material breach of the Agreement. Satisfying any or all
criteria and /or requirements of this section 5.0 shall not relieve Supplier of
its warranties or other obligations of the Agreement.


 


7.0                               EMERGENCY
ORDERS


 


7.1                               Emergency
Order Placement Process.


If or when
buffer stock of Product is not available to Buyer from a Supplier hub, Supplier
will accept and respond to EOs from Buyer during normal business hours (i.e.,
7:00 AM to 5:00PM PST), each business day of the year.  Supplier will provide contact information
for EO coverage at all times.  Supplier
will respond to all EOs via fax, EDI (or other electronic commerce approach)
and/or telephone, such EOs to be confirmed by Buyer with a written WA mailed,
faxed, or electronically transmitted to Supplier within two (2) business days
of EO placement.  EOs may include Buyer’s
WA number, Buyer’s part number, part number description, quantity, unit Price,
relevant EO code (A-Alert, A, B, S, and X), delivery date and ship to address.
Supplier will acknowledge all EOs back to Buyer via fax or telephone within two
(2) hours of receipt for EOs with an A-Alert EO code and within four (4) hours
of receipt for EOs with an A, B, S, or X EO code. Buyer may cancel EOs without
cost at any time prior to Supplier’s acknowledgement of such EO. Supplier will
deliver EO Products directly to the address specified in the EO and in accordance
with this SOW.


 


7.2                               Emergency
Order Shipment Responsibilities.


Supplier will
ship all FRUs required pursuant to an EO, using it’s best commercial efforts
for same day shipment to arrive on the next business day at the Buyer specified
receiving location, subject to receipt of the EO from Buyer within a period
reasonably allowing Supplier to meet cutoff times established by the
transportation carriers. Supplier will ensure that FRUs that are not shipped on
the same day the Supplier receives an EO will be shipped on the next business
day after EO receipt.


 


8.0                               WARRANTY SUPPORT


 


8.1                               Epidemic Defects.


Epidemic Defects shall mean Products that experience
one of more of the following: (a) the same or similar defect at a rate of *** or
more in any given sixty (60) day period, (b) the same or similar defect at a
rate of ***
or more of total purchases, (c) recalls, or (d) safety defects.


 


8.2                               Warranty
Period.


The warranty redemption set
forth in the section of the BA entitled, “Warranty Redemption” as it applies to
subsection five of the section of the BA entitled, “Ongoing Warranties” will be
available to Buyer for all Product hereunder for the longer of the relevant
warranty period set forth in the applicable Product Unique Attachment (as
calculated from the date Buyer takes title of Product). Such warranty
redemption for Repaired Product shall be the longer of the above period for the
original Product or one hundred eighty


 


8

















 


(180) days after the date of
Repair. In no case, will said warranty be for a period less than that provided
by Supplier to its most favored customers.


 


8.3                               Warranty
Redemption Logistics.


Supplier will
provide Buyer with information and processes by which Buyer is able to verify
Product warranty entitlement. Where Supplier is required to ship Product
pursuant to its warranty redemption responsibilities under the Agreement,
Supplier will ship such Product to Buyer’s designated “ship to” location via
Buyer’s designated carrier.  Unless
specified otherwise by Buyer, Supplier will provide locations for Buyer to
redeem Product warranty in the following four geographic areas: United States,
Western Europe, Pacific Rim and Brazil.


 


8.4                               Data
Integrity.


In addition to all the
other warranties in the Agreement, Supplier warrants that all Products shall be
tested comprehensively, prior to any delivery, to ensure that all such Products
conform to these warranties, and that Supplier shall provide these test results
to Buyer upon Buyer’s request.


 


9.0                               REPAIR


 


9.1                               Required
Replacement.


All components
of Products sent to Supplier for Repair that exhibit unsafe conditions
(including but not limited to cracking, chafing, and/or other unsafe
conditions) will be replaced with an identical (same manufacturer, part or model
number, electrical/thermal rating, physical dimensions and agency approval) or
an approved alternate component (identical mechanical, electrical/thermal,
physical, compositional and performance characteristics but different
manufacturer). Compliance with this section will not relieve Supplier of its
other obligations under the Agreement.


