Exhibit
10.9


 


Overland Storage PPA
1585-042103


 


*** 
Confidential portions of this document have been redacted and separately
filed with the Commission.


 


 


PRODUCT
PURCHASE AGREEMENT


 


 


NO.
1585-042103


 


1

















 


	
  TABLE OF CONTENTS

  	
   

  
	
   

  	
   

  	
   

  
	
  1.

  	
  SCOPE OF
  AGREEMENT

  	
   

  
	
  1.1 General.

  	
   

  
	
  1.2
  Eligible Purchasers

  	
   

  
	
  1.3
  Term of Agreement

  	
   

  
	
  1.4
  Committed Volume

  	
   

  
	
   

  	
   

  	
   

  
	
  2.

  	
  DEFINITIONS

  	
   

  
	
  2.1 Definitions 

  	
   

  
	
   

  	
   

  	
   

  
	
  3.

  	
  ORDERING AND SHIPMENT
  OF PRODUCT

  	
   

  
	
  3.1 In General

  	
   

  
	
  3.2 Orders

  	
   

  
	
  3.3 Blanket Purchase
  Orders

  	
   

  
	
  3.4 Order
  Acceptance and Acknowledgment

  	
   

  
	
  3.5
  Emergency Orders

  	
   

  
	
  3.6 Forecasts

  	
   

  
	
  3.7 Lead Times

  	
   

  
	
  3.8 Inventory Requirements

  	
   

  
	
  3.9 Order
  Changes

  	
   

  
	
  3.10
  Purchase Reports

  	
   

  
	
  3.11 Delivery,
  Shipment and Packaging

  	
   

  
	
   

  	
   

  	
   

  
	
  4.

  	
  PRICES
  AND PAYMENT TERMS

  	
   

  
	
  4.1  Prices

  	
   

  
	
  4.2  Payment Terms

  	
   

  
	
  4.3  Offset

  	
   

  
	
  4.4  Discounts and Rebates

  	
   

  
	
  4.5 Sales Taxes and Duties

  	
   

  
	
  4.6
  Financial Condition

  	
   

  
	
   

  	
   

  	
   

  
	
  5.

  	
  [***]

  	
   

  
	
   

  	
   

  	
   

  
	
  6.

  	
  PRODUCT RETURNS;
  NON-CONFORMING PRODUCT

  	
   

  
	
  6.1 Return Materials
  Authorization

  	
   

  
	
  6.2
  Return Charges

  	
   

  
	
  6.3
  Duty to Remove Marks or Destroy Non-conforming Product

  	
   

  
	
  6.4 Correction of
  Non-conforming Product

  	
   

  
	
   

  	
   

  	
   

  
	
  7.

  	
  ENGINEERING
  PROCESS OR DESIGN CHANGES

  	
   

  
	
  7.1 Supplier Proposed Changes

  	
   

  
	
  7.2 Notice of Proposed Change

  	
   

  
	
  7.3
  HP Proposed Changes

  	
   

  
	
  7.4 Safety Standard Changes

  	
   

  
	
   

  	
   

  	
   

  
	
  8.

  	
  QUALITY

  	
   

  
	
  8.1
  Quality System

  	
   

  



 


2

















 


	
  8.2 Product
  Holds

  	
   

  
	
  8.3 HP’s Right to
  Inspect Facilities

  	
   

  
	
  8.4  Reports

  	
   

  
	
  8.5
  SUPPLIER RATING

  	
   

  
	
   

  	
   

  	
   

  
	
  9.

  	
  SAFETY

  	
   

  
	
   

  	
   

  	
   

  
	
  10.

  	
  WARRANTIES

  	
   

  
	
  10.1 Product General
  Warranties

  	
   

  
	
  10.2 Product
  Intellectual Property Warranties.

  	
   

  
	
  10.3
  Warranty Periods

  	
   

  
	
  10.4 Software and
  Documentation Warranty

  	
   

  
	
  10.5 Services and Support
  Warranty

  	
   

  
	
  10.6 Compliance with
  Applicable Law

  	
   

  
	
  10.7
  Warranty Exclusions

  	
   

  
	
  10.8 DISCLAIMER

  	
   

  
	
   

  	
   

  	
   

  
	
  11.

  	
  SUPPORT;
  OTHER SERVICES

  	
   

  
	
  11.1 General

  	
   

  
	
  11.2 New
  HP Products

  	
   

  
	
  11.3 HP
  Property

  	
   

  
	
  11.4
  Substitute Products

  	
   

  
	
  11.5 Survival of
  Support Obligations

  	
   

  
	
   

  	
   

  	
   

  
	
  12.

  	
  DISCONTINUANCE OF PRODUCT

  	
   

  
	
  12.1 [***] Buy
  Rights

  	
   

  
	
  12.2 HP’s Right to
  Manufacture

  	
   

  
	
  12.3 Survival
  of [***] Buy Rights

  	
   

  
	
   

  	
   

  	
   

  
	
  13.

  	
  LOSS CONTROL

  	
   

  
	
  13.1
  Business Continuity

  	
   

  
	
  13.2 Safety,
  Security and Fire Protection

  	
   

  
	
   

  	
   

  	
   

  
	
  14.

  	
  MARKETING
  AND LICENSING

  	
   

  
	
  14.1
  Marketing Authority

  	
   

  
	
  14.2
  No Rights in Marks

  	
   

  
	
  14.3
  Private Labeling

  	
   

  
	
  14.4 Software License

  	
   

  
	
  14.5
  Documentation License

  	
   

  
	
   

  	
   

  	
   

  
	
  15.

  	
  INTELLECTUAL PROPERTY
  PROTECTION

  	
   

  
	
  15.1 Supplier’s Duty to
  Defend

  	
   

  
	
  15.2
  HP’s Duty to Notify

  	
   

  
	
  15.3 Actions After
  Injunction or Order

  	
   

  
	
  15.4
  Limitations

  	
   

  
	
  15.5
  Intellectual Property Developed under this Agreement

  	
   

  
	
   

  	
   

  	
   

  
	
  16.

  	
  TRADE
  REQUIREMENTS

  	
   

  
	
  17.

  	
  CLASSIFICATION
  AND LICENSING AUTHORITY

  	
   

  



 


3

















 


	
  18.

  	
  GOVERNMENTAL
  COMPLIANCE

  	
   

  
	
  18.1 Duty to Comply

  	
   

  
	
  18.2 Social and
  Environmental Responsibility

  	
   

  
	
  18.3 Environmental
  Requirements

  	
   

  
	
  18.4 Procurement Regulations

  	
   

  
	
  18.5Anti-Terrorism
  Security Measures

  	
   

  
	
   

  	
   

  	
   

  
	
  19.

  	
  FORCE
  MAJEURE EVENTS

  	
   

  
	
  19.1
  Delaying Causes

  	
   

  
	
  19.2 Occurrence of a
  Delaying Cause

  	
   

  
	
  19.3 Resumption of
  Performance

  	
   

  
	
   

  	
   

  	
   

  
	
  20.

  	
  EVENTS OF DEFAULT AND
  REMEDIES

  	
   

  
	
  20.1
  Events of Default

  	
   

  
	
  20.2 Rights and
  Remedies Upon Default

  	
   

  
	
  20.3 Cover
  Costs

  	
   

  
	
   

  	
   

  	
   

  
	
  21.

  	
  CONFIDENTIAL
  INFORMATION

  	
   

  
	
  21.1
  Confidential Information

  	
   

  
	
  21.2 Exclusions

  	
   

  
	
  21.3
  Personal Data

  	
   

  
	
   

  	
   

  	
   

  
	
  22.

  	
  INSURANCE
  AND INDEMNITY

  	
   

  
	
   

  	
   

  	
   

  
	
  23.

  	
  LIMITATION
  OF LIABILITY

  	
   

  
	
  23.1 Liability Disclaimers

  	
   

  
	
  23.2 Liability Limitations

  	
   

  
	
  23.3
  Exceptions to Liability Disclaimers and Limitations

  	
   

  
	
  23.4 EXCLUDED DAMAGES

  	
   

  
	
   

  	
   

  	
   

  
	
  24.

  	
  TERMINATION

  	
   

  
	
  24.1 Termination for
  Convenience

  	
   

  
	
  24.2 Termination for Default

  	
   

  
	
  24.3 Termination for
  Assignment

  	
   

  
	
  24.4 Termination
  Pursuant to Other Power

  	
   

  
	
  24.5 Effect of Termination

  	
   

  
	
  24.6
  Termination Claim

  	
   

  
	
   

  	
   

  	
   

  
	
  25.

  	
  MISCELLANEOUS

  	
   

  
	
  25.1 Notices

  	
   

  
	
  25.2 Exhibits; Other
  Documents

  	
   

  
	
  25.3 Independent Contractors

  	
   

  
	
  25.4 Assignment

  	
   

  
	
  25.5 No Waiver

  	
   

  
	
  25.6 No Third Party Beneficiary

  	
   

  
	
  25.7 Headings; Interpretation

  	
   

  
	
  25.8 Publicity

  	
   

  
	
  25.9
  Severability

  	
   

  



 


4

















 


	
  25.10
  Entire Agreement

  	
   

  
	
  25.11 [***]

  	
   

  
	
  25.13
  Counterparts

  	
   

  
	
  25.14
  Authority of Signatory

  	
   

  
	
  25.15 Disputes/Escalation
  Process

  	
   

  
	
   

  	
   

  	
   

  
	
  Signature
  Authorization

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBIT A..PRODUCT
  DESCRIPTION AND SPECIFICATION

  	
   

  
	
   

  	
   

  
	
  EXHIBIT B..DELIVERY,
  PACKAGING AND SHIPPING REQUIREMENTS

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBIT C..SERVICE AND
  SUPPORT REQUIREMENTS

  	
   

  
	
   

  	
   

  
	
  EXHIBIT D..CONFIDENTIAL
  DISCLOSURE AGREEMENT

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBIT F..RECIPIENTS FOR
  NOTICES

  	
   

  
	
   

  	
   

  
	
  EXHIBIT
  G..MARKETING REQUIREMENTS

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBIT
  H..SOFTWARE AND DOCUMENTATION WARRANTY

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBIT I..FLEXIBILITY
  AGREEMENT

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBIT J..QUALITY, WARRANTY
  and WARRANTY COMPENSATION

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBIT K..PRICING

  	
   

  
	
   

  	
   

  
	
  EXHIBIT M..HP REGIONAL TRADE
  GUIDELINES

  	
   

  



 


5

















 


PRODUCT PURCHASE AGREEMENT


 


NO. 1585-042103


 


 


This PRODUCT PURCHASE
AGREEMENT (“Agreement”) is entered into as of the 31st day of July
2003 (the “Effective Date”) by and between HEWLETT-PACKARD COMPANY (“HP”), a
Delaware corporation, having its principal place of business located at 3000
Hanover Street, Palo Alto, California 94304, and OVERLAND STORAGE, INC.
(“Supplier”), a


 


ý               
corporation


 


o            limited liability company


 


other,


 


organized and operating
under the laws of California with its principal place of business at:


 


4820 Overland
Avenue


San Diego,
California 92123.


 


 


RECITALS


 


WHEREAS, Supplier wishes
to sell, and HP wishes to purchase, goods or services, or both, upon the terms
and conditions hereinafter provided; and


 


WHEREAS, Supplier and HP
intend to establish mutual understanding concerning such sales and purchases
and, in so doing and in performing hereunder, meet the parties’ respective
needs for a well-defined and stable relationship in an atmosphere of close
cooperation and mutual trust.


 


NOW, THEREFORE, in
consideration of the mutual promises and covenants herein contained, Supplier
and HP hereby agree as follows:


 


1.                                       SCOPE OF AGREEMENT


 


1.1         General. The
goods to be provided hereunder are set forth in Exhibit A (the “Goods”). Goods
will meet Specifications and any other requirements which may be attached
hereto or referred to herein. Any services to be provided, whether primary
performance hereunder as set forth in Exhibit C (the “Services”) or performed in
connection with the furnishing of Goods, will meet generally accepted practices
and standards and any other requirements


 


 












*** 
Confidential portions of this document have been redacted and separately
filed with the Commission.


 


6

















 


which may
be attached hereto or referred to herein. As used herein, “Product” refers
interchangeably to Goods or Services, or both in combination, unless the
context expressly otherwise provides.


 


1.2            Eligible Purchasers. [***] and, as may be mutually
agreed in writing by Supplier and HP, [***] pursuant to the terms of this
Agreement; provided that:


 


1.2.1 [***];


 


1.2.2 [***];and


 


1.2.3 As may reasonably
be requested [***].


 


Each Eligible Purchaser will, when purchasing Product pursuant
to this Agreement, state as may be reasonably acceptable to Supplier that such
Eligible Purchaser is purchasing Product pursuant to this Agreement, [***] with
respect to any Accepted Order for Product; provided that nothing herein
restricts or otherwise limits modification or waiver of this Agreement, or part
hereof, with respect to any such Order upon mutual agreement in writing
[***].  Anything in this Agreement to
the contrary notwithstanding, any liability disclaimer or limitation in this
Agreement applicable to HP or Supplier inter se will be applicable to each
Eligible Purchaser and to Supplier inter se; provided that [***].


 


1.3 Term
of Agreement.
This Agreement will be effective upon execution by the parties and covers a
period (the “Term”) which commences as of the Effective Date and continues for
one (1) year and thereafter continues indefinitely unless terminated earlier
under the terms of this Agreement; provided that in no event will this
Agreement continue longer than three (3) years from the Effective Date unless
extended or renewed upon mutual written agreement of the parties.


 


1.4 Committed
Volume.
[***] nothing in this Agreement obligates HP to purchase any minimum quantity
of Product. This Agreement sets forth the terms and conditions during the Term
which govern Orders and Acknowledgments for Product or which otherwise apply to
any legally binding volume commitment for Product. Any Order or Acknowledgment
or other legally binding volume commitment for Product which is entered during
the Term will remain governed by this Agreement notwithstanding expiration or
termination of this Agreement for any reason. Unless otherwise agreed, [***]
within which to purchase Product at the then current volume rate and pricing
then in effect. [***]. Unless otherwise agreed, if Supplier is unable, for any
reason or no reason, to furnish or delays furnishing committed volume, [***]
with this Agreement.


 


7

















 


2.                                       DEFINITIONS


 


2.1 Definitions.
As used in this Agreement, and in addition to other terms elsewhere defined in
this  Agreement,
each of the following terms has the indicated meanings:


 


“Accepted Order” means an
Order as to which Supplier has issued its Acknowledgment accepting the Order or
which is deemed accepted as set forth in Section 3.4 or which otherwise
constitutes a contract under Applicable Law, is legally binding or legally
enforceable.


 


“Acknowledgment” means a
written or electronic acknowledgment or confirmation issued by Supplier in
response to and following Supplier’s receipt of an Order issued by HP or an
Eligible Purchaser to Supplier for Delivery of Product.


 


“Affiliate” means an
entity whose voting shares are owned less than fifty percent (50%), but at
least ten percent (10%), by a party to this Agreement and which is not
controlled by, or under common control with, a party to this Agreement as its
Subsidiary.


 


“Applicable Law” means
all constitutions, laws, statutes, codes, ordinances, orders, judgments,
decrees, injunctions, rules, regulations, permits and legally binding
requirements of all federal, state and local governmental authorities
applicable to any party’s performance under this Agreement.


 


“Backlog” means Orders
placed by HP or Eligible Purchasers and not yet shipped by Supplier to the
destination required under the Order.


 


“Business Day” (whether
initial letters are capitalized or not) means a Day other than a Saturday,
Sunday or a Day on which U.S. commercial banks in [***], or, if different,
commercial banking institutions in the location at which performance of an act
or obligation under this Agreement is to occur, are closed or required to close
under Applicable Law.


 


“Confidential
Information” has the meaning set forth in Section 21.1.


 


“Control” (including the
terms “controlling,” “controlled by” and “under common control with”) means the
possession, direct or indirect, of the power to direct or cause the direction
of the management and policies of a person or entity, whether through the
ownership of voting securities, by contract or otherwise.


 


“Day” (whether initial
letter is capitalized or not) means a calendar day and includes Saturdays,
Sundays and holidays, except that, in the event that an obligation to be
performed under this Agreement falls due on a day other than a Business Day,
the obligation will be deemed due on the first Business Day thereafter.


 


8

















 


“Delaying Cause” has the
meaning set forth in Section 19. 1.


 


“Delivery” means, in
accordance with an Accepted Order and this Agreement, delivery to common
carrier for shipment or shipment and arrival of Product at the receiving area,
as HP or an Eligible Purchaser may designate, and Supplier may agree, from time
to time during the Term. “Deliver” or usage of similar import refers to a
Delivery.


 


“Delivery Date” means the
date specified in an Accepted Order for the Delivery of Product by Supplier to
the destination required under the Accepted Order.


 


“Discontinued Product”
has the meaning set forth in Section 12. 1.


 


“Documentation” means the
technical documentation that Supplier will provide with Product from time to
time during the Term and to the extent HP may reasonably request and show need
for access.


 


“Eligible Purchaser”
means [***].


 


“Emergency Order” has the
meaning set forth in Section 3.5.


