Document:

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

  

 

31Exhibit 10.6

 

***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.

 

DEVELOPMENT AND OEM SUPPLY
AGREEMENT

 

THIS DEVELOPMENT AND OEM SUPPLY AGREEMENT (the “Agreement”) is
made and entered into by and among Dot Hill Systems
Corporation, a Delaware corporation, having its principal place of
business at 6305 El Camino Real, Carlsbad, CA 92009, and Dot Hill
Systems B.V., a Netherlands corporation, having its principal place
of business at Marssteden 94, 7547 TD Enschede, the Netherlands (hereinafter
jointly “Dot Hill”); and Network
Appliance, Inc., a Delaware corporation, having its principal place
of business at 495 East Java Drive, Sunnyvale, CA, and Network
Appliance, B.V., a Netherlands corporation, having its principal
place of business at Scorpius 2, 2132 LR Hoofddorp, the Netherlands
(hereinafter jointly “NetApp”).  Dot Hill and NetApp may individually be
referred to as a “party” and
collectively as the “parties” in
this Agreement.

 

1.             RECITALS

 

WHEREAS, NetApp manufactures and sells
network attached storage file server and caching appliances and related
hardware, software and support products;

 

WHEREAS, Dot Hill manufactures and
sells storage systems enclosures, and licenses storage management software;

 

WHEREAS, Dot Hill will design and develop for NetApp products to
agreed specifications, and will manufacture prototypes and products for sale to
NetApp;

 

WHEREAS, both parties are entering into
this Agreement in which NetApp, or NetApp designated contract manufacturers,
will buy products from Dot Hill and resell those products as part of NetApp’s
file server appliance solutions; and

 

NOW, THEREFORE, in
consideration of the terms and conditions herein and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, Dot Hill and NetApp hereby agree to the following;

 

2.             NETAPP AUTHORIZED PURCHASERS

 

Subject to the other
terms of this Section 2, upon written request by NetApp, Dot Hill shall use
commercially reasonable efforts to negotiate and enter into an agreement with a
NetApp Authorized Purchaser(s), as defined below, for the purchase of Products
from Dot Hill and, upon completion of such agreement, sell 

 

NetApp
and Dot Hill Confidential

 

1

 

such Products to such
NetApp Authorized Purchaser(s). In connection with such negotiations, Dot Hill
shall extend terms and conditions to such NetApp Authorized Purchaser(s) that
are substantially similar in all material respects to the then-current pricing,
payment terms, delivery, rescheduling, cancellation, warranty, intellectual
property indemnity, and quality provisions for an applicable Product, as such
terms are set forth in this Agreement. 
Dot Hill shall have the right to determine the creditworthiness of any
NetApp Authorized Purchaser(s) and if Dot Hill determines that a NetApp
Authorized Purchaser is not creditworthy, then Dot Hill may require such NetApp
Authorized Purchaser to pay on a cash basis or through a letter of credit.
NetApp shall be liable to pay only for Products ordered by and invoiced
directly to NetApp and shall not be liable to pay for any Products ordered by
any NetApp Authorized Purchasers. 
Notwithstanding anything to the contrary, nothing in this Section 2
shall limit, restrict or prevent Dot Hill from selling on its own any Products
to third parties.

 

3.             EXHIBITS

 

The following Exhibits
are incorporated fully herein by reference and are made a part of this
Agreement:

 

Exhibit
A – Engineering Specifications

 

Exhibit
B – Product Price and Bill of Materials Breakdown

 

Exhibit
C – Statement of Work and Acceptance Criteria

 

Exhibit
D – Initial Manufacturing Volume Forecast

 

Exhibit
E – Dot Hill Quality Requirements

 

Exhibit
F – Order Replenishment and Logistics Requirements

 

Exhibit
G – NetApp Customer Support Requirements

 

[***]

 

Exhibit
I  – Mutual
Non-Disclosure Agreement

 

Exhibit
J  –  Requirements Obligations

 

Exhibit
K  – NetApp Workmanship
Standards

 

Exhibit
L  – Manufacturing Test
Requirements

 

Exhibit
M – On-Site Support Requirements

 

Exhibit
N – List of NetApp Designated Technology

 

Exhibit
O – List of NetApp Other Technology

 

2

 

Exhibit
P – Business Continuance Plan

 

4.             TERM
OF THIS AGREEMENT

 

The initial term of this Agreement shall
begin on the date of signature by both parties hereto (the “Effective Date”) and end three (3) years immediately after
NetApp’s First Customer Shipment, as defined below, of the initial Product
covered under this Agreement.  The term
of this Agreement will automatically renew for additional one (1)-year periods
unless one party informs the other of its intent not to renew the Agreement at
least [***]  All sales of Products made
by Dot Hill to NetApp prior to the signing of this Agreement shall be governed
by this Agreement.

 

5.             DEFINITIONS

 

For purposes of the
construction and interpretation of this Agreement, the following terms shall
have the following meanings:

 

5.1           “Affiliate”
shall refer to any entity that controls, is controlled by, or under common
control with a party, where control means the direct or indirect beneficial
ownership of more than fifty percent (50%) of the outstanding voting interests
of such entity (but only for so long as such entity meets these requirements).

 

5.2           “Development
Units” shall mean the units purchased prior to Software Quality
Assurance testing that are to be used for engineering evaluation and
verification purposes at NetApp.

 

5.3           “Dot Hill
Designated Contract Manufacturer” or “Dot Hill DCM”
shall mean a third party that is authorized in writing by Dot Hill and NetApp
to manufacture Products for Dot Hill. 
NetApp shall not unreasonably withhold, delay or condition its approval
of any request for authorization that is made by Dot Hill for an entity to
become a Dot Hill Designated Contract Manufacturer. NetApp hereby expressly
approves of Solectron Corporation and its affiliates as a Dot Hill Designated
Contract Manufacturer.

 

5.4           “Dot Hill Background IPR”
shall mean rights in or to any pre-existing Intellectual Property Rights that
Dot Hill owns or has the right to license.

 

5.5           “Dot Hill
Foreground IPR” shall mean any Intellectual Property Rights which
are developed, conceived or reduced to practice by the employees or contractors
of Dot Hill as a result of the performance of the development activities set
forth in the Statement of Work to this Agreement and without any material
contribution made by any employees of NetApp to such Intellectual Property
Rights.