 


9.2                               Scope
of Repair Services.


Supplier will
make Repair Services available to Buyer up through and including the relevant
EOS date, as specified by Buyer in writing. Products sent to Supplier for
Repair during the applicable warranty period will be Repaired at no cost to
Buyer and returned to Buyer at Supplier’s cost. Products sent to Supplier for
Repair outside of the applicable warranty period will be Repaired and returned
to Buyer freight prepaid in accordance with the delivery date specified by
Buyer in the WA for such Repair and at the Repair Prices set forth in the SOW.
All Repaired Products must meet the requirements regarding CSPs set forth in
this SOW. Repair Services will not be performed on Products sent for Repair a
second time.  In such event, Supplier
will, at Buyer’s discretion, provide Buyer a replacement Product, or credit or
refund Buyer an amount equal to the Price paid by Buyer for the initial Repair
(including associated shipping cost) and return the units to Buyer for
scrapping.  Supplier must maintain a
history of Repair activities and provide a monthly report to Buyer in the
format of the attachment to this SOW that is entitled “Monthly Warranty Analysis
Report.”


 


9.3                               CSP
Requirements.


Products will
only be classified as CSP with Buyer’s written approval.  Products classified as CSP may be used for
field service only and may not be used in the manufacturing of a new Product.
CSPs will meet the following criteria: (i) the functional performance of such
Products will comply with all current and applicable engineering drawings,
specifications, and other Product requirements; (ii) the appearance of such
Products will be equivalent to that of a new counterpart; (iii) manufacturer
warning labels will remain intact and legible or will be replaced, and
protective covers (e.g., guards or shields) will be securely mounted as
originally designed or will be replaced; and (iv) the Repair of such Products
(including EC related Repairs) will be in compliance with all agreed upon
listings and certifications issued by National Certification Body (NCB). If
Supplier is not able to meet specified criteria, then Product will be deemed
non-repairable and Buyer will be notified accordingly. Suppliers will place on
all CSPs, a “SERVICEABLE USED 

PART(S)” label meeting the following criteria: (i) printed using high quality
paper with a shelf life of ten (10) years; 
(ii) using permanent pressure sensitive and tamper evident


 


9

















 


adhesive
(black printing on orange background); (iii) which do not contain any voids,
ink specks, ink fill-ins or edge-roughness; (iv) which are applied in a manner
that provides durable and wrinkle free labels that permanently and securely
bonds to the Product and container under variable environmental conditions; (v)
which are clearly visible; and (vi) which will not adversely affect the
functionality or aesthetics of the Product. The original manufacture date will
be preserved or restored as needed at the time of Repair. Product labels
(labels applied directly to the Product) will comply with the following
dimensions:  (i) large labels will
measure 3.0448 cm x 0.9615 cm (1.1875 in x 0.3750 in); (ii) small labels will
measure 2.2435 cm x 0.6410 cm (0.8750 in x 0.2500 in).  Container labels (labels applied to the
container) will comply with the following dimensions:  (i) 9.2948 cm x 4.4871 cm (3.6250 in x 1.7500 in).


 


9.4                               Engineering
Deliverables.


Supplier will provide
Buyer, upon Buyer’s request, all the information (in the English language)
required to enable Buyer to procure alternate Repair source(s), including but
not limited to the following:


•                  Product drawings


•                  Schematics / diagrams


•                  Engineering specifications


•                  Performance specifications


•                  Component placement listings


•                  Certified component source listings
(IEC / UC / CSA 950)


•                  Debug / fault isolation test
procedures


•                  Special tooling drawings /
specifications if applicable


•                  Rework / upgrade instructions


•                  Test procedures / software  / equipment


•                  Repair verification procedures / test
software / equipment


•                  Hazardous
materials listings


 


10.0                        CONSIGNED
MATERIALS


 


10.1                        Handling
of Consigned Materials.


In instances
where Buyer sends Product to Supplier for Repair, and/or provides to Supplier
tooling and/or other items, Buyer may, but is not obligated to, entrust such
Products, tooling, and/or other items to Supplier as Consigned Materials.  Buyer will retain title to Consigned
Material at all times. Supplier will: (i) use Consigned Materials only in the
performance of this SOW and will not reuse or resell nor allow to be reused or
resold any Consigned Material without Buyer’s prior written authorization; (ii)
acknowledge receipt of Consigned Materials within five (5) business days of
receipt to the Buyer’s Business Coordinator via e-mail or fax, and such
acknowledgement will include a detailed report of any quantity shortages or
overages (any shortages not reported to Buyer’s Coordinator in such acknowledgement
will be deemed received by Supplier), all relevant part numbers, and the
relevant WA (if applicable) and quantity; (iii) immediately notify carrier and
Buyer’s Business Coordinator of any Consigned Materials that exhibit external
damage at the time of delivery from Buyer to Supplier, document on carrier’s
freight bill such damage, and receive either an inspection report or a letter
from carrier stating that such inspection has been waived; (iv) ensure that
Consigned Materials are not pledged, mortgaged, assigned, borrowed or
encumbered by security interests or otherwise and are not be removed from
Supplier’s location without Buyer’s prior written authorization, unless
provided to Buyer in accordance with the terms and conditions of this SOW; (v)
provide monthly reports of all transactions made by Supplier involving
Consigned Materials, together with the quantities remaining in Supplier’s
custody as of the date of such report, and will make due settlement and payment
on a monthly basis, if not already made, for any and all Consigned Materials in
accordance with this SOW; (vi) maintain account books and records providing
complete information as to all such transactions involving Consigned Materials,
and such books and records will be available to Buyer during normal business
hours, upon forty eight (48) hours prior notice to Supplier; (vii) permit Buyer
to inspect Consigned Materials at any time during normal business hours, at
Supplier’s location and to remove any or all of the same if Buyer so desires; (viii)
maintain replacement cost insurance


