Exhibit 10.5


 


***Text
Omitted and Filed Separately


with the
Securities and Exchange Commission.


Confidential
Treatment Requested


Under 17 C.F.R. Sections 200.80(b)(4)


and
240.24b-2.


 


SECOND AWARD LETTER


 


THIS SECOND AWARD LETTER (the “Second Award
Letter”) is made on and as of the 16th day of September, 2005 (the “Award Letter Date”) by and between DOT HILL
SYSTEMS CORPORATION, a Delaware corporation (“Dot Hill”)
and SOLECTRON CORPORATION, a Delaware
corporation, on behalf of itself and its subsidiaries, including but not
limited to Solectron Technology Singapore Pte. Ltd., and Solectron Europe B.V.
(“Supplier”), pursuant to the
Manufacturing Agreement, dated as of May 20, 2002, as amended, between Dot
Hill and Supplier (the “Agreement”).  Capitalized terms which are not defined in
this Second Award Letter shall have the meanings as ascribed to such terms in
the Agreement.  Dot Hill and Supplier
hereby agree as follows:


 


1.                                      Applicability:  The
provisions contained within this Second Award Letter and the related
Attachments described herein shall apply only to those Product(s) described in Attachment
A to this Second Award Letter, and not to any other Product(s) which may be
supplied under any other Award Letters which have been or may be issued under
the Agreement.


 


2.                                      Products and Pricing/Initiatives:  The prices in Attachment A
are preliminary, tentative and subject to validation by Supplier of anticipated
bill of material, assembly, test and other transformation costs that are
included in the prices in Attachment A. 
Supplier will verify promptly, after the receipt of the complete design
package (including but not limited to, bill of materials, approved vendor list
and released controlled drawings and documents) from Dot Hill, the accuracy of
such costs included in such prices, and advise Dot Hill promptly of any
increases or decreases in prices to Dot Hill arising or resulting from any
material discrepancies between anticipated costs that Supplier expects to incur
and those costs included in the prices in Attachment A.  Dot Hill may purchase Product(s) from
Supplier based on the prices set forth in Attachment A if there are no
such material discrepancies which result in an increase in prices for
Product(s) to Dot Hill.  If, however,
there are material discrepancies which result in an increase in prices for
Product(s) to Dot Hill, then Dot Hill and Supplier shall work together to
attempt to resolve immediately such material discrepancies and Dot Hill may
purchase Product(s) from Supplier, at Dot Hill’s option, at either (i) the
then-adjusted, updated pricing that include such material discrepancies or the (ii) the
then-current updated agreed prices once such material discrepancies are
resolved.  Attachment A shall be
updated at any time and from time to time by Dot Hill and Supplier to reflect
any product changes and cost and other price changes.  At a minimum, Dot Hill shall receive from
Supplier a reduction in then-current prices for the cost reductions described
in Section 3.3.3 (Cost Reductions) of the Agreement.  All cost reductions provided by Supplier
shall be cumulative, i.e., the then-current prices in Attachment A will
be reduced further for such costs reductions. 
During the first week of each calendar quarter and more frequently as
requested by Dot Hill, Supplier shall provide a detailed cost breakdown to Dot
Hill for each Product covered by this Second Award Letter for the then-current
quarter and estimates for the following [***]. 
Such breakdown will cover all then-current costs for the Product(s).


 


3.                                      Minimum Purchase Quantities:  Notwithstanding anything to the
contrary, Supplier acknowledges and agrees that Dot Hill is not required to
purchase any minimum quantities or 


 


Confidential


 


1





















 


units of Product(s) under this Second Award Letter or the Agreement,
unless such quantities or units are specifically identified in a binding
purchase order that Dot Hill may issue to Supplier under the applicable
provisions of this Second Award Letter and the Agreement.  Supplier acknowledges and agrees that Dot
Hill does not make any representations or warranties as to the future success
of the Product(s) or as to the volume of any purchases of Products that Dot
Hill may acquire from Supplier under this Second Award Letter or the Agreement.


 


4.                                      Supply Plan Communication:  Dot
Hill’s material organization representative shall provide Supplier with an
updated Supply Plan on at least a quarterly basis and subsequent updates as
needed.  In the event that Supplier has
not received this information within [***] after the beginning of a quarter,
Supplier will notify Dot Hill accordingly.


 


5.                                      Upside Support:  Dot
Hill may request all or any part of Upside Support quantity at anytime, up to the maximum amount
indicated below, beginning upon Dot Hill’s first customer shipment of the
Product(s) to a customer of Dot Hill. 
Supplier shall sell, manufacture
and ship such Upside Support quantities to Dot
Hill on a “first-in, first-out” basis.


 


Supplier shall provide to
Dot Hill upside flexibility upon and after
first customer ship to the then-current production forecast to allow for the
following conditions:


 


(i)                                     [***] of
Upside Support to any [***]
forecasted demand to be delivered within [***] of a Dot Hill request occurring no earlier than [***] after the date of any previous Dot Hill request
for such Upside Support;


 


(ii)                                  [***] of
Upside Support to the [***]
forecasted demand to be delivered within [***] of a Dot Hill request
occurring no earlier than [***] after the date of any previous Dot Hill requests
for Upside Support; and


 


(iii)                               [***] of Upside Support to the [***] forecasted demand to be
delivered within [***] of a Dot Hill request occurring no earlier than [***]
after the date of any previous Dot Hill requests for Upside Support.


 


Supplier shall accommodate any requests from Dot
Hill for delivery of Upside Support of quantities of Products in the
timeframes indicated above subject, however, to the payment of an additional
charge by Dot Hill to Supplier for such Upside Support.  Such additional charge will be equal to [***]
of Supplier’s then-current average manufacturing cost for the [***].


 


The parties will
collectively use their best efforts to implement a vendor managed inventory (“VMI”) or hubbing program with third party suppliers of
drives which are to be included in the Products. Supplier shall also use
commercially reasonable efforts to implement a vendor managed inventory (“VMI”) or hubbing program with third party suppliers of power
supply units and other major components which are included in Products.  Upon implementation by Supplier or Dot Hill
of a VMI or hubbing program with such drive, power supply unit and/or other
major component suppliers, except as otherwise agreed in writing by Supplier
and Dot Hill, Dot Hill [***].


 


Supplier shall provide to
Dot Hill upon request thorough information as to quantities and costs of
Products, major components and raw materials that Supplier maintains on hand to
support the Upside Support requirements in this Second Award Letter.  Supplier will also provide to Dot Hill on a [***]
basis details regarding the amount that will become due from Supplier for the
maintenance of Upside Support [***].  Dot
Hill shall have the right to audit all such information that Supplier provides.


 


2





















 


Any amount due from Dot Hill
for Upside Support that Supplier is required to maintain under the provisions
of this Second Award Letter during an applicable calendar quarter will be
computed by Supplier and reported in writing to Dot Hill, and Supplier will
provide an invoice(s) to Dot Hill for the costs of such Upside Support no later
than [***] after the end of each such calendar quarter.  Dot Hill will pay to Supplier any undisputed
amount due for such Upside Support at the applicable Reconciliation Date, which
is described in Section 3.4 of the base terms of the Manufacturing
Agreement, immediately following such quarter-end.


 


For any request which may be
made by Dot Hill for quantities in excess of the Upside Support requirements
described above, the parties shall negotiate
in good faith acceptable delivery
dates, and subject to the parties’ agreement to such dates, Supplier will use
commercially reasonable efforts to deliver and provide such additional quantities
to Dot Hill.


 


If
Supplier is unable to achieve Upside Support due to a Force Majeure Event or a
failure by any vendor or supplier operating under any supply agreement of Dot
Hill or a Dot Hill customer to deliver on a timely and sufficient basis to Dot
Hill any drives or components which Dot Hill requires for incorporation into
Products to be made and sold by Supplier, then Supplier’s Upside Support
obligations hereunder shall be excused to the extent that such Force Majeure
Event or failure results in or causes a Supplier inability to meet such Upside
Support requirements.