 

5.6           “Dot Hill IPR”
shall mean collectively the Dot Hill Background IPR and the Dot Hill Foreground
IPR.

 

3

 

5.7           “Dot Hill
Technology” shall mean Technology that Dot Hill owns or has the
right to license and is used by Dot Hill in the engineering, manufacture,
assembly, testing, and support of Products or is reasonably necessary for
NetApp to exercise second sourcing and/or manufacturing for Products.

 

5.8           “DVT”
shall mean Design Verification Test, which is a mutually agreed program of
testing by which the production design is verified to meet the Engineering
Specifications.

 

5.9           “Engineering
Specifications” shall mean drawings, prints, written descriptions,
and NetApp requirements of the Product as set forth in, or referred to in, Exhibit
A, which Exhibit A may be modified from time to time upon mutual
written agreement of the parties to reflect additional Products to be supplied
hereunder.

 

5.10         “Initial Purchase Period” for a Product shall have the same
meaning as is ascribed to such term in Exhibit J, Requirements
Obligations.

 

5.11         “EVT” shall mean
Engineering Verification Test: a mutually agreed program of testing by which
the pre-production design and included technology is verified to meet the
Engineering Specifications.

 

5.12         “First Customer Shipment”,
“First Customer Ship” or “FCS” shall mean the date on which units of Products are
generally available from Dot Hill for delivery in volume by NetApp to NetApp’s
customers.

 

5.13         “Final Product Acceptance”
shall mean NetApp’s written approval of all the Development Units, and all deliverable verification reports as defined
and described in Exhibit C (the Acceptance Criteria and Statement of
Work), and in Exhibit A (the Engineering Specifications) on the dates as
specified therein.

 

5.14         “Intellectual Property Rights” or “IPR”
shall mean all rights worldwide in Patents, copyrights, trade secrets,
Confidential Information, semiconductor topography rights (including, but not
limited to, semiconductor mask works rights), but excluding rights in
trademarks, service marks, trade names, service names, and Internet domain
names and other similar designations.

 

5.15         “Jointly Developed IPR”
shall mean any Intellectual Property Rights developed, conceived or reduced to
practice by one or more employees of Dot Hill with one or more employees of
NetApp as a result of a material contribution by one or more employees of both
Dot Hill and NetApp in connection with the performance of the development
activities set forth in the Statement of Work to this Agreement.

 

5.16         “NetApp Authorized
Purchaser” shall mean a third party (i) that is expected to purchase
in volume from Dot Hill Products available for sale by Dot Hill to 

 

4

 

NetApp under this Agreement,
and (ii) which has been authorized in writing by the parties to purchase such
Products from Dot Hill, which authorization will not be unreasonably withheld
by Dot Hill.

 

5.17         “NetApp Background IPR”
shall mean rights in or to any pre-existing Intellectual Property Rights that
NetApp owns or has the right to license.

 

5.18         “NetApp Designated Contract Manufacturer” or “NetApp DCM” shall mean a third party that is authorized in
writing by NetApp to manufacture or develop products for NetApp.
Purchases of Products by NetApp DCMs shall be governed by this Agreement
only if such purchases are made for resale by NetApp DCMs to NetApp, and NetApp
DCMs agrees in writing with Dot Hill that such Products are intended for resale
solely to NetApp. No sale of Products by NetApp DCMs to third parties other
than NetApp is authorized by this Agreement.

 

5.19         “NetApp Designated
Technology” shall mean the items of Technology specified in Exhibit
N, which includes [***], that NetApp owns or has the right to license to Dot Hill and is
provided or otherwise disclosed to Dot Hill under this Agreement for use by Dot
Hill or Dot Hill DCMs in the engineering, manufacture, assembly testing, and
support of Products.

 

5.20         “NetApp Foreground IPR”
shall mean any Intellectual Property Rights which are developed, conceived or
reduced to practice by the employees or contractors of NetApp as a result of
the performance of development activities and without any material contribution
made by any employees of Dot Hill to such Intellectual Property Rights.

 

5.21         “NetApp IPR”
shall mean collectively the NetApp Background IPR and the NetApp Foreground
IPR.

 

5.22         “NetApp Other Technology”
shall mean Technology, other than the NetApp Designated Technology, specified
in Exhibit O  that NetApp owns or has the right to license and is provided
or otherwise disclosed to Dot Hill under this Agreement for use by Dot Hill or
a Dot Hill DCM in the engineering, manufacture, assembly, testing and support
of Products.

 

5.23         “Nonconformity”
shall mean: (a) with regard to the Product, [***] (b) with regard to the
Product, non-conformance with the cosmetic or workmanship specifications per [***],
as set forth in Exhibit K, (c) with regard to the Product, the failure to
meet the quality requirements set forth in Exhibit E, or (d) with regard
to the Product, failure to meet the manufacturing test requirements as set
forth in Exhibit L.

 

5.24         “Patents” shall mean patents, patent applications, design
patents and registrations, and utility models, along with any reissues,
re-examinations, continuations, continuations-in-part, divisions and renewals
thereof.

 

5

 

5.25         “Permitted Purposes”
shall mean: (i) the development of improvements to the applicable Products (the
“Improvements”), (ii) the manufacture by
or on behalf of NetApp of the applicable Products and Improvements solely for
integration into or as additions to NetApp systems, appliances and other
products; (iii) the sale, distribution, servicing and support by NetApp (and
its authorized resellers, original equipment manufacturers, designated contract
manufacturers and service providers) of the systems, appliances and other
products containing the applicable Products or Improvements; and/or (iv) [***]

 

5.26         “Products” shall
mean a Dot Hill component or assembly that is specified on Exhibit B,
which Exhibit B may be modified in writing at any time and from time to
time by mutual written agreement of the parties.

 

5.27         “Production Unit”
shall mean a unit of Product manufactured by or for Dot Hill for NetApp or a
NetApp Designated Contract Manufacturer, all for intended NetApp resale after “Final
Product Acceptance” pursuant to Section 7.

 

5.28         “Purchase Commitment”
shall mean a commitment from NetApp or a NetApp Designated Contract
Manufacturer to purchase any number or no number of Products that Dot Hill
agrees to supply.

 

5.29         “Purchase Order”
shall mean a written or electronic notification of a request to purchase one or
more Products at the Total Price(s) set forth in Exhibit B.