 


10

















 


on Consigned
Materials; (ix) upon Buyer’s written request, or upon termination or expiration
of this SOW, return Consigned Materials to Buyer pursuant to Buyer’s
instructions and in the same condition as received by Supplier; (x) upon Buyer
request, mark Consigned Material in a manner acceptable to Buyer to indicate
Buyer’s ownership; (xi) control Consigned Materials in a secure and separate
area so as to not commingle Consigned Materials with other materials, parts, or
other assets of Supplier or of any third party; and (xii) notify Buyer
immediately in writing of any personal property taxes or assessments that may
be levied on Consigned Materials. 
Supplier shall not charge inventory fees or any other costs to Buyer
regarding Consigned Materials.


 


10.2                        Return
of Consigned Materials.


Supplier will
provide a packing slip with all return shipments of Consigned Materials to
Buyer which specifies Supplier’s name, Buyer part number(s) of Consigned
Materials being returned, quantity of Consigned Materials, by Buyer part
number, being returned, and the relevant WA number.  Consigned Materials which Supplier is unable to Repair will be
returned to Buyer with a packing slip which additionally references a return
authorization number, obtained from Buyer, and provide a reason for why
Supplier is unable to Repair such Consigned Materials.  Supplier will reimburse Buyer for Consigned
Materials that are not returned to Buyer in accordance with the terms of this
SOW, including, without limitation, any Consigned Materials that have been
stripped, stolen, lost, damaged, or unaccounted for.  The calculations for reimbursement of Consigned Materials is as
follows: (i) for new Consigned Materials, Supplier will reimburse Buyer an
amount equal to Buyer’s then current price for the Consigned Materials; or (ii)
for used Consigned Materials, Supplier will reimburse Buyer an amount equal to *** of
Buyer’s weighted average cost per piece.


 


11.0                        LIMITATION
OF SUPPLIER LIABILITY UNDER THE SOW


 


Supplier’s
liability for Buyer damages arising under this SOW, shall be limited to the
greater of *** or the total amount of money paid for Products and Services
during the term of the SOW, provided that this limitation shall not apply and
have no effect on any Supplier liability arising under section 9.0 of the BA.


 


 


	
  ACCEPTED AND AGREED TO:

  	
   

  	
  ACCEPTED AND AGREED TO:

  	
   

  
	
  BUYER

  	
  SUPPLIER

  
	
   

  	
   

  
	
  By: 

  	
  /s/ Paul
  Pitarra for Ron Clarke

  	
   

  	
  3/14/03

  	
   

  	
  By: 

  	
  /s/ Vernon
  A. LoForti

  	
   

  	
  3/17/03

  	
   

  
	
  Buyer
  Signature

  	
  Date

  	
  Supplier
  Signature

  	
  Date

  
	
   

  	
   

  
	
  Paul Pitarra
  for Ron Clarke

  	
   

  	
  Vernon A.
  LoForti

  	
   

  
	
  Printed Name

  	
  Printed Name

  
	
   

  	
   

  
	
  Procurement
  Director

  	
   

  	
  VP and CFO

  	
   

  
	
  Title

  	
  Title

  
													



 


11

















 


PRODUCT UNIQUE ATTACHMENT #1 EFFECTIVE BEGINNING NOVEMBER 1,
2002


 


1.0                               PRODUCT DESCRIPTION


The Product is an SDLT/LTO Library with associated options.
The Product (including Product code and documentation) will be available in the
following languages: English


 


2.0                               PART NUMBER UNIQUE TERMS


 


	
  Buyer P/N

  	
   

  	
  Description

  	
   

  	
  ***

  	
   

  	
  Delivery
  Term

  	
   

  	
  ***

  	
   

  	
  Country of
  Origin and

  Complete Street Address

  	
   

  	
  ***

  	
   

  	
  Repair
  Price

  (USD)*

  	
   

  	
  TAT

  	
   

  	
  Yield

  
	