 


6.                                      Milestones:  Supplier will assist Dot Hill in pre-production and other similar
efforts as may be necessary to enable Dot Hill to meet the following schedule for
the Product(s) described in Attachment A: 


 


	
  Description

  	
   

  	
  Shasta

  	
   

  
	
  P0 (pre-Engineering
  Validation Test) units

  	
   

  	
  [***]

  	
   

  
	
  P1 (Engineering Validation
  Test) units

  	
   

  	
  [***]

  	
   

  
	
  P2 (Development Validation
  Test) units

  	
   

  	
  [***]

  	
   

  
	
  Pilot production units

  	
   

  	
  [***]

  	
   

  
	
  Production First Customer Ship
  (“FCS”)

  	
   

  	
  [***]

  	
   

  



 


Upon request by Dot Hill,
critical design, quality, manufacturing readiness and other similar reviews
will be held immediately by Supplier with Dot Hill.  Meeting the above milestones is critical.  If a schedule slip occurs primarily as a
result of the Supplier’s failure to execute, Supplier shall [***].  In this regard, if a slip in the date of the
pilot production of units or FCS occurs due to such failure to execute, then [***].


 


7.                                      Quality Requirements:  For the Product(s) described in Attachment A, Supplier shall
adhere to the quality requirements in Attachment B, at no additional
charge to Dot Hill.  These quality
requirements shall be additional to those set forth in Exhibit C
and Exhibit C-1 to the Agreement.


 


8.                                      Manufacturing Test Specification
and Workmanship Standards:
For the Product(s) described in Attachment A, Supplier shall ensure that
all such Product(s) are manufactured in all respects according to the
Manufacturing Test Specification in Attachment C and meet in all respects
the Workmanship Standards in Attachment D.


 


9.                                      Turnkey Components, Material
Lead-times and EOQs:  Dot Hill will provide a components parts list
indicating approved vendors for the Product(s). Supplier will use that list to
identify current Material Lead-times and vendor requirements, if any, for
economic order quantities (“EOQ”) for each
Product (the “List”). The initial version of the
List will be added to this 


 


3





















 


Second Award Letter as Attachment G within [***] after execution
of this Second Award Letter.  Updates to
this List will be set forth in a separate written document that will be
incorporated by reference.  Supplier
shall update the List, subject to Dot Hill’s approval, at least [***]. As part
of the List, Supplier will identify EOQ components which are required to be
procured in a minimum order quantity (“MOQ”) so that
Dot Hill and Supplier can evaluate, as necessary, the costs of procuring the
EOQ versus the MOQ.


 


10.                               Warranty and Global Support:  Supplier will address additional warranty and global services support
requirements of Dot Hill for the Product(s) covered under this Second Award
Letter.  These additional warranty and
global services support needs will include the following:


 


10.1                        Warranty Support. 
Supplier will provide in- and out-of-warranty customer service and
support for the Product(s) covered under this Second Award Letter in accordance
with Exhibit B to the Agreement, as modified by the provisions in Attachment
F to this Second Award Letter. 
Except as otherwise provided in the immediately following sentence, the
in-warranty period for a Product(s) covered under this Second Award Letter
shall be [***] for which there will be [***]. 
Additionally, Supplier shall provide to Dot Hill the benefits of all
warranties with a longer term obtained from component suppliers for all
components included in the Products.


 


10.2                        End of Life Support. 
Supplier shall support Dot Hill’s provision of spare parts and provide
root cause analysis (“RCA”) of
failures of the Product(s) covered under this Second Award Letter for at least [***]
after the last delivery of the Product(s), as further described in Attachment
B and Attachment F to this Second Award Letter.


 


10.3                        RMA Criteria. The Return Material Authorization (“RMA”) criteria and process for the Product(s) covered under
this Second Award Letter will be established and fully tested by Supplier, as
further described in Attachment B and Attachment F to this Second
Award Letter.


 


10.4                        Failure Analysis. Supplier shall provide root cause failure
analysis and corrective action support for customer returns of Product(s) which
are covered under this Second Award Letter and establish and provide a support
escalation process to address issues with respect to such Product(s), as
further described in Attachment B and Attachment F to this Second
Award Letter.


 


The foregoing warranty and
global service support requirements for the Product(s) covered under this
Second Award Letter are in addition to those warranty and global support
service obligations that Supplier has already agreed to perform in the
Agreement for such Product(s).


 


11.                               Notices:  Dot
Hill and Supplier shall each assign an individual to administer the Agreement
throughout its term (each, an “Administrator”).  Each party shall inform the Administrator of
the other in writing of any change of Administrator or such Administrator’s
address or fax number.


 


	
  Dot Hill’s
  Administrator shall be:

  	
   

  	
  Supplier’s
  Administrator shall be:

  
	
   

  	
   

  	
   

  
	
  Senior
  V.P. – Operations

  	
   

  	
  V.P.,
  Contracts and Compliance

  
	
  Dot Hill
  Systems Corporation

  	
   

  	
  Solectron
  Corporation

  
	
  6305 El
  Camino Real

  	
   

  	
  847
  Gibraltar Drive, Building 5

  
	
  Carlsbad,
  California 92009

  	
   

  	
  Milipitas,
  California 95035

  
	
   

  	
   

  	
   

  
	
  Fax:
  (760) 931-5527

  	
   

  	
  Fax:
  (408) 935-5925

  



 


4





















 


 


12.                               Second Award Letter Components:  The
parties agree to be bound by the terms and conditions contained in the
following exhibits indicated below, which are incorporated by reference herein:


 


	
  ý

  	
   

  	
  Attachment
  A
  (Product Pricing)

  
	
  ý

  	
   

  	
  Attachment
  B
  (Quality Requirements)

  
	
  ý

  	
   

  	
  Attachment
  C
  (Manufacturing Test Specifications)

  
	
  ý

  	
   

  	
  Attachment
  D
  (Workmanship Standards)

  
	
  ý

  	
   

  	
  Attachment
  E
  (Order Replenishment and Logistics Requirements)

  
	
  ý

  	
   

  	
  Attachment
  F
  (Global Service Requirements)

  
	
  ý

  	
   

  	
  Attachment
  G
  (Turnkey Components and EOQ)

  
	
  ý

  	
   

  	
  Attachment
  H
  (Product Specifications)

  
	
  ý

  	
   

  	
  Attachment
  I
  (Business Continuity Plan)

  
	
  ý

  	
   

  	
  Attachment
  J
  (Tooling)

  



 


13.                               Forecasts.  Dot
Hill shall submit forecasts to Supplier at least monthly. These forecasts will
provide visibility into Dot Hill’s forecasted quarterly supply demand for
Products for [***], with updates made to such forecasts during a quarter.  Within [***] after receipt of a forecast,
Supplier shall provide Dot Hill with a written acknowledgement of the forecast
(“Supply Availability”) for the requested
quantity of the Products in the forecast or propose a revised quantity or schedule for
the supply of Products.  In connection
with Supplier’s review of a forecast, Supplier should consider any Upside
Support requirements that it is obligated to maintain, as set forth in Section 6
above.  If a revised quantity or schedule is
proposed, then the parties shall confer and attempt in good faith to agree upon
a final Supply Availability for each applicable month.


 


14.                               Submittal of Purchase Orders.  Dot
Hill shall initiate purchases of Products by submitting to Supplier quarterly
blanket Purchase Orders via electronic data interchange to a designated
Supplier email address based upon the mutually agreed forecast.  These Purchase Orders will be submitted by
Dot Hill to Supplier at least [***] prior to the beginning of each fiscal
quarter of Dot Hill’s customer(s).  All
quarterly blanket Purchase Orders shall (a) specify the quantities, price,
payment terms, and delivery instructions; and (b) refer to and be governed
by the terms and conditions of this Agreement. 
Blanket Purchase Orders shall be updated by Dot Hill, as needed, to
reflect agreed-upon price adjustments and agreed revision changes for Products
(including, where applicable, agreed engineering changes and deviations).