 

5.30         “SQA units”
shall mean those units intended for use in connection with Software Quality
Assurance (“SQA”): a NetApp program of testing
by which the final systems testing is completed by NetApp to verify the Product
meets the Engineering Specifications.

 

5.31         “Statement of Work”
or “SOW” shall mean Exhibit C, which
is incorporated by reference into this Agreement and includes but is not
limited to the development activities, dates for completion, responsible party
(or parties), deliverables, and information related to the Products to be
developed and supplied under this Agreement, which Exhibit C may be
modified at any time and from time to time upon mutual written agreement.

 

5.32         “Technology” shall
mean any and all technical information,
know how, trade secrets, data, plans, schematics, drawings, design hardcopy,
computer-assisted design files, specifications, vendor lists, board layouts,
test software, test scripts, quality standards, internal component test design,
tooling, tooling designs, functional and system test software and
documentation, process flows, and process setups and process instructions.

 

5.33         “Tier 1 Customer” is a business entity that
(i) is involved substantially in the distribution and sale of disk storage
products to third parties on a global basis or 

 

6

 

(ii)
accounts for more than [***] from the sale of storage products and services [***]. 
For the purpose of interpretation of this definition, a “Tier 1 Customer”
includes, without limitation, the following business entities: [***].

 

5.34         “Total Price”
shall mean the amount that Dot Hill will charge NetApp or a NetApp Designated
Contract Manufacturer for each Product set forth in Exhibit B, which Exhibit
B may be modified at any time and from time to time upon mutual written
agreement of the parties to reflect additional Products to be supplied
hereunder.

 

5.35         “Trigger Event” for an applicable Product shall mean:

 

(i)            a material breach by Dot Hill
occurs if any of the provisions of this Agreement as to [***] in this
Agreement, for such Product which breach

 

(a)           is not the result of an event
of Force Majeure,

 

(b)           is not caused by NetApp or a
NetApp DCM,

 

(c)           is not the result of a supply
constraint for a drive or component [***]

 

(d)           [***]

 

(e)           is not cured by Dot Hill within
[***] after receipt by Dot Hill of written notice thereof from NetApp, and

 

(f)            results in a failure by Dot
Hill to deliver on or after NetApp’s FCS and within agreed lead times [***]
that are compliant with the Engineering Specifications and NetApp General
Workmanship Standards under a Purchase Order that is accepted and agreed to by
Dot Hill [***] over a
period of [***] to NetApp and NetApp DCMs, which for such purpose only
demonstrated claims of such failure made within [***] of delivery will be used
in determining this [***];

 

(ii)           Dot Hill Systems Corporation
ceases to do business, and a successor-in-interest to Dot Hill Systems
Corporation fails to provide maintenance support or to assume Dot Hill Systems
Corporation’s obligations hereunder;

 

(iii)          Dot Hill Systems Corporation
(a) becomes insolvent, (b) files or has filed against it a petition under
applicable bankruptcy law, which is not dismissed within [***], (c) pursues any
dissolution with creditors, (d) makes an assignment of its business or
substantial amount of its assets for the benefit of Dot Hill System Corporation’s
creditors, or (e) appoints a receiver, trustee or similar agent to take possession
of the business and properties of Dot Hill Systems Corporation;

 

7

 

(iv)          the Expiration of Initial
Purchase Period for such Product;

 

(v)           Dot Hill Systems Corporation enters into a binding agreement
with a third party where (a) substantially all of Dot Hill Systems Corporation’s
net assets or greater than fifty percent (50%) of the outstanding voting stock
of Dot Hill Systems Corporation is to be acquired by a third party, or Dot Hill
Systems Corporation is to be merged into another company, and (b) such third
party (1) demonstrates, in writing or by action or inaction, an intention not
to honor the provisions of this Agreement, or (2) is [***], and does not state
in writing its intention to honor the provisions of this Agreement; or

 

(vi)          a material breach by Dot Hill of any
material provision applicable to the supply of such Product to NetApp occurs
under this Agreement and such breach is not cured by Dot Hill within a [***]
period after receipt by Dot Hill of written notice thereof from NetApp
provided, however, such breach does not (a) arise or result from a supply
constraint for a drive or component [***] or (b) result from a [***]

 

6.             DELIVERABLES

 

6.1           Subject to the compliance by NetApp with the
provisions of this Agreement, including the payment of all amounts due
hereunder, Dot Hill agrees to supply to NetApp or a NetApp Designated Contract
Manufacturer the following:

 

•              The Development Units in accordance with the
quantities and dates documented in Exhibit C, and

 

•              The Production Units in accordance with the
provisions in Exhibit D, and the quantity of Products on Purchase Orders
that are received from NetApp or a NetApp Designated Contract Manufacturer and
accepted by Dot Hill, for delivery in accordance with the requested delivery
dates specified on such Purchase Order or pursuant to the Kanban replenishment
process specified in Exhibit F.

 

Dot Hill shall be
responsible for submitting and testing the Products that are to be supplied to
NetApp under this Agreement for all regulatory certifications as established in
Exhibit A and Exhibit C.

 

6.2           Subject to the compliance by NetApp with the
provisions of this Agreement, including the payment of all amounts due
hereunder, Dot Hill will provide sustaining activities agreed to by and between
Dot Hill and NetApp for NetApp in the areas of the following for the Products: [***]

 

6.3           Dot Hill will design and test the Product to
satisfy the Engineering Specifications.

 

8

 

6.4           Prototype Product DVT and EVT.  Dot
Hill will perform EVT and DVT to the criteria set forth in Exhibit A,
and shall supply test results thereof to NetApp, and such other requirements as
set forth in Exhibit C (Statement of Work).

 

6.5           Product
Forecasts.  NetApp has provided to Dot Hill an initial volume forecast for each of
the Products (see Exhibit D). NetApp also agrees to provide to Dot Hill [***]
rolling forecast for each of the Products. This rolling forecast, which will be
updated by NetApp on a [***] basis, will be a good faith estimate by NetApp of
NetApp’s future needs for each of the Products over the immediately following [***],
will be non-binding, and is to be used by Dot Hill for planning purposes
only.  NetApp
shall issue Purchase Orders to Dot Hill for units of Products based on the
then-current forecasted demand for such units that are included in the
then-current NetApp forecast that Dot Hill has accepted and agreed to.  In the event that Dot Hill acts as NetApp’s
agent for the purpose of placing Purchase Orders for each of the Products, Dot
Hill shall ensure that all Purchase Orders which are issued on behalf of NetApp
are kept consistent with the then-forecasted demand.  Purchase Commitments for each of the Products may arise only through
the placement of Purchase Orders and Dot Hill’s acceptance thereof.  The [***] for the supply by Dot Hill of
Products to NetApp under this Agreement are described in Exhibit F to
this Agreement.  Notwithstanding anything
to the contrary herein, NetApp will be liable to Dot Hill in accordance with
the provisions of Sections 1.13 and 1.14 of Exhibit F to this Agreement
for any [***] that is (i) [***] or (ii) [***].

