Document:

exv10w41

 

Exhibit 10.41

***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.

Agreement No. AR-____________

PRODUCT SUPPLEMENT/AWARD LETTER (SCSI U320)

This
Product Supplement/Award Letter (this “Award Letter”) is made on and as of the 10th day of
October, 2005 (“Effective Date”) by and between Sun
Microsystems, Inc. (“Sun”) and Dot Hill
Systems Corporation (“Supplier”), pursuant to the Product Purchase Agreement, dated May 24, 2002,
Agreement No. AR-63645, made between the parties (the
“Agreement”). Capitalized terms not
defined in this Award Letter have the meanings set forth in the Agreement. The parties agree as
follows:

	1	 	SCOPE: Neither this Award Letter nor the Agreement constitutes a commitment by Sun to
purchase Products unless Sun, in its sole discretion, issues one or more P.O.’s in the manner
described in the Agreement. The terms and conditions of the Agreement are incorporated herein
by reference as if set forth in full.
	 
	2	 	PRODUCT DESCRIPTIONS AND PRICING/[***]: Product descriptions and pricing are set forth in
Exhibit A to this Award Letter.
	 
	3	 	MINIMUM PURCHASE RIGHTS PERIOD: Pursuant to the terms of Section 2.1 of the Agreement, the
Minimum Purchase Rights Period (as defined therein) is [***].
	 
	4	 	UPSIDE SUPPORT: Sun may request all or any part of Upside quantity at anytime during the
applicable quarter [***]. Supplier shall sell, manufacture and ship such Upside quantities to
Sun on a “first-in, first-out” basis within [***] after Sun’s written request.
	 
	 	 	[***]
	 
	 	 	[***]
	 
	 	 	Supplier shall [***] to accommodate any request from Sun to accelerate delivery of Upside
quantities of Products within the timeframes indicated above. With respect to any request
for quantities in excess of Upside Support described above, the parties shall negotiate in
good faith acceptable delivery dates.
	 
	5	 	SUN-UNIQUE COMPONENTS: The initial List of Sun-unique Components is set forth as Exhibit B.
	 
	6	 	STATEMENT OF WORK: The Statement of Work is set forth as Exhibit C.
	 
	7	 	SPECIFICATION: The Product Specification is set forth as Exhibit D.
	 
	8	 	SUN CONTRACTORS: The list of Sun Contractors, if any, is in Exhibit E.
	 
	9	 	EXTERNAL MANUFACTURERS: The list of External Manufacturers, if any, is in Exhibit F.
	 
	10	 	BUSINESS CONTINUITY PLAN: Supplier’s business continuity plan for the Product is in Exhibit G.
	 
	11	 	DEMAND REPLENISHMENT and/or CFIT Programs: The Demand Replenishment and or CFIT Programs
for the Product is in Exhibit H.
	 
	12	 	SEEDSTOCK: For the 3320 Product, Supplier will provide Sun with [***] units of
initial seed stock of FRUs for such Products for use by Sun’s service organization at [***]
each. Additional units required as seed stock to be used solely by Sun [***].

					
	 	 	 	 	 
	SMI/MinnowProductAwardLetter
	 	1.
	 	October 10, 2005

***Confidential Treatment Requested

 

 

	13	 	CERTIFICATION REGARDING ROHS COMPLIANCE: For the parts listed on Exhibit J to this
Award Letter that are included in Products covered under this Award Letter to be delivered by
Dot Hill to Sun for intended delivery by Sun to third parties for use within the European
Community, Dot Hill certifies to its knowledge as of the execution by Dot Hill and Sun of this
Award Letter that such parts will, at Sun’s request, be designed by Dot Hill to be compliant
to with European Union Directive 2002/95/EC using the “lead-in-solder” exemption as stated in
Article 4(1) paragraph 7 therein. Sun’s sole and exclusive remedy for a breach of this
provision shall be for Dot Hill to repair or replace, at Dot Hill’s election, the affected
materials in the non-compliant Products or the non-compliant Products themselves, subject to
delivery by Sun to Dot Hill of such non-compliant Products during their applicable warranty
period using the agreed RMA process established in the Agreement for such non-compliant
Products.
	 
	14	 	LEADTIME AND PRICING FOR [***] CONFIGURATIONS: Dot Hill will supply to Sun under this Award
Letter both [***] configured 3320 systems. [***] configured 3320 systems shall have same
leadtimes and costs as their [***] configured 3320 counterparts that are manufactured at the
same manufacturing location and delivered by Dot Hill to the same Sun delivery location.
	 