  4560SLX

  	
   

  	
  BASE
  EXPANDER UNIT

  	
   

  	
  ***

  	
   

  	
  FOB
  KINGSTON US LOCAL WAREHOUSE

  	
   

  	
  ***

  	
   

  	
  USA
  4820 OVERLAND AVENUE, SAN DIEGO, CA 92123

  	
   

  	
  ***

  	
   

  	
  TBD

  	
   

  	
  30
  days

  	
   

  	
  100%

  
	
  59P6656

  	
   

  	
  BASE
  EXPANDER UNIT

  	
   

  	
  ***

  	
   

  	
  DDU
  Greenock Hub

  	
   

  	
  ***

  	
   

  	
  USA
  4820 OVERLAND AVENUE, SAN DIEGO, CA 92123

  	
   

  	
  ***

  	
   

  	
  TBD

  	
   

  	
  30
  days

  	
   

  	
  100%

  
	
  59P6657

  	
   

  	
  FIBER
  CHANNEL CARD

  	
   

  	
  ***

  	
   

  	
  FOB
  KINGSTON US LOCAL WAREHOUSE DDU Greenock Hub

  	
   

  	
  ***

  	
   

  	
  USA
  4820 OVERLAND AVENUE, SAN DIEGO, CA 92123

  	
   

  	
  ***

  	
   

  	
  TBD

  	
   

  	
  30
  days

  	
   

  	
  100%

  
	
  59P6658

  	
   

  	
  LTO
  UPGRADE DRIVE

  	
   

  	
  ***

  	
   

  	
  FOB
  KINGSTON US LOCAL WAREHOUSE DDU Greenock Hub

  	
   

  	
  ***

  	
   

  	
  USA
  4820 OVERLAND AVENUE, SAN DIEGO, CA 92123

  	
   

  	
  ***

  	
   

  	
  TBD

  	
   

  	
  30
  days

  	
   

  	
  100%

  
	
  59P6659

  	
   

  	
  LTO
  MAGAZINE

  	
   

  	
  ***

  	
   

  	
  FOB
  KINGSTON US LOCAL WAREHOUSE DDU Greenock Hub

  	
   

  	
  ***

  	
   

  	
  USA
  4820 OVERLAND AVENUE, SAN DIEGO, CA 92123

  	
   

  	
  ***

  	
   

  	
  TBD

  	
   

  	
  30
  days

  	
   

  	
  100%

  
	
  59P6660

  	
   

  	
  SDLT
  UPGRADE DRIVE

  	
   

  	
  ***

  	
   

  	
  FOB
  KINGSTON US LOCAL WAREHOUSE DDU Greenock Hub

  	
   

  	
  ***

  	
   

  	
  USA
  4820 OVERLAND AVENUE, SAN DIEGO, CA 92123

  	
   

  	
  ***

  	
   

  	
  TBD

  	
   

  	
  30
  days

  	
   

  	
  100%

  
	
  59P6661

  	
   

  	
  SDLT
  MAGAZINE

  	
   

  	
  ***

  	
   

  	
  FOB
  KINGSTON US LOCAL WAREHOUSE DDU Greenock Hub

  	
   

  	
  ***

  	
   

  	
  USA
  4820 OVERLAND AVENUE, SAN DIEGO, CA 92123

  	
   

  	
  ***

  	
   

  	
  TBD

  	
   

  	
  30
  days

  	
   

  	
  100%

  
	
  59P6662

  	
   

  	
  EXPRESS
  CHANNEL 1

  	
   

  	
  ***

  	
   

  	
  FOB
  KINGSTON US LOCAL WAREHOUSE DDU Greenock Hub

  	
   

  	
  ***

  	
   

  	
  USA
  4820 OVERLAND AVENUE, SAN DIEGO, CA 92123

  	
   

  	
  ***

  	
   

  	
  TBD

  	
   

  	
  30
  days

  	
   

  	
  100%

  
	
  59P6663

  	
   

  	
  EXPRESS
  CHANNEL 2

  	
   

  	
  ***

  	
   

  	
  FOB
  KINGSTON US LOCAL WAREHOUSE DDU Greenock Hub

  	
   

  	
  ***

  	
   

  	
  USA
  4820 OVERLAND AVENUE, SAN DIEGO, CA 92123

  	
   

  	
  ***

  	
   

  	
  TBD

  	
   

  	
  30
  days

  	
   

  	
  100%

  
	
  59P6698

  	
   

  	
  LTO
  DRIVE SLED FRU

  	
   

  	
  ***

  	
   

  	
  FOB
  Overland Storage, San Diego

  	
   

  	
  ***

  	
   