 


“Engineering Change” has
the meaning set forth in Section 7. 1.


 


“Epidemic Failure” has
the meaning set forth in Exhibit J.


 


“Failure Rate” has the
meaning set forth in Exhibit J.


 


“Field Failure” has the
meaning set forth in Exhibit J.


 


“Forecast” means HP’s
non-binding (except as may be required in Exhibit I with respect to buffer
inventory) estimate of purchases of Product over a [***] period, or such other
period as may be designated by the parties.


 


“HP Contractor” or “Contractor”
means any third party which performs work for HP or HP Subsidiaries or
Affiliates and which requires Product from Supplier. HP Contractors are
independent contractors of HP or its Subsidiaries or Affiliates and are not
legally related to HP or its Subsidiaries or Affiliates as agent, employee,
partner, joint venturer or other manner.


 


“HP Products” means the
HP products or systems that include or incorporate Product and that will be
marketed and sold to end-user customers by HP or HP Subsidiaries or Affiliates
and its and their resellers.


 


“HP Property” means all
property including without limitation models, tools, equipment, copies of
designs and documentation and other materials that may be 


 


9

















 


furnished to Supplier by
HP or on HP’s behalf or separately paid for by HP for use by Supplier in
connection with this Agreement or any Order.


 


“HP Warehouse” means any
facility which is owned, leased, rented or use of which is otherwise arranged
by HP where HP inventory, including raw material, components and
work-in-process, may be stored.


 


“Hubs” means Supplier or
Supplier’s logistic service providers which store, maintain or handle Supplier
Managed Inventory.


 


“Indemnitee” has the
meaning set forth in Section 15. 1.


 


“Infringing Product’ has
the meaning set forth in Section 15.3.


 


“Intellectual Property
Rights” means any ideas, whether or not patentable, inventions, discoveries,
processes, works of authorship, marks, names, know-how, and any and all rights
in such materials on a worldwide basis, including any rights in patents,
inventor’s certificates, utility models, copyrights, moral rights, trade
secrets, mask works, trade names and marks and other analogous rights.


 


“IP Claim” has the
meaning set forth in Section 15. 1.


 


“Lead Time” means the
time between the date an Order is issued and the Delivery Date.


 


“Mark” (whether initial
letter is capitalized or not) means any trademark, service mark, trademark and
service mark application, trade dress, trade name, logo, insignia, symbol,
design or other marking identifying a party or its products.


 


“Month” and “year” mean
calendar month and year.


 


“Non-cancelable Order”
means an Accepted Order that due to special circumstances (e.g., ordered
quantities or item of Product) or agreement of the parties may not be
rescheduled or canceled by HP, except as set forth in Section 3.9. Any Accepted
Order for Unique Product will be deemed to be a Non-cancelable Order.


 


“Non-conforming Product”
means any Product which after Delivery and reasonable opportunity for
inspection and acceptance does not comply with the Specifications or otherwise
does not comply with the requirements of an Accepted Order or this Agreement.


 


“Non-SMI” has the meaning
set forth in Section 3.8.


 


10

















 


“Order” means a written
or electronic purchase order or release issued by HP or an Eligible Purchaser
to Supplier for Delivery of Product.


 


“Product” has the meaning
set forth in Section 1.1 and includes any Goods and services set forth in
Exhibit A, Parts and, as the context may allow, all related Documentation and
other deliverables provided pursuant to this Agreement. “Parts” means the
spares, replacements, components and other items that may be supplied in  conjunction
with or as additions to Product.


 


“Return Materials
Authorization” or “RMA” has the meaning set forth in Section 6.1.


 


“Schematics” means
construction and assembly drawings, photo-tooling for PCBs, and codes, software
or firmware for custom or proprietary components.


 


“Services” has the
meaning set forth in Exhibit C.


 


“Shipment” (whether
initial letter is capitalized or not) means the date of shipment from
Supplier’s facility, or in the case of Product shipped from a third party
warehouse, the date of shipment from the third party warehouse to HP or an
Eligible Purchaser’s facility.


 


“Software” means one or
more programs capable of operating on a controller, processor or other device
or hardware product. Software may be a separate Product, included with another
Product or fixed in a device or hardware product and not removable in normal
operation.


 


“Specifications” means
Supplier’s standard specifications for Product, the technical and functional
requirements for Product set forth in Exhibit A, any Unique Specification and
any other requirements which may be attached hereto or referred to herein or
agreed to by the parties or which may be published in Supplier’s manuals and
technical data sheets for Product in effect on the date Supplier Delivers the
corresponding Order.


 


“Subcontractor” means any
third party, under contract or other arrangement with Supplier, with
responsibility for supply of components or parts for Product, Support of
Product, or for assembly, storage or configuration of Product.


 


“Subsidiary” means an
entity controlled by, or under common control with, a party to this Agreement,
through ownership or control of fifty percent (50%) or greater of the voting
power of the shares or other means of ownership or control, for as long as such
ownership or control continues to exist.


 


“Supplier Managed  Inventory”
or “SMI” means a program or process for Supplier’s inventory to be stored at
Hubs or within Supplier’s designated area within an HP Warehouse.


 


11

















 


“Support” means technical
support and other Services as set forth in Exhibit C, standard services
Supplier customarily provides for Product, or substantial equivalent, and
services for Product  mutually agreed to be provided by Supplier
to HP; provided that if Product includes or  constitutes Software, Support also
includes fixes, updates and upgrades, unless otherwise agreed.


 


“Technical Information”
means Supplier’s manufacturing information and technology to produce Product
and provide Support, including without limitation: (i) specifications,
software, schematics, designs, drawings or other materials pertinent to the
most current  revision level of manufacturing of Product; (ii) copies of
all inspection, manufacturing, test and quality control procedures and any
other work processes; (iii) designs relating to jigs, fixtures and tooling;
(iv) Supplier history files; (v) support documentation; and (vi) any additional
technical information or materials that may be agreed to by the parties.


 


“Term” has the meaning
set forth in Section 1.3.


 


“Unique Materials” means
special parts or components or dedicated raw materials which are used in the
production of HP’s Unique Product and which cannot reasonably be reused,
reworked, returned, sold or otherwise incorporated into any other products
manufactured by Supplier.


 


“Unique Product” means
Product that is unique in nature, customer-specific to HP and cannot be resold
by Supplier to customers other than HP without major modification.


 


“Unique Specification”
means a specialized or particularized requirement of HP which is unique to HP
and which does not include industry standards or conventional requirements or
guidelines or Supplier’s own standards, requirements or guidelines.


 


3.                                       ORDERING AND SHIPMENT OF PRODUCT


 


3.1 In
General. HP and Eligible Purchaser may order
Product in one or more of the following ways: (a) by issuing a standard
purchase order or Order; (b) by issuing a Blanket Purchase Order; or (c)
according to any applicable SMI process. 
Only an Order which fully complies with the terms of this Agreement can
create a binding obligation to purchase for HP or the Eligible Purchaser. Each
Order must be in writing (which includes electronic form). A binding obligation
to purchase by HP or an Eligible Purchaser and to sell by the Supplier is
created when the Order is Acknowledged and accepted by the Supplier as provided
herein. Such obligation to purchase and sell is limited to the Products and
quantity covered by the applicable Order.


 


12

















 


3.2 Orders. Each sale and purchase of Product under
this Agreement will be initiated by an Order issued to Supplier by HP or an
Eligible Purchaser. [***]. HP or an eligible Purchaser may schedule regular
intervals for Deliveries by an Order setting forth the intervals. This
Agreement applies to all Orders for Product and all Acknowledgment of Orders
whether or not the Order or Acknowledgment refers to this Agreement.


 


3.3 Blanket
Purchase Orders. [***]. Except as may be set forth in
Exhibit I, [***]. Supplier will use its commercially reasonable efforts to
fulfill all Forecasts it receives from HP and/or the Eligible Purchaser that
are associated with Blanket Purchase Orders. .


 


3.4 Order Acceptance and Acknowledgment. [***]; provided that such confirmation
of receipt does not constitute an acceptance of the Order unless it expressly
so states. [***]. Unless otherwise expressly agreed by HP, Delivery must be in
strict conformity with Accepted Orders and time is of the essence.


 


3.5 Emergency
Orders.
HP or an Eligible Purchaser may issue Orders on an emergency basis (“Emergency
Order”). Subject to availability of Product, Supplier will use reasonable
commercial efforts to fill Emergency Orders upon acceptance thereof by Supplier.


 


3.6 Forecasts. As Supplier may reasonably request,
[***]. Supplier will use all commercially reasonable efforts to fulfill all
Forecasts provided to it by HP. HP may revise any Forecasts as necessary.


 


3.7 Lead
Times.
[***]. Either party may request a change in Lead Times at any time, and any
change announced by Supplier will apply unless otherwise agreed; provided that
Lead Times may not be materially lengthened on less than [***] prior notice.


 


3.8 Inventory Requirements. [***] Use of an SMI process,
whether with Hubs, HP Warehouse or otherwise, may require additional or
different terms and conditions and is subject to mutual agreement. Inventory
requirements for an SMI process may be agreed by the parties. Without limiting
any of the obligations or liabilities  of Supplier, Supplier will maintain, at
its own expense, as long as this Agreement is in effect, insurance policies of
the kind and limits listed below


 


3.9 Order
Changes.
[***] by notice to Supplier as set forth in this Section; provided that any
increase in quantity or any rescheduling to an earlier Delivery Date is subject
to Supplier’s Acknowledgment as set forth in Section 3.4. [***]. At any time
prior to Shipment, HP may decrease any Accepted Order; provided that quantities
under a Non-cancelable Order may not be decreased, and Non-cancelable Orders
may not be canceled, to the extent Supplier has commenced production or
acquired special components or dedicated raw materials for production. Accepted
Orders for Product not shipped from Hubs


 


13

















 


may be
canceled at any time prior to Supplier’s commencement of production, and those
shipped from Hubs may be canceled at any time prior to Shipment. If HP cancels
or modifies any Accepted Order upon less than applicable notice or other
requirement set forth in this Section, Supplier may invoice HP Supplier’s
customary cancellation charge.


 


3.10 Purchase Reports. Within [***] after close of each
HP fiscal quarter, Supplier will provide HP a report which details purchases of
Product by HP and all Eligible Purchasers by item, quantity and purchase
location, showing total quantities shipped, total dollars invoiced, returns,
percent of on-time and on-quality orders and such other information as HP and Supplier
may mutually determine is appropriate. Reports will be sent to HP’s respective
purchase locations, and a report detailing HP’s total purchases will be sent to
HP’s primary contact set forth in Exhibit F.


 


3.11 Delivery, Shipment and Packaging. As set forth in
Exhibit B, attached hereto.


 


4.                                       PRICES AND PAYMENT TERMS. Prices, payment terms and
other pricing terms will be as follows:


 


4.1  Prices. Prices [***] during the Term.


 


4.2  Payment Terms. Payment terms are [***]. No invoice
may be dated or submitted earlier than date of Delivery. Any prompt payment
discount will be calculated from the same date. Payment will be in U.S.
currency unless otherwise stated. Payment terms are firm for the entire Term
unless changed by mutual written agreement of the parties.


 


4.3  Offset. With respect to any payment, reimbursement
or other amount owed by Supplier to HP under this Agreement, [***] by HP to
Supplier under this Agreement or any other agreement.


 


4.4  Discounts and
Rebates.
Discounts and rebates [***].


 


4.5 Sales Taxes and Duties. Unless otherwise agreed,
prices are exclusive of all taxes or duties (other than taxes levied on
Supplier’s income) that Supplier may be required to collect or pay upon
purchase, sale or shipment of Product. Any such taxes or duties must appear as
a separate item on Supplier’s invoice. HP will pay such taxes or duties unless
HP is exempt. Where applicable, HP will provide Supplier with an exemption
resale certificate.


 


4.6 Financial Condition. Any credit line extended to an
Eligible Purchaser will be subject to Supplier’s normal credit standards and
approval procedures in effect from time to time during the Term. [***], and
Supplier will make available to HP, upon written request, information as may be
reasonable, customary and sufficient


 


14

















 


[***]. If
the financial condition of either party materially and adversely changes from
its financial condition as of the date of this Agreement, then the other party
will have the [***].


 


5.                                       [***]


 


                                                5.1                                 [***].


 


                                                5.2                                 [***].


 


                                                5.3                                 [***].


 


                                                5.4                                 [***].


 


                                                5.5                                 [***].


 


6.                                       PRODUCT RETURNS; NON-CONFORMING PRODUCT


 


6.1 Return Materials Authorization. Product may be
returned to Supplier by HP and by Eligible Purchasers as set forth in this
Article and in Article 11.0. Product returned to Supplier will be accompanied
by a Return Materials Authorization (“RMA”). Unless Supplier reasonably
requires further verification, Supplier will provide an RMA within [***] of
HP’s request. HP may return Product without an RMA if Supplier unreasonably
refuses or fails to provide an RMA.


 


6.2 Return Charges. All Non-conforming Product returned to
Supplier, and all replacement Product shipped by Supplier, [***].


 


6.3 Duty to Remove Marks or Destroy Non-conforming
Product. Supplier will not sell, transfer or otherwise
relinquish possession of Product which bears any HP Mark, part number or
identifier, including any HP packaging, copyright, color or design scheme or
code, other than as may be Ordered for Delivery by HP or Eligible Purchasers,
nor may Supplier sell, transfer or otherwise relinquish possession or dispose
of or reuse or remanufacture Non-conforming Product which bears any HP Mark,
part number or other such identifier unless Supplier removes same there from,
even if such removal would result in destruction of the affected Product or
Non-conforming Product. Supplier will not represent any Product as built for HP
or to HP specifications; provided that nothing herein limits or otherwise
affects Supplier’s right to represent Product as functional in or compatible
with any HP Products or as complying with or conforming to specifications for
HP Products, when such representation is true and correct in all material
respects. All manufacturing overruns of HP branded Product or defective HP
branded Product will be destroyed by Supplier in a secure manner upon HP’s
authorization. At no time may an HP branded Product be sold or transferred to
another party without HP’s prior written authorization.


 


15

















 


6.4 Correction of Non-conforming Product. An entire lot of
Product may be returned if a statistically significant sampling of that lot
contains Non-conforming Product. Supplier will, as may be reasonable under the
facts and circumstances and within a reasonable time, [***], and having
reviewed its options with HP, repair or rework Nonconforming Product or replace
same and reship for redelivery, [***], or issue credit therefore or refund the
purchase price if paid.


 


7.                                       ENGINEERING PROCESS OR DESIGN CHANGES


 


7.1 Supplier Proposed Changes. Except as set forth in
this Article, Supplier will not  make or incorporate any changes in Product
or geographical relocations affecting electrical performance, mechanical form,
fit, function or performance, environmental compatibility, chemical
characteristics, software compatibility or the life, reliability or quality of
Product.


 


7.2 Notice of Proposed Change. Supplier will notify HP in
writing of any proposed Engineering Change and will provide evaluation samples
and other appropriate information as HP may reasonably request a delay of up to
[***] prior to the first proposed shipment of any Product involving an
Engineering Change provided that Supplier may not provide Product involving an
Engineering Change to HP for production usage until HP has notified Supplier,
in writing, that it has completed its qualification testing. If any such change
affects price, component obsolescence, quality performance or delivery
schedules of Product, an impact proposal prepared by Supplier shall be
presented to HP for approval prior to Supplier initiating any change.  If as a result of such an Engineering Change
HP would be unable to utilize Product due to a failure under HP’s qualifications,
Supplier will continue to provide Product without the Engineering Change until
Supplier and HP resolve any qualification issues. If a resolution mutually
recognized as such by both parties is not achieved within a reasonable time,
Supplier may, subject to Sections 11.5 and 12.1, discontinue supply of Product
without the Engineering Change, whereupon HP may cancel all  Accepted Orders for Product
without cost or liability or terminate this Agreement upon written notice to
Supplier.


 


7.3 HP Proposed Changes. HP may change HP-supplied
drawings or designs or the Specifications at any time prior to manufacture
effective upon notice to Supplier. If any such change affects price, component
obsolescence, quality performance or delivery schedules of Product, an impact
proposal prepared by Supplier shall be presented to HP for approval prior to
Supplier initiating any change. Supplier may make written claim for any
equitable adjustment related to such change within [***] from the date HP gives
notice to Supplier of such change, or such claim will be deemed untimely and
adjustment with respect thereto will be waived, renounced, released and forever
barred.


 


7.4 Safety Standard Changes. Supplier will provide HP
oral notice, to be followed by written notice, or email notice within [***] of
Supplier having knowledge of


 


16

















 


the need
for any upgrade, substitution or other change required to make Product meet
applicable safety standards or requirements of Applicable Law. HP, in its
discretion, may require that all affected Product be reworked or returned to
Supplier for upgrade to current revisions or be upgraded by Supplier or HP in
the field. If Product met applicable safety standards and requirements of
Applicable Law at time of manufacture, HP and Supplier will share the costs of
any subsequent upgrade, substitution or other required correction as may be
equitable under the circumstances; provided that if mutual agreement on sharing
such costs is not reached within [***] of Supplier’s initial notice hereunder,
the parties will divide costs equally between  them. If Product met
applicable safety standards and requirements of Applicable Law at the time of
Delivery, HP will bear all costs of any subsequent upgrade, substitution or
other required correction.