	15	 	AWARD LETTER COMPONENTS: The parties agree to be bound by these terms and conditions which
consists of the Award Letter and the Exhibits indicated below:

	 	 	 	 	 
	 

	 	x
	 	Exhibit A (Product Descriptions and Pricing)
	 

	 	x
	 	Exhibit B (Sun-unique Components)
	 

	 	                    
	 	Exhibit C (Statement of Work)
	 

	 	x
	 	Exhibit D (Specification)
	 

	 	x
	 	Exhibit E (Sun Contractors)
	 

	 	x
	 	Exhibit F (External Manufacturers)
	 

	 	x
	 	Exhibit G (Business Continuity Plan)
	 

	 	x
	 	Exhibit H (Demand Replenishment Program and/or CFIT Program)
	 

	 	                    
	 	Exhibit I (Licensed Software)
	 

	 	x
	 	Exhibit J (List of RoHS Compliant Parts)

					
	 	 	 	 	 
	SMI/MinnowProductAwardLetter
	 	2.
	 	October 10, 2005

***Confidential Treatment Requested

 

 

The undersigned duly authorized representatives of the parties have executed and delivered this
Award Letter as of the Effective Date.

	 	 	 	 	 	 	 	 	 
	Sun Microsystems, Inc.	 	 	 	Dot Hill Systems Corporation
	 
	 	 	 	 	 	 	 	 
	By

	 	/s/ Tom Calderwood
	 	 	 	By
	 	/s/ Preston Romm
	 

	 	 
	 	 	 	 	 	 
	 
	Name

	 	Tom Calderwood
	 	 	 	Name
	 	Preston Romm
	 
	Title

	 	Director, DMG Supplier Mgmt
	 	 	 	Title
	 	CFO
	 
	Date

	 	10/13/05
	 	 	 	Date
	 	10/12/05
	 
	 	 	 	 	 	 	 	 
	Sun Microsystems International B.V.	 	 	 	Dot Hill Systems BV
	 
	 	 	 	 	 	 	 	 
	By

	 	[Illegible]
	 	 	 	By
	 	/s/ Preston Romm
	 

	 	 
	 	 	 	 	 	 
	 
	Name

	 	[Illegible]
	 	 	 	Name
	 	Preston Romm
	 
	Title

	 	Director
	 	 	 	Title
	 	CFO
	 
	Date

	 	10/20/05
	 	 	 	Date
	 	10/12/05

					
	 	 	 	 	 
	SMI/MinnowProductAwardLetter
	 	3.
	 	October 10, 2005

 

 

EXHIBIT A

[***]

***Confidential Treatment Requested

 1

 

 

EXHIBIT B

2U LVD Unique Inventory

[***]

***Confidential Treatment Requested

 1

 

 

950-4685-01 Rev. 50—Series 3320—2U

8/12/2005 3:00 PM

Engineering
Specification

for the

Sun StorEdgeTM 3320 SCSI Array

Specification provided under non-disclosure

by Dot Hill Systems Corporation to:

Sun Microsystems Inc.

910 San Antonio Road

Palo Alto, CA 94303 USA

(650) 960-1330

This document is the property of Dot Hill Systems Corporation and contains

information which is confidential and proprietary to Dot Hill Systems Corporation.

No part of this document may be copied, reproduced or disclosed to third parties

without the prior written consent of Dot Hill Systems Corporation.

					
	 	 	 	 	 
	Dot Hill Systems Corp.
	 	- 1 -
	 	Proprietary: Provided Under Non-Disclosure

 

 

[***]

***Confidential Treatment Requested

 

 

Exhibit E

SUN CONTRACTORS

[***]

*** Confidential Treatment Requested

 

 

External Manufacturer Sites:

[***]

*** Confidential Treatment Requested

 

 

Technical

Contingency

Planning

[***]

[***]

*** Confidential Treatment Requested

 

 

Document Revision History

Document Revision History

[***]

*** Confidential Treatment Requested

© 2004 dot Hill Proprietary and Confidential

			
	 

Document Part Number: 83-00003447 Rev. A2
	 
 	 
ii

 

 

Table of Contents

Table of Contents

[***]

*** Confidential Treatment Requested

© 2004 dot Hill Proprietary and Confidential

			
	 

Document Part Number: 83-00003447 Rev. A2
	 	iii

 

 

Introduction

1.0 Introduction

[***]

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© 2004 dot Hill Proprietary and Confidential

			
	 

Document Part Number: 83-00003447 Rev. 2
	 	Page 1 of 10

 

 

Servers

[***]