  	
  USA
  4820 OVERLAND AVENUE, SAN DIEGO, CA 92123

  	
   

  	
  ***

  	
   

  	
  TBD

  	
   

  	
  30
  days

  	
   

  	
  100%

  



 


12

















 


	
  59P6699

  	
   

  	
  SDLT
  DRIVE SLED FRU

  	
   

  	
  ***

  	
   

  	
  FOB
  Overland Storage, San Diego

  	
   

  	
  ***

  	
   

  	
  USA
  4820 OVERLAND AVENUE, SAN DIEGO, CA 92123

  	
   

  	
  ***

  	
   

  	
  TBD

  	
   

  	
  30
  days

  	
   

  	
  100%

  
	
  59P6703

  	
   

  	
  LEFT
  LTO LIBRARY MAGAZINE FRU

  	
   

  	
  ***

  	
   

  	
  FOB
  Overland Storage, San Diego

  	
   

  	
  ***

  	
   

  	
  USA
  4820 OVERLAND AVENUE, SAN DIEGO, CA 92123

  	
   

  	
  ***

  	
   

  	
  TBD

  	
   

  	
  30
  days

  	
   

  	
  100%

  
	
  59P6704

  	
   

  	
  RIGHT
  LTO LIBRARY MAGAZINE FRU

  	
   

  	
  ***

  	
   

  	
  FOB
  Overland Storage, San Diego

  	
   

  	
  ***

  	
   

  	
  USA
  4820 OVERLAND AVENUE, SAN DIEGO, CA 92123

  	
   

  	
  ***

  	
   

  	
  TBD

  	
   

  	
  30
  days

  	
   

  	
  100%

  
	
  59P6705

  	
   

  	
  LEFT
  SDLT LIBRARY MAGAZINE FRU

  	
   

  	
  ***

  	
   

  	
  FOB
  Overland Storage, San Diego

  	
   

  	
  ***

  	
   

  	
  USA
  4820 OVERLAND AVENUE, SAN DIEGO, CA 92123

  	
   

  	
  ***

  	
   

  	
  TBD

  	
   

  	
  30
  days

  	
   

  	
  100%

  
	
  59P6706

  	
   

  	
  RIGHT
  SDLT LIBRARY MAGAZINE FRU

  	
   

  	
  ***

  	
   

  	
  FOB
  Overland Storage, San Diego

  	
   

  	
  ***

  	
   

  	
  USA
  4820 OVERLAND AVENUE, SAN DIEGO, CA 92123

  	
   

  	
  ***

  	
   

  	
  TBD

  	
   

  	
  30
  days

  	
   

  	
  100%

  
	
  59P6707

  	
   

  	
  ROBOT
  BARCODE READER FRU

  	
   

  	
  ***

  	
   

  	
  FOB
  Overland Storage, San Diego

  	
   

  	
  ***

  	
   

  	
  USA
  4820 OVERLAND AVENUE, SAN DIEGO, CA 92123

  	
   

  	
  ***

  	
   

  	
  TBD

  	
   

  	
  30
  days

  	
   

  	
  100%

  
	
  59P6708

  	
   

  	
  LIBRARY
  CNTRLLR FRU

  	
   

  	
  ***

  	
   

  	
  FOB
  Overland Storage, San Diego

  	
   

  	
  ***

  	
   

  	
  USA
  4820 OVERLAND AVENUE, SAN DIEGO, CA 92123

  	
   

  	
  ***

  	
   

  	
  TBD

  	
   

  	
  30
  days

  	
   

  	
  100%

  
	
  59P6709

  	
   

  	
  POWER
  SUPPLY FRU

  	
   

  	
  ***

  	
   

  	
  FOB
  Overland Storage, San Diego

  	
   

  	
  ***

  	
   

  	
  USA
  4820 OVERLAND AVENUE, SAN DIEGO, CA 92123

  	
   

  	
  ***

  	
   

  	
  TBD

  	
   

  	
  30
  days

  	
   

  	
  100%

  
	
  59P6713

  	
   

  	
  LCD
  DISPLAY ASSEMBLY FRU

  	
   

  	
  ***

  	
   

  	
  FOB
  Overland Storage, San Diego

  	
   

  	
  ***

  	
   

  	
  USA
  4820 OVERLAND AVENUE, SAN DIEGO, CA 92123

  	
   

  	
  ***

  	
   

  	
  TBD

  	
   

  	
  30
  days

  	
   

  	
  100%

  
	
  59P6715

  	
   

  	
  FIBER
  CARD FRU

  	
   

  	
  ***

  	
   

  	
  FOB
  Overland Storage, San Diego

  	
   

  	
  ***

  	
   