 

7.             FINAL PRODUCT ACCEPTANCE

 

NetApp shall deliver a written Final Product Acceptance
for a Product to Dot Hill upon completion of the SOW and Acceptance Criteria (Exhibit
C).

 

8.             SPECIFICATION
CHANGES PRIOR TO DESIGN ACCEPTANCE

 

Requests for changes
made to the Exhibit A, or Exhibit C, (the “EC Requests”)
will be analyzed by Dot Hill and if possible be accommodated within Exhibit A
or Exhibit C.  If this is not possible,
then Dot Hill will use reasonable efforts to advise NetApp of the necessary
effect of the EC Request within [***] of receipt of such request. Such
responses to NetApp’s EC Requests shall specify the reasonable effect to the
development schedule as documented in Exhibit C, and any total cost
required to integrate the requested changes and any Product cost changes (the “EC Response”).

 

Dot Hill will not
proceed with the changes covered under the EC Request until NetApp Supply Chain
Management has approved in writing and agreed to the changes reflected in the
EC Response.  NetApp agrees to accept or
reject the proposed EC Response within [***] after receipt of EC Response from
Dot Hill.  If NetApp does not accept the
EC Response within this [***] period, then NetApp shall be deemed to have
rejected such EC Response.

 

9

 

If Dot Hill chooses to
proceed with any change without NetApp’s written approval, there will be no
charge to NetApp for the implementation of such changes, and there will be no
increase to the quoted Product price to NetApp as a result of the changes made
by Dot Hill.  In the event that Dot Hill
does implement a change that is not approved by NetApp, then NetApp reserves
the right to reject Product implemented with the unapproved change and also to
require Dot Hill to rework the Product to the prior approved design at Dot Hill’s
expense.  If, however, NetApp requests in
writing from NetApp Supply Chain Management for a change to be implemented
prior to Dot Hill’s completion of its evaluation of pricing, schedule and
quality impact, then Dot Hill will undertake reasonable efforts to perform as
directed and [***], unless the change is due to the failure by Dot Hill to
manufacture Products in accordance with the agreed Specifications for the
Product.

 

All change requests will
be maintained by a Dot Hill program manager in a central program change
log.  All changes requested to and from
NetApp shall go through NetApp’s Supply Chain Management function and Dot Hill’s
designated program management function.

 

9.             ENGINEERING
CHANGE AFTER DESIGN ACCEPTANCE

 

9.1           Dot Hill will notify NetApp in writing (i) [***]
prior to the introduction of unplanned changes to the Products which are likely
to affect the form fit, or function of the Products; and (ii) at least [***]
prior to the introduction of any planned change to Products which affects the
form, fit, or function of the Products.  Dot Hill will also notify NetApp within [***]
prior to the introduction of any authorized vendor list component change, or
any major change to Dot Hill’s manufacturing processes for the Products,
including, but not limited to, a change of a Dot Hill DCM, a manufacturing line
move, a major change in the layout of a manufacturing line for Products,
tooling or fixture changes.

 

9.2           Dot Hill will not proceed with such changes to
the Products without agreement from NetApp unless the change is necessary to
eliminate an infringement with a third party’s intellectual property rights, to
cure a Nonconformity or to meet the requirements in the Agreement.

 

9.3           Dot
Hill will evaluate and advise NetApp of the cost or manufacturing impact of any
proposed changes to the Products, which shall include all cost, delivery and
quality implications.  If a change causes
an increase in the cost or the time required by Dot Hill for performance, then,
if NetApp still wishes for such change to be made, the parties may establish
promptly a reasonable adjustment to the price or delivery schedule or both.

 

9.4           Except as otherwise provided in Section 9.2,
Dot Hill will not proceed with changes until NetApp has approved and agreed to
the changes and any cost impacts in writing. NetApp’s approval of and agreement
to these changes will not be unreasonably withheld, delayed or conditioned.
NetApp agrees to accept or reject the proposed change within [***] after
receipt of such written notice. If no 

 

10

 

response
is received from NetApp on a proposed change within the [***] period, the
proposed changed will be deemed rejected by NetApp. If Dot Hill does proceed
with changes without written approval from NetApp Supply Chain Management,
there will be no charge to NetApp for implementation of the change, and no
increase to the quoted Product price.  In
the event that Dot Hill does implement a change that is not approved by NetApp,
then NetApp reserves the right to reject Product implemented with the unapproved
change and also to require Dot Hill to rework the Product to the prior approved
design [***].

 

9.5           If
NetApp requests in writing by NetApp Supply Chain Management for a change be
implemented prior to Dot Hill’s completion of its evaluation of pricing,
schedule and quality impact, then Dot Hill will undertake reasonable efforts to
perform as directed [***] unless the change is due to the failure by Dot Hill
to manufacture Products in accordance with the agreed Specifications for the
Product.

 

9.6           All changes will be managed through the
formal Dot Hill Engineering Change process. 
All changes requested to and from NetApp shall go through NetApp’s
Supply Chain Management function and Dot Hill’s designated program management
function.

 

10.          NRE EXPENSES

 

10.1         Each party may request the other to add or
develop specific additional functionality or features for a product or to
perform certain or modified quality or test requirements for the Products or
create new products which involve non-recurring engineering work (collectively,
“NRE”). 
Any such reimbursement of NRE shall be subject to mutual agreement by
the parties, which will be reflected in Exhibit H, as may be updated or
modified in writing, upon mutual agreement by the parties, at any time and from
time to time.

 

10.1.1         Should the parties agree that a party will
pay the other party for such NRE, the party that intends to perform the
proposed NRE will provide the other party with a quoted expense amount for such
NRE.  If the parties do not reach agreement
on the payment of NRE, if any, for requested engineering work, then the party
quoting such NRE will have no obligation to perform such work.