 


15.                               Confirmation of Purchase Orders. 
Supplier shall confirm its receipt of the blanket Purchase Order by
notifying Dot Hill electronically within [***] after the receipt of the
Purchase Order. Supplier shall be required to accept all Purchase Orders that
conform to a mutually agreed forecast. Supplier shall notify Dot Hill of its
acceptance or rejection of the blanket Purchase Order by facsimile or
electronic mail within [***] after its receipt of Dot Hill’s Purchase Order.


 


16.                               Unexpected Failures. 
With respect to this Second Award Letter and the Products that are to be
provided by Supplier to Dot Hill hereunder, the Unexpected Failure provisions
in Section 6.3.1 of the base terms of the Manufacturing Agreement shall be
modified so that the failure rate of [***].


 


5





















 


IN WITNESS
WHEREOF, the duly authorized representatives of the parties have executed and
delivered this Second Award Letter as of the Second Award Letter Date. 
Supplier hereby signs this Agreement on behalf of itself and those
Supplier subsidiaries and affiliates which are described in the introductory
paragraph of the base terms of the Agreement.


 


	
  DOT HILL
  SYSTEMS CORPORATION

  	
   

  	
  SOLECTRON CORPORATION

  
	
   

  	
   

  	
   

  
	
  By:

  	
    /s/ Preston Romm

  	
   

  	
  By:

  	
    /s/ Darryl Payton

  
	
   

  	
   

  	
   

  
	
  Name:
  Preston Romm

  	
   

  	
  Name:
  Darryl Payton

  
	
   

  	
   

  	
   

  
	
  Title: CFO

  	
   

  	
  Title:
  Director Contracts and Compliance

  
	
   

  	
   

  	
   

  
	
  Date: 9/16/05

  	
   

  	
  Date: 9/16/05

  
					



 


6





















 


ATTACHMENT A


 


PRODUCT PRICING


 


[***]


 


7





















 


ATTACHMENT
B


 


QUALITY REQUIREMENTS 


 


1.                                      Definitions:


 


1.1                                 “Failure” shall mean the occurrence of any of the following:


•                  Non-conformance
of the Product and/or components therein to the Bill of Material (“BOM”);


•                  Non-conformance
to workmanship requirements in the Engineering Specifications, including but
not limited to mechanical and electrical non-conformance.


•                  Defects in material and
workmanship, including but not limited to defects in mechanical assembly and
parts thereof;


•                  Non-operation of the Product
or its components, including but not limited to mechanical and electrical
non-operation; or


•                  Cosmetic
or workmanship non-conformance of the Product to the workmanship standards in Attachment
D of the Second Award Letter.


 


1.2                                 “Failure
Analysis” or “FA” shall mean
an investigation of Failures by means of diagnostic testing within a
standardized test environment and performed by Supplier or its service
providers. Test results will identify the hardware / firmware assignable cause
of a component’s failure where applicable.


 


1.3                                 “Root
Cause Analysis” or “RCA” consists
of Failure Analysis as described above followed by a thorough investigation by
Supplier and/or Supplier’s suppliers to diagnose failures to the lowest
component level.


 


1.4                                 “Defective
Parts Per Million” or “DPPM” shall
be the basis for determining factory integration issues.  DPPM is the first pass Failure rate seen at
integration in a factory.  Test sample
size will be defined in individual sections below.


 


[***]


 


1.5                                 “On-Going Reliability Test” or “ORT”
shall be a test conducted in Dot Hill’s or Supplier’s factory for the purpose
of monitoring product reliability.  The
parties shall meet and confer to develop the appropriate test protocols;
however, Dot Hill shall have the ultimate decision on test requirements.


 


1.6                                 “Out Of Control” shall mean a condition when any of the
following exist with respect to Supplier or any of its suppliers:


 


[***]


 


1.7                                 “Stop Ship Order” shall mean a process by which Dot Hill
stops a released Product or other item from being shipped from Supplier.


 


1.8                                 “Dead On Arrival” or “DOA” shall
mean, for purposes of this Exhibit, a Failure of a Product or Spares upon first
installation at NetApp customer site.


 


8





















 


1.9                                 “Pareto” shall mean a histogram sorted from highest frequency
of occurrence to lowest frequency of occurrence.


 


1.10                           “Product Storage Enclosure” consists of the chassis with or
without the controller (I/O module), power supply, fan, and backplane, drive
dongle and drive carrier.


 


2.                                      Test Procedures.  The Products
are subject to certain agreed test and inspection procedures for Failures by
Dot Hill or its customer(s).  If a unit
of Product has a Failure as determined by such testing and inspection criteria,
then Dot Hill shall notify Supplier of such Failure, and such Product may be
returned by Dot Hill to Supplier pursuant to the agreed warranty provisions for
such Product.


 


3.                                      Inspection rights.  Dot Hill and
its customer(s) shall have the right to perform vendor qualifications and/or
on-site source inspections at Supplier or any of its manufacturing facilities
involved in the manufacture of the Products. 
Dot Hill shall provide advance written notice of desire to an inspection
at least [***] prior notice for routine visits and with [***] notice for Out of
Control or Stop Ship Order situations. 
If an inspection or test is made on Supplier’s premises, Supplier shall
provide Dot Hill and its customer with reasonable access and assistance at no
additional charge.


 


4.                                      Product and Process Quality
Requirements.  Manufacturing
and quality processes will be implemented at Supplier with the goal to produce
Products that meet Dot Hill’s zero defect quality requirements.  The minimum
acceptable quality levels specified in the table below shall also be met in the
Supplier manufacturing process.  If these
quality levels are not maintained, Dot Hill reserves the right to require Supplier
to implement corrective actions that include, but are not limited to,
additional manufacturing processes, screens, tests, burn-in, etc.  Supplier will bear the cost of such
corrective actions if the failure to maintain such levels arises or results
from a problem relating to workmanship. 
If the quality level does not rise to the minimum acceptable levels in
spite of these actions, Dot Hill may stop accepting Product. Additionally:


 


•                                          Supplier and those suppliers, if any,
selected by Supplier must be ISO 9001 certified and all manufacturing locations
for the Product and its components must be identified and specified to Dot
Hill;


 


•                                          Supplier must provide, and use commercially
reasonable efforts to obtain from its suppliers, detailed process quality plans
that include all quality controls for each manufacturing process (including
rework);


 


•                                          Weekly line quality metrics that includes
individual process yields, FA results and corrective actions for Supplier and
its suppliers must be provided and discussed during the weekly quality call
with Dot Hill and/or its customers;


 


•                                          Supplier must respond to Dot Hill Corrective
Action Requests (“CARs”) within [***]
and implement corrective action within [***];


 


•                                          All engineering changes, process changes,
test changes, authorized vendor list component changes, manufacturing location
changes must have written Dot Hill approval;


 


9





















 


•                                          The Products shall be manufactured in a clean
environment with Electro Static Discharge (“ESD”),
temperature and humidity controls;


 


•                                          Defect reduction / continuous improvement
processes must be implemented at Supplier and its suppliers;


 


•                                          The Products must have full backward
traceability for agreed key components from the finished Product to the
component level;


 


•                                          All operators shall be fully trained for
their responsible processes;


 


•                                          Supplier shall pass all New Product
Introduction (“NPI”) qualification steps of
Failure Mode Effect Analysis (“FMEA”),
Engineering Verification Test (“EVT”), Design
Verification Test (“DVT”), Highly
Accelerated Life Testing (“HALT”), Pilot,
Design Maturity Test (“DMT”), Design
For Manufacturing (“DFM”) and
Design For Test (“DFT”) before
going into mass production;


 


•                                          Supplier shall perform industry standard operations
such as Environmental Stress Screen (“ESS”), Highly
Accelerated Stress Screen (“HASS”) and
Ongoing Reliability Test (“ORT”) to ensure
a high quality Product; and


 


•                                          All exposed PCBA surfaces must be protected
from handling damage.