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© 2004 dot Hill Proprietary and Confidential

			
	 

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Servers

[***]

*** Confidential Treatment Requested

© 2004 dot Hill Proprietary and Confidential

			
	 

Document Part Number: 83-00003447 Rev. 2
	 	Page 3 of 10

 

 

Servers

[***]

*** Confidential Treatment Requested

© 2004 dot Hill Proprietary and Confidential

			
	 

Document Part Number: 83-00003447 Rev. 2
	 	Page 4 of 10

 

 

Servers

[***]

*** Confidential Treatment Requested

© 2004 dot Hill Proprietary and Confidential

			
	 

Document Part Number: 83-00003447 Rev. 2
	 	Page 5 of 10

 

 

Servers

[***]

***Confidential
Treatment Requested

© 2004 dot Hill Proprietary and Confidential

			
	 

Document Part Number: 83-00003447 Rev. 2
	 	Page 6 of 10

 

 

Servers

[***]

*** Confidential Treatment Requested

© 2004 dot Hill Proprietary and Confidential

			
	 

Document Part Number: 83-00003447 Rev. 2
	 	Page 7 of 10

 

 

Servers

[***]

*** Confidential Treatment Requested

© 2004 dot Hill Proprietary and Confidential

			
	 

Document Part Number: 83-00003447 Rev. 2
	 	Page 8 of 10

 

 

Local
Area Network

[***]

*** Confidential Treatment Requested

© 2004 dot Hill Proprietary and Confidential

			
	 

Document Part Number: 83-00003447 Rev. 2
	 	Page 9 of 10

 

 

Local Area Network

[***]

*** Confidential Treatment Requested

© 2004 dot Hill Proprietary and Confidential

			
	 

Document Part Number: 83-00003447 Rev. 2
	 	Page 10 of 10

 

 

Virus and Spam Protection

[***]

*** Confidential Treatment Requested

© 2004 dot Hill Proprietary and Confidential

			
	 

Document Part Number: 83-00003447 Rev. 2
	 	Page 11 of 10

 

 

[***]

***Confidential
Treatment Requested

Page 6

 

 

[***]

*** Confidential Treatment Requested

Dot Hill Systems Corp. • 6305 El Camino Real • Carlsbad, California 92009-1606

P: 760.931.5500/800.872.2783 • F: 760.931.5527 • E: sales@dothill.com

www.dothill.comexv10w44

 

Exhibit 10.44

***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.

License
Reference Number___ [***] ___

122205
                                 
                                                 PATENT CROSS LICENSE

     LICENSE AGREEMENT (“Agreement”) dated December ___, 2005 (“Agreement Date”) between
INTERNATIONAL BUSINESS MACHINES CORPORATION, a New York corporation (“IBM”), and Dot Hill Systems
Corp., a California corporation (“DOT HILL”).

     Each of the parties (as “Grantee”) desires to acquire a nonexclusive license under patents of
the other party (as “Grantor”). In consideration of the premises and mutual covenants herein
contained, IBM and DOT HILL agree as follows:

Section 1. Definitions

“Authorized Assembler” shall mean a third party that, pursuant to a written contract with a
Grantee, assembles Grantee’s Licensed Products, in accordance with written specifications provided
by said Grantee, for sale under Grantee’s brand name. The definition of an Authorized Assembler
is distinct from that of a have-made manufacturer, which is licensed pursuant to Section 2.1(b).

“Authorized Copy (Copies)” shall mean a software program
copied from a Master Copy by a third party under written authorization to such third party to make
copies of such Master Copy for its own use or for further Distribution (by transmission or other
distribution means). A have-made manufacturer, which is licensed pursuant to Section 2.1(b), is
defined distinctly from a third party who makes or distributes Authorized Copies.

“Distribute” shall mean lease, license, sell, or otherwise transfer.

“DOT HILL Licensed Products” shall mean: [***]

*** Confidential Treatment Requested

1

 

“Effective Date” shall mean December ___, 2005.

“IBM Licensed Products” shall mean [***]

“IHS Product” shall mean an [***]

“Information Handling System” shall mean [***]

“Integrated Circuit” shall mean an integral unit including a plurality of active and/or passive
circuit elements formed at least in part of Semiconductor Material and associated on, or in, one
substrate comprising the first level of packaging for such elements; such unit forming or
contributing to the formation of a circuit for performing electrical or electronic functions.