 


8.                                       QUALITY


 


8.1 Quality
System.
Supplier will maintain a quality system that ensures compliance with this
Agreement and meets at least one (1) of the following:


 


•   Currently certified to the applicable ISO
9000 series of standards for the Products and/or spare parts provided to HP


 


•  Maintains a quality management system and
manual that complies with the applicable ISO 9000 quality systems series of
standards


 


•   Currently executing a plan to achieve ISO
9000 certification within [***] from the Effective Date


 


•   Has successfully passed HP’s supplier
qualification audits


 


Supplier, upon written
request from HP, will provide to HP copies of Supplier’s quality system
documentation and supporting test documentation. The parties will create and
maintain a combined team to provide oversight of Supplier’s quality systems to
ensure Supplier’s compliance with this Agreement.


 


8.2  Product Holds. Supplier will, upon HP’s request,
hold shipments of Product until HP’s verification that the Product complies
with HP’s specifications.


 


8.3 HP’s Right to Inspect Facilities. With reasonable
advance notice (but no less than [***] notice), during normal business hours
and in compliance with Supplier’s security and safety requirements, HP and/or
its designated representative may inspect Supplier’s production and repair
facilities (including but not limited to Product, raw materials, equipment
associated manufacturing processes, test and inspection data, reliability data,
failure analysis data, corrective action data, and training data) to ensure
compliance with this Agreement. HP’s inspection may be for any reason related
to this Agreement, including assuring Supplier’s compliance with HP’s
requirements. Supplier will use reasonable


 


17

















 


efforts
to secure for HP similar rights to inspect Supplier’s Subcontractors at no
charge to HP.


 


8.4  Reports. Supplier will provide quality-related
reports and such other reports and information as HP may reasonably request.


 


8.5 SUPPLIER
RATING.
HP PERIODICALLY REVIEWS ITS SUPPLIERS UNDER A RATING SYSTEM FOR TECHNOLOGY,
QUALITY, RESPONSIVENESS, DELIVERY, COST, ENVIRONMENT, REGULATORY AND SECURITY
(TQRDC-RS). SUPPLIER WILL PARTICIPATE IN THE TQRDC-RS REVIEW PROCESS.


 


9.                                       SAFETY


 


Supplier will designate a
representative within its organization to interface with HP on Product safety
issues. Supplier will work with HP to establish a procedure for reporting real
or potential Product safety problems or risks to HP within [***] of Supplier
becoming aware of such problems or risks.


 


10.                                 WARRANTIES


 


10.1 Product General Warranties. Supplier represents and
warrants that all Product is and will:


 


10.1.1                  [***].


 


10.1.2                  [***].


 


10.1.3                  [***].


 


10.1.4                  [***].


 


10.1.5                  [***].


 


10.1.6                  [***].


 


10.2 Product Intellectual Property
Warranties. Supplier represents and warrants with
regard to all Product (including Software and Documentation to the extent
included with Product) that:


 


10.2.1 [***].


 


10.2.2 Except as has been
disclosed to HP in writing prior to the date of this Agreement, [***].


 


18

















 


[***]. If a U.S. District
Court or any court worldwide adjudges that Product, or any item or part
thereof, [***] irrespective of whether further right of appeal lies available
to Supplier, or if Product or use is enjoined at any stage of the proceedings,
[***]. [***].


 


10.3 Warranty Periods. [***]. The warranties set forth
in Sections 10.1.2 and 10.1.5 are effective upon Delivery, are continuing and
will remain in effect for the longer of Supplier’s normal warranty period or as
stated in Exhibit J following acceptance of the Product. The warranties set
forth in Sections 10.1.1, 10.1.3, 10.1.4 and 10.1.6 are made and effective at
Delivery. All warranties set forth in Section 10.2 are  effective at Delivery, are
continuing and will remain in effect in perpetuity.


 


10.4 Software and Documentation Warranty. If Product
includes or constitutes Software, Supplier provides additional warranties, and
warrants Software and related Documentation, as set forth in Exhibit H.


 


10.5 Services and Support Warranty. Supplier warrants that all Services and Support will
be provided in a professional and workmanlike manner by competent, experienced
personnel possessing suitable expertise in the subject matter.


 


10.6 Compliance with Applicable Law. Supplier warrants
that it will comply with Applicable Law in its performance under this
Agreement.


 


10.7 Warranty Exclusions.  The warranties set forth in
this Article 10 will not apply to any Product to the extent such Product (i)
have been improperly installed, repaired, altered or otherwise modified (other
than by Supplier or Supplier’s authorized Subcontractors), (ii) have been
subjected to misuse, abuse, negligence or accident, (iii) have been used in a
manner contrary to Specifications or Supplier’s written instructions or
Documentation, (iv) are comprised of materials provided or a design stipulated
by HP and not approved by Supplier in writing or (v) are used Product (to the
extent HP may have waived Section 10. 1.3 in a particular instance), and do not
cover normal wear and tear.


 


10.8 DISCLAIMER. EXCEPT AS EXPRESSLY PROVIDED IN THIS
AGREEMENT, SUPPLIER MAKES NO OTHER WARRANTIES, EITHER EXPRESS OR IMPLIED,
REGARDING PRODUCT INCLUDING MERCHANTABILITY AND FITNESS FOR ANY PARTICULAR
PURPOSE.


 


11.                                 SUPPORT; OTHER SERVICES


 


11.1 General. Supplier will maintain such number of
qualified personnel as is necessary to provide timely and knowledgeable Support
and will provide Support to HP as set forth in Exhibit C. Supplier may
independently offer and provide maintenance and support  services to third parties,
including HP’s customers, but


 


19

















 


Supplier
may not use HP Confidential Information or HP Property to provide such services.


 


11.2 New
HP Products.
HP may request that Supplier provide [***]. Supplier will consider each request
on a case-by-case basis. [***].


 


11.3 HP
Property.
HP may provide to Supplier HP Property solely for use in providing Services,
Support or in Supplier’s manufacturing, testing or adapting Product. All HP
Property will be segregated from Supplier’s property and identified as the sole
property of HP. HP Property may not be transferred, assigned, loaned or
otherwise encumbered by Supplier in any way. HP Property may be provided to
third parties for fulfillment of Supplier’s obligations hereunder only upon
HP’s prior written consent. [***], upon HP’s request or in all events upon
termination or expiration of this Agreement. HP may require Supplier to enter
into further written agreement and execute appropriate documentation as a
condition to Supplier having access to HP Property.


 


11.4 Substitute Products. [***], if compatible with any
current version of HP Products, [***].


 


11.5 Survival of Support Obligations. Unless otherwise
stated in Exhibit C, Supplier’s obligations to provide Support will continue
throughout the [***]; provided that as to any Product for which manufacture or
supply is discontinued in accordance with Article 12.0, such obligations may be
discontinued when such Product is discontinued or if later, when Supplier
ceases Support for that Product; and provided further that in the event of any
expiration or termination of this Agreement, except a termination by Supplier
pursuant to Section 24.2 for HP’s default, Supplier may, unless otherwise
agreed, charge for providing Support at the prices mutually agreed upon by HP
and Supplier.


 


12.                                 DISCONTINUANCE OF PRODUCT


 


12.1 [***]  Buy
Rights. In
consideration of HP’s purchase of any Product or Spares hereunder, Supplier
grants to HP the option to purchase Products and Spares [***] for a
period of [***], [***]. If thereafter Supplier determines
to discontinue the manufacture, supply of said Product (a “Discontinued
Product”), Supplier will give written notice to HP in no event less than [***]
in advance of the last date the Discontinued Product can be  ordered (the “Notice
Period”). After receipt of notice of discontinuance, during the Notice Period,
HP may at its discretion:


 


12.1.1 Purchase from
Supplier such commercially reasonable quantity of the Discontinued Product as
HP may reasonably deem necessary for its future requirements; or


 


20

















 


12.1.2 Manufacture and/or
Support the Discontinued Product under the manufacturing rights granted in
Section 12.2, [***].


 


12.2 HP’s Right to Manufacture. Subject to Section 12.1,
[***].


 


12.2.1 [***] within a
reasonable time after HP has notified Supplier of HP’s exercise of its rights
under this Section 12.2. [***]. If HP uses self-help measures to obtain
possession of any such Technical Information, HP may [***].


 


12.2.2 Supplier will
furnish to HP within [***] after HP’s written request, the names and addresses
of Supplier’s sources for Parts not manufactured by Supplier, including the
appropriate part numbers for commercially available equivalents of electronic
Parts. Supplier will use reasonable efforts to enable HP to [***].


 


12.2.3 Supplier
will furnish to HP [***] all Parts catalogues, schematics, design specifications,
blueprints, material lists, engineering change orders, and other servicing
documentation deemed necessary by HP to service and support the Discontinued
Product.


 


12.2.4 Supplier [***]
license rights it may have with third parties for software, documentation or
any intellectual property used in the manufacture of the Discontinued Product.


 


12.3 Survival
of  [***] Buy Rights. Supplier’s
obligations to provide [***] buy rights as set forth in Section 12.1 and
manufacturing rights as set forth in Section 12.2 [***], except a termination
by Supplier pursuant to Section 24.2 for HP’s default, for [***] of this
Agreement. Notwithstanding any expiration or termination of this Agreement,
Supplier may, at its discretion, provide [***] buy rights as set forth in
Section 12.1 for [***] following any such expiration or termination.


 


13.                                 LOSS CONTROL


 


13.1 Business Continuity


 


13.1.1                  Supplier will
develop and keep current a formal business continuity plan that details
Supplier’s strategies for response to and recovery from a broad spectrum of
potential disasters that could disrupt operations and timely delivery of
Product, material and services required pursuant to this Agreement.


 


Supplier’s plan  will
include a baseline material hazard analysis, a written recovery plan and
documented emergency and incident response procedures, a mitigation plan to
prevent losses or minimize the effects of a disaster, and a crisis
communication plan. 


 


21

















 


“Hazard” means an
existing or unusual occurrence in the natural or the human-made environment
that may adversely affect human life, property, or activity to the extent of a
disaster. Industrial/Technological Hazards include destruction of data storage,
retrieval and processing facilities, hazardous materials release, loss of data
systems integrity from breaches of security, power failures, structural
failures, telecommunications failures, and transportation failures. Natural
Hazards include earthquake, flood, hurricane, landslide, tornado, tsunami,
volcano, wild or forest fire, and windstorm and winter storm.


 


13.1.2(a)    Supplier will conduct an annual test and evaluation of
its business continuity plan, which upon request by HP may be witnessed by HP,
to ensure expected systemic and process responsiveness from Supplier.


 


13.1.2(b) Upon request,
Supplier will make its business continuity plan and the annual evaluation
available to HP or its designated representative for review.


 


13.2 Safety, Security and Fire Protection. Supplier will be responsible
for maintaining the Hubs, SMI and all warehouse and storage facilities and
operations (except HP Warehouses) in accordance with applicable and prudent
safety, security, and fire protection standards. Supplier will allow HP and its
designated representatives to perform on-site audits of such facilities and
operations and will cooperate in the resolution of recommendations for
improvement.


 


14.                                 MARKETING AND LICENSING


 


14.1 Marketing Authority. HP will have the authority
worldwide to market Product and  HP Products containing Product to the
extent it deems appropriate. Without limiting the generality of the foregoing
sentence, [***] with respect to marketing Product or HP Products [***]
developing, purchasing, licensing or marketing any product which performs the
same or similar function as Product. HP will have the right to use its own
business and license terms for all marketing and distribution of Product and HP
Products.


 


14.2 No Rights in Marks. Except as otherwise set forth in
Section 14.3, nothing in this Agreement grants either party any rights in the
Marks of the other party; provided that HP may use the name of Supplier and the
name of any Product in advertising and marketing Product or HP Products. As
Supplier may reasonably require, Product will be affixed with copyright notices
sufficient to give notice as to the respective rights of the parties.


 


14.3 Private Labeling. If during the Term HP requests Supplier
to produce HP private label versions of Product, Supplier will ensure that
Product contains HP Marks, serial number format and packaging as specified by
HP and conforms to HP specifications for external appearance. Supplier will
make commercially reasonable efforts to fulfill such request, as long as there
is no material change in


 


22

















 


form or dimensions of Product and no required
commercially unreasonable action. [***].


 


14.4 [***].


 


14.5 [***].
For purposes of this Agreement, [***]. These rights
with respect to the Documentation will extend to Eligible Purchasers and, to
the extent related to distribution or sale of HP Products, to HP Subsidiaries,
Affiliates and third party channels of distribution as may be authorized by HP.


 


15.                                 INTELLECTUAL PROPERTY PROTECTION


 


15.1 Supplier’s Duty to Defend. Except as provided in
Section 15.4 and conditioned upon HP’s satisfaction of its obligations under
Section 15.2, Supplier will, to the maximum extent permitted by law, [***]
(individually, an “Indemnitee” and collectively, “Indemnitees”) [***]


 


15.2 HP’s Duty to Notify. HP will give Supplier prompt notice of any IP Claim.
If Supplier assumes defense of such IP Claim without reservation of rights, HP
will provide Supplier the authority, information and reasonable assistance (at
Supplier’s expense) necessary to defend. Supplier will control defense, and HP
will not settle such IP Claim without Supplier’s consent, not to be
unreasonably withheld; provided that if Supplier does not diligently pursue
resolution of such IP Claim or fails to provide HP, upon request at any time
and from time to time, with reasonable assurance that it will diligently pursue
resolution, then HP may, without in any way limiting its other rights and
remedies, defend the claim and collect all costs of doing so from Supplier. [***]
settlement or compromise Supplier desires to enter [***]. HP and any other
Indemnitee may, in its or their discretion, participate in the defense of such
IP Claim.


 


15.3 Actions After Injunction or Order. If the use or
combination of any Product is enjoined, if the combination of any Product with
an HP Product is enjoined where such combination is intended by Supplier or
reasonably inferable from Specifications, Supplier’s written designs or
Documentation or if a court or government agency enters an injunction or order
forbidding the importing of any Product or preventing the Delivery of any
Product to HP (any of which Product being referred to as “Infringing Product”),
Supplier will, as may be reasonable under the facts and circumstances and
within a reasonable time, [***], and having reviewed its options with HP:


 


15.3.1 [***].


 


15.3.2 [***].


 


15.3.3 [***].


 


23

















 


15.3.4 [***].


 


If none of the foregoing
options is commercially achievable, [***].


 


In addition to the
above,  [***].


 


15.4 Limitations. Nothing in this Article 15 applies to
any Products to the extent such Products (i) have been improperly installed,
repaired, altered or otherwise modified (other than by Supplier or Supplier’s
authorized Subcontractors), (ii) have been subjected to misuse, abuse,
negligence or accident, (iii) have been used in a manner contrary to
Specifications or Supplier’s written instructions or Documentation; (iv) are
comprised of materials provided or a design stipulated by HP or information or
instructions provided by HP and not approved by Supplier in writing to the
extent that the claim arises from Supplier’s compliance with a Unique
Specification or result directly from use of such materials, design or
information so provided by HP or (v) have been (A) modified by HP or a third
party or (B) used by HP or a third party in connection with or in combination
with an HP Product or a part or system not provided by Supplier in an
application which in either the case of (A) or (B) is not expressly intended by
or prohibited by Supplier in Specifications, Supplier’s written designs or
Documentation; [***].To the extent that any of the foregoing limitations would
otherwise apply, it will not apply where the Product is claimed to be an unauthorized
use, misappropriation or infringement on account of a manufacturing, test,
upgrade and/or repair process used by Supplier unless HP has required Supplier
to use in manufacture, test, upgrade and/or repair of such Product the
particular manufacturing, test, upgrade and/or repair steps that resulted in
such claim. Notwithstanding anything else contained in this Agreement, [***].


 


15.5 Intellectual Property Developed under
this Agreement.
Intellectual Property Rights developed by Supplier or otherwise arising in the
performance of this Agreement will be owned as provided in this Section. [***].


 


15.5.1 [***]. Either
party may proceed on its own if the other party declines to participate or fund
such activities, and any such refusal to participate or fund will not affect
the parties’ joint ownership rights with respect to any affected Intellectual
Property Rights. [***].


 


15.5.2 Notwithstanding
the foregoing, [***],  provided that (a)
additional consideration is provided for in a professional services agreement
or (b) as the parties hereto otherwise agree in writing.  In the event Intellectual Property Rights
arising under this agreement (irrespective of who developed those rights, or
whether the rights were jointly developed) are developed by Supplier not as a
result of [***], but where those Intellectual Property Rights have [***] (as
opposed to the products, processes or services of [***] in aggregate), Supplier
agrees [***] for so long as HP is


 


24

















 


in an active purchasing
relationship with Supplier or an affiliate of the Supplier on the same terms
and conditions.


 


15.5.3 Each party agrees
to require its employees and contractors to be subject to an assignment
obligation to such party for any Intellectual Property Rights arising under
this Agreement.