 


	
  Description

  	
   

  	
  First

  [***] units

  	
   

  	
  After

  [***] units

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  



 


Dot Hill will have the right
to accept only those Products which meet the agreed upon Dot Hill
Engineering Specification, Manufacturing Test Specification, and Quality
Specifications.


 


Dot
Hill and Supplier will
also discuss any opportunities to improve DPPM levels and will mutually agree
on corrective actions.  Supplier shall
maintain DPPM’s at the lowest possible level. 
Supplier will be held accountable to resolve any issues contributing to
the high DPPM’s and show progress for decreasing them.


 


Additionally and
notwithstanding anything to the contrary in this Attachment, Supplier shall
also be responsible for any Unexpected Failures which occur in the Product, as
defined in the base terms of the Manufacturing Agreement as modified by Section 16
of the base terms of the Second Award Letter. 
In the event of any such Unexpected Failure, Supplier will perform its
responsibilities to resolve such Unexpected Failures in accordance with the
base terms of the Manufacturing Agreement as modified by Section 16 of the
base terms of the Second Award Letter.


 


5.                                      Process Out Of Control.  Dot Hill
Quality / Engineering will become involved if the Supplier’s process goes out
of control.  At this point, a production
Stop Ship Order or a screen / rework at Supplier’s expense will be issued.


 


10





















 


6.                                      Stop Ship process.  The following is a summary of the process for
Stop Shipments:


 


•                                          Dot
Hill will communicate a Stop Ship Order to Supplier in writing or by email.


 


•                                          At
Dot Hill’s discretion, Dot Hill may choose to return any affected Product in
transit to Supplier or in inventory at Dot Hill.


 


•                                          Product
still in inventory at Supplier will be held at Supplier.


 


•                                          Supplier
will provide serial numbers of systems that are affected by the potential
non-conformance mode.


 


•                                          Supplier
will provide urgent root cause analysis of the non-conformance as defined in Section 10.


 


•                                          Supplier
will provide a Stop Ship Order release plan within [***] of Stop Ship Order
being communicated.  The release plan
will propose a process to fix a non-conformance and resumption shipments; and
attempt to resume shipment of Product within [***] of submission and acceptance
by Dot Hill.


 


7.                                      DOA Goals. 
Products shall use reasonable efforts to
achieve zero Dead on Arrival non-conformance Failures after their delivery to
Dot Hill.  If any customer of Dot Hill
experiences any a significant amount of DOA Products, attributable to Supplier
workmanship or components, Dot Hill may impose a Stop Ship Order or inspection
for failing criteria [***].


 


8.                                      Bill of
Material Conformance.  The Product
shipped to Dot Hill must conform, as defined elsewhere herein, to the Bill of
Material (“BOM”).  If the Product experiences a BOM
non-conformance, Dot Hill can impose a Stop Ship Order or inspection for
failing criteria [***].  Supplier shall
meet all manufacture specifications relating to storage, assembly, and handling
of raw material throughout its production process.


 


9.                                      Workmanship
Standards.  All Products must maintain compliance
with the Workmanship Standards documented in Attachment D to the Second
Award Letter, which may be updated from time to time as mutually agreed by
Supplier and Dot Hill.


 


10.                               FA and
RCA Turnaround Times.  Dot Hill
will assign a level of urgency to each failure analysis / root cause analysis
request as “routine” or “urgent”.  In a “routine”
request for FA Supplier shall use commercially reasonable efforts to provide
Failure Analysis for returned material within [***].  In a “routine” request for RCA Supplier shall
use commercially reasonable efforts to provide Root Cause Analysis for returned
material within [***].  In an “urgent”
request for FA Supplier shall use best efforts to provide failure Analysis for
returned material within [***].  In an “urgent”
request for RCA Supplier shall use best efforts to provide RCA for returned
material within [***].  A corrective
action request issued to Supplier must be fully addressed and returned to Dot Hill
by the due date indicated in such request.


 


During the period of the
warranty for a Product, Supplier[***] shall perform RCA for defects.  After such warranty period, Dot Hill may
request RCA of any discovered defects, and Supplier shall perform the requested
RCA on the following basis: (1) 


 


11





















 


provided the Product
satisfies the quality goal defined in the DPPM table above, Supplier may [***];
and (2) if the Product fails to satisfy the quality goal defined in the
DPPM table above, or if the Product has an Unexpected Failure, Supplier shall [***].


 


11.                               Quality
Metrics.  Supplier will provide Dot Hill
with quality metrics on a weekly basis about Supplier and its suppliers.  Metrics will include, but are not limited to:


 


1)                                      First pass line yields (includes in circuit
test (“ICT”), functional verification test (“FVT”), burn-in test (“BI”), etc) of
major assemblies as well as top level assembly;


2)                                      First pass goals for (1);


3)                                      Failure Pareto of these assemblies;


4)                                      Root cause for failures; and


5)                                      Corrective action for Failures.


 


Supplier shall notify Dot
Hill of any failures of Product that raise safety concerns, e.g., any incidence
of fire must be reported to Dot Hill.


 


RMA monthly metrics shall
also be provided and shall include, but are not limited to, (i) RMA
failure Pareto; (ii) RMA turn around time tracking; and (iii) Field
AF.


 


ORT testing metrics shall be
provided on a monthly basis and include, but are not limited to: (1) total
units tested that month; (2) test time per unit; (3) Failure totals; (4) Failure
symptoms; and (5) root cause failure analysis.


 


12.                               Component
Traceability.  Supplier
shall track serial numbers of key components and make this information
available, upon request from Dot Hill, to conduct any necessary field recall.
Serial number data of affected systems shall be provided by Supplier within [***]
after request.  Supplier shall have traceability, by serial
number, of completion of key processes documented in the sample process flow in
section 14.  For Printed Circuit
Board Assemblies (“PCBA’s”), this
will include visual Quality Assurance (“QA”), PCBA
cleaning/wash, ICT results, and FVT results. 
The Product shall have backward component traceability for mutually
agreed key components.


 


13.                               ORT.  Supplier will perform ORT testing of the Product on an ongoing basis and
provide data as required in the Quality Metrics section of this
Attachment.


 


14.                               Quality
Plan.  Supplier shall complete and
adhere to the following quality plan:


 


[***]


 


Sample QA
Process Flow:


[


]


 


12





















 


ATTACHMENT
C


 


MANUFACTURING
TEST SPECIFICATION


 


All shelves shall use [***].  These items shall be [***].  Such testing shall [***].


 


13





















 


ATTACHMENT
D


 


WORKMANSHIP
STANDARDS


 


1.0                               PURPOSE


 


The purpose of
this standard is to provide for the efficient manufacturing and support of all
chassis, enclosure and system level products.


 


This standard
defines the specifications used in assembly and inspection processes for
chassis and integrated systems assemblies. Furthermore it defines the
workmanship requirements and acceptability criteria that apply to the
production and prototyping of plastic, cast and sheet metal parts that are
submitted to Dot Hill.


 


This document
also defines the acceptability requirements for printed circuit board
assemblies as well as ESD handling and packaging requirements of those
assemblies.


 


2.0                               SCOPE


 


This work
instruction will be used by Dot Hill Systems suppliers, as well as Dot Hill
Systems personnel involved in engineering, first article inspection,
purchasing, assembly, and final audits at all Dot Hill Systems manufacturing
sites.


 


3.0                               RESPONSIBILITY


 


It shall be the
responsibility of Quality Assurance and Engineering in conjunction with Dot
Hill Systems personnel involved in Purchasing, Design and Assembly to adhere to
workmanship standards established herein.