“Licensed Patents” shall mean all patents, including utility models and typeface design patents and
registrations (but not including any other design patents or registrations):

	(a)	 	issued or issuing on patent applications entitled to an effective filing date prior to [***];
and

*** Confidential Treatment Requested

2

 

	(b)	 	under which patents or the applications therefor a party hereto or any of its Subsidiaries
has as of the Agreement Date, or thereafter obtains, the right to grant licenses to Grantee of
or within the scope granted herein without such grant or the exercise of rights thereunder
resulting in the payment of royalties or other consideration by Grantor or its Subsidiaries to
third parties (except for payments among Grantor and its Subsidiaries, and payments to third
parties for inventions made by said third parties while employed by Grantor or any of its
Subsidiaries).

Licensed Patents shall include said patent applications, continuations-in-part of said patent
applications, and any patents reissuing on any of the aforesaid patents. Notwithstanding the
foregoing, in the case when IBM is the Grantor, Licensed Patents shall not include any patent
having any claim directed to a method or process of making (including methods or processes for
testing) Semiconductor Products, and no license is granted herein under any such patents.

“Licensed Products” shall mean either IBM Licensed Products or DOT HILL Licensed Products as the
context indicates.

“Master Copy” shall mean a software program distributed by Grantee to a third party with written
authorization to such third party to make copies of such software program for its own use or for
further Distribution (by transmission or other distribution means).

“Performance of Business Processes” shall mean [***] enterprise or organization.

“Semiconductor Product” shall mean any Semiconductor Material, Semiconductor Device, Semiconductor
Circuit, and/or Integrated Circuit and any combination thereof. Any instrumentality or aggregate of
instrumentalities primarily designed for use in the fabrication (including testing) of a
Semiconductor Product shall not be considered to be a Semiconductor Product.

“Semiconductor Circuit” shall mean a circuit in which one or more Semiconductor Devices are
interconnected in one or more paths (including passive circuit elements, if any) for performing
fundamental electrical or electronic functions, and if provided therewith, such circuit includes
housing and/or supporting means therefor.

*** Confidential Treatment Requested

3

 

“Semiconductor Device” shall mean a device and any material therefor, comprising a body of one or
more Semiconductor Materials and one or more electrodes associated therewith, and, if provided
therewith, housing and/or other supporting means therefor.

“Semiconductor Material” shall mean any material whose conductivity is intermediate to that of
metals and insulators at room temperature and whose conductivity, over some temperature range,
increases with increases in temperature. Such materials shall include but not be limited to
refined products, reaction products, reduced products, mixtures and compounds.

“Data Storage Products” shall mean [***]

“Data Storage Software” shall mean [***]

*** Confidential Treatment Requested

4

 

“Database Products” shall mean [***] including but not limited to:

(i) [***];

(ii) [***];

(iii) [***]; and

(iv) [***].

“Subsidiary” of a party hereto or of a third party shall mean a corporation, company or other
entity:

	(a)	 	more than fifty percent (50%) of whose outstanding shares or securities (representing the
right to vote for the election of directors or other managing authority) are, now or
hereafter, owned or controlled, directly or indirectly, by a party hereto or such third party,
but such corporation, company or other entity shall be deemed to be a Subsidiary only so long
as such ownership or control exists; or

	(b)	 	which does not have outstanding shares or securities, as may be the case in a partnership,
joint venture or unincorporated association, but more than fifty percent (50%) of whose
ownership interest representing the right to make the decisions for such corporation, company
or other entity is now or hereafter, owned or controlled, directly or indirectly, by a party
hereto or such third party, but such corporation, company or other entity shall be deemed to
be a Subsidiary only so long as such ownership or control exists.

Section 2. Grants of Rights

2.1 Each party, as Grantor, on behalf of itself and its Subsidiaries grants to the other, as
Grantee, a nonexclusive and worldwide license under Grantor’s Licensed Patents:

	(a)	 	to make (including the right to use any apparatus and practice any method in making), use,
import, offer for sale, lease, license, sell and/or otherwise transfer Grantee Licensed
Products; and
	 
	(b)	 	to have Grantee Licensed Products made by another manufacturer for the use, importation,
offer for sale, lease, sale and/or other transfer by Grantee only when the conditions set
forth in Section 2.2 are met.
	 
	(c)	 	to use any apparatus and practice any method in connection with the Performance of Business
Processes for itself or third parties in connection with Licensed Products.