  	
  USA
  4820 OVERLAND AVENUE, SAN DIEGO, CA 92123

  	
   

  	
  ***

  	
   

  	
  TBD

  	
   

  	
  30
  days

  	
   

  	
  100%

  
	
  71P9121

  	
   

  	
  CARTRIDGE
  ELEVATOR

  	
   

  	
  ***

  	
   

  	
  Overland
  Storage, San Diego

  	
   

  	
  ***

  	
   

  	
  USA
  4820 OVERLAND AVENUE, SAN DIEGO, CA 92123

  	
   

  	
  ***

  	
   

  	
  TBD

  	
   

  	
  30
  days

  	
   

  	
  100%

  
	
  71P9122

  	
   

  	
  CARTRIDGE
  ELEVATOR

  	
   

  	
  ***

  	
   

  	
  FOB
  Overland Storage, San Diego

  	
   

  	
  ***

  	
   

  	
  USA
  4820 OVERLAND AVENUE, SAN DIEGO, CA 92123

  	
   

  	
  ***

  	
   

  	
  TBD

  	
   

  	
  30
  days

  	
   

  	
  100%

  



 












* Repair Price applies only to
Products Repairs not covered by Product warranty.


 


3.0                               WA
FLEXIBILITY


 


	
  Number of
  Days prior to a 

  WA

  Scheduled Delivery Date

  	
   

  	
  Increase of Product Quantity to a WA

  Scheduled Delivery Date

  (% of WA Quantity)

  	
   

  	
  Cancellation of Product Quantity to a WA

  Scheduled Delivery Date

  (% of WA Quantity)

  	
   

  	
  Rescheduling of Product Quantity to a

  WA Scheduled Delivery Date

  (% of WA Quantity)

  	
   

  
	
  Less than 15 days

  	
   

  	
  0

  	
  %

  	
  0

  	
  %

  	
  0

  	
  %

  
	
  From 15 days to 30 days

  	
   

  	
  50

  	
  %

  	
  50

  	
  %

  	
  50

  	
  %

  
	
  From 30 days to 45 days

  	
   

  	
  100

  	
  %

  	
  100

  	
  %

  	
  100

  	
  %

  
	
  More than 45 days

  	
   

  	
  Unlimited

  	
   

  	
  100

  	
  %

  	
  100

  	
  %

  



 


While the above flexibility
terms also apply to Pull Products, in the event the relevant Pull Profile has
more favorable terms, then such more favorable terms shall take precedence.


 


13

















 


4.0                               REPLENISHMENT


4.1                               Product
Pull Profile.


 


	
  Buyer P/N

  	
   

  	
  Package

  Quantity

  	
   

  	
  Pallet

  Quantity

  	
   

  	
  Container

  Quantity

  	
   

  	
  Bulk

  Pull

  	
   

  	
  Rounding

  Indicator

  	
   

  	
  Pull Start

  Date

  	
   

  	
  ***

  	
   

  	
  Transit

  Time

  	
   

  	
  Process

  Time

  	
   

  	
  ***

  	
   

  	
  Upside

  Flexibility

  	
   

  	
  Liability

  Horizon

  
	
  4560SLX

  	
   

  	
  1

  	
   

  	
  6

  	
   

  	
  NA

  	
   

  	
  G

  	
   

  	
  6

  	
   

  	
  11/22/02

  	
   

  	
  ***

  	
   

  	
  7days

  	
   

  	
  1
  DAY

  	
   

  	
  ***

  	
   

  	
  Sec
  3.0

  	
   

  	
  2
  WEEKS

  
	
  59P6657

  	
   

  	
  1

  	
   

  	
  10

  	
   

  	
  NA

  	
   

  	
  G

  	
   

  	
  10

  	
   

  	
  11/22/02

  	
   

  	
  ***

  	
   

  	
  7days

  	
   

  	
  1
  DAY

  	
   

  	
  ***

  	
   

  	
  Sec
  3.0

  	
   

  	
  2
  WEEKS

  
	
  59P6658

  	
   

  	
  1

  	
   

  	
  10

  	
   

  	
  NA

  	
   

  	
  G

  	
   

  	
  10

  	
   

  	
  11/22/02

  	
   

  	
  ***

  	
   

  	
  7days

  	
   

  	
  1
  DAY

  	
   

  	
  ***

  	
   

  	
  Sec
  3.0

  	
   

  	
  2
  WEEKS

  
	
  59P6659

  	
   

  	
  1

  	
   

  	
  25

  	
   

  	
  NA

  	
   

  	
  G

  	
   

  	
  25

  	
   

  	
  11/22/02

  	
   

  	
  ***

  	
   

  	
  7days

  	
   