 


16.                                 TRADE REQUIREMENTS


 


16.1 Supplier understands
that this Agreement is subject to compliance with U.S. and other national
export, import, customs and trade-related laws and regulations and that it is
responsible for implementing procedures to ensure compliance with all
guidelines outlined in each of HP Regional Trade Guidelines. Supplier
acknowledges that it is knowledgeable about such laws, regulations, and HP
requirements and agrees to comply with same.


 


16.2 Supplier, at each of
its sites, is responsible for determining the appropriate country of origin
(“CO”) for the product(s) it manufactures/assembles for HP and for marking
these products in accordance with the requirements set out in BF Regional Trade
Guidelines. Further, Supplier will cooperate fully with HP in supplying data to
facilitate HP’s origin reporting requirements and qualification for
preferential origin programs such as NAFTA, IFTA, FMF, EXIM and the like
including, but not limited to, all requested origin analysis, certificates of
origin, manufacturer’s affidavits, data (e.g. EDI) transmissions, and special
reporting.


 


16.3 The following trade
data elements must be able to be printed out or be capable of being transferred
electronically on each commercial invoice prior to shipment of Product and must
be sent to HP via the standard electronic/EDI shipping confirmation signal:


 


•                  Country
of Origin (line item level)


•                  Import
Country HTS Classification (line item level)


•                  ECCN
(line item level)


•                  License
(line item level)


•                  Destination
Control Statement


•                  HP
Part Number


•                  Appropriate
INCOTERM


 


Further, Supplier must
maintain, and reproduce upon demand, all documentation relating to the
international transport of HP goods for a period of not less than six (6)
calendar years from the date of each shipment. All such record keeping system
will comport with the legal requirements of the U.S. and other nations
including, but not limited to, requirements set out in Parts 762 and 772, U.S.
Department of Commerce, Export Administration Regulations and the U.S. Customs
Record-Keeping Regulations, 19 C.F.R. 163.


 


25

















 


Supplier will provide
immediate notice to HP (via the site’s appointed HP representative) in the
event of an action by the U.S. or other national government customs/export
authorities that relates specifically to goods or services provided to HP by
Supplier’s sites.


 


Supplier will afford HP,
and HP’s duly appointed agents, reasonable access to the sites for trade
compliance audit purposes and further agrees to respond in a timely manner to
HP’s requests for production of trade control records and to comply with all
remedial or corrective actions that HP may specify.


 


16.4 Supplier must be
capable of producing accurate and complete shipping documentation for each
Supplier site and each shipment from such site. Supplier is responsible for  knowing
and understanding shipping documentation standards applied in the normal course
of international business and for knowing and understanding additional
requirements outlined in HP Regional Trade Guidelines. Supplier acknowledges
that each of its sites is staffed with personnel knowledgeable about such
standards and HP requirements and agrees to comply with same.


 


16.5 Supplier is
responsible for knowing and understanding the terms of sale governing its
agreement(s) with HP. Supplier is responsible for understanding the scope of
its responsibilities under the applicable sales term(s), for ensuring that all
of the site’s employees and agents are likewise educated, and for implementing
procedures to ensure that the site, the site’s employees and the site’s agents
fulfill the Supplier’s responsibilities under the applicable term(s).


 


16.6 For each transaction
where HP is to be importer of record, the Supplier is responsible for ensuring
that commercial documentation accurately reflects the actual price paid or
payable between HP and Supplier’s site. It is Supplier’s responsibility that
each of its sites reconciles its financial records against commercial
documentation in order to validate HP’s use of transaction value, whenever
possible, for declarations to Customs. When transaction value cannot be
applied, Supplier will apply sequentially the World Trade Organization (“WTO”)
valuation rules for HP transactions. Supplier acknowledges that it is
knowledgeable about the requirements for transaction value declarations and
agrees to comply with same.


 


16.7 Duty Drawback.
Unless otherwise requested, Supplier will allow HP to be the importer of record
for all Deliveries. If HP is not importer of record and Supplier obtains duty
drawback rights to Product, Supplier will, upon HP’s request, provide HP with
documents required by the customs authorities of the country of receipt to
prove importation and to transfer duty drawback rights to HP if HP has paid or
arranged deposit of the subject duties.


 


26

















 


17.                                 CLASSIFICATION AND LICENSING AUTHORITY


 


17.1 Where Products are
of HP’s design, technology or software or are manufactured to HP’s functional
specification, HP will assist the Supplier in the export of the commodities by
providing Export Control Commodity Numbers (“ECCN”) and Harmonized Tariff Code
Numbers (“HTS”) on behalf of HP’s subsidiary Hewlett-Packard International GmbH
(“HPIG”). Supplier will comply with Applicable Law governing import or export
of Product and will be solely responsible for obtaining all requisite licenses
and other authorizations. Supplier will not export, re-export or otherwise
disclose, directly or indirectly, technical data or the direct product of such
technical data received from HP without HP’s prior knowledge and written
consent.


 


17.2 Supplier’s
Declaration. Where Products are of Supplier’s design, technology or software or
are manufactured to the Supplier’s functional specification; the Supplier will
provide HP with the correct ECCN or with sufficient technical information to
determine classification. Additionally, the Supplier must provide any additional
information that it knows will affect the determination of license authority.
The information will be supplied via trade’s supplier’s declaration at: [***].


 


17.3 Country of Origin
Marking. The Supplier will mark the containers, in English, as well as all
Products with the Country of Origin, in compliance with Section 304 of the
United States Tariff Act. If the Product itself cannot be marked legibly due to
size, then its immediate container must be marked with a signed certificate
stating Country of Origin (manufacture) by quantity and part number (HP’s and
Supplier’s).


 


18.                                 GOVERNMENTAL COMPLIANCE


 


18.1 Duty to Comply. Supplier, its agents,
employees and Subcontractors will comply with all Applicable  Law
in its performance of this Agreement. Upon request, Supplier agrees to certify
compliance with any applicable law or regulations. HP is neither responsible
for monitoring Supplier’s nor Supplier’s Subcontractor’s compliance with any
Applicable Law.


 


18.2 Social and Environmental
Responsibility.
Supplier warrants that in all countries in which Supplier and, to Supplier’s
knowledge, information and belief, Supplier’s authorized Subcontractors do
business, its and their operations comply with all applicable laws and
regulations governing protection of the environment, employee health and
safety, and labor and employment practices, including but not limited to, laws
and regulations relating to working hours, working conditions, wages, benefits,
child labor, forced labor, freedom of association and equal employment
opportunity. [***].


 


18.2.1                  Supplier
warrants that its U.S. operations comply with the requirements of Executive
Order 11246, the Vocational


 


27

















 


Rehabilitation Act and
the Vietnam Era Veterans’ Readjustment Assistance Act.


 


18.2.2                  Accessibility.
Supplier is in compliance with all applicable laws and regulations governing
the accessibility of information technology for people with disabilities.  Supplier will provide HP with information
about accessibility features of Products.


 


18.3 Environmental Requirements. Without limiting the
generality of Sections 18.1 and  18.2 above, Supplier warrants and agrees
that:


 


18.3.1 Product Content.
All Products and their packaging will comply with HP’s  General Specifications for
Environment, DWG No. A-5951-1745-1 [***] and, for purposes of this Agreement,
such specifications are part of the Specifications for the Product.


 


18.3.2 Shipment. All
Products will be shipped in conformance with all applicable national and international
transportation regulations including, where applicable, regulations regarding
chemicals and hazardous materials, dangerous goods, or fumigation and aeration.
All packaging materials, including pallets, will be free of pests and comply
with national and international regulations regarding Solid Wood Packing
Materials (SWPM) where applicable.


 


18.3.3 Chemical
Substances. Each chemical substance contained in the Product is on the
inventory of chemical substances compiled and published by the United States
Environmental Protection Agency pursuant to the Toxic Substances Control Act.


 


18.3.4 Supplier will
provide complete and accurate Material Safety Data Sheets (MSDS) for Product to
HP prior to shipment.


 


18.3.5 Environmental
Information. Supplier will furnish HP any information reasonably requested by
HP to confirm compliance with Applicable Law or to determine the environmental
effects of materials included in the Products or in the packaging.


 


18.3.6 Disposition of
Excess Materials. Supplier will recycle or dispose of any excess or waste
materials generated from manufacture, test, upgrade or repair of Product
(including damaged or nonconforming product or materials) in compliance with
the provisions of this Agreement, Applicable Law and any specific instructions
received from HP.


 


18.3.7 Manufacturer will
continuously implement and maintain processes and policies designed to protect
the environment at any facility at which


 


28

















 


Product manufacturing,
test, upgrade or repair operations are performed under this Agreement.


 


18.3.8 Ozone Depleting Substances.
Supplier hereby certifies that neither Product, nor any part, piece or
component of any Product:


 


18.3.8.1 Contains any
“Class I Substance” or “Class II Substance” as those terms are defined in 42
U.S.C. Section 7671 and implementing regulations of the United States
Environmental Protection Agency at 40 C.F.R. Part 82, as now in existence or
hereafter amended; or


 


18.3.8.2 Has been
manufactured, tested, upgraded, or repaired with a process that uses any “Class
I or Class II Substance.”


 


18.4 Procurement Regulations. HP is a commercial
corporation that is also a contractor and subcontractor for the U.S.
government. All of the Products to be purchased from Subcontractor by HP
pursuant to a subcontract/purchase order in the United States, its territories,
possessions, the District of Columbia and the Commonwealth of Puerto Rico are
deemed to be “Commercial Items” as defined in Federal Acquisition Regulation
(“FAR”) 2. 10 1, Part 12 and 52.202 1(c). Notwithstanding any other clause in
HP’s contract with the U.S. government, only those clauses identified in the
clause at FAR 52.244-6 are required to be in agreements (subcontracts) for
commercial items or commercial components. In addition, and in accordance with
determinations made as a result of U.S. government audits, HP is required to
flow down FAR 52.219-9, Small Business Subcontracting Plan, on all
subcontracts/purchase orders with large business concerns that exceed $500,000
in value.


 


Pursuant to FAR
52.212-5(e) and/or FAR 44.402(b), subcontractor, meaning any supplier,  distributor,
vendor or firm that furnishes supplies or services to or for a prime contractor
or another subcontractor in support of U.S. government business, will accept
the following FAR clauses, which are hereby incorporated by reference into this
Agreement, with the same force and effect as if they were presented in full:


 


FAR 52.222-26, Equal
Opportunity (February 1999)


FAR 52.219-8, Utilization
of Small Business Concerns (October 2000)


 


APPLICABLE IF THE
SUBCONTRACT/PURCHASE ORDER EXCEEDS $2,500: FAR 52.222-41, Service Contract Act
of 1965, as Amended (May 1989) if the purchase order is principally for the
furnishing of services through the use of service employees.


 


APPLICABLE IF THE
SUBCONTRACT/PURCHASE ORDER IS FOR $10,000 OR MORE:


 


29

















 


FAR 52.222-35,
Affirmative Action for Disabled Veterans and Veterans of the Vietnam Era (April
1998)


FAR 52.222-36,
Affirmative Action for Workers with Disabilities (June 1998)


 


APPLICABLE
IF THE SUBCONTRACT/PURCHASE ORDER EXCEEDS  $500,000 AND SUBCONTRACTOR IS NOT A SMALL
BUSINESS:


FAR 52.219-9, Small
Business Subcontracting Plan (October 2000)


 


18.5 Anti-Terrorism Security Measures. Supplier acknowledges that its failure to comply
with the laws, or regulations of any applicable governmental authority, U.S.
CTPAT or equivalent security guidelines or TAPA/HP security requirements will
be considered by HP as negligence and failure on the part of Supplier to
provide due care for HP shipments. Supplier will be liable for all fines and
penalties imposed on HP, and other damages incurred by HP, relating to
Supplier’s noncompliance with any such security regulations, guidelines or
requirements.


 


19.                                 FORCE MAJEURE EVENTS


 


19.1
Delaying Causes.
Neither party will be liable for any delay in performance  under this Agreement caused
by any act of God or other cause beyond Supplier’s reasonable control and
without Supplier’s fault or negligence including but not limited to fire,
flood, war, embargo, riot or an unforeseeable intervention of any government
authority, which causes complete business interruption (a “Delaying Cause”). A
Delaying Cause does not include delays  in transportation, shortages of materials,
delays by manufacturers or Subcontractors or economic considerations or
inefficiencies. No Delaying Cause will suspend or excuse either party’s
obligations as set forth in Articles 15, 21 and 22.


 


19.2 Occurrence of a Delaying Cause. Any party whose
performance is affected by a Delaying Cause will notify the other party
promptly upon commencement of a Delaying Cause and will provide its best
estimate of the expected duration of such occurrence. Upon notice to Supplier
during pendency of a Delaying Cause, HP may terminate any unfilled Accepted
Orders without liability. Any party whose performance is affected by a Delaying
Cause will exercise reasonable diligence to overcome and effect cessation of
the Delaying Cause and to mitigate effects thereof. Performance of the parties’
respective obligations to purchase and sell Product will be suspended to the
extent affected by, and for the duration of, a Delaying Cause, and during
pendency of a Delaying Cause affecting Supplier’s ability to make timely
Delivery, [***].


 


19.3 Resumption of Performance. The parties will resume
performance under this Agreement once the Delaying Cause ceases, and HP may,
upon written notice not


 


30

















 


later
than [***] following such cessation, extend the Term up to the length of time
the Delaying  Cause endured.


 


20.                                 EVENTS OF DEFAULT AND REMEDIES


 


20.1 Events of Default. A party will be in default under
this Agreement upon  the


occurrence of any of the following
events (each an “Event of Default”):


 


20.1.1 Said party fails
to pay or perform any payment obligation when and as due under this Agreement
or any Accepted Order after ten (10) days written notice from the other party;


 


20.1.2 Said party fails
to perform any obligation under this Agreement or any Accepted Order, other
than as set forth in Section 20.1.1, when such failure continues for [***]
after written notice thereof is given or, if such failure cannot reasonably be
cured within said [***], but is capable of cure within a longer period not
exceeding [***] and said party commences to cure such failure promptly upon
receipt of such written notice and thereafter proceeds with reasonable
diligence to cure such failure, for such longer period as may be necessary for
said party to cure the same with reasonable diligence;


 


20.1.3 Any representation
or warranty made by said party in connection with this Agreement proves to be
false in any material respect; provided that if such representation or warranty
is capable of being cured, then said party may cure such misrepresentation or
breach of warranty within [***] after written notice thereof is given or, if
such misrepresentation or breach of warranty cannot reasonably be cured within
said [***], but is capable of cure within a longer period not exceeding [***]
and said party commences to cure same promptly and thereafter proceeds with
reasonable diligence to cure same, for such longer period as may be necessary
for said party to cure the same with reasonable diligence;


 


20.1.4 Said party makes
an assignment for the benefit of creditors, admits in writing its inability to
pay its debts as they mature, applies to any court for the appointment of a
trustee or receiver for any of its properties, or commences any voluntary
proceeding under any bankruptcy, reorganization, arrangement, insolvency,
readjustment of debt, dissolution, liquidation or other similar law of any.
jurisdiction; or any such application or any such proceeding is filed or
commenced against said party and said party indicates its approval, consent or
acquiescence thereto; or there is filed or commenced against said party an
involuntary proceeding under any bankruptcy, reorganization, arrangement,
insolvency, readjustment of debt, dissolution, liquidation  or other similar law of any
jurisdiction and such proceeding is not dismissed, and remains


 


31

















 


in effect, for [***] or
more; or an order is entered adjudicating said party bankrupt or insolvent; or


 


20.1.5 Except as may be
permitted under Section 25.4, said party transfers all or substantially all of
its properties or merges with or into any other entity or there is otherwise
any change in controlling interest or ownership of said party, without the
prior written consent of the other party.


 


20.2 Rights and Remedies Upon Default. Upon the occurrence and during the continuation of
any Event of Default, the party not in default will have, in addition to all
other rights and remedies provided herein, all of the rights and remedies under
the Uniform Commercial Code, as may be limited or otherwise affected by this
Agreement. [***]. All rights and remedies will be cumulative and may be
exercised singularly or concurrently.


 


20.3 Cover Costs.
In the event of default by Supplier, Supplier and HP agree to discuss [***] of certain
premium costs (“Cover Costs”) reasonably incurred by HP to remedy Supplier’s
default. [***].


 


21.                                 CONFIDENTIAL INFORMATION


 


21.1 Confidential Information.  During
the Term, a party (the “Recipient”) may receive or have access to certain
information of the other party (the “Discloser”) that is marked as
“Confidential Information,” including, though not limited to, information or
data concerning the Discloser’s products or product plans, business operations,
strategies, customers and related business information. The Recipient will
protect the confidentiality of Confidential Information with the same degree of
care as the Recipient uses for its own similar information, but not less than reasonable
care. Confidential Information may only be used by those employees of the
Recipient who have a need to know such information for purposes related to this
Agreement. Supplier will, upon HP’s written request, use commercially
reasonable efforts to cause any entity or person designated by HP to enter into
a nondisclosure agreement which affords materially comparable protections for
HP’s Confidential Information as the Confidential Disclosure Agreement
referenced in Exhibit D. [***].