*** Confidential Treatment Requested

5

 

A particular Licensed Product, or use of any apparatus or practice of any method in connection with
the Performance of Business Processes, shall be licensed under only those of Grantor’s Licensed
Patents that: (a) exist in the country where Grantee made, used, imported, offered for sale,
leased, licensed, sold, and/or otherwise transferred such Licensed Product, or used any such
apparatus or practiced any such method in connection with the Performance of Business Processes,
and which, but for the license granted herein would have been infringed (including contributory
infringement) by the performance of such acts; or (b) exist in any country other than where Grantee
performed such acts and which, but for the license granted herein would have been infringed
(including contributory infringement) if Grantee’s performance of such acts had occurred in the
country where such Licensed Patents exist.

The license granted by DOT HILL to IBM is fully paid up, and the license granted by IBM to DOT HILL
shall be fully paid up upon the payment by DOT HILL of the amount specified in Section 4.1.

2.2 The license granted in Section 2.1(b) to Grantee to have products made by another manufacturer:

	(a)	 	shall only apply to [***];
	 
	(b)	 	shall only apply to Grantee Licensed Products and/or portions thereof for which [***];
	 
	(c)	 	shall only be under claims of [***]; and
	 
	(d)	 	shall not apply to any products in the form manufactured or marketed, or any process or
method used, [***].

Unless Grantee informs Grantor to the contrary, Grantee shall be deemed to have authorized said
other manufacturer to make Grantee’s Licensed Products under the license granted to Grantee in this
section when the conditions specified in this Section 2.2 are fulfilled. In response to a written
request identifying a product and a manufacturer, Grantee shall in a timely manner inform Grantor
of the quantity of such product, if any, manufactured by such manufacturer pursuant to the license
granted in Section 2.1(b).

*** Confidential Treatment Requested

6

 

2.3 Except as expressly provided herein, no license or immunity is granted under this Agreement by
either party, either directly or by implication, estoppel or otherwise to any third parties
acquiring items from either party for the combination of such acquired items with other items
(including items acquired from either party hereto) or for the use of such combination. Such
acquired items in such combinations, if licensed hereunder, shall continue to enjoy the license
rights set forth herein.

2.4 Subject to Section 2.5, the licenses granted herein shall include the right of each party to
grant sublicenses to its Subsidiaries existing on or after the Agreement Date, which sublicenses
may include the right of sublicensed Subsidiaries to sublicense other Subsidiaries of said party.
No sublicense shall be broader in any respect at any time during the life of this Agreement than
the license held at that time by the party that granted the sublicense.

2.5 A sublicense granted to a Subsidiary shall terminate on the earlier of:

	(a)	 	the date such Subsidiary ceases to be a Subsidiary; and
	 
	(b)	 	the date of termination or expiration of the license of the party or Subsidiary that granted
the sublicense.

If a Subsidiary ceases to be a Subsidiary and holds any patents under which a party hereto is
licensed, such license shall continue for the term defined herein.

2.6 In the event that neither a party nor any of its Subsidiaries has the right to grant a license
under any particular Licensed Patent of the scope set forth in Section 2, then the license granted
herein under said Licensed Patent shall be of the broadest scope which said party or any of its
Subsidiaries has the right to grant within the scope set forth above.

2.7 If, after the Agreement Date, a party or any of its Subsidiaries (“Acquiring Party”) either
acquires an entity or acquires substantially all of the assets from an entity, and said entity is,
immediately prior to the date of acquisition, [***], then the license and other rights granted
herein to the Acquiring Party with respect to said Licensed Patents shall [***], provided that such
[***].

*** Confidential Treatment Requested

7

 

2.8 If, subsequent to the Agreement date, a party (the “Transferring Party”) either: [***] and
if such [***] includes at least [***], then after written request to the other party hereto jointly
by the Transferring Party and either: [***] and where, in either case, such request is within [***]
days following the [***], the other party hereto shall [***] (the “Recipient”) provided that:

	(a)	 	[***]
	 
	(b)	 	[***]
	 
	(c)	 	[***]

*** Confidential Treatment Requested

8

 

	(d)	 	this Section 2.8, Section 3, and Section 4 shall be omitted from the [***];
	 
	(e)	 	[***] and
	 
	(f)	 	if during any [***] period the [***]

In the event of [***] which includes [***] then each party will [***]

Notwithstanding the foregoing provisions of this Section 2.8, the [***], and the other party shall
have no obligation to [***]

2.9 A product which, if assembled by Grantee, would be licensed to Grantee hereunder shall also be
licensed hereunder if assembled by an Authorized Assembler, provided:

	(a)	 	the purchase price paid to Grantee and Grantee’s designees for items included in the product
[***]; and
	 
	(b)	 	the product is sold under Grantee’s brand name.