  	
  1
  DAY

  	
   

  	
  ***

  	
   

  	
  Sec
  3.0

  	
   

  	
  2
  WEEKS

  
	
  59P6660

  	
   

  	
  1

  	
   

  	
  10

  	
   

  	
  NA

  	
   

  	
  G

  	
   

  	
  10

  	
   

  	
  11/22/02

  	
   

  	
  ***

  	
   

  	
  7days

  	
   

  	
  1
  DAY

  	
   

  	
  ***

  	
   

  	
  Sec
  3.0

  	
   

  	
  2
  WEEKS

  
	
  59P6661

  	
   

  	
  1

  	
   

  	
  25

  	
   

  	
  NA

  	
   

  	
  G

  	
   

  	
  25

  	
   

  	
  11/22/02

  	
   

  	
  ***

  	
   

  	
  7days

  	
   

  	
  1
  DAY

  	
   

  	
  ***

  	
   

  	
  Sec
  3.0

  	
   

  	
  2
  WEEKS

  
	
  59P6662

  	
   

  	
  1

  	
   

  	
  24

  	
   

  	
  NA

  	
   

  	
  G

  	
   

  	
  24

  	
   

  	
  11/22/02

  	
   

  	
  ***

  	
   

  	
  7days

  	
   

  	
  1
  DAY

  	
   

  	
  ***

  	
   

  	
  Sec
  3.0

  	
   

  	
  2
  WEEKS

  
	
  59P6663

  	
   

  	
  1

  	
   

  	
  10

  	
   

  	
  NA

  	
   

  	
  G

  	
   

  	
  10

  	
   

  	
  11/22/02

  	
   

  	
  ***

  	
   

  	
  7days

  	
   

  	
  1
  DAY

  	
   

  	
  ***

  	
   

  	
  Sec
  3.0

  	
   

  	
  2
  WEEKS

  



 


4.2                               Transaction Documents.


 


	
  TRANSACTION
  DOCUMENT

  	
   

  	
  EDI/ANSI  EDIFACT

  	
   

  	
  E-Mail

  	
   

  	
  Fax

  	
   

  	
  Frequency

  
	
  Invoice
  (810/INVOIC)

  	
   

  	
  X

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  AS REQUIRED

  
	
  Remittance
  Advice (820/REMADV)

  	
   

  	
  X

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  AS REQUIRED

  
	
  Planning
  Schedule (830/DELFOR)

  	
   

  	
  X

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  AS REQUIRED

  
	
  Forecast
  Response (830/DELFOR)

  	
   

  	
  X

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  AS REQUIRED

  
	
  Purchase
  Order (850/ORDERS)

  	
   

  	
  X

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  AS REQUIRED

  
	
  PO
  Acknowledgment (855/ORDRSP)

  	
   

  	
  X

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  AS REQUIRED

  
	
  Advance Ship
  Notice (856/DESADV)

  	
   

  	
  X

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  AS REQUIRED

  
	
  PO Change
  (860/ORDCHG)

  	
   

  	
  X

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  AS REQUIRED

  
	
  Pull
  Notification (862/DELJIT)

  	
   

  	
  X

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  AS REQUIRED

  
	
  Product
  Transfer & Resale Report (867)

  	
   

  	
  X

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  AS REQUIRED

  
	
  Functional
  Acknowledgment (997/CONTRL)

  	
   

  	
  X

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  AS REQUIRED

  
	
  Inventory
  Inquiry/Advice (846/INVRPT)

  	
   

  	
  X

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  AS REQUIRED

  



 


5.0                               COMMUNICATIONS


Each party may change its
designated coordinators and/or addresses any time by a written notification to
the relevant coordinator.


 


5.1                               Business
Coordinators.


 


	
  SUPPLIER

  	
   

  	
   

  	
   

  	
  BUYER

  	
   

  	
   

  
	
  Name

  	
   

  	
  ***

  	
   

  	
  Name

  	
   

  	
  ***

  
	
  Title

  	
   

  	
  IBM Account Manager

  	
   

  	
  Title

  	
   

  	
  X Series Tape Commodity Manager

  
	
  Address

  	
   

  	
  4820 Overland Avenue

  San Diego, CA 92123

  	
   

  	
  Address

  	
   

  	
  3093 Cornwallis Road

  Research Triangle Park, NC 27709

  
	
  Phone

  	
   

  	
  ***

  	
   

  	
  Phone

  	
   

  	
  ***

  
	
  Fax

  	
   

  	
  ***

  	
   

  	
  Fax

  	
   

  	
  ***

  
	
  E-mail

  	
   

  	
  ***

  	
   

  	
  E-mail

  	
   