 


21.2 Exclusions. The foregoing confidentiality
obligations will not apply to any information that (a) is known by the
Recipient prior to disclosure, (b) was developed by the Recipient prior to
disclosure or is subsequently developed independently and without reference to
the disclosure, (c) is or becomes publicly available through no fault of the
Recipient, (d) is rightfully received from a third party with no duty of
confidentiality, (e) is disclosed by the Recipient with the Discloser’s written
approval or (f) is disclosed under operation of law.


 


21.3 Personal
Data.
Both parties agree to comply with the applicable data protection rules when
collecting, storing, transferring, sharing and/or otherwise


 


32

















 


processing
any personal data in connection with this Agreement. Unless expressly agreed
otherwise, any HP employee personal data HP discloses to Supplier may only be
used by Supplier in accordance with the then current HP Privacy Policy
(available on request) for administering the relationship between Supplier and
HP. Unless expressly agreed otherwise, any personal data customer discloses to
HP may be used by HP in accordance with the then current HP Privacy Policy for
administering the relationship between the customer and HP and for providing
customer with information about HP’s products, services and programs. HP may
share such personal data with other HP entities and business partners who are
providing services on behalf of HP (whether established in Europe or elsewhere)
that are bound by appropriate confidentiality obligations. HP will secure
customer’s consent before sharing such personal data with any other third
party.


 


22.                                 INSURANCE AND INDEMNITY


 


22.1 Without limiting any
of the obligations or liabilities of Supplier, Supplier will maintain, at its
own expense, as long as this Agreement is in effect, insurance policies of the
kind and limits listed below:


 


Worker’s
Compensation Insurance: Supplier will maintain Workers
Compensation Insurance as required by Applicable Law having jurisdiction over
Supplier’s employees wherever work is to be performed under this Agreement.


 


Employer’s
Liability Insurance: Supplier will maintain Employer’s
Liability Insurance in an amount keeping with the law of the nation, state,
territory or province having jurisdiction over Supplier’s employees wherever
work is to be performed under this Agreement [***].


 


General Liability
Insurance: Supplier will maintain Comprehensive or Commercial
General Liability Insurance (including but not limited to premises and
operations, products and completed operations, broad form contractual
liability, broad form property damage and personal injury liability) with a
minimum limit of [***] claims of bodily injury, including death, and property
damage  that
may arise from use of the Products or acts or omissions of Supplier under this
Agreement. Each policy obtained by Supplier will name HP, its officers,
subsidiaries, directors and employees as additional insureds. Such insurance
will apply as primary insurance and no other insurance will be called upon to
contribute to a loss covered thereunder.


 


Claims Made
Coverage. If any policies have “claims made” coverage,
Supplier will maintain such coverages with HP named as an additional insured
for a minimum of three years after termination of this Agreement. Any such
coverage must have a retroactive date no later than the date upon which work
commenced under this Agreement.


 


33

















 


Additional
Requirements. All deductibles on policies providing coverage
will be paid by Supplier. In the event Supplier is self insured for matters
described in Section 13.0, Supplier agrees to respond to any claims or losses
made against or incurred by HP in the same fashion as if insurance had been
purchased with the same or broader coverage terms than what is generally
available to similar Supplier’s. In no event will the coverages or limits of
any insurance required under this Article, or the lack or unavailability of any
other insurance, be deemed to limit or diminish Supplier’s obligations or
liability to HP under this Agreement. In addition, where allowed by law, such
policies will permit Supplier to waive, on its own behalf and on behalf of its
insurers, any rights of subrogation against HP, its subsidiaries, officer
directors and employee.


 


All insurance policies
will be written by a company authorized to do business in the territory and
jurisdiction where the project is located. In no event will the coverage or
limits of any insurance maintained by Supplier under this Article, or the lack
or unavailability of any other insurance, limit or diminish in any way
Supplier’s obligations or liability to HP under this Agreement. All insurance
policies will be written with appropriately licensed and financially
responsible  insurers


 


Certificate of
Insurance. Supplier will furnish Certificates of Insurance
acceptable to HP before any Work is commenced hereunder by Supplier. The
Certificate of Insurance will provide that there will be no cancellation or
reduction of coverage without [***] prior written notice to HP.


 


22.2 Indemnity. Supplier
will, to the maximum extent permitted by law, indemnify, defend and hold
harmless HP and HP’s directors, officers, employees and agents from and against
any and all claims, liability, loss or damage for bodily injury, occupational
sickness or disease or death of any person, including any employee of Supplier
or any Subcontractor, or for any physical damage to property, or loss of use
thereof, (i) to the extent proximately caused by Product or Non-conforming
Product or (ii) which is proximately caused by the negligence, strict liability
or other fault of, or breach of this Agreement or any Accepted Order by,
Supplier, including its Subcontractors and its and their employees, agents and
suppliers, in whole or in part or jointly with HP. Nothing in this Article 22.0
applies to any Products to the extent such Products have been installed,
repaired, altered, modified or used by HP in a manner contrary to
Specifications or Supplier’s written instructions or Documentation. In the
event any claim, liability, loss or damage is caused by the joint or concurrent
negligence, strict liability or other fault of Supplier and HP, except to the
extent due to HP’s passive negligence or HP’s failure to manage or supervise
Supplier, including  its Subcontractors and its and their
employees, agents and suppliers, or HP’s failure to oversee or control
Supplier’s performance under this Agreement or any Accepted Order, including
performance of Supplier’s Subcontractors and its and their employees, agents
and suppliers, then such claim, liability, loss or damage will be borne by
Supplier and HP in proportion to its respective degree of


 


34

















 


fault. Conditioned upon
HP’s satisfaction of its obligations under Section 22.3, Supplier will at its
own expense defend any suit, action or other proceeding asserting a claim
covered hereunder, and Supplier will pay all costs, including attorneys’ fees
and litigation costs, incurred in enforcement. Supplier will not have any
obligation to defend, indemnify or hold harmless hereunder when the occurrence
giving rise to such claim, charge, liability, loss or damage is caused solely
by the negligence, strict liability or other fault of HP. Supplier’s
obligations to defend, indemnify and hold harmless hereunder will not be
limited or otherwise affected by any insurance, self-insurance or retention of
risk which it may carry or assume.


 


22.3 HP’s Duty to  Notify.
HP will give Supplier prompt notice of any such claim or action for which
Supplier is obligated to indemnify under Section 22.2. If Supplier assumes
defense of such claim or action without reservation of rights, [***], upon
request at any time and from time to time, with reasonable assurance that it
will diligently pursue resolution, HP may, without in any way limiting its
other rights and remedies, defend the claim and collect all costs of doing so
from Supplier. [***]. HP and any other Indemnitee may, in its or their
discretion, participate in the defense of such claim or action.


 


23.                                 LIMITATION OF LIABILITY


 


23.1 Liability Disclaimers. TO THE FULLEST EXTENT
PERMITTED BY LAW, NEITHER PARTY WILL BE LIABLE TO THE OTHER FOR ANY SPECIAL,
INDIRECT, OR CONSEQUENTIAL DAMAGES OF THE OTHER (INCLUDING LOSS OF PROFITS OR
REVENUE, COST OF CAPITAL OR DOWNTIME COSTS) ARISING OUT OF ANY PERFORMANCE OF
THIS AGREEMENT OR ANY ORDER, REGARDLESS OF WHETHER SUCH DAMAGES ARE BASED IN
TORT, WARRANTY, CONTRACT OR ANY OTHER LEGAL THEORY, EVEN IF ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES; [***].


 


23.2 Liability Limitations. The respective liability of
Supplier and HP to each other for any claim whether in contract, warranty,
negligence, tort, strict liability, or otherwise for loss or damage arising out
of, connected with, or resulting from this Agreement or any Order or the
performance or breach hereof, or from the design, manufacture, sale, delivery,
resale, repair, replacement, installation, technical direction, inspection,
operation or use of any Goods covered by or furnished under this Agreement or
any Order, or from any Services rendered in connection herewith, [***].


 


23.3 Exceptions to Liability Disclaimers
and Limitations.
NOTHING IN THIS ARTICLE 23 OR OTHERWISE EXCLUDES, DISCLAIMS, LIMITS OR
OTHERWISE AFFECTS EITHER PARTY’S LIABILITY FOR CLAIMS OF ANY THIRD PARTY,
CLAIMS FOR PERSONAL INJURY OR DEATH OR


 


35

















 


CLAIMS
FOR PHYSICAL DAMAGE TO PROPERTY. EXCLUDED DAMAGES. NEITHER PARTY
WILL BE LIABLE TO THE OTHER FOR ANY PENAL, EXEMPLARY OR PUNITIVE DAMAGES OR FOR
ANY MULTIPLE DAMAGES.


 


24.                                 TERMINATION


 


24.1 Termination for Convenience. HP may terminate this
Agreement at any time without liability for damages and without need to show
cause upon [***] Supplier may terminate this Agreement at any time without
liability for damages and without need to show cause upon 180 days prior
written notice. Except for any obligations to purchase Products in inventory as
[***], upon termination pursuant to this Section, HP’s entire payment liability
will be limited to all Products for which HP has received and accepted
delivery.


 


24.2 Termination for Default. Either party may terminate
this Agreement or any Accepted Order in accordance with Article 20.0.


 


24.3 Termination for Assignment. Either party may, upon
reasonable prior written notice, terminate this Agreement or any Accepted Order
in case of an assignment or attempted assignment of this Agreement or any
Accepted Order to a competing entity or in case of an assumption or delegation
of performance of this Agreement or any Accepted Order by a competing entity,
if in the party’s reasonable determination such assignment or performance would
be detrimental to the performance of this Agreement or any Accepted Order or to
its business interests or prospects.


 


24.4 Termination Pursuant to Other Power. Either party may
terminate this Agreement or any Accepted Order pursuant to any other right
granted to or reserved in that party under this Agreement or any Accepted Order
or as may exist at law or in equity, as may be limited or otherwise affected by
this Agreement.


 


24.5 Effect of Termination. [***].


 


24.6 Termination Claim. Upon the occurrence of a
termination event, failure of either party to submit it’s termination claim in
writing within [***] unless extended by  the other party in writing prior to the
expiration of said period, will constitute a waiver and release of such claim,
and neither party will be required to notify the other party or make any
determination thereof. [***].


 


25.                                 MISCELLANEOUS


 


25.1 Notices. All notices that are required to be given
under this Agreement will be in writing and will be sent to the respective
address as set forth in Exhibit F, or such other address as each party may
designate by notice given in accordance


 


36

















 


with this
Section. Any such notice may be delivered by hand, by overnight courier, by
first class pre-paid letter or by facsimile or electronic mail transmission,
and will be deemed to have been received: (a) by hand delivery, at the time of
delivery; (b) by overnight courier, on the succeeding business day; (c) by
first class mail, two (2) business days after day of mailing; and (d) by
facsimile or electronic mail, immediately upon confirmation of transmission,
provided a confirmatory copy is sent pre-paid by first class mail or overnight
courier or is hand delivered by the end of the next business day.


 


25.2 Exhibits; Other Documents. The Exhibits and Schedules
attached to this Agreement and all other documents referred to herein are
hereby incorporated herein by this reference and made part of this Agreement.
In the event of any conflict between a provision contained in any Exhibit,
Schedule or other document and a provision of this Agreement, then the
provisions of the Exhibit will govern.


 


25.3 Independent Contractors. The relationship of the
parties established under this Agreement is that of independent contractors,
and neither party is a partner, employee, agent or joint venturer of or with
the other. Nothing in this Agreement precludes either party from independently
developing, manufacturing, selling or supporting products similar to Product.


 


25.4 Assignment. Subject to the exception set forth in
the following sentence, neither this Agreement nor any right, license,
privilege or obligation provided herein or in any Accepted Order may be
assigned, transferred or shared by either party without the other party’s prior
written consent, not to be unreasonably withheld, and any attempted assignment,
transfer or sharing without consent is void; provided that Supplier may perform
its obligations hereunder through any Subsidiary or Affiliate for whose
performance Supplier will be responsible and remains liable. [***]  The assigning party must ensure that the
assignee assumes in writing or by operation of law the assigning party’s
obligations, and no assignment will relieve the assigning party of its
obligations, under this Agreement and any assigned Accepted Orders. This
Agreement will inure to the benefit of and will be binding on the permitted
successors and assigns of the parties.


 


25.5 No
Waiver. No
modification or waiver of or amendment to or release from any provision of this
Agreement or any Accepted Order and no waiver of or release from any breach or
default hereunder will be of any force or effect unless contained in a writing
which is signed by the party which is sought to be bound thereby, nor may same
be held or considered to be a modification or waiver of or amendment to or
release from any other provision, nor be a waiver of or release from any other
breach or default. No modification or waiver of or amendment to or release from
any provision of this Agreement and no waiver of or release from any breach or
default hereunder will result from any conflicting, different or printed
provisions of any subsequently dated sales or purchase order, order


 


37

















 


acknowledgment,
or a confirmation thereof, for Product, unless such subsequent provision is
stated conspicuously on the face of any such order, acknowledgment or
confirmation and such order, acknowledgment or confirmation is agreed in a
writing signed by an authorized representative of the party to be bound
thereby. The parties contemplate that from time to time such order,
acknowledgment and confirmation forms may be utilized, and the provisions of
this Agreement will govern and control such forms except to the extent of any
such subsequent provision as aforesaid. The failure of any party to enforce any
provision of this Agreement, or to exercise any right, will not be considered a
waiver of that provision or right.


 


25.6 No Third Party Beneficiary. This Agreement does not
confer any right or remedy other than to the parties hereto and their
respective permitted successors and assigns, and no action may be brought
against any party hereto by any third party claiming as a third party
beneficiary to this Agreement or any Accepted Order. Nothing in this Agreement
is intended to  relieve or discharge any obligation or liability of any third
party to any party to this Agreement, and nothing herein confers, or is
intended to give any third party, any right of subrogation or action over.


 


25.7 Headings; Interpretation. The Article and Section
headings used in this Agreement are for convenience of reference only and do
not limit or extend the meaning of any provision of this Agreement, and will
not be used in interpretation of any provision of this Agreement. All terms
defined in this Agreement in the singular form will have comparable meanings
when used in the plural form and vice versa. References in this Agreement to
“Articles,” “Sections,” “Exhibits” and “Schedules” are to articles, sections,
exhibits and schedules herein or hereto unless otherwise indicated. The words
“include” and “including” and words of similar import when used in this
Agreement will not be construed to be limiting or exclusive.


 


25.8 Publicity. Subject to the terms and conditions of
Article 19 above, neither party may publicize or disclose to any third party,
without the written consent of the other party, the existence or terms of this
Agreement except as required under applicable federal securities laws. In the
event that Supplier becomes aware that disclosure is likely to be required by
operation of law, Supplier shall promptly provide HP with ample notice and
opportunity to seek a protective order. Supplier agrees that in the event that
disclosure to the SEC is likely, Supplier shall promptly file a request for confidential
treatment. Without limiting the generality of the foregoing sentence, no press
releases regarding the subject matter, content, or existence of this Agreement
may be made without the prior mutual consent of each party.


 


25.9 Severability. If any provision in this Agreement
is held invalid or unenforceable by a body of competent jurisdiction, such
provision will be construed limited or, if necessary, severed only to the
extent necessary to


 


38

















 


eliminate
such invalidity or unenforceability. The parties will negotiate a valid,
enforceable substitute provision that most nearly effects the parties’ original
intent in entering into this Agreement or to provide an equitable adjustment in
the event no such provision can be added. The other provisions of this
Agreement will remain in full force and effect.


 


25.10 Entire Agreement. This Agreement, together with the
Exhibits and Schedules, comprise the entire understanding between the parties
with respect to the subject matter hereof and supersede any previous
communications, representations or agreements, whether oral or written, with
respect thereto; provided that any separate non-disclosure agreement between
the parties will continue unchanged and in full force and effect according to
its terms. For purposes of construction and interpretation, this Agreement will
be deemed to have been drafted by both parties, and no ambiguity will be
construed in favor of or against either party.


 


25.11 [***]


 


25.12 Governing
Law.
This Agreement and each Order and Acknowledgment will be governed in all
respects by California law without reference to any choice or conflict of laws
provisions of California or the law of any other jurisdiction. The parties
hereby submit to the jurisdiction of the courts of California or any court of
the United States sitting in California with subject matter jurisdiction, and
waive any venue objections against the United States District Court for the
Northern District of California, San Jose Branch and the Superior and Municipal
Courts of the State of California, Santa Clara County, in any litigation
arising under this Agreement. The parties exclude application of the 1980
United Nations Convention on Contracts for the International Sale of Goods, if applicable.


 


25.13 Counterparts. This Agreement may be executed in
any number of counterparts, each of which will be deemed an original, but all
of which together will constitute one and the same instrument. If this
Agreement is executed in counterparts, no signatory hereto will be bound until
all parties have duly executed, or caused to be duly executed, a counterpart of
this Agreement.


 


25.14 Authority of Signatory. If HP or Supplier executes
this Agreement by agent or representative, such agent or representative by
his/her act of signing this Agreement individually warrants and represents to
the parties, and HP and Supplier warrant and represent respectively to each
other, that he/she is authorized to execute, acknowledge and deliver this
Agreement on behalf of HP or Supplier, as the case may be, and thereby to bind
the respective party to the same.