2.10 For purposes of this Agreement, an Authorized Copy shall be deemed to have been Distributed by
the Grantee that Distributed

*** Confidential Treatment Requested

9

 

the Master Copy from which the Authorized Copy was copied, provided such Authorized Copy is used or
Distributed under a brand name of Grantee.

Section 3. Releases

3.1 Each party (as “Releasor”) on behalf of itself and its Subsidiaries which are Subsidiaries on
the Agreement Date, irrevocably releases the other party, its Subsidiaries which are Subsidiaries
on the Agreement Date, its and their respective customers, its Authorized Assemblers and its
have-made manufacturers pursuant to Section 2.1(b) from any and all claims of infringement of
Releasor’s Licensed Patents which claims are based on acts prior to the Effective Date, which, had
they been performed after the Effective Date would have been licensed under this Agreement.

The release contained herein shall not apply to any person other than the persons named in this
Section 3 and shall not apply to the manufacture of any items by any person other than those named
in this Section 3. The release granted by DOT HILL to IBM is effective immediately. The release
granted by IBM to DOT HILL shall become effective upon receipt of payment specified in Section 4.1.

Section 4. Payment

4.1 DOT HILL shall pay to IBM the sum of two and a half million US dollars (US $ 2,500,000) on
signing of this Agreement.

4.2 DOT HILL shall be liable for interest on any overdue payment required to be made pursuant to
Section 4, commencing on the date such payment becomes due, at an annual rate which is the greater
of [***] or [***] percentage points higher than the prime interest rate as quoted by the head
office of Citibank N.A., New York, at the close of banking on such date, or on the first business
day thereafter if such date falls on a non-business day. If such interest rate exceeds the maximum
legal rate in the jurisdiction where a claim therefor is being asserted, the interest rate shall be
reduced to such maximum legal rate.

4.3 If the payment set forth in Section 4.1 is not made by its due date, and if such payment, plus
interest pursuant to Section 4.2 (“Late Payment”), is not made prior to [***] days after such due
date, then, at IBM’s sole option, either:

	(a)	 	all of the payments set forth in Section 4.1 that have not been paid shall automatically
become due and payable in

*** Confidential Treatment Requested

10

 

	 	 	full on the [***] day after IBM sends written notice of its election to accelerate the
remaining payments, unless IBM receives the Late Payment within [***] business days after
IBM sends such notice; or
	 
	(b)	 	all licenses and other rights granted herein to DOT HILL shall automatically terminate on the
[***] day after IBM sends written notice of its election to terminate DOT HILL’s rights,
unless IBM receives the Late Payment within [***] business days after IBM sends such notice.
In such event, DOT HILL shall remain obligated to pay all payments which had become due prior
to such notice (plus interest thereon as provided in Section 4.2).

Section 5. Term of Agreement; Acquisition of a Party

5.1 The term of the licenses granted under this Agreement shall be from the Effective Date until
the last to expire of the Licensed Patents, unless earlier terminated under the provisions of this
Agreement.

5.2 If one party (the “Acquired Party”) is acquired by a third party[***]:

	(a)	 	the Acquired Party shall promptly give notice of such acquisition to the other party; and
	 
	(b)	 	the license granted to the Acquired Party and all sublicenses (if any) granted to the
Acquired Party’s remaining Subsidiaries shall automatically [***] within the licenses granted
in this Agreement (or in such sublicense) prior to such acquisition.

5.3 If one party (the “Acquired Party”) is acquired by a third party [***], the license granted to
the Acquired Party shall terminate as of the date of acquisition. If the third party is licensed
under one or more of the other party’s Licensed Patents in a field within the scope of the Acquired
Party’s Licensed Product field, then [***]. If the third party is not licensed under the other
party’s Licensed Patents in the same product field as the Acquired Party, then [***].

*** Confidential Treatment Requested

11

 

Section 6. Means of Payment and Communication

6.1 Payment shall be made by electronic funds transfer. Payments shall be deemed to be made on the
date credited to the following account:

     [***]

6.2 Notices and other communications shall be sent by facsimile or by registered or certified mail
to the following addresses and shall be effective upon mailing:

	 	 	 	 	 
	 

	 	For IBM:
	 	For DOT HILL:
	 

	 	Director of Licensing
	 	Chief Financial Officer
	 

	 	IBM Corporation
	 	Dot Hill Systems Corp.
	 

	 	North Castle Drive, MD-NC119
	 	6305 El Camino Real
	 

	 	Armonk, NY 10504-1785
	 	Carlsbad, CA 92009
	 

	 	United States of America
	 	United States of America
	 

	 	Facsimile: (914) 765-4380
	 	Facsimile: (760) 931-5527

6.3 A License Reference Number will be assigned to our agreement upon execution. This number
should be included in all communications including wire transfer payments, royalty reports, tax
credit certificates, letters, faxes and E-Mail messages.