 


[***]


 


4.0                               DEFINITIONS


 


4.1                                 [***]


 


[***]
Visible on a constant, daily basis.  This
includes, but is not limited to, the top or front of either a file server or
cabinet.


 


[***]
Visible occasionally, as the sides of a unit.


 


[***]
Visible during normal customer maintenance, such as the back and bottom of
unit.


 


[***]
Not normally visible.  This encompasses
all other surfaces, which are not Class 1, 2 or 3.


 


4.2                                 Specific Terms:               refer to Appendix.


 


5.0                               REFERENCE


 


5.1                                 IPC-A-610C


 


5.2                                 MIL-STD-1686C - Electrostatic Discharge
Control Program


 


5.3                                 MIL-HDBK-263B - Electrostatic Discharge
Control


 


14





















 


6.0                               INSTRUCTIONS


 


6.1                                 Cosmetic Inspection Criteria


 


(a)                                  Conditions
of Inspection: Inspection
must take place under the following viewing conditions in order to assure
uniform acceptance standards.  Lighting
must be uniform and non-directional. The luminous intensity of the light must
be between 80- and 150-foot candles.


 


(b)                                 Background: Inspection should be conducted on a white or light gray
background.


 


(c)                                  Line
of Sight:
The part surface is to be evaluated at a 45-degree angle to the line of sight.
The part is to be rotated 10 degrees in both directions about the axis.


 


(d)                                 Inspection: A part under inspection must not be manipulated to reflect
on a single light source in order to accentuate a possible flaw.  The part must be inspected without directly
reflecting a light source.  For example,
if a defect such as a scratch or shiny spot can only be viewed at an angle by
reflecting a light source, then it is not considered a defect, as it is not
readily detectable under normal conditions. 
A defect must be visible throughout the entire rotation about the axis.


 


(e)                                  Time
and Distance method: Parts shall
be inspected using the “Time and Distance” method describes below to further
assure uniform acceptance standards and to stimulate operating conditions.  The cosmetic reference standard defined in
this procedure is to be used to assist in making an “Accept/Reject” decision.


 


6.2                                 Grading system


 


Category:  Three categories are established to identify
the final location of the surface being inspected.  


 


	
  CATEGORY

  	
   

  	
  SURFACE

  
	
  I

  	
   

  	
  Plastic windows
  (see-through)

  
	
  II

  	
   

  	
  External

  
	
  III

  	
   

  	
  Internal

  



 


Class: Three
cosmetic classes are established to identify the frequency a surface will be
viewed the end user. 


 


	
  CLASS

  	
   

  	
  SURFACE

  
	
  A

  	
   

  	
  Usually visible

  
	
  B

  	
   

  	
  Seldom visible

  
	
  C

  	
   

  	
  Not visible (except during
  maintenance, installation, etc.)

  



 


Category and Class: – Each combination of Category and Class letter defines an
inspection time and viewing distance. (This means that a part is to be looked
at for X amount of time and at Y distance.)


 


The table below specifies the inspection time and viewing distance to
be used for each cosmetic graded area as specified on the Schulze drawing
and/or Inspection Instructions.


 


Judgment: A
defect that occurs in the same location on a group of identical parts and
becomes more noticeable after repeated viewing. 
If the defect was judged acceptable because it was not detected within
the time and conditions at the beginning of the inspection, it shall be
acceptable at the end.


 


15





















 


[***]


 


7.0                               SURFACE FINISH


 


7.1                                 Painted Surface: Refer to the reference
table below for acceptance criteria for painted plastic and metal surfaces.


 


TABLE: Acceptability
Criteria for Painted Surfaces


 


7.1.1                        Table:[


 


[***]


 


7.1.2                        Nomenclature


 


7.1.2.1               Pad
printed characters shall be completely legible and shall not exhibit fuzziness
from the inspection distance.  Bar code
label shall be legible by scanner.


 


7.1.2.2               Labels
and logos must be free of tears, uneven trim and peeling.  Edges of the labels and logos shall be
installed parallel to the edges of the surface on which they are applied.  If labels or logos are installed in a depression,
the label or logo should be visibly parallel to the edges of the depression.


 


7.1.3                        Comments:


 


7.1.3.1               Cracks
and / or rust are not acceptable under any circumstances.


 


7.1.3.2               All
surfaces must be free of dirt, grime, grease, oil, and other contaminates.  Also, all parts must be free of entrapped
solutions around hardware or in gaps, openings, or blind areas.


 


7.1.3.2
Color shall be visibly consistent over all Class 1 and 2 surfaces when
matched against an approved color sample. 
Color on all surfaces shall not deviate more than +/-0.5 delta E from
the Master Color Chip when measured using a colorimeter or similar device.  Purchasing Agent or Supplier Quality Engineer
of Commodity obtains color chips.


 


7.1.3.3
No visible paint touch-up will be allowed on Class 1 surfaces.  The maximum allowable touch-up for Class 2
surfaces will be two (2) areas 0.25” square each.  Class


 


3
surface touch-ups will be allowed for four (4) areas of 0.50” square
each.   Touch-ups are allowed on any Class 4
surface if they do not affect Form, Fit, or Function. In all instances, the
touch-up areas will be consistent with the original texture on the remaining
surface.


 


7.2                                 Plated
Surfaces


 


7.2.1                        Refer
to Table II for acceptance criteria for plated surfaces.


 


[***]


 


7.2.2                        Comments


 


In
all specifications in Table II, excluding Plating thickness requirements, the
defects listed as staining, discoloration, roughness, dents, scratches and
pinholes may be acceptable if the finished surface meets the
specification.  In all instances, a Dot
Hill Systems representative must authorize these conditions before the supplier
moves product to the next process.


 


16





















 


Exposed
base / pre-plate material (i.e., metal or plastic) beneath a plated surface is
not acceptable. Improper plating adhesion exposing bare plastic or metal is not
acceptable.  Blisters are unacceptable on
any surface classification.  [***]


 


7.3                                 Molded Plastic Surface


 


7.3.1                        Refer to Table III for acceptance
criteria for molded plastic surfaces.


 


General
Plastics Workmanship Requirements:


 


Material:  Part material(s) must conform to the
specifications on the engineering drawings. 
No deviation from the specifications is allowed without an approved
Engineering Change Order (ECO) or a Temporary Process Deviation (TPD).


 


[***]


 


Processing
parameters shall be compatible to specified materials, so that the processes
employed do not cause excessive mold stresses or stress cracking on finished
product.


 


7.3.2                        Dimensional Conformity:


 


Part dimensions
must conform to the specified tolerances in conformance with the dimensional
design specifications.  No deviation from
the specifications is allowed without an Engineering Change Order (ECO) or a
Temporary Process Deviation (“TPD”). 
Tolerances are given based on a dimension datum.  Examples of datum are shown in figure 1.  Refer to table below for Tolerance.


 


[***]


 


No
cracking, flash, or damages from insertion process are allowed in the boss
area.


 


7.4                                 Cosmetic Inspection Criteria:


 


Conditions
of Inspection: Inspection
must take place under the following viewing conditions in order to assure
uniform acceptance standards.


 


Lighting
must be uniform and non-directional. The luminous intensity of the light must
be between 80- and 150-foot candles.


 


Background: Inspection should be conducted on a white or light gray
background.


 


Line
of Sight:
The part surface is to be evaluated at a 45-degree angle to the line of sight.
The part is to be rotated 10 degrees in both directions about the axis.


 


Inspection: A part under inspection must not be manipulated to reflect
on a single light source in order to accentuate a possible flaw.  The part must be inspected without directly
reflecting a light source.  For example,
if a defect such as a scratch or shiny spot can only be viewed at an angle by
reflecting a light source, then it is not considered a defect, as it is not
readily detectable under normal conditions. 
A defect must be visible throughout the entire rotation about the axis.


 


Time
and Distance method: Parts shall
be inspected using the “Time and Distance” method describes below to further
assure uniform acceptance standards and to stimulate operating conditions.  The cosmetic reference standard defined in
this procedure is to be used to assist in making an “Accept/Reject” decision.