 

10.1.2          Each party agrees that it will use
commercially reasonable efforts to complete the specific engineering request
agreed upon on the receipt of the other party’s advance written approval, and
that the party performing such NRE will absorb any NRE expenses that it incurs [***].  However, the payment of NRE for any
incremental changes to the scope of an engineering request shall be negotiated
by the parties on a case-by-case basis.

 

11

 

10.2         The parties will meet or confer at mutually
agreed dates and times to update any NRE forecasts, current attainment, cumulative
attainment and exposures contained in Exhibit H.  Also, the parties will hold [***] meetings to
review and, to the extent necessary, amend the NRE assumptions used in
establishing the per unit rate used for allocation of any NRE expenses by Dot
Hill to the Products that are to be provided by Dot Hill to NetApp under this
Agreement.

 

10.3         [***], Dot Hill shall notify NetApp of [***],
Dot Hill shall offer to [***]. For each Product that the parties agree to
include in this Agreement, Dot Hill will use reasonable efforts to make
available Development Units, SQA Units and Production Units of such Product to
NetApp under this Agreement [***].  This obligation shall, however, not
apply in any circumstance where a delay in the potential or actual achievement
of such availability arises or results from any:

 

10.3.1          Decision made by NetApp or a NetApp DCM to
not perform or delay the performance of any test, qualification, inspection,
acceptance or other activities that, if performed, would have permitted
Development Units, SQA Units or Production Units to be received by NetApp or a
NetApp DCM within such timeframe;

 

10.3.2          Negligent, reckless or malicious acts or
omissions by NetApp, a NetApp DCM or their respective employees, agents or
subcontractors; or

 

10.3.3          [***]

 

11.          LICENSE
RIGHTS, RESTRICTIONS AND OWNERSHIP

 

11.1         NetApp
License Rights and Restrictions

 

(a)           Ordinary
Use. Subject to the terms and
conditions of this Agreement, including, but not limited to, the payment by
NetApp of all amounts due for Products and services provided to NetApp under
this Agreement, Dot Hill hereby grants, on behalf of itself and its Affiliates,
to NetApp a worldwide, perpetual, non-transferable (except as permitted under
Section 19 (“Assignment”), non-sublicensable, nonexclusive right and license under
the Dot Hill IPR to: (i) use internally, reproduce, modify and prepare
derivative works of the Dot Hill Technology solely for the purpose of the
development of Products, enhancements thereto and follow-on products; and (ii)
use internally, sell, offer to sell, import, export and other dispose of those
specific units of Products that are purchased by NetApp from Dot Hill under
this Agreement.

 

(b)           Manufacturing Rights. Subject to the terms and conditions of this
Agreement, for each Product Dot Hill hereby grants, on behalf of itself and its
Affiliates, to NetApp:

 

12

 

(i)            [***], a worldwide, revocable in accordance
with Section 11.1(c), non-transferable (except as permitted under Section 19 (“Assignment”)), royalty-free, perpetual, nonexclusive right
and license, without the right to sublicense (except as set forth in Section
11.1(d)): (A) [***] to qualify [***] the manufacture of Products on a
non-commercial basis; and (B) under the Patents of Dot Hill to use internally
and make [***] such Product for the purpose of qualification activities; and

 

(ii)           upon the occurrence of a Trigger Event
relating to such Product,  a worldwide,
perpetual, revocable in accordance with Section 11.1(c), non-transferable
(except as permitted under Section 19 (“Assignment”)),
royalty-free, nonexclusive right and license, without the right to sublicense
(except as set forth in Section 11.1(d)): (A) [***] to perform the Permitted
Purposes for such Product; and (B) under the Patents of Dot Hill to use, make,
sell, offer to sell import, export and otherwise dispose of such Product.

 

(c)           Certain Rights of
Revocation.  Each party acknowledges and agrees that the
license rights granted to NetApp in Section 11.1(b) above may be revoked
immediately by Dot Hill, upon written notice to NetApp, in the event of the
occurrence of any of the following events: (1) during the Initial Purchase
Period NetApp does not acquire from Dot Hill all of NetApp’s requirements for
Products; (2) despite Dot Hill’s compliance
with the product availability, quality, cost and support requirements for the
Products as set forth in this Agreement, [***] set forth in Sections 4 and 5 of
Exhibit J; (3) despite the satisfactory performance by Dot Hill of all
of its material obligations under this Agreement, NetApp does not provide an
opportunity to Dot Hill to (i) [***], and (ii) [***], including, without
limitation, the ability to [***]; or (4)
this Agreement is terminated by Dot Hill in accordance with its terms due a
material breach thereof by NetApp.

 

(d)           Sublicense Rights.  The
rights granted in Section 11.1(b) above may be sublicensed by NetApp to (i)
NetApp DCMs solely to make and develop Products for sale to NetApp and (ii) its
Affiliates.  Prior to the granting by
NetApp of such sublicense rights to NetApp DCMs or its Affiliates, NetApp shall
obtain the written agreement of NetApp DCMs or its Affiliates, as applicable,
to hold in confidence all Dot Hill Technology NetApp may provide and, in the case
of a grant of sublicense rights to NetApp DCMs, for NetApp DCMs to use such Dot
Hill Technology solely to make or develop Products for sale to NetApp. Except
as is otherwise set forth in this Section 11.1(d), the license rights granted
by Dot Hill in this Agreement may not be sublicensed by NetApp to any other
third parties without the prior written approval from an authorized
representative of Dot Hill.

 

13

 

(e)           License Restrictions. 
NetApp acknowledges and agrees that (i) the Dot Hill Technology is
confidential to Dot Hill; (ii) NetApp shall not disclose to any third party,
other than NetApp DCMs or parties authorized in writing by Dot Hill, the Dot
Hill Technology; and (iii) NetApp shall have no rights to use any Dot Hill
Technology, except as expressly provided for in this Agreement.

 

11.2         Dot Hill License Rights and
Restrictions

 

(a)           NetApp Designated Technology. 
NetApp hereby grants, on behalf of itself and its Affiliates, to Dot
Hill a worldwide, perpetual, non-transferable (except as permitted under
Section 19 (“Assignment”)), nonexclusive,
royalty-free right and license, without the right to sublicense (except as set
forth in Section 11.2(c)), under the NetApp IPR to use, reproduce, modify, [***]
and distribute, directly or indirectly, the NetApp Designated Technology only
to develop and make Products for sale and delivery by Dot Hill pursuant to this
Agreement to NetApp,  NetApp DCMs and/or
NetApp Authorized Purchasers.