Section 7. Miscellaneous

7.1 Neither party shall assign or grant any right under any of its Licensed Patents unless such
assignment or grant is made subject to the terms of this Agreement.

7.2 Neither party shall assign any of its rights (other than the right to receive payments) or
delegate any of its obligations under this Agreement. Any attempt to do so shall be void.
However, a party which undergoes reorganization may assign such rights and delegate such
obligations to its legal successor, provided that after the reorganization, the successor and its
Subsidiaries will have essentially the same assets as such party and its Subsidiaries had prior to
the reorganization.

*** Confidential Treatment Requested

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7.3 Neither party shall use or refer to this Agreement or any of its provisions in any promotional
activity.

7.4 Each party represents and warrants that it has the full right and power to grant the license
and release set forth in Sections 2 and 3. Each party (as a Grantor) further represents and
warrants that prior to the Agreement Date, it has informed the other party of any patent
originating from inventions made by employees of Grantor or its Subsidiaries, which patent is or
was owned by Grantor or its Subsidiaries as of the Effective Date, and which patent, owing to prior
arrangements with third parties, does not qualify as a Licensed Patent of Grantor under which
licenses are granted in Section 2. A listing of such patents owned by IBM is attached as
Attachment A. Despite such listing at Attachment A, [***] Neither party makes any other
representation or warranty, express or implied, with respect to the validity of its Licensed
Patents or otherwise, nor shall either party have any liability in respect of any infringement of
patents or other rights of third parties due to the other party’s operation under the license
herein granted.

7.5 Nothing contained in this Agreement shall be construed as conferring any rights by implication,
estoppel or otherwise, under any non-patent intellectual property right, or any patents or patent
applications, other than the Licensed Patents. Neither party is required hereunder to furnish or
disclose to the other any technical or other information (including copies of Licensed Patents)
except as specifically provided herein.

7.6 Neither party shall have any obligation hereunder to institute any action or suit against third
parties for infringement of any of its Licensed Patents or to defend any action or suit brought by
a third party which challenges or concerns the validity of any of its Licensed Patents. Neither
party shall have any right to institute any action or suit against third parties for infringement
of any of the other party’s Licensed Patents. Neither party, nor any of its Subsidiaries, is
required to file any patent application, or to secure any patent or patent rights, or to maintain
any patent in force.

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7.7 Each party shall, upon a request from the other party sufficiently identifying any patent or
patent application, inform the other party as to the extent to which said patent or patent
application is subject to the licenses and other rights granted hereunder. If such licenses or
other rights under said patent or patent application are restricted in scope, copies of all
pertinent provisions of any contract or other arrangement creating such restrictions shall, upon
request, be furnished to the party making such request, unless such disclosure is prevented by such
contract, and in such event, a statement of the nature of such restriction shall be provided.

7.8 If a third party has the right to grant licenses under a patent to a party hereto (as a
“Licensee”) with the consent of the other party hereto, said other party shall provide said third
party with any consent required to enable said third party to license said Licensee on whatever
terms such third party may deem appropriate. Each party hereby waives any right it may have to
receive royalties or other consideration from said third party as a result of said third party’s so
licensing said Licensee within the scope of the licenses granted under Section 2 of this Agreement.

7.9 This Agreement shall not be binding upon the parties until it has been signed hereinbelow by or
on behalf of each party. No amendment or modification hereof shall be valid or binding upon the
parties unless made in writing and signed as aforesaid, except that IBM may amend Section 6.1 and
either party may amend its address in Section 6.2 by written notice to the other party.

7.10 If any section of this Agreement is found by competent authority to be invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and enforceability of such
section in every other respect and the remainder of this Agreement shall continue in effect so long
as the Agreement still expresses the intent of the parties. However, if the intent of the parties
cannot be preserved, this Agreement shall be either renegotiated or terminated.

7.11 This Agreement shall be construed, and the legal relations between the parties hereto shall be
determined, in accordance with the law of the State of New York, USA, as such law applies to
contracts signed and fully performed in New York.

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7.12 The headings of sections are inserted for convenience of reference only and are not intended
to be a part of or to affect the meaning or interpretation of this Agreement.