 


25.15 Disputes/Escalation Process.  Supplier and HP will attempt
in good faith to resolve all disputes under this Agreement by mutual agreement
before initiating any legal action or attempting to enforce any rights or
remedies hereunder; provided that nothing herein will prevent either party from
giving notice at any


 


39

















 


time of
default as set forth in Article 20.0 or termination as set forth in Article
24.0. [***] both parties may pursue any or all rights and remedies as may exist
at law or in equity, as may be limited or otherwise affected by this Agreement.
[***]. Nothing herein will prevent either party, at any time, from suggesting
referral of any dispute to mediation before a mutually acceptable mediator
under mutually acceptable rules and procedures.


 


40

















 


IN WITNESS WHEREOF, the
parties, intending to be legally bound, have executed this Agreement by their
respective authorized representatives as of the Effective Date.


 


	
  OVERLAND STORAGE

  	
   

  	
  HEWLETT-PACKARD
  COMPANY

  	
   

  
	
  Supplier

  	
   

  	
  HP

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By

  	
   

  	
   

  	
   

  	
  By

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Print Name: Vernon A.
  LoForti

  	
   

  	
  Print Name:  Richard Gentilini

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
  Vice President and
  Chief

  Financial Officer

  	
   

  	
  Title: Director NSS
  Procurement

  	
   

  
									



 


41

















 


EXHIBIT
A


 


TO PRODUCT
PURCHASE AGREEMENT


BETWEEN HP AND
OVERLAND STORAGE


 


 


PRODUCT DESCRIPTION AND SPECIFICATIONS


 


 


1.  Product
Description


 


Storage tape
libraries, related accessories, options and spares


 


2.  Product
Specifications


 


Product will conform to
Specifications.  Specifications include
without limitation:


 


a)              HP
Product and Spares specifications and all industry standard specifications
included within the Product and Spares specification.


b)             HP
Safety and regulatory agency requirements


c)              HP’s
Packing and Shipping Requirements specified in Exhibit B


d)             HP’s
General Specification for Environment


e)              Technical
requirements specified in Accepted Orders


 


42

















 


EXHIBIT
B


 


TO PRODUCT
PURCHASE AGREEMENT


BETWEEN HP AND
OVERLAND STORAGE


 


DELIVERY,
PACKING AND SHIPPING REQUIREMENTS


 


1.0                     General
Shipping Terms


 


1.1                       Shipment
Requirements.  All Accepted Orders are
to be shipped complete.  Supplier will
give HP immediate notice if it learns or has reason to believe that it cannot
meet a Delivery Date or that only a portion of the Accepted Order will be
available for Delivery to meet a Delivery Date.  For partial shipments, Supplier will ship the available
quantities unless directed by HP to reschedule Delivery.  If Supplier ships by a method other than as
specified in the corresponding Accepted Order, Supplier will pay any resulting
increase in the cost of shipment.  HP
may utilize drop shipment options to any destination; provided that if HP drop
ships outside the country in which the Accepted Order is placed, HP will pay
all resulting additional costs. The failure of Supplier to comply with these
shipping requirements will be considered a material breach of the Agreement.


 


1.2                       Right to
Accept Over Shipments.  If Supplier
ships more Product than is covered by the corresponding Accepted Order, the
amount of the over shipment may be either retained by HP for application
against future Orders or returned to Supplier at Supplier’s risk and expense,
as HP may determine in its discretion.


 


1.3                       [***]


 


1.4                       Freight
Terms; Passage of Title; and Risk of Loss. 
Freight terms will be negotiated by the parties from time to time during
the Term.  [***].


 


1.5                       Packing
List.  Each Delivery will include a
packing list that satisfies the requirements, including as to country of
origin, set forth in Article 16 and Exhibit B.


 


1.6                       Packaging.  Supplier will preserve, package, handle and
pack all items of Product so as to protect same from loss, damage,
electrostatic discharge or otherwise in conformance with good commercial
practice, Exhibit B, Specifications, Applicable Law and other applicable standards
as may be mutually agreed from time to time.


 


1.7                       Responsibility
for Damage.  Supplier will select the
common carrier to be used for shipment of Product.  Supplier is responsible and liable for any loss or damage due to
its failure to properly preserve, package, handle or pack Product.  Neither HP nor any Eligible Purchaser will
be required to assert any claim for such loss or damage


 


43

















 


against the common
carrier involved, nor will either be liable for any loss or damage due to a
release of chemicals or other hazardous materials to the environment by reason
of improper Delivery or Non-conforming Product.


 


1.8                       Off-Premises
Inspection.  [***].  HP will bear its expenses of pre-inspection,
and will indemnify and hold Supplier harmless from any damage or injury caused
by HP’s personnel at such facility.


 


1.9                     Inspection.  HP will inspect Product upon Delivery to
verify whether HP has received the number of boxes of Product shown on
Supplier’s packing list and to detect any visible damage or any apparent damage
from transportation to the boxes or packaging of Product.  HP will promptly notify Supplier of any such
damage to the boxes or external packaging as delivered and will make a notation
on the common carrier’s waybill of such damage and/or of any shipment
shortages.  HP will also promptly notify
Supplier of any shortage in the number of boxes delivered.


 


1.10               Changes
to delivery dates may only be made by HP’s authorized purchasing
representatives, as specified by HP.  HP
may, [***], issue Change Orders for Product quantities and schedule dates. If
any Change Order is made orally, Supplier will send HP a written confirmation
thereof within [***] Business Days of Supplier’s receipt of said Change Order
and HP will provide Supplier with an Order confirming such change within [***]
Business Days of receiving Supplier’s confirmation.


 


1.11               If
Supplier does not deliver Product in accordance with an Accepted Order or such
Product does not meet the Specifications, then HP shall have the right to
receive remedies specified herein. 
Supplier is not responsible for delays caused by a Delaying Cause as
defined in Section 19.1. Supplier acknowledges the importance of HP receiving
Product in a timely manner.  [***].


 


2.0                     Outbound
Logistics Operational Requirements


 


Supplier is required to
meet the following outbound logistics requirements in order to ship products
from their facility/shipping site to HP specified destinations.  [***].


 


A.           Customs & Legal
Requirements


 


1.               [***].  [***]. 
[***].  Requirements will vary
based on shipping origin, shipping destination, financial flow, customs
regulations, and Supplier’s legal registration within origin/ destinations
countries.


 


2.               Legal
Registration - The Supplier will be responsible for obtaining appropriate
registrations to legally conduct outbound logistics as specified by HP.


 


44

















 


B.             Physical Shipping
Requirements


 


1.               Documents and Labeling – The Supplier
must be able to produce and support all required shipping documentation
required to meet customs (export and import), transportation, and customer
requirements.  Specific requirements
will vary based on shipping origin, shipping destination, transportation lane,
delivery tracking, and customer. 
Supported documents include the following.


•                  Commercial
Invoice – multiple type


•                  International
Packing list


•                  Bill
of Lading/ Airway Bill


•                  Shipping
labels


 


2.               Packing
and Marking – The Supplier must prepare and pack all Products in a manner (i)
[***], that is consistent with practices customary in the computer component
industry, (ii) necessary to meet a designated carrier’s requirements, and (iii)
that conforms with the laws and regulations of any applicable country
(including, but not limited to, the United States of America) and any
applicable subdivision thereof.


 


3.               Palletizing
— The Supplier is required to palletize products for shipments when required
based on transportation mode.  The
Supplier will need to provide documented pallet specifications for HP approval
based on product dimensions. 
Palletizing of products will need to be sufficient to adequately protect
the products during shipment, provide necessary security measures, support
shipment load optimization, and meet customer requirements.


 


4.               [***]


 


5.               Serial
Number Scanning — The Supplier will need to support serial number scanning for
product shipments requiring serial number tracking as defined by HP.  Scanned product serial numbers will be
required on shipping documentation and will need to be systemically provided to
HP or other sites as defined within the IM requirements.


 


6.               Additional
Requirements — HP may request additional outbound logistics requirements of the
Supplier either during implementation or post implementation.  These requirements could include, but are
not limited, to the following:


 


•                  New customer requirements


•                  Trade laws (customs)


•                  Process integration and improvements


 


45

















 


C.             Security Requirements


 


The Supplier will be
required to meet HP security requirements to effectively minimize product
damages and losses from shipment point of origin to destination.


 


D.            Carrier/ Freight
Forwarder Requirements


 


1.               Delivery
Service Level — The Supplier will need to support HP specified transportation
modes and delivery service levels.


 


2.               Use
of HP Carriers – In the case that HP is responsible for the outbound
transportation, the Supplier will be required to schedule shipments via
specific HP carriers.  Carrier assignments
will vary based on shipping origin, shipping destination, customer, shipment
size, product type, and other factors. 
In the case that HP carriers need to be used, HP will provide the
Supplier a Routing Guide with routing parameters and specific carrier
preferences.


 


3.               Carrier
Scheduling – The Supplier will be responsible for arranging carrier pick up and
providing required shipment documentation.


 


4.               Reporting
– In some cases the Supplier will be required to support outbound logistics
reporting needs beyond those established in the IM requirements.


 


E.              IM System
Requirements


 


The Supplier will be
required to support all IM system requirements directly related to meeting the
outbound logistics requirements as defined in the IM system requirements.  Outbound logistics operations processes will
be required to be automated in the areas of producing shipping documentation
and capturing and sending logistics required information.


 


F.              Compliance &
Audits


 


The Supplier will be
required to support logistics process and IM system audits related to the
outbound logistics requirements.  This
will include [***].  Audit findings and
observations will be shared with the Supplier as a means of improving logistics
execution to ensure all customs and customer requirements are successfully
supported.


 


46

















 


3.0                                 Duties
Minimization


 


a)              Supplier will
enclose a “Form A” document in every shipment to Europe or the United States of
America to comply with “General System of Preferences” (“GSP”) requirements
each time this benefit can be applied to shipments.


 


b)             Supplier will also
make all reasonable effort to minimize freight and duties and keep the Product
eligible for the GSP by choosing suitable components and manufacturing site(s)
for Product.


 


47

















 


EXHIBIT
C


 


TO PRODUCT
PURCHASE AGREEMENT

BETWEEN HP AND OVERLAND STORAGE


 


SERVICE & SUPPORT REQUIREMENTS


 


This Service and Support Requirements Exhibit (“SSR”) is part of the
Purchase Agreement between HP and Supplier (“Agreement”) and provides
additional terms and conditions for maintenance Parts as set forth on the
attached list of spares (“Spares”) and associated services defined below
(“Services”) to be provided to HP’s services organization.  Terms used have the same definitions as in
the Agreement.  In the case of conflict
with the Agreement, the terms of this SSR will take precedence as regards
service and support but will not otherwise modify the Agreement.


 


A.  SPARES AVAILABILITY: Supplier will provide Spares and associated Services to HP as
requested by HP. Spares are identified on the attached Schedule of Spares. [***].  Spares will take priority over HP’s
production units (first builds) and will ship first.


 


B. DELIVERY: Supplier will ship Spares from
a Supplier hub located in San Diego, CA. 
Supplier will maintain a sufficient inventory of spares at each hub in
order to ship orders and repair/exchange Products within [***].  Supplier will use product failure data
available to it as the manufacturer, product failure trend data provided by HP,
and HP Forecasts and any other information available to Supplier to maintain
adequate inventory. Any other changes/additions to Supplier’s hub facilities
will need to be negotiated and mutually agreed.


 


C.  PRIORITY DELIVERY:
If HP is experiencing a critical support situation, Supplier will use its best
efforts to ship same day, [***].


 


D.  RMA PROCEDURE: At
least weekly, HP will return to Supplier any Products to be returned, and HP
will request an RMA# prior to return of any material to Supplier.  HP will provide quantity and part numbers of
materials to be returned. Products will be returned to Supplier’s designated
hubs.  [***].  If Supplier cannot repair/exchange parts in [***], then Supplier
will use its best efforts [***] to repair/exchange Products and the lead-time
for such repair/exhchange will not exceed [***].  Supplier will provide the RMA# within [***].


 


E.  WARRANTY
SUPPORT:  Upon receipt
of Supplier’s RMA, HP will return in warranty Spares to Supplier for
repair/exchange.   From time to time to
manage unusual situations, [***].  Supplier will notify HP [***] of receipt if the failure of any Spare
is attributable to obvious end user negligence or abuse and is not the warranty
responsibility of Supplier; unless HP is notified [***]. 
HP may audit any Spare Supplier claims has been subjected to obvious end
user abuse and will provide disposition, [***], instructing Supplier to return to HP, repair at HP’s expense or
other.


 


48

















 


F.  WARRANTY: Supplier
warrants replacement Spares for the remaining Product warranty term or [***]
calendar days from the date of shipment to HP, whichever is greater. Supplier
is responsible to track Spares warranty by item serial number and will provide
to HP or HP’s designated third party upon request information about repair
dates for specific units.


 


G.  POST WARRANTY
SUPPORT: HP may return
out of warranty Spares for repair. 
Repair pricing for out of warranty Spares returned is identified on the
attached Spares and Repairs Pricing Exhibit. 
Supplier will notify
HP [***] of receipt if any
returned Spare has been damaged and not repairable.  Supplier will not be obligated to replace or repair such damaged
returns because repair pricing is based on HP returning repairable units.  HP may audit the damaged Spare and will
provide disposition, [***],
instructing Supplier to return to HP, scrap at Supplier site or similar
disposition.  Unless Supplier reports
damage with five business days, Supplier will be obligated to replace the
returned Spare at the pricing agreed upon in this Exhibit.


 


I.  TERM OF
AVAILABILITY: HP may purchase Spares and return defective
spares for repair/exchange during the “Term of Availability”. The Term of
Availability, for each Spare, is a period of time continuing for (i) [***] from
the date Supplier last ships HP volume shipments of any Product during the
Term, which the Spare is used to support and (ii) which ends upon written
notification from Supplier. Supplier’s notification, discontinuing Product
support (see Section 12 of PPA), must provide [***] notice to HP and identify
the affected Spares. Supplier will support HP’s non-cancelable order, received
a minimum [***] in advance of the end of the Term of Availability, requesting
delivery for “last buy” quantities with shipment on or before the end of the
Term of Availability.


 


J.  SUBSTITUTION:  Supplier may request HP
approval to deliver a one-time or permanent replacement for any Spare.   The replacement Spare must meet or exceed
all contract specifications that were applicable to the item(s) being replaced
and must be priced equivalent to the item(s) being replaced.  [***]. 
Once a permanent replacement parts has been approved, the remaining Term
of Availability applicable to the item being replaced shall apply to the
replacement Spare.


 


K.  PRICING:
The purchase price for Spares, are identified in the Schedule of Spares.  HP and Supplier agree to [***], as
necessary. Pricing changes are subject to mutual agreement and must be
documented in writing.  For warranty
repairs/replacements, HP or its designated third party will be responsible for
the return of the material to Supplier’s designated repair center.  [***].


 


[***]


 


L.  RIGHTS AND ASSISTANCE
TO REPAIR: In the event that Supplier affects the
end-of-service (EOS) of a Spare not superceded by a compatible alternative,
Supplier grants to HP the right to repair and have repaired Spares for as long
as HP chooses to support Products. [***]


 


49

















 


M.  QUALITY:
[***].  Spares, if repaired and not new,
will have functionality at least equivalent to the current shippable revision,
will be functionally compatible and suitable for replacement in all Products
which the Spare supports, and externally visible portions of the Product will
meet the attached cosmetic specifications. 
Upon request by HP, Supplier will provide information reasonably needed
by HP to understand quality and reliability issues such as failure analysis
data, reliability testing data, inspection histories, and specifications as
well as provide access to facilities and repair processes.  Supplier agrees to share all support
documentation by giving HP read access to their knowledge repository when
appropriate.  Also, requests for support
related information will be delivered to HP within 14 days of request except
that Supplier agrees to deliver priorities requests for escalation support
within one business day.


 


Quality Reporting


 


See Exhibit J; “Reporting
Requirements”.


HP and supplier will
agree to work together, to use supplier data for mutually agreed upon goals and
metrics.  Key Process Indicators may
include, but are not limited to-DOA, NTF/NFF, MROC, and TTF.  Collection of data, metric goals, frequency
and submission of quality data will be finalized no later then August 31st
2003.


 


N.  THIRD PARTY REPAIR
SERVICES: HP may use a third party to manage aspects of its
repair processes.  Upon HP’s request and
subject to mutual agreement with Supplier, Supplier will provide HP’s third
party repair center with the same support it provides to HP.  [***].


 


O.  SUPPLIER
MANAGEMENT PROGRAM: Supplier agrees to participate in HP’s
Supplier Management Program applicable to Services and Support and meet with
HP, as requested up to twice per year, in order to review Supplier’s
performance, establish performance metrics to drive continuous improvements,
and discuss other areas of mutual concern. 
Supplier agrees to designate a Supplier Representative who shall act as
HP’s primary contact for any service issues, parts purchases, exchange, repair,
quality or customer escalated issues. Supplier must provide an internal written
escalation process and said Representative or designated backup(s) must be available
to HP during normal business hours.