 

(b)           NetApp Other Technology. NetApp hereby grants, on behalf of itself
and its Affiliates, to Dot Hill a worldwide, perpetual, non-transferable
(except as otherwise permitted under Section 19 (“Assignment”)),
nonexclusive, royalty-free (except as otherwise provided in Exhibit O)
right and license, without the right to sublicense (except as set forth in
Section 11.2(c)): (i) under the NetApp IPR to use, reproduce, modify, [***] and
distribute, directly or indirectly, the NetApp Other Technology (but
specifically excluding NetApp Designated Technology) to develop and make
Products; and (ii) under the Patents of NetApp to use, make, sell, offer to
sell, import, export and otherwise dispose of Products.  Royalties, if any, due from Dot Hill, the payment
terms applicable thereto and any terms for revocation with respect to the use
by Dot Hill, in accordance with the provisions of Section 11, of any items of
NetApp Other Technology shall be set forth in Exhibit O.

 

(c)           Sublicense Rights.  The
rights granted in Sections 11.2(a) and 11.2(b) above may be sublicensed by Dot
Hill to (i) Dot Hill DCMs to make Products for Dot Hill and (ii) its
Affiliates.  Prior to the granting by Dot
Hill of such sublicense rights to Dot Hill DCMs or its Affiliates, Dot Hill
shall obtain the written agreement of Dot Hill DCMs or its Affiliates, as
applicable to hold in confidence all NetApp Designated Technology and NetApp
Other Technology that Dot Hill may provide and, in the case of a grant of
sublicense rights to Dot Hill DCMs, for Dot Hill DCMs to use such NetApp
Designated Technology and NetApp Other Technology solely to make Products for
sale to Dot Hill.  Except as is otherwise
set forth in this Section 11.2(c), the license rights granted by NetApp in this
Agreement 

 

14

 

may
not be sublicensed by Dot Hill to any other third parties without the prior
written approval from an authorized representative of NetApp.

 

(d)           License Restrictions. Dot Hill acknowledges and agrees that (i)
the NetApp Designated Technology and NetApp Other Technology are confidential
to NetApp; (ii) Dot Hill shall not disclose to any third party, other than Dot
Hill DCMs or parties authorized in writing by NetApp, the NetApp Designated
Technology or NetApp Other Technology; and (iii) Dot Hill shall have no rights
to use any NetApp Designated Technology or NetApp Other Technology, except as
expressly provided for in this Agreement.

 

11.3         No Other Rights Granted. 
Except as expressly set forth above in this Section 11, neither party
shall be deemed to grant to the other party, either directly or by implication,
estoppel or otherwise, any license rights under any Intellectual Property
Rights that a party may own or possess.

 

11.4         Future Desired License Rights.  If NetApp desires for a NetApp DCM to make
for and sell to parties other than NetApp any of the Products, then Dot Hill
and NetApp agree to negotiate in good faith the provisions, including any
royalties or fees, applicable to the potential grant of any additional license
rights under the Dot Hill IPR or Dot Hill Technology that may be necessary to
address such circumstance.  Also, if Dot
Hill decides to revoke NetApp’s
license rights pursuant to Section 11.1(c) above and NetApp desires to continue
to make use of the Dot Hill IPR or Dot Hill Technology to manufacture, or have
a NetApp DCM manufacture for NetApp, the applicable Products, then Dot Hill and
NetApp agree to negotiate in good faith [***] in accordance with the license
rights previously granted by Dot Hill to manufacture such Products. [***]

 

11.5         Intellectual Property Ownership Rights

 

(a)           Background IPR.  As
between NetApp and Dot Hill: (i) NetApp and its licensors shall retain title to
and all ownership rights and interests in and to the NetApp Background IPR, and
(ii) Dot Hill and its licensors shall retain title to and all ownership rights
and interests in and to the Dot Hill Background IPR.

 

(b)           Foreground IPR.  As
between NetApp and Dot Hill: (i) NetApp shall own all NetApp Foreground IPR,
subject to the underlying ownership rights and interests of Dot Hill in and to
any Dot Hill Background IPR; and (ii) Dot Hill shall own all Dot Hill
Foreground IPR, subject to the underlying ownership rights and interests of
NetApp in and to any NetApp Background IPR.

 

(c)           Jointly Developed IPR.  As
between NetApp and Dot Hill, each party shall jointly own any Jointly Developed
IPR subject to the underlying ownership rights and interests of (i) NetApp in
and to any NetApp 

 

15

 

Background
IPR and NetApp Foreground IPR, and (ii) Dot Hill in and to any Dot Hill
Background IPR and Dot Hill Foreground IPR. 
Notwithstanding the foregoing, the authorized representatives of both of
the parties may mutually agree during the term of this Agreement that certain
item(s) of Jointly Developed IPR should be owned exclusively by one of the
parties.  If the authorized
representatives of the parties so agree, then the parties will enter into and
execute a written assignment covering the transfer of such item(s) of Jointly
Developed IPR to NetApp or Dot Hill, as applicable, subject, however, to the
condition that such item(s) will become NetApp Designated Technology, NetApp
Other Technology or Dot Hill Technology, as the authorized representatives of
the parties shall so designate in such written assignment, and covered under
the license grants and restrictions applicable thereto in Section 11 of this
Agreement.

 

(d)           No Duty to Account.  For
Jointly Developed IPR, neither party will have a duty to account to the other party,
or to pay any share of any revenue or compensation earned or received, with
respect to its use or exploitation; provided, however, if such Jointly
Developed IPR contains Background IPR or Foreground IPR of the other party,
then the party desiring to use or exploit such Jointly Developed IPR will not
be able to do so unless and until it has received appropriate rights from the
other party under such Background IPR or Foreground IPR to permit such use or
exploitation.

 

11.6         [***].  In the event that a Trigger
Event, other than the expiration of the Initial Purchase Period, occurs and a
Dot Hill DCM becomes a NetApp DCM in order to make Products for supply to
NetApp, then any manufacture or other production of such Products may, at
NetApp’s option, [***] provided, however, that: (i) this right may be exercised
by NetApp for a period of [***] following the date of such Trigger Event [***];
and (ii) NetApp shall be entitled to [***] [***] that NetApp would have been [***]
under this Agreement, based on the application of the [***] Exhibit F
and determined as if NetApp had elected to purchase such Products from Dot
Hill, instead of from a Dot Hill DCM. 
Upon the occurrence of a Trigger Event due to the expiration of Initial
Purchase Period, notwithstanding anything to the contrary herein, NetApp
acknowledges and agrees that it shall have no right [***].