  	
  ***

  



 


5.2                               Technical
Coordinators.


 


	
  SUPPLIER

  	
   

  	
   

  	
   

  	
  BUYER

  	
   

  	
   

  
	
  Name

  	
   

  	
  ***

  	
   

  	
  Name

  	
   

  	
  ***

  
	
  Title

  	
   

  	
  IBM Account
  Manager

  	
   

  	
  Title

  	
   

  	
  X Series
  Procurement Engineer

  
	
  Address

  	
   

  	
  4820
  Overland Avenue

  San Diego, CA 92123

  	
   

  	
  Address

  	
   

  	
  3093
  Cornwallis Road

  Research Triangle Park, NC 27709

  
	
  Phone

  	
   

  	
  ***

  	
   

  	
  Phone

  	
   

  	
  ***

  
	
  Fax

  	
   

  	
  ***

  	
   

  	
  Fax

  	
   

  	
  ***

  
	
  E-mail

  	
   

  	
  ***

  	
   

  	
  E-mail

  	
   

  	
  ***

  



 


14

















 


MONTHLY WARRANTY ANALYSIS REPORT


 


	
  Supplier Name:

  	
   

  	
   

  
	
  Month: 

  	
   

  	
   

  
				



 


 


	
  Buyer P/N

  	
   

  	
  Description

  	
   

  	
  Barcode

  	
   

  	
  Symptoms

  	
   

  	
  Actual

  Finding

  	
   

  	
  Explanation

  Code

  	
   

  	
  Root Cause Analysis Action Taken to Fix

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 


	
  SUMMARY REPORT

  
	
  Total Units
  Repaired in Current Month

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Total
  Warranty Claims Received

  	
   

  	
   

  
	
  Actual
  Warranty Accepted

  	
   

  	
   

  
	
  Warranty %

  	
   

  	
   

  
	
  High Flyers
  (more than       %)

  	
   

  	
  High Flyers
  Require a Corrective Action Plan and Date of Implementation.

  
	
   

  	
   

  	
   

  



 


	
  EXPLANATION
  CODE

  	
   

  	
  DESCRIPTION

  
	
  Code 03

  	
   

  	
  Warranty
  Expired

  
	
  Code 04

  	
   

  	
  Missort

  
	
  Code 07

  	
   

  	
  Cannibalized
  or Missing Parts

  
	
  Code 08

  	
   

  	
  Warranty
  Product Received

  
	
  Code 09

  	
   

  	
  Physical
  Damage

  
	
  Code 10

  	
   

  	
  No Defect
  Found

  
	
  Code 11

  	
   

  	
  Other

  



 


15

















 


	
  International Business Machines Corporation

  	
   

  	
  Fax completed form to Accounts Payable:

  
	
  1701 North
  Street

  	
   

  	
  (607)
  755-6124

  
	
  Endicott, NY
  13760

  	
   

  	
   

  



 


AUTHORIZATION FOR ELECTRONIC FUNDS TRANSFER


 


You hereby authorize
International Business Machines Corporation to initiate credit entries to the
account listed below in connection with agreed upon Electronic Data Interchange
(EDI) transactions between our companies. 
You agree that such transactions will be governed by the National
Automated Clearing House Association rules. 
This authority is to remain in effect until International Business
Machines Corporation has received written notification of termination in such
time and such manner as to afford International Business Machines Corporation a
reasonable opportunity to act on it.  IN
NO EVENT SHALL IBM BE LIABLE FOR ANY SPECIAL, INCIDENTAL, EXEMPLARY OR
CONSEQUENTIAL DAMAGES AS A RESULT OF THE DELAY, OMISSION OR ERROR OF AN
ELECTRONIC CREDIT ENTRY, EVEN IF INTERNATIONAL BUSINESS MACHINES CORPORATIONS
HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.


 


	
  Trading
  Partner Name

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Payment
  Remit Address

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Account
  Payee

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Payee Address

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  EFT Domestic
  Banking Institution

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Contact Name
  / Title

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Contact
  Phone Number

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Bank Address

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Account
  Number

  	
   

  	
   

  	
  (MAX 17)

  
	
   

  	
   

  	
   

  	
   

  
	
  Bank Routing
  / Transit CD

  	
   

  	
   

  	
  (MAX 9)

  
	
   

  	
   

  	
   

  	
   

  
	
  Remit Advice
  Option

  	
   

  	
   

  	
  1

  	
   

  	
  2

  	
   

  
	
   

  	
   

  	
  DUNS Number / User ID / Account Number

  
	
  Tax ID
  Number

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Name

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Title

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Phone Number

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Date

  	
   

  	
   

  
								



 


16