 


17





















 


7.5                                 Grading system


 


Category:  Three categories are established to identify
the final location of the surface being inspected.


 


	
  CATEGORY

  	
   

  	
  SURFACE

  
	
  I

  	
   

  	
  Plastic windows (see-through)

  
	
  II

  	
   

  	
  External

  
	
  III

  	
   

  	
  Internal

  



 


Class: Three
cosmetic classes are established to identify frequency a surface will be viewed
the end user. 


 


	
  CLASS

  	
   

  	
  SURFACE

  
	
  A

  	
   

  	
  Usually visible

  
	
  B

  	
   

  	
  Seldom visible

  
	
  C

  	
   

  	
  Not visible (except during maintenance,
  installation, etc.)

  



 


Category
and Class: – Each combination of Category and Class letter
defines an inspection time and viewing distance. (This means that a part is to
be looked at for X amount of time and at Y distance.). The table below (time
and distance) specifies the inspection time and viewing distance to be used for
each cosmetic graded area as specified on the Schulze drawing and/or Inspection
Instructions.


 


Judgment:
A defect that occurs in the same location on a group of identical parts and
becomes more noticeable after repeated viewing. 
If the defect was judged acceptable because it was not detected within
the time and conditions at the beginning of the inspection, it shall be
acceptable at the end.


 


[***]


 


8.0                               SHEET-METAL WORKMANSHIP
REQUIREMENTS


 


8.1                                 General Requirements


 


Material:  Part material(s) must conform to
specifications on the drawing.  No
deviation from the specifications is allowed without an Engineering Change
Notice (ECN) or a Temporary Process Deviation (TPD).


 


Process:  All materials and processing shall be
compatible, so that the combinations employed do not cause corrosion or stress
cracking.


 


Dimensional
Conformity: Part dimensions must conform to specified tolerances
in conformance with the dimensional design specifications. No deviation from
the specifications is allowed without an Engineering Change Notice (ECN) or a
Temporary Process Deviation (TPD). 
Tolerances are given based on dimensions from a datum.  Examples of datum are shown in Figure 1.  Refer to the table below for Tolerance
Guidelines.


 


18





















 


Tolerance Guidelines:


 


	
  [***]

  	
   

  	
  [***]

  



 


Figure 1: Dimension Datum


 





 


	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  



 


Flatness:  Variation from
flatness will be measured by laying the parts on a flat inspection table with
the convex side up, and measuring the maximum rise.  Refer to Figure 2.  Clamps and/or weight will not be used during
measurements.


 





 


Refer
to table below for Maximum Allowable Rise (MAR) values.  Parts measuring in excess of the Maximum
Allowable Rise are unacceptable.


 


[***]


 


Straightness : see table for tolerances.


 


Figure: Straightness definition


 





 


19





















 


[***]


 


General Angular
Tolerances: Applied to shear edges and bent angles


 


Figure 4: Shear Edge
Angles


 





 


Shear
Edge Angle Tolerances: Reference
Figure (See Angular Tolerances in table).


 


Bent Angle Tolerances: Reference Figure (See Angular Tolerances in
table).


 


[***]


 


20





















 


Bend
Radii: Reference Figure 6.  (See Bend Radii Table)


 


Bend Radii:


	
   

  	
  Unspecified
  Bend

  	
  Sharp
  Corner

  



 





 


	
  [***]

  	
  [***]

  	
  [***]

  	
  [***]

  	
  [***]

  



]


 


9.0                               MECHANICAL ASSEMBLY


 


Fit:


 


Alignment
– Unless otherwise specified on the engineering or assembly drawings, gaps and
overlaps shall be governed by the following criteria:


 


[***]


 


Functionality


 


Moving
Parts – Operational buttons, and switches,
ejectors ... etc., shall move in their intended directions freely without
sticking, squeaking, or hanging up.  Keys
shall not be able to dislodge from their intended positions during the course
of normal operation.


 


Doors
– All “swinging” doors shall be able to open and close freely without sticking,
squeaking, or hanging up.  All
spring-loaded doors shall return to the closed position without force.  When doors are designed to snap shut, they
shall not open unintentionally.


 


Hinges
– Hinges shall not squeak during normal operation.  Hinges should be able to be operated using
uniform force throughout the intended range of motion.


 


Latches
– Latches shall move freely in their intended directions without sticking or
hanging up.  All latches must adequately
serve their functional purposes during the course of normal operation.  Latches shall not be able to be dislodged
from their intended positions during the course of normal operation.


 


Inserts
– Inserts must slide in and out of their respective slots without excessive
force.  They shall move freely in their
intended directions without sticking or hanging up. Once in the assembly, the
insert shall not rock, wiggle, or move in any direction other than that of its
intended use.


 


Snaps
– Where snaps are used to mate parts, the snaps shall function well enough so
that the parameters set forth in 8.1.1. (Alignment) are not violated.  Broken or bent snaps that in any way may
affect the alignment of the parts are unacceptable.


 


21





















 


Hardware


 


Torque
- Refer to appropriate assembly drawings for specific torque values.  Nut-bolt assemblies, screw, etc. shall be
firmly mounted so that there is no movement between parts.


 


Assembly


 


Screws
– All screws shall meet or exceed their minimum torque requirements.  The bottom surface of the screw head shall be
in contact with the material to which it is mounted.  The top surface of any countersunk flat head
screw shall be flush or below the material to which it is mounted.  The angle that the screw enters the
supporting material shall be the same as the angle of the countersink in the
supporting material.


 


The
top surface of a flat head screw shall be parallel to the surface of the
supporting material.  Similarly, the
bottom surface of a round head screw shall be parallel to the surface of the
supporting material.  No part of a
slotted head screw (Phillips, straight) should show any sight of strip or tear
due to excessive torque or inappropriate driver used.


 


Rivets
– Mated parts must be flush at the rivet. 
The bottom surface of the rivet head must be flush and parallel to the
supporting material.  Cracks extending
through to the edge are unacceptable. 
One crack per quadrant is acceptable. 
Rivets must be seated firmly and be unable to spin.


 


Countersunk
holes - The angle of the countersunk edges
must correspond to the engineering drawing. 
Countersunk holes must be free of burrs, flash, or other material
residue.


 


Washers
- Cracks, chips, or other damages caused by washers to an exterior surface are
unacceptable.


 


Rubber
inserts - Where specified on the assembly
drawings, rubber stoppers, or “feet” may be used for cushioning or cosmetic
purposes.  The rubber inserts shall be
firmly attached to the supporting surface in such a way that they are unable to
be dislodged during normal operation of the assembly.  When rubber inserts are used as “feet” or for
cushioning purposes, they must provide a stable, even platform on which the
assembly or sub-assembly rests squarely. 
Rubber inserts shall be positioned as marked on the assembly drawings.


 


Cable
connectors - All cable
connections will be fully engaged and not skewed.


 


All
finished products will be reasonable clean, free of dust and have all obvious
fingerprints or smudges removed prior to shipment.


 


9.0                                 Printed Circuit Board Requirements


 


9.1                                 Acceptability


 


9.1.1                        All Printed circuit board assemblies shall conform to IPC-A-610C.


 


9.2                                 ESD handling and packaging


 


9.2.1                        All Printed circuit board assemblies and ESD
sensitive devices must be handled and packaged per MIL-STD-1686C and MIL-HDBK-263B.


 


10.0                        LOGS AND RECORDS


 


A
soft copy master of this document shall be retained in the document control
department of the applicable plants.  The
document control department shall be responsible for maintaining appropriate 


 


22





















 


filing
systems that shall enable control of the master.  In addition, document control shall be
responsible to assure that all individuals listed on the distribution of this
document receive the changes within a reasonable period from when the change
was issued.


 


11.0                        APPENDIX A


 


Abrasion:
A scuffed or rubbed surface imperfection characterized by its large width and
length relative to its depth.