7.13 Until [***], each party, on behalf of itself and its Subsidiaries, agrees not to disclose any
term or condition of this Agreement to any third party without the prior written consent of the
other party. This obligation is subject to the following exceptions:

	(a)	 	disclosure is permissible if required by government or court order, provided the party
required to disclose first gives the other prior written notice to enable it to seek a
protective order;
	 
	(b)	 	disclosure is permissible if otherwise required by law, including, but not limited to,
disclosure requirements of the SEC or other government entities;
	 
	(c)	 	disclosure is permissible if required to enforce rights under
this Agreement;
	 
	(d)	 	each party may use similar terms and conditions in other agreements;
	 
	(e)	 	each party may disclose only the scope of the licenses and immunities granted hereunder (but
not any financial terms) to the extent reasonably necessary, on a confidential basis, to its
customers, potential customers, and other third parties with which it has a current or
potential commercial relationship; and
	 
	(f)	 	each party may disclose the terms and conditions of this Agreement to the extent reasonably
necessary, on a confidential basis, to its accountants, attorneys, financial advisors, its
present or future providers of venture capital and/or potential investors in or acquirers of
such party or product lines [***].

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This Agreement and its attachments embody the entire understanding of the parties with respect to
the Licensed Patents, and replaces any prior oral or written communications between them.

	 	 	 	 	 	 	 	 	 
	Agreed to:	 	 	 	Agreed to:
	Dot Hill Systems Corp.	 	 	 	INTERNATIONAL BUSINESS
	 	 	 	 	 	 	MACHINES CORPORATION
	 
	 	 	 	 	 	 	 	 
	By:

	 	/s/ Preston Romm
	 	 	 	By:
	 	/s/ Mark Peterson
	 

	 	 
	 	 	 	 	 	 
	Name: Preston Romm	 	 	 	 	 	Mark Petersen
	Title: CFO	 	 	 	 	 	Director of Finance,
	 

	 	 	 	 	 	 	 	Technology &
	 

	 	 	 	 	 	 	 	Intellectual Property
	Date: 12/29/05	 	 	 	Date: 12/28/05

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ATTACHMENT A

Non-Licensed Patents

[***]

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EXHIBIT 1

Section X. Accruals, Records, Reports and Other Information

X.1 [***]

X.2 RECIPIENT’s accounting period shall end on the day before each anniversary date [***] during
the term of this Agreement. Within [***] after the end of each such period, RECIPIENT shall
furnish to THE OTHER PARTY[***] a written report containing the information specified in Section
X.5 and shall [***].

X.3 RECIPIENT shall [***]

X.4 THE OTHER PARTY may accept [***]

X.5 RECIPIENT’s written report shall be certified by an officer of RECIPIENT and shall contain the
following information:

	(a)	 	[***]
	 
	(b)	 	[***]
	 
	(c)	 	[***]

In the event [***] RECIPIENT’s report shall so state.

X.6 RECIPIENT shall keep records in accordance with generally accepted accounting principles and in
sufficient detail [***] Such records shall include, but not be limited to, detailed records
supporting the information provided under Section X.5. Such records shall be kept for [***]
following the submission of the related report.

Upon written notice for an audit, RECIPIENT shall permit auditors designated by THE OTHER PARTY,
together with such legal and technical support as THE OTHER PARTY deems

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necessary, to examine, during ordinary business hours, records and materials of RECIPIENT for the
purpose of verifying compliance with this Agreement.

Each party shall pay the costs that it incurs in the course of the audit. However, in the event
that the audit establishes [***] RECIPIENT shall reimburse THE OTHER PARTY for the reasonable costs
of the audit; provided, however, such reimbursement shall not exceed [***]. For purposes of the
section and without prejudice to other and additional costs being deemed as reasonable, an amount
paid to a independent third party to carry out the audit permitted under this section will be
deemed a “reasonable cost” to the extent it does not exceed the customary fee the third party
charges to other corporate customers for the same or similar services plus reimbursement for costs
actually incurred.

X.7 THE OTHER PARTY shall have the right to terminate this Agreement, or the license granted
hereunder, if RECIPIENT fails [***] at any time to:

	(a)	 	maintain records which meet the requirements of Section X.6;
	 
	(b)	 	furnish a report which meets the requirements of Section X.5;
	 
	(c)	 	[***] or
	 
	(d)	 	permit an audit pursuant to Section X.6;

and if such failure is not cured within [***] after mailing of written notice from THE OTHER PARTY
to RECIPIENT specifying the nature of such failure. THE OTHER PARTY’s termination of this
Agreement or of the license shall be effective upon expiration of said [***] cure period.

X.8 No termination of this Agreement or the license granted hereunder shall [***]

END EXHIBIT 1

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