 

12.          PRODUCT
PRICING

 

12.1         The initial Total Price and costed Bill-Of-Materials (“BOM”) for each of the Products that may be purchased by
NetApp or a NetApp Designated Contract Manufacturer from Dot Hill under this
Agreement is included in Exhibit B. 
The Total Price for each of the Products and the high-level BOM for each
of the Products will be provided by Dot Hill and jointly reviewed [***] after
the Final Product Acceptance. Dot Hill shall provide complete, accurate and
detailed bills-of-materials in the form and format as set forth in Exhibit B
as may be updated from time to time. 
Product prices shall not be changed unless mutually agreed 

 

16

 

to by the parties.  If the Total Price for a Product is changed, Exhibit
B shall be updated to reflect the new Total Price for such Product.

 

12.2        The Total Price for each Product is set forth in
Exhibit B along with full-costed BOM breakdowns. To the extent not
prevented by confidentiality restrictions, these BOM breakdowns will disclose [***],
Dot Hill will provide (i) [***], and (ii) [***].  Dot Hill will work with NetApp throughout the
life of the Products on cost reductions with the desire to aggressively drive
down costs while maintaining the quality of the Products.

 

12.3        While this Agreement is in effect, Dot Hill
will provide NetApp with [***] and the other applicable terms and conditions in
this Agreement.  If, at any time during
the term of this Agreement, Dot Hill [***], Dot Hill shall immediately [***].
In the event that Dot Hill does not [***], then Dot Hill shall [***].

 

12.4        Each party agrees to participate in ongoing [***]
cost reduction activities for the Product. All changes will be documented and
updated in accordance with the provisions of Exhibit B, which may be
updated at any time and from time to time by the parties upon mutual
agreement.  [***] to a Product that Dot
Hill has agreed to undertake and provide to NetApp after the Effective Date, as
described in Exhibit B and/or Exhibit H, Dot Hill will [***]. Any
then-existing units of Product for which such cost reductions have not been
implemented will be [***] provided, however, that Dot Hill has used reasonable
efforts to [***].  Dot Hill shall [***]
which are included in units of a Product sold to NetApp and/or a NetApp DCM
under this Agreement [***].

 

13.          ESCROW

 

13.1         Establishment of Escrow:  As
of the beginning of NetApp’s FCS of each Product, and for the duration of each
Product’s mutually agreed upon manufacturing life, Dot Hill agrees to place one
complete copy of Dot Hill Technology into escrow with an escrow agent
acceptable to both parties for the benefit of NetApp pursuant to a mutually
agreed upon escrow agreement. Dot Hill and NetApp will work in good faith to
establish such mutually agreed escrow agreement with such escrow agent prior to
NetApp’s FCS for each applicable Product. 
In accordance with the provisions of Section 13.4.1, Dot Hill agrees to
update the Dot Hill Technology for each Product, and keep such Dot Hill
Technology that has been deposited current during the term of the escrow
agreement. The escrow agreement shall provide that no earlier than (i) [***]
before the date on which the Initial Purchase Period is anticipated to end for
a Product, or (ii) the date on which any other Trigger Event occurs for such
Product, whichever occurs first, the escrow agent shall release the Dot Hill
Technology to NetApp for such Product. 
Dot Hill Technology to be placed into escrow for each of the applicable Products will include [***]

 

17

 

13.2        Dot Hill Authorizations

 

As
of the beginning of NetApp’s FCS of each Product, and for the duration of each
Product’s mutually agreed upon manufacturing life, Dot Hill shall deposit into
the established escrow account the following written authorizations:

 

(a)           for NetApp to use Dot Hill’s suppliers and
Dot Hill DCMs to provide components and services for the Products to NetApp and
NetApp DCMs, and

 

(b)           to Dot Hill DCMs to allow NetApp and NetApp
DCMs to [***].

 

The
authorizations shall contain conditions that (i) [***], (ii) [***] written
agreements entered into by NetApp or NetApp DCMs with such suppliers and/or Dot
Hill DCMs, and (iii) Dot Hill will have no obligation, liability or
responsibility to any such suppliers and/or Dot Hill DCMs for [***] NetApp or
NetApp DCMs in connection with the manufacture of Products.

 

13.3         Improvements made by the employees or
contractors of NetApp or a NetApp Designated Contract Manufacturer, while using
Dot Hill Technology pursuant to Section 11 and Section 13, do not require use
of the process for Engineering Changes set forth in Sections 8, 9, and 10 of
this Agreement. All other improvements made by the employees or contractors of
NetApp or a NetApp Designated Contract Manufacturer, outside of the process
during which, or before, Dot Hill Technology is released from escrow pursuant
to Section 13 and licensed for use pursuant to Section 11, and all improvements
made by Dot Hill in connection with the Products to be supplied hereunder at
any time during the term of this Agreement shall require the use of the process
for Engineering Changes set forth in Sections 8, 9, and 10 of this Agreement.
Any resulting Intellectual Property Rights shall be owned as set forth in
Section 11 of this Agreement.  Dot Hill’s
cooperation with respect to processing these Engineering Changes shall not be
unreasonably withheld.

 

13.4         Updates, Format and Completeness

 

13.4.1      Dot
Hill shall deposit updates into escrow, in accordance with the following
sentence, either quarterly or upon ECO changes that affect (i) form, fit or
function, (ii) supplier source for components and/or (ii) process changes, whenever
any such changes occur.  Dot Hill shall
deposit updates into escrow or, if a Trigger Event has occurred, provide such
updates directly to NetApp, for (1) [***]
following the expiration or earlier termination of this Agreement, for any
reason, or (2) at least as long after the expiration or earlier termination of
this Agreement as NetApp has support and warranty obligations to its end users,
whichever period is shorter.  Dot Hill
will provide to NetApp a summary of all changes which are submitted into the
escrow account on a [***]
In the event that no updates are made within the quarter, Dot Hill shall
affirmatively notify NetApp [***].