 


P.  TECHNICAL SUPPORT:  Overland shall provide technical Support to
HP for the duration set forth in and subject to Section 11.5 of the Purchase
Agreement.  [***].


 


50

















 


Schedule of Spares


 


 


[***]


 


51

















 


EXHIBIT D


 


TO PRODUCT
PURCHASE AGREEMENT

BETWEEN HP AND OVERLAND STORAGE


 


 


CONFIDENTIAL DISCLOSURE AGREEMENT


 


 


Supplier and HP are
parties to a certain non-disclosure agreement [***] dated June 2003.


 


52

















 


EXHIBIT
F


 


TO PRODUCT
PURCHASE AGREEMENT

BETWEEN HP AND OVERLAND STORAGE


 


 


RECIPIENTS FOR NOTICES


 


 


For HP:


 


	
  Name

  	
   

  	
  [***]

  
	
  Title

  	
   

  	
  Commodity Manager

  
	
  Address

  	
   

  	
  Hewlett Packard Company

  
	
   

  	
   

  	
  200 Forest Street

  
	
   

  	
   

  	
  Marlboro, MA 01752

  
	
  Phone 

  Number

  	
   

  	
  [***]

  
	
  FAX Number

  	
   

  	
  [***]

  
	
  Email

  	
   

  	
  [***]

  



 


For Supplier:


 


	
  Name

  	
   

  	
  [***]

  
	
  Title

  	
   

  	
  Account Manager

  
	
  Address

  	
   

  	
  4820 Overland Ave

  
	
   

  	
   

  	
  San Diego, CA 92123

  
	
  Phone 

  Number

  	
   

  	
  [***]

  
	
  FAX Number

  	
   

  	
  [***]

  
	
  Email

  	
   

  	
  [***]

  



 


53

















 


RELATIONSHIP MANAGERS


 


The Agreement will be
facilitated by a management sponsor from each party.


 


The sponsors will
conduct quarterly reviews concerning status of the Agreement and outlook for
the future.  Each sponsor will act,
respectively, as an escalation path for issues arising under the Agreement
during the Term with the objective of timely resolution.


 


The individuals indicated
in this Exhibit may be re-designated at any time by their respective employers
with appropriate information to the other party.


 


	
  HP TITLE

  	
   

  	
  HP Name,
  Address,

  Phone, Fax, E-Mail

  	
   

  	
  SUPPLIER

  Equivalent

  TITLE

  	
   

  	
  SUPPLIER
  Name, Address,

  Phone, Fax, E-Mail

  
	
  Commodity 

  Manager

  	
   

  	
  [***]

  	
   

  	
  HP Account 

  Manager

  	
   

  	
  [***]

  
	
  Quality 

  Engineer

  	
   

  	
  [***]

  	
   

  	
  Quality 

  Engineer

  	
   

  	
  [***]

  
	
  Engineering 

  Program 

  Manager

  	
   

  	
  [***]

  	
   

  	
  Program 

  Manager

  	
   

  	
  [***]

  
	
  Marketing 

  Manager

  	
   

  	
  [***]

  	
   

  	
  Director 

  Marketing 

  Programs

  	
   

  	
  [***]

  
	
  Service 

  Commodity 

  Manager

  	
   

  	
  [***]

  	
   

  	
  Customer 

  Service 

  Supervisor

  	
   

  	
  [***]

  
	
  Product Safety 

  Representative

  	
   

  	
  [***]

  	
   

  	
  Product 

  Safety 

  Representative

  	
   

  	
  [***]

  
	
  Procurement

  Manager

  	
   

  	
  [***]

  	
   

  	
  Director OEM 

  Sales

  	
   

  	
  [***]

  
	
  Business 

  Segment 

  Manager

  	
   

  	
  [***]

  	
   

  	
  VP WW Sales

  	
   

  	
  [***]

  



 


54

















 


EXHIBIT G


 


TO PRODUCT PURCHASE
AGREEMENT

BETWEEN HP AND OVERLAND STORAGE


 


 


MARKETING SUPPORT AND DEVELOPMENT FUNDS

NEW PRODUCT REQUIREMENTS


 


1.               [***]


 


2.               Supplier agrees to
the exclusive use of HP Ultrium drives on all NEO based library products
provided there are no supply contraints, that the quality and reliability meet
or exceed competitive products and that the pricing is less than or equal to
competitor drive pricing and except for OEM or major account opportunities as
defined by the customer.


 


3.               Supplier agrees to
Marketing Development Funds (MDF) equal to [***] of [***].


 


4.               Supplier agrees to
buy/sell HP branded media products provided there are no supply constraints,
that the quality and reliability meet or exceed competitive products and that
pricing for the media is less than or equal to other competitive media
products.


 


5.               Supplier agrees to
provide an HP focused worldwide account team, to support high level sales
management engagement, general sales force engagement, sales training and
managing sales process issues and conflict resolution.


 


6.               Supplier agrees to
provide an HP focused marketing support person responsible for, but not limited
to, creating and delivering HP sales tools, marketing promotions, collateral,
event coordination and advertising support


 


7                [***].


 


8.               Supplier agrees to
provide training support, including, but not limited to, quarterly training
events, technical support for product configuration and call center training.


 


55

















 


9.               As it relates to any joint new
product development, Supplier will support a [***] providing [***]. 
Supplier agrees to support HP with exclusivity on any unique features
where HP has invested financially such as with NRE in the development of the
feature or where both parties have mutually agreed on exclusivity prior to the
implementation of the feature...


 


10.         [***].


 


11.         Supplier will perform, as
mutually agreed by the parties, reasonable agency compliance testing per HP’s
requirements and provide HP certifications from agencies as required by HP.


 


12.         [***].


 


13.         [***].


 


14.         Supplier will provide
source code for all learning product materials but not limited to; installation
guides, user guides and service guides.


 


56

















 


EXHIBIT H


 


TO PRODUCT
PURCHASE AGREEMENT

BETWEEN HP AND OVERLAND STORAGE


 


 


SOFTWARE AND DOCUMENTATION WARRANTY


 


 


To the extent Product
includes or constitutes Software and with respect to related Documentation,
Supplier warrants and represents to HP, in addition to the warranties set forth
in Article 9 of the Agreement:


 


1.               That
Supplier has, as of date of delivery, and perpetually thereafter, clear title
for sufficient proprietary rights in and to the Software and Documentation to
grant HP any license, lease or other non-ownership rights granted in and to the
Software and Documentation and that the Software and Documentation are free of
any and all restrictions, settlements, judgments or adverse claims that might
adversely affect any such right granted HP.


 


2.               That
the Software will conform to Specifications and will operate substantially in
accordance with the Specifications and Documentation.


 


3.               That the Software
will not (1) contain lock out devices or have any virus, disabling device, time
bomb, Trojan horse, back door or any other harmful component, (2) replicate,
transmit or activate itself without control of a person operating the computing
equipment on which it resides, (3) alter, damage or erase any data or other
computer programs without control of a person operating the computing equipment
on which it resides or (4) contain any code, key, node lock, time-out or other
function whether implemented by electronic, mechanical or other means which
restricts or may restrict use or access to programs or data based on residency
on a specific hardware configuration, frequency or duration of use, or other
limiting criteria.


 


4.               That the Software
and Documentation, including accompanying trademarks, copyrights and trade
names, do not violate or infringe any patent, copyright, trademark, trade
secret or other proprietary right of any third party, that Supplier is not
aware of any facts upon which such a claim for infringement could be based and
that Supplier will promptly notify HP if it becomes aware of any claim or any
facts upon which a claim could be based.


 


[***]


 


57

















 


EXHIBIT
I


 


TO PRODUCT
PURCHASE AGREEMENT

BETWEEN HP AND OVERLAND STORAGE


 


 


Flex / Buffer Model


 


Supplier shall develop and
implement internal processes to provide HP maximum flexibility and shall
maintain buffer inventory as directed. Subject to and in accordance with
Section 5.4 of the Product Purchase Agreement, [***]


 


Flex is defined as ability to accept incremental demand.


 


Buffer is defined as ability to pull-in existing demand.


 


HP’s flex requirements are:


 


	
  Number of Calendar 

  Days Prior to Scheduled 

  Demand Date

  	
   

  	
  HP’s
  Maximum

  % Increase

  	
   

  	
  HP’s
  Maximum

  % Decrease

  	
   

  	
  Maximum
  USD 

  liability for 

  Decreases of HP 

  Unique Product **

  
	
  0
  – 30

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  
	
  31
  – 60

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  
	
  61
  – 90

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  
	
  91
  +

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  



 












* Any weekly incremental upside above these percentages will
be responded to with best reasonable efforts in the areas of number of units
and replenishment cycle time.


 


[***]


 


In addition to the weekly
EDI transmission, HP also agrees to chair a weekly interlock meeting with
Supplier to review short and long term Forecast updates.


 


58

















 


EXHIBIT
J


 


TO PRODUCT PURCHASE AGREEMENT

BETWEEN HP AND OVERLAND STORAGE


 


 


QUALITY
ASSURANCE REQUIREMENTS AND

ADDITIONAL PRODUCT WARRANTIES


 


 


This exhibit specifies
the Quality agreement that has been reached between Supplier and HP.  This exhibit applies to all automated tape
libraries purchased from Supplier unless otherwise specified.


 


1.                                      Warranty


 


Supplier hereby warrants
that for [***] months from the date of Delivery of Product(s) to Buyer or to
Buyer’s customers, that (i) all Product(s), shall be free from defects in
material, workmanship, and design; and (ii) shall conform to applicable
specifications drawings, samples, and descriptions which references this
agreement; and (iii) shall be suitable for the purpose for which they were
intended.


 


2.                                      Supplier’s
Annualized Return Rate (SRR) / Supplier’s Annual Field Rate (SFR) 


 


Supplier shall
incorporate sufficient design margin, quality control, and reliability tests on
tape libraries purchased by HP to ensure that the agreed to SRR/SFR is not
exceeded.  The SRR/SFR for the individual
tape drive family will be referenced in the HP Product Specification.  SRR performance goals will be communicated
via the QBR.  Supplier  shall
support Field Performance Analysis initiatives and other related activities as
needed to reduce SRR/SFR.


 


[***]


 


3.                                      Epidemic Failure


 


a.
“Epidemic Failure” shall have either of the following two meanings:


 


1.               The occurrence of
multiple failures of the same component(s), for the same cause, to the extent
that the annualized failure rate exceeds [***] the agreed upon failure rate in
the HP Product Specification. This annualized failure rate shall be based on a
[***], and Supplier and HP must agree that the failures have been properly
diagnosed and that the failure count for that cause is accurate.


 


59

















 


2.               Random supplier
attributable failures for multiple causes to the extent that the annualized
failure rate exceeds [***] the agreed upon failure rate in the HP Product
Specification. This annualized failure rate shall be based on a [***], and
supplier and HP must agree that the failures have been properly diagnosed and
the failure count for that cause is accurate.


 


b. Epidemic failure
process definition and compensation


 


1.               In the event HP believes there has been
an Epidemic Failure, HP shall immediately provide written notice to Supplier.


 


2.               No later than [***] following receipt of
such notice, Supplier shall use its reasonable efforts to (a) stop production
until containment and/or corrective action is in place, (b) provide a plan for
conducting complete root cause failure analysis, and (c) begin implementing a
corrective action plan as soon as is reasonably practical.


 


3.               [***]


 


4.               [***]


 


5.               [***]


 


4.                                      Firmware Controls


 


Supplier shall control
distribution and use of diagnostics and Firmware shipping with the
Product.  Firmware revision shall be
traceable to the serial number of the units. 
For firmware not created by HP, this information shall be conveyed to HP
for field tracking purposes.


 


Supplier shall back up
all HP-supplied test software on media that will allow testing of individual
products.  [***].


 


5.                                      Product
Traceability


 


Supplier shall maintain
traceability records for all regulatory-controlled products listed in agency
reports.  Such products must be traceable
from the source of manufacture by lot or date code through the manufacturing
process, and to their final destination via serialization.  Traceability information shall be provided
to HP upon request.  Traceability must
be in place by date code or serial number for all returned FRU’s.


 


6.                                      Safety
and Regulatory Agency Reports


 


Supplier shall provide
copies of all regulatory and safety agency submittal reports and approvals as
defined in the Supplier Management Process.


 


60

















 


7.                                      New
Material Requirements


 


HP will not purchase, or
accept delivery, of Product that has been shipped to any of Supplier’s
customers.  Supplier shall notify HP in
writing:  A)  if such Product was mistakenly shipped to HP or B)  to request approval prior to shipment of
such Product to HP in order for Supplier to meet obligations to HP.


 


8.                                      Supply
Interruptions


 


Supplier will not
intentionally ship any Product to HP with a potential problem that could result
in a channel purge or Product hold.  Supplier’
goal is to have zero Product purges or Product holds in HP’ process.


 


9.                                      Supplier
Management Process (formally the Supplier Development Process)


 


Supplier will adhere to
all aspects of HP’ Supplier Management Process.  All data requested by HP will be provided by Supplier during the
5 Step qualification process.  Supplier
will implement an agreed to Process Management Plan (PMP) prior to Step 3
release.


 


10.                               Final
Audit / Out of box Audit Quality (OBA)


 


Supplier will perform “Out of
Box Audit” (OBA), [***].


 


Upon failure, a clearance
will be completed of both finished goods Product of the same part number, and
WIP. If repeated failures are found, all potentially impacted inventory within
Supplier control will be screened/corrected, an estimate of exposure to HP
calculated and communicated to HP Procurement Engineering [***] of the original
failure.


 


All OBA failures will require
the immediate generation of an 8D and communication to HP per the 8D response
guidelines detailed below in the “closed loop corrective action process”.


 


11.                               Ongoing
Reliability Testing


 


Supplier will be
responsible for demonstrating Product reliability meets specified goals both
prior to Step 2 via RDT (Reliability Demonstration Testing) and thereafter on
ongoing revenue shipments by conducting an On-Going Reliability Test (ORT) on
Product supplied to HP.  The ORT plan
will be modeled in accordance with MIL STD 781, Probability Ratio Sequential
Test (PRST). ORT testing is the process whereby the Product MTBF is verified [***].  In addition ORT is to, monitor the outgoing
quality level from production, assure HP the process is in manufacturing
control, and minimize the potential for “early life or field” failures.


 


The conditions and
criteria for the continuous On-Going Reliability Test shall be mutually defined
and agreed to by HP and the Supplier. 
Failures causing test to enter the failure zone will be reported to HP
Procurement Engineering [***] and will require an 8D for closure.  Test results will be reported [***].


 


12.                               Failure
Analysis


 


Supplier will be
responsible for performing [***] led failure analysis in conjunction with the
HP Procurement Engineering Team.  The
preliminary failure analysis results will be 


 


61

















 


communicated to HP
[***].  For any library or library FRU
that is returned to Supplier for detailed failure analysis, the closed loop
corrective action process will be used.


 


13.                               Closed
Loop Corrective Action Process


 


In the event that HP
encounters problems of any nature that affect the ability to sustain full
manufacturing needs (late Product shipment, Product shortage, receiving
inspection failures, in-line manufacturing failures, material purges, etc.), HP
will notify the Supplier and generate a Supplier Corrective Action Request
(SCAR) using the Compaq 8-D process or equivalent.


 


The Supplier is required
to acknowledge receipt of the Request for Corrective Action within [***]
Supplier [***].  Furthermore, the
Supplier is required to define and implement an effective containment [***] of
receipt of the SCAR.  A long term,
corrective action plan should be available [***] working days of root
cause identification.  The proposed
timeframes should be considered general guidelines.  Each SCAR should be assessed for its criticality and urgency and
action taken appropriately.


 


The Supplier is expected
to respond with the following information:


 


[***]


 


[***]


 


[***]


 


[***]


 


Furthermore, the
Supplier will report internal problem issues including failure to meet agreed
upon quality goals (Purges, OBA, and ORT. etc).  The Supplier will adhere to the aforementioned response times.


 


14.                               Process/Product
Change Notification Process


 


The Supplier must notify
HP of any significant changes to the manufacturing process, Product, test or
critical components [***].  Significant
changes include, but are not limited to the following:


 


•                  Changes
affecting Form, Fit, or Functionality of the Product


•                  Changes
in the primary manufacturing site/location


•                  Changes
in Supplier’s final acceptance test process


•                  Changes
in critical components


 


During the
development phase, all proposed SCR/PCN’s should be forward to the appropriate
Design Engineer.  During the production
phase, proposed all SCR/PCN’s should be forwarded to the appropriate Procurement
Engineer.  The notification must be
received at HP no later than [***] to the Supplier’s planned implementation
date.  At a minimum, the notification
must contain the following information:


 


62

















 


•                  [***]


•                  [***]


•                  [***]


•                  [***]


•                  [***]


•                  [***]


•                  [***]


•                  [***]


 


Final approval is granted
by HP, based on successful Product analysis and qualification [***]), and is
subject to audit by HP.  The Supplier
and all affected departments shall be notified in writing of the final
status.  HP will make every effort to
shorten the qualification timeframe whenever possible.  [***].