 


Arcing
Mark: Marks in the part caused by the part
coming into contact with the plating.


 


Brush
Finish: Electro-Galvanized material brushed to
provide a consistent finish.


 


Bleeding:
Evidence of one color visually altering another where they overlap.


 


Blister:
Surface deformation caused.


 


Blurring:
Silkscreen is fuzzy and width of character is noticeably larger.


 


Burn:
Evidence of thermal decomposition, usually with discoloration.


 


Burrs:
Rough pieces of debris attached to part.


 


Cracks:
Separation through the entire cross-section, usually at a folded corner (tear).


 


Dent:
Unintended depression in a surface.


 


Debris:
Any unintended foreign substance in the coating or on the surface of the part.


 


Discoloration:
Any change from original color or unintended inconsistent part color (including
alodine stain, plating bleed-out, dirt, burn, etc.)


 


Blush:
Discoloration or change in gloss, usually at gate areas or where wall thickness
changes.


 


Bubbles:
Transparent parts or void pockets (may appear as a blister or bulge on colored
parts).


 


Burns:
Brown marks spots or streaks (usually associated with poor venting of gasses
during molding).


 


Burr:
Ragged or usually sharp protrusions on edges or holes (defined as a percentage
of material thickness and protrusion height).


 


Cold
Slug: First material to enter the mold during
injection. The solid or semi-solid material leaves a border with the adjacent
material and weakens the bond between the two materials.


 


Contamination:  Discoloration from foreign material or
foreign material embedded in the surface.


 


Cracking:
Splitting or fissures causing separation of the material.


 


Crazing:
Tiny cracks due to stress exerted on the part


 


De-lamination:
Peeling of the layers of plastic.


 


Dent:
A depression or hollow made by impact or pressure.


 


23





















 


Discoloration:
Inconsistent color or any deviation from the color standard.


 


Drag
Marks: Scratches from the plastic scraping
against the mold when ejected.


 


[***]


 


Electro-galvanized:
E-Galve, Galve.  A pre-coated zinc on
cold-rolled steel base materials appearing as a gray coating


 


Engineering
drawing: A control specification document.  All dimensions, materials, processes, and
finishes are specified in the Engineering drawing


 


Finishes:
Those properties having to do with appearance.


 


Flash:
In rubber or plastics molding, which portion of the charge that overflows from
the mold cavity at the joint line.


 


Flatness:
A surface is considered flat when all its elements are in one plane.


 


Flaw:
Very minor non-measurable entity, less noticeable than a fine scratch


 


Fracturing:
Separation of metal on the outside perimeter surface of the fold (peeling).


 


Flow
Marks: Wavy or streaked appearance of a
surface.


 


Flash:
Excessive plastic along the parting line or mating surface of the mold.


 


Gas
Marks: Burn marks or dark discolored streaks
caused by incomplete venting of the gasses trapped in the mold.


 


Gouge:
Surface imperfection due to abrasion, nicking or damage.


 


Grease:
Machine lubrication on the part.


 


Haze:
Cloudiness of a transparent part.


 


Marbling:
Colored streaks due to incomplete mixing of color


 


Nicks:
Surface imperfection due to damage.


 


Non-adhesion:
Lack of proper sticking of the coating to the surface (chipping, orange peel).


 


Non-uniform
coverage: Areas that have an insufficient or
excessive coating


 


Noticeable:
May be seen from various positions.


 


Obvious:
Can be seen easily.


 


Orange
peel: Rough surface of coating; looks like an
orange peel.


 


Plating
bleed-out: Marking on sheet metal where two
surfaces in close contact have retained moisture from the plating process that
causes streaking.


 


Pin
Push: Distortion or protrusion caused by
ejector pin pushing into part more than normal.


 


24





















 


Pitting:
Discontinuities in the material surface that result from the removal of roll
inclusions and/or oxidation.  The
resultant surface, although discontinuous, is either removed or neutralized.


 


Porosity:
Holes or voids in the material.


 


Protrusion:
Raised area on a surface, such as a blister or bump.


 


Pulling:
Part distortion caused from plastic catching in the mold.


 


Scratch:
A mark in the surface that is characterized by its long length relative to its
depth and width.


 


Shine:
Glossy or shiny areas on textured surfaces (usually caused by worn or damaged
areas in the mold).


 


Shorts:          Missing
material due to incomplete filling of the mold.


 


Sink:
Surface depression caused by non-uniform material solidification and shrinkage.


 


Slug:
A small piece of material produced during stamping when piercing a hole.


 


Slug
Mark: Dents caused when slugs are trapped
between the mating die surfaces and the sheet metal.


 


Specks:
Small discolored spots or matter embedded in the material.


 


Splay:
Off-colored streaking (often silver-like) caused by moisture in the material or
thermal degradation of the resin during processing.


 


Straightness: A surface is
considered straight when all its elements are straight lines.


 


Surface
contamination: Loose
foreign particles (dirt) on the surface or particles imbedded into the surface


 


Surface
texture: Variation in
the surface, including roughness, waviness, lay, and flaws.


 


Water
Spots: Discoloration on sheet metal caused by
impurities in the wash.


 


Weld-lines:
Appears as a line where two or more fronts of molten plastic converge (also
called knit-lines or flow-lines).


 


White
Rush: Powdery substance resulting from zinc
coating oxidation.


 


Witness
Lines: A visible line formed by the junction
of two pieces of steel in the mold, an insert, for example, with the main mold
body.  The line can be seen as a slight
raised thin plastic, or it can be accompanied by a change in surface
co-planarity, if the insert is not properly installed.


 


25





















 


ATTACHMENT E


 


REPLENISHMENT AND LOGISTICS REQUIREMENTS


 


1.                                      KANBAN REPLENISHMENT PROCESS


 


1.1                                 The “Kanban Replenishment Process” is defined as a [***] issued
by Dot Hill to Supplier to enable Supplier to [***], as set forth below.


 


1.2                                 [***].


 


1.3                                 [***].


 


1.4                                 [***].


 


1.5                                 [***].


 


1.6                                 Dot Hill may require [***] as
needed. If [***] are required, Dot
Hill shall provide notice to Supplier by [***].


 


1.7                                 This process will be
managed within Supplier’s manufacturing location(s) and Dot Hill will issue [***]. A
representative of Supplier will monitor the process to manage and identify
the quantity of [***] to satisfy the
requirements of the Kanban Replenishment Process. The status of the [***] will be updated and communicated by Supplier in
a [***].


 


1.8                                 The average expected
Kanban [***], however, [***].


 


1.9                                 For [***]
Kanban needs, Dot Hill requires Supplier to have a [***].  The
Supplier [***].


 


1.10                           Supplier’s [***].


 


1.11                           Dot Hill and Supplier will mutually agree on all [***].
All Products must be [***] unless
otherwise specified by Dot Hill, and must be [***]. (See Attachment 1 below). Supplier is
responsible for testing and qualifying appropriate [***].


 


1.12                           In the event that Supplier is unable to support the Kanban
Replenishment Process [***], Supplier shall notify Dot Hill before the [***].


 


1.13                           Dot Hill shall provide notice to Supplier of any changes or
cancellations to blanket purchase orders that Dot Hill desires. Supplier shall
notify Dot Hill of acceptance or rejection of change orders within [***] after
receipt of Dot Hill’s notification of change or change order request.


 


1.14                           Supplier shall immediately notify Dot Hill in writing of any
anticipated [***] as requested by Dot Hill, stating the reason [***].  If Supplier’s [***], then Supplier shall,
upon Dot Hill’s request, [***].


 


1.15                           If the consumption rate for the current month is greater than that
described under the [***], Supplier shall use commercially reasonable efforts
to support the greater demand.


 


2.                                       LOGISTICS.  The logistics requirements for the Product are as
follows:


 


26





















 


2.1                                 Supplier will [***] following the Kanban
Replenishment Process described in Section 1.7 from the Supplier’s [***].  The [***] will be
managed and owned by Supplier.