 


Although timeframes for
SCR/PCN notification and qualification have been defined, it is understood that
each SCR/PCN should be reviewed for criticality and urgency and action taken
appropriately.


 


15.                               Reporting
Requirements


 


Supplier will adhere to
the following reporting timelines.


 


Any
critical problems on which HP has issued an 8D will be responded to per the
timeline above.


 


Supplier will inform HP
within [***] of any incident whereby a violation of a critical parameter in the
Process Management Plan (PMP) has occurred.


 


Supplier
will inform HP within [***] of any ORT or OBA failures.


 


Reaction guidelines and
stop ship criteria will be established around “Out of Box Audit”, in accordance
with the aforementioned sampling plans.


 


The following information will be provided by Supplier on a [***] basis
on the due dates mutually agreed as follows:


 


•                  Summary
of all [***] led F/A libraries analyzed for HP.


•                  Summary
of all libraries / library FRU’s returned to Supplier where root cause failure
analysis was specifically requested.


•                  [***]
summary of all failure analysis performed on failing libraries from any HP
factory integration testing.


•                  [***] by defect description for Total fallout.


•                  Product/Process Change Notification Log (SCR)


•                  8D’s
on top [***] problems by defect.


•                  SRR
and SFR data


•                  Process
Management Plan (if changed from current released version)


 


63

















 


•                  Updated 8D for
the following if required:


•
Purges/Product Hold


•
OBA failures


•
ORT failures


 


16.                                 [***]


 


64

















 


EXHIBIT
K


 


TO PRODUCT
PURCHASE AGREEMENT

BETWEEN HP AND OVERLAND STORAGE


 


 


PRICING


 


 


Supplier will provide a
Product and Spares pricing schedule to HP [***] which is incorporated into this
Agreement by reference. It will include Supplier’s part number and description,
HP’s part number and current quarter pricing plus [***].
The terms and conditions of this Agreement shall apply to those Products and
Spares purchased by HP.


 


Supplier agrees that
pricing [***].


 


65

















 


EXHIBIT
M


 


TO PRODUCT
PURCHASE AGREEMENT


BETWEEN HP AND
OVERLAND STORAGE


 


HP REGIONAL TRADE GUIDELINES


TABLE OF CONTENT


 


	
  SECTION 1 

  	
  HP Trade Basics (Overview)

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  1.1

  	
  Compliance

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.2

  	
  Terms
  of Sale

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.3

  	
  Country of Origin

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.4

  	
  Valuation

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.5

  	
  Shipping Documentation

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.6

  	
  Records

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 2 

  	
  COO Marking/Labeling

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  2.1

  	
  Country of Origin

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.2

  	
  Marking

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.3

  	
  COO Checklist

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 3 

  	
  Shipping Documentation

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  3.1

  	
  Documentation Requirements

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.2

  	
  Commercial Invoice

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 4

  	
  Reporting/Recordkeeping

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  4.1

  	
  Reporting/Data
  Transmissions

  	
   

  
					



 


66

















 


	
   

  	
  4.2

  	
  Records

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.3

  	
  Trade Incidents

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.4

  	
  Audit

  	
   

  



 


SECTION 1                                   HP Trade Basics


 


1.1                               Trade Compliance


Each Supplier shipping
location bears ultimate responsibility for ensuring its own import/export
compliance; however, HP is responsible for setting baseline policies and
guidelines for Supplier operations.  The
following is distributed in order to clearly convey HP’s minimum trade compliance
expectations and to provide an operations reference tool for Supplier
locations; responsibility for developing and implementing procedures to comply
with the following belongs solely to the Supplier .


 


1.2                               Terms of Sale


Supplier is responsible for implementing the sales term (eg.
FOB, FCA, DDP, etc.) negotiated with HP. 
Supplier’s responsibilities may include, but are not limited to, the
following:


•                  Warehouse
storage at point of origin


•                  Warehouse
labor at point of origin


•                  Export
packing


•                  Loading
at point of origin


•                  Inland
freight to origin port


•                  Port
receiving


•                  Loading
on vessel


•                  International
freight/transport


•                  Customs
clearance at destination port


•                  Delivery
to final destination


 


1.3                               Country of Origin


Each Supplier site is
responsible for determining the appropriate country of origin (“COO”) for the
product(s) it manufactures/assembles and for marking the products accordingly.  Further, each site must ensure that shipping
documentation and EDI confirmation signals accurately convey shipment-level COO
data; Country of Origin is a mandatory line-item data element for all HP EDI
shipping confirmation (eg. 856/4010) signals. 
Finally, each site must cooperate fully with HP in supplying data to
facilitate HP’s origin reporting requirements and qualification for
preferential origin programs such as NAFTA, IFTA, FMF, EXIM and the like
including, but not limited to, all requested origin analysis, certificates of
origin, manufacturer’s affidavits, data transmissions, and special reporting.


 


67

















 


Additional HP COO
marking/labeling guidelines are set out in Section 2 of this Exhibit.


 


1.4                               Valuation


For each and every
transaction where HP is to be importer of record into the US, the Supplier site
is responsible for ensuring that commercial documentation accurately reflects
the actual price paid or payable between HP and the site.  It is Supplier’s responsibility to reconcile
its financial records against commercial documentation in order to validate
HP’s use of Transaction Value for declarations to US Customs under
Section 402(b)(1) of the Trade Agreements Act of 1979 (TAA; 19 U.S.C. 1401a);
no alternate valuation methodologies are used or approved for HP transactions.


 


Zero dollar values are
unacceptable for US Customs purposes. 
Where items are provided “free of charge,” the commercial invoice must
reflect fair market value for the products; the nomenclature “Value for Customs
Purposes Only,” may be used in these instances.


 


1.5                               Shipping Documentation


All Supplier sites must
be capable of producing accurate and complete shipping documentation for each
shipment.  Supplier is responsible for
knowing and understanding shipping standards applied in the normal course of
international business and for knowing and understanding additional HP
requirements outlined in this Exhibit.


 


1.6                               Recordkeeping/Reporting


Each Supplier site must
comply with record-keeping, data-transmission, incident-reporting, and audit
requirements set out in Section 4 of this Exhibit.


 


SECTION 2                                   Labeling/ Marking


 


2.1                               Country of Origin


A Product’s
country of origin is where the Product is wholly manufactured or the final
location where a substantial transformation occurs.  A Product is substantially transformed if the end product
functions in a significantly different manner than the individual components.
As a practical matter, Customs looks to whether the final assembly has a new
“name, character, and use” from the component level parts.


 


[***]


 


2.2                               Marking


Every article of
foreign origin entering the United States must be marked with the English name
of the country of origin preceded by the HP standard nomenclature: “PRODUCT
OF.”  This marking must appear in a
conspicuous, legible, indelible 


 


68

















 


and permanent form
on the outermost packaging (e.g. pallet), on the consumer packaging (box in
which the item will arrive to the ultimate consumer), and on the Product
itself.


 


For the human
readable portion of HP’s standard label, COO must be indicated by the complete
country name; abbreviations are unacceptable. 
For the barcode scan area, COO should be represented by the 2-digit ISO country
code; one digit codes (eg. A = US) are NO LONGER ACCEPTABLE nor
supported by HP.  Material with multiple
COOs must be segregated, separately palletized (if applicable) and separately
scanned so as to be represented on the commercial invoice as individual invoice
line items with individual COOs.


 


COO Product
markings/labels must ALWAYS match COO indicated on the commercial invoice and
reported to HP via the shipping confirmation signal.  Supplier is responsible for implementing
procedures to ensure that labels are checked for accuracy and audited against
shipping documentation/data transmissions.


 


Further
clarification regarding HP marking standards is provided in HP’s COO Marking
Policy, as well as HP’s Country of Origin Encoding spec [***]


 


2.3.1                     COO Checklist


Supplier must
adhere to the following COO requirements:


 


•                  Must
implement processes to determine correct COO for Products.


 


•                  Must
ensure that COO is labeled on outermost packaging conspicuously, legibly,
indelibly, and permanently.


 


•                  Must
ensure that COO is labeled on consumer packaging (box in which the item will
arrive to the last person in the US who will receive it in its imported form)
conspicuously, legibly, indelibly, and permanently.


 


•                  Must
ensure that COO is labeled directly on the Product conspicuously, legibly,
indelibly, and permanently.


 


•                  Must
ensure that the accurate COO prints in the designated field on the commercial
invoice.


 


•                  Must
ensure that COO designated for a particular Product to be shipped is consistent
across all labels and documentation.


 


69

















 


SECTION 3                                   Shipping Documentation


 


3.1                               Documentation Requirements


Supplier must adhere to
the following trade requirements:


 


•                    Must
produce accurate and complete shipping documentation for each and every
shipment.  All text must be in English;
all monetary amounts must be represented in US dollars.


 


•                  Must be
able to reproduce shipping document on demand (with or without requested
modifications and/or corrections) for a minimum of [***] after shipment.


 


•                  Must
have internal audit procedures in place for verification/correction of all
outbound documentation issues including, but not limited to, proper print
alignment.  Where data is printed more than
1/16” off assigned documentation fields,  the documentation must be discarded and
reprinted before shipment release.


 


3.2                               Commercial Invoice


 


The following fields are required for each and every
commercial invoice:


 


	
  •

  	
  Ship To Address

  	
  Address to which the
  Goods are being shipped.

  Provided
  by EDI feed from HP.*

  
	
   

  	
   

  	
   

  
	
  •

  	
  Bill To Address

  	
  Address to which
  billing information will be sent.

  Provided
  by EDI feed from HP.*

  
	
   

  	
   

  	
   

  
	
  •

  	
  Ship To ID #

  	
  Specific ID # assigned
  to each Ship To address.

  Provided by EDI feed from HP.*

  
	
   

  	
   

  	
   

  
	
  •

  	
  Bill To ID #

  	
  Specific ID # assigned
  to each Bill To address.

  Provided
  by EDI feed from HP.*

  
	
   

  	
   

  	
   

  
	
  •

  	
  Ship ID/Invoice No.

  	
  Unique number assigned
  at the time of shipment to each outbound shipment.  This number should never be repeated and should appear on the
  shipping label tying the freight to the commercial invoice for a given
  shipment.

  Assigned
  by the Supplier site.

  
	
   

  	
   

  	
   

  
	
  •

  	
  Date

  	
  Actual shipment date.

  Assigned
  by the Supplier site.

  



 


70

















 


	
  •

  	
  Page

  	
  Commercial invoice page
  number.  Multi-page invoices will
  follow the format eg. 1/4, 2/4, etc.

  Assigned
  by the Supplier site.

  
	
   

  	
   

  	
   

  
	
  •

  	
  Bill of Lading No.

  	
  Air waybill number
  utilized for transport.

  Assigned
  by the Supplier site.

  
	
   

  	
   

  	
   

  
	
  •

  	
  Shipped Via

  	
  HP-approved
  courier/freight forwarder handling the transport.

  Provided
  by EDI feed from HP.*

  
	
   

  	
   

  	
   

  
	
  •

  	
  Freight Terms

  	
  Party responsible for
  freight charges.

  (Eg. “Pre-paid,”  “collect”)

  Provided
  by EDI feed from HP.*

  
	
   

  	
   

  	
   

  
	
  •

  	
  Terms of Sale

  	
  Incoterm designating
  responsibilities of the parties.

  (Eg. EXW, FCA, DDP)

  Provided
  by EDI feed from HP.*

  
	
   

  	
   

  	
   

  
	
  •

  	
  Terms of Payment

  	
  Agreed upon payment
  terms.

  [***]

  Provided
  by EDI feed from HP.*

  
	
   

  	
   

  	
   

  
	
  •

  	
  Customer P.O. No.

  	
  Purchase order  number  assigned
  to the transaction

  Provided
  by EDI feed from HP.*

  
	
   

  	
   

  	
   

  
	
  •

  	
  Sales Order No.

  	
  Sales Order number
  under which the shipment is placed.

  Provided
  by EDI feed from HP.*

  
	
   

  	
   

  	
   

  
	
  •

  	
  Line Item

  	
  Sales Order line item
  fulfilled by the item shipped.

  
	
   

  	
   

  	
  Provided by EDI feed from HP.*

  
	
   

  	
   

  	
   

  
	
  •

  	
  Product No.

  	
  HP part number assigned
  to the Product.

  
	
   

  	
   

  	
  Provided by EDI feed from HP.

  
	
   

  	
   

  	
   

  
	
  •

  	
  Description

  	
  Description of the Good(s).

  
	
   

  	
   

  	
  Provided by EDI feed from HP.*

  
	
   

  	
   

  	
   

  
	
  •

  	
  Quantity

  	
  Number of units of the particular part shipped.

  
	
   

  	
   

  	
  Provided by EDI feed from HP.*

  
	
   

  	
   

  	
   

  
	
  •

  	
  Unit Price

  shipper 

  	
  Actual dollar value to
  be paid to the Supplier for one  unit of the particular part number.

  Provided
  by EDI feed from HP.*

  



 


71

















 


	
  •

  	
  Extended Price

  	
  Sum of quantity field
  multiplied by unit price.

  Provided by EDI feed from HP.*

  
	
   

  	
   

  	
   

  
	
  •

  	
  Total
  Value

  	
  Sum of extended values for all line items.

  Provided
  by EDI feed from HP.*

  
	
   

  	
   

  	
   

  
	
  •

  	
  Country of Origin



  	
  The country in which
  the Goods were manufactured.

  DETERMINED
  AND APPLIED BY THE SUPPLIER SITE.

  
	
   

  	
   

  	
   

  
	
  •

  	
  License

  	
  Export License
  exception determined by HP trade.

  Provided
  by EDI feed from HP.*

  
	
   

  	
   

  	
   

  
	
  •

  	
  ECCN

  	
  Export Commodity
  Control # determined by HP.

  Provided
  by EDI feed from HP.*

  
	
   

  	
   

  	
   

  
	
  •

  	
  HTS

  	
  Harmonized tariff
  scheduleclassification determined by HP.

  Provided
  by EDI feed from HP.*

  
	
   

  	
   

  	
   

  
	
  •

  	
  Destination Control

  	
  Statement required to
  be printed on all commercial invoices per  the US Export Administration Regulations.

  Provided by EDI feed from HP.*

  



 


In accordance with
controlling customs requirements, HP also requires line level itemization of
the following:


•                  Desktop
computers necessitate separate itemization of the CPU, mouse, and
keyboard.


•                  All
items shipped with “dropped-in-the-box” (uninstalled) software necessitate separate
software itemization.  Software country
of origin is the location where programming/recording is installed on the
media.  Software value is to be
indicated per the media (unrecorded CD, diskette, or tape) value only.


 












* ALL data transmitted from HP must be
verified for accuracy.  Supplier is
responsible for implementing procedures demonstrating reasonable care in the
verification of all data received from HP.


 


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SECTION 4                                   Reporting/ Recordkeeping 


 


4.1                               Reporting/Data Transmissions


The following trade data elements must be printed on
each commercial invoice and must be returned to HP via the standard
electronic/EDI Shipping Confirmation signal:


•                  Country
of Origin (line item level)


•                  HTS
Classification (line item level)


•                  ECCN
(line item level)


•                  License
(line item level)


•                  Destination
Control Statement


These are HP-required
data elements for the Shipping Confirmation signal.  Failure to transmit these items will result in signal rejection.


 


4.2                               Records


Each Supplier site must
maintain a system for retention, retrieval and reproduction (for a period of
not less than six calendar years from the date of each shipment) of original
shipping, export, customs, import and other trade-related documentation (“Trade
Control Records”), pertaining to the international transport of HP Goods.  Such record keeping system will comport with
the legal requirements of the U.S. and other nations including, but not limited
to, requirements set out in Parts 762 and 772, U.S. Department of Commerce,
Export Administration Regulations and the U.S. Customs Record-Keeping
Regulations, 19 C.F.R. 163.


 


Supplier, upon receipt of
written notice from HP, will collect, reproduce if required, and provide to HP
(at Supplier’s expense) originals and/or satisfactory copies of 100% of the
Trade Control Records as HP may request from time to time.  All HP requests for Trade Control Records
must be fulfilled within 15 business days of HP’s written request, or the
response date required by an official government record production request or subpoena,
whichever is the lesser time for response. 
Supplier will not destroy or render inaccessible any of the Trade
Control Records relating to HP transactions, without having first obtained the
express written permission from HP.


 


4.3                               Trade Incidents


Supplier will provide
immediate notice to HP in the event of an action by U.S. or other national
government customs/export authorities which relates specifically to Goods or
Services provided to HP by Supplier. Such government communications and actions
may include, but are not limited to, cargo detentions, cargo seizures,
subpoenas, record production requests and search warrants.  Issues, questions, or incidents arising
pursuant to this section should be escalated to HP via the


 


[***]


 


4.4                               Audit


Supplier will afford HP,
and HP’s duly appointed agents, reasonable access to Supplier’s premises for
trade compliance audit purposes. 
Supplier further agrees 


 


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to fully cooperate with
HP in this regard, to respond in a timely manner to HP’s requests for
production of Trade Control Records, and to comply with all remedial or
corrective actions that HP may specify.


 


74