 


2.2                                 Supplier will own the Products, including
title thereto, [***], which will occur at the time such Products [***].


 


2.3                                 All [***]
costs are included in the total price of each of the Products, as documented in
Attachment A.


 


2.4                                 Dot Hill requires an
EIA (i.e., Electronics Industry Association) label on all inbound material
delivered to Dot Hill. All packaging and labeling of Products shall comply with
the [***]. (See provisions in Attachment 1, which is attached below)


 


3.                                      REVERSE
LOGISTICS


 


3.1                                 For rejected units of
Product that does not conform to the warranty in the Agreement, Supplier will [***]
upon Supplier’s authorization for the return of such units of Product. Supplier’s
response to return of authorization request shall be made within [***].


 


3.2                                 Each Product to be
returned will be [***].  Supplier
may change, modify or update the address of the [***], at any time and from time to time, upon written
notice to Dot Hill, provided the [***] are met as defined elsewhere in this Attachment.


 


3.3                                 Supplier will perform
its warranty obligations under the Agreement for Product that does not conform
to warranty.  Upon completion of any
necessary repair activities, Supplier will return back the Product, freight
prepaid, to Dot Hill.  Supplier will
re-invoice Dot Hill for the full amount of Product after it is repaired and
returned back to Dot Hill.


 


ATTACHMENT 1


 


[***]


 


27





















 


ATTACHMENT F


 


GLOBAL SERVICE REQUIREMENTS


 


1.                           Customer and Manufacturing FRUs


 


•                  Minimum refurbished parts warranty shall be [***]
or balance of warranty period, whichever is greater from Dot Hill ship date.


 


•                  FRUs repair, RCA, and RMA support beyond the
applicable warranty period shall be [***].


 


•                  Supplier shall provide replacements to Dot
Hill for all RMA parts properly returned within [***] after receiving the
returned RMA parts.


 


2.                           RMA Requirements


 


•                  Dot Hill Systems reserves
the right to request credit or replacement of Product for any and all warranty
RMA returns.


 


•                  Supplier shall replace rather than refurbish
any in warranty Product that has been properly returned for the [***], and
retire such RMA Product permanently.


 


•                  Supplier shall [***] for any reasonable
logistics and test charges incurred for any refurbished units rejected (under
the mutually agreed upon acceptance process) that exceed the Threshold,
provided that Dot Hill has complied with the mutually-agreed-upon testing
process.  “Threshold” means [***].


 


•                  Supplier shall be responsible for the costs
of shipping warranty RMA replacements to Dot Hill. Dot Hill shall be responsible
for the costs of shipping warranty RMA returns to Supplier.


 


[***]


 


3.                          Dead on Arrival


 


•                  The parties shall jointly define Dead on
Arrival (“DOA”) policy and obligation (including
DOA replacement lead-time) between Supplier and Dot Hill.


 


•                  The parties shall jointly define DOA Process
workflow between Supplier and Dot Hill.


 


•                  Supplier shall accept RMAs associated with
any DOA Product for [***] from shipment of Product from Supplier, and replace
DOA Product [***].


 


4.                          End of Life Support


 


•                  Dot Hill End of Life (“Dot Hill EOL”)
begins the day Dot Hill no longer makes the Product available to its customers.


 


•                  After [***] following FCS of the Product, the
Parties will initiate good faith negotiations regarding Dot Hill’s provisions
for post-Dot Hill EOL support and replacement Product. Post-Dot Hill EOL
support beyond the applicable warranty period, such as Product repair and RCA
support, will be mutually agreed upon by the parties, and based on the
then-current time-and-material costs for a period of at least [***] after the
Dot Hill EOL.


 


28





















 


•                  For a period of [***] following shipment of
last time buy of EOL product, Supplier will provide DOA support.  Supplier will establish dedicated safety
stock of new product to cover projected DOA requirements.


 


•                  Dot Hill may purchase any residual safety
stock at [***] following shipment of last time buy of EOL product.


 


•                  Supplier will fill DOA RMAs with new
replacement product as long as safety stock remains available.


 


•                  If safety stock has been exhausted, then
Supplier will accept DOAs on a return to factory basis for rework and return to
Dot Hill in like new condition.


 


•                  In the event that no safety stock remains
available, and a DOA return is deemed non-recoverable, Dot Hill may [***].


 


•                  After Dot Hill EOL Supplier shall continue to
provide replacement of defective parts [***] for the [***] following Dot Hill
EOL.


 


6.                          Product Warranty.  If Dot Hill requests warranty coverage beyond the [***] warranty
period, Supplier may charge Dot Hill for such extended coverage based upon the
then-current time and materials which are actually incurred by Supplier.


 


7.                      Product Quality


 


•                  The Parties shall jointly define RCA
obligation and response time.


 


•                  The Parties shall jointly define packaging
and shipping requirements for FRUs.


 


•                  The Parties shall jointly define acceptable
manufacturing process quality metrics and enforcement guidelines.


 


•                  The Parties shall jointly define Workmanship
Standards for refurbished material.


 


8.                          Costs and Upgrades.  Supplier will absorb all Supplier costs of, and Dot Hill costs of
upgrades to, Product in the event that Supplier is found to be the cause of a
manufacturing defect which causes the product not to meet the Specifications.


 


29





















 


ATTACHMENT G


 


TURNKEY COMPONENTS AND EOQ


 


30





















 


ATTACHMENT H


 


PRODUCT
SPECIFICATIONS


 


1. Description


Shasta is a disk drive storage shelf. 
Components of the shelf include:


 


[***]


 


2. Specifications


 


The complete specification for the Shasta product is formed by the sum
total of a series of specifications. 
These specifications are comprised of the following documents.  Listed are the current revisions of the
specifications as of the time of execution of the Second Award Letter to this
Agreement. These specifications are applicable to the design of the
Product.  Supplier’s obligations to
comply with these specifications are limited solely to any requirements
described in them which are applicable to the manufacturing process related to
the Product.  These specifications may be
modified from time to time by the parties in writing by mutual agreement.


 


	
  Title

  	
   

  	
  Date

  	
   

  	
  Document
  (Dot Hill p/n)

  
	
  System Hardware
  Specification

  	
   

  	
  7/8/2005

  	
   

  	
  83-00003707
  Rev. 26

  
	
  IOM Hardware Specification

  	
   

  	
  6/7/2005

  	
   

  	
  83-00003704
  Rev. 25

  
	
  IOM External Firmware
  Specification

  	
   

  	
  6/7/2005

  	
   

  	
  83-00003710
  Rev. 25

  
	
  Midplane

  	
   

  	
  6/15/2005

  	
   

  	
  83-00003708
  Rev. 25

  
	
  SATA Hardware Dongle

  	
   

  	
  6/5/2005

  	
   

  	
  83-00003705
  Rev. 25

  
	
  SAS Hardware Dongle

  	
   

  	
  6/5/2005

  	
   

  	
  83-00003706
  Rev. 25

  
	
  750W Power Supply Core

  	
   

  	
  5/5/2005

  	
   

  	
  83-00003719
  Rev. 26

  
	
  4U 750W Power Supply FRU

  	
   

  	
  6/1/2005

  	
   

  	
  83-00003658
  Rev. 27

  
	
  4U 750W Power Supply FW

  	
   

  	
  6/7/2005

  	
   

  	
  83-00003775
  Rev. 25

  
	
  Chassis Mechanical
  Specification

  	
   

  	
  4/2/2005

  	
   

  	
  83-00003718
  Rev. 7

  
	
  Shasta External Firmware
  Specification

  	
   

  	
  6/7/2005

  	
   

  	
  83-00003775
  Rev. 25

  
	
  Shasta Internal Firmware
  Specification

  	
   

  	
  4/2/2005

  	
   

  	
  83-00003719 Rev. 7

  



 


31