 

18

 

13.4.2      Computer readable data included in Dot Hill
Technology is, as of the Effective Date of this Agreement, being utilized by
Dot Hill as follows:

 

[***]

 

Dot Hill shall notify NetApp within a
reasonable period of time, but [***] of any changes to the configurations above
which could affect NetApp’s ability to utilize in a manner intended the Dot
Hill Technology.

 

13.4.3      Dot
Hill warrants that the Dot Hill Technology that it places into escrow shall be
and continue to be current, accurate and sufficiently complete so as to enable
the manufacture by NetApp or a NetApp Designated Contract Manufacturer of
Products for NetApp in compliance with the specifications and quality standards
contained in this Agreement.

 

13.5         [***].  Dot Hill agrees to provide NetApp with [***]
for the purpose of performance of [***]. 
Unless otherwise agreed, NetApp’s use of such items [***].  Also, if NetApp desires for Dot Hill to
perform any [***].

 

13.6         Confidential Nature of Dot Hill Technology.  NetApp acknowledges and agrees that the Dot
Hill Technology is Confidential Information belonging to Dot Hill.  Prior to NetApp’s provision of any such Dot
Hill Technology to a NetApp DCM or any other third party, NetApp will enter
into a written agreement that requires such NetApp DCM or other third party to
treat such Dot Hill Technology as Confidential Information of Dot Hill and in a
manner consistent with the confidentiality obligations of NetApp in the
Non-Disclosure Agreement contained in Exhibit I hereto.  NetApp shall, however, not disclose any Dot
Hill Technology to any third party, without obtaining the prior written
approval of an authorized representative of Dot Hill, unless: (i) such
disclosure is made for the purpose of either: (a) enabling a third party to
work with a NetApp DCM to have such NetApp DCM make Product for sale to NetApp,
(b) permitting NetApp to establish a business relationship with a third party
whereby such third party will acquire from NetApp a NetApp storage solution
which contains Products sold by NetApp, or (c) permitting a third party to
develop for NetApp enhancements to or derivative Products; and (ii) such third
party has a strict need to know such Dot Hill Technology in order to perform
its obligations associated with or related to such purpose.  This obligation shall not prevent or restrict
NetApp’s right to use the Dot Hill Technology in a manner that is consistent
with the license rights granted by Dot Hill and related restrictions in Section
11 of this Agreement.

 

13.7         [***]
escrow account that is contemplated under this Section 13.

 

19

 

14.          PAYMENT TERMS

 

All invoices to NetApp and a NetApp Designated
Contract Manufacturer shall be due and payable within [***] from the date of
invoice, and shall be [***]  NetApp’s
payment advice shall reference Dot Hill’s invoice number(s) and date(s).  NetApp payments will be considered timely by
Dot Hill if mailed within [***] from the date of invoice.  Upon [***] prior written notice to NetApp,
Dot Hill reserves the right to [***] Dot Hill prior to delivery of
Products.  [***] location set forth in Exhibit
F.  All amounts due hereunder
(including, without limitation, any [***]) shall be paid by NetApp or a NetApp
Designated Contract Manufacturer to Dot Hill in U.S. dollars.

 

Dot
Hill will work in good faith with NetApp [***]
at a future date to be determined.

 

15.          RIGHTS TO ACCESS AND OTHER MATTERS

 

15.1         [***], Dot Hill will allow NetApp Operations
and Technical Teams full access to audit, qualify and continue to interact
throughout the life of the Product with Dot Hill [***] within reason and with
reasonable notice prior to onsite audits. Dot Hill will also use commercially
reasonable efforts to close actions raised if any concerns [***] are raised by
NetApp. NetApp will inform Dot Hill of any intention to [***]; Dot Hill will
facilitate NetApp inquiries into [***]. 
These rights to access and audit [***] Dot Hill shall extend to auditing
compliance with applicable ROHS, WEEE, and other environmental regulations that
apply to the manufacture of the Products.

 

15.2         During the term of this Agreement before and
during which NetApp is acquiring Products from Dot Hill, Dot Hill will make
available to NetApp (i) during normal business hours, Pacific Standard Time
(excluding weekends and holidays) and, (ii) during extended NetApp hours, as
required, at the beginning and end of a NetApp fiscal quarter, the services of
an individual to perform the Buyer/Planner responsibilities for the Products,
and an individual to perform Dot Hill SQE responsibilities for the Products, as
such responsibilities are described in Exhibit M.  These
individuals will be located at NetApp’s facility in Sunnyvale,
California. NetApp will make available to these individuals, at no charge,
access to work space, a desk, a telephone and other equipment to enable these individuals
to perform their assigned responsibilities.

 

16.          PRODUCT
ORDERING AND DELIVERY

 

16.1         This Agreement sets forth the terms and
conditions under which NetApp shall order the Products and shall replace and
supersede, in their entirety, all of the printed Purchase Order terms and
conditions appearing on NetApp’s Purchase Order or Dot Hill’s acknowledgement
or related forms, or any other form of NetApp or Dot Hill, and any other
conditions which may be submitted at any time by either company, unless mutually
agreed by both parties in writing.

 

20

 

16.2         Terms of the order and fulfillment process
and obligations of the parties for delivery and return of Products are
documented in Exhibit F (Order Replenishment and Logistics
Requirements).

 

17.          TITLE

 

Title
to hardware included in Products will pass to NetApp when such Products [***].
Dot Hill reserves a purchase money security interest in all such Products,
which will be extinguished upon payment in full of amounts due for such
Products.  All risk of loss or damage to
the Product will pass to NetApp [***].

 

18.          CONFIDENTIALITY

 

Attached hereto as Exhibit
I is a Mutual Non-Disclosure Agreement between the parties which shall
govern all confidentiality obligations (including obligations regarding
information non-disclosure and use) applicable hereunder to the parties with
respect to the subject matter of this Agreement.  Notwithstanding the foregoing, each party
shall hold in confidence and not disclose to any third parties, without first
obtaining the prior written consent of the other party, the terms and
conditions of this Agreement, including, without limitation, the pricing for
Products contained in Exhibit B and other non-public information related
to actual and potential activities occurring under this Agreement; provided,
however, that each party may, without obtaining the other party’s written
consent, disclose terms and conditions of this Agreement and other non-public
information related to actual and potential activities occurring under this
Agreement (i) as required by law, statute or regulation, or any court or other
governmental body, (ii) in confidence to legal counsel of a party, (iii) in
confidence to a the accountants, banks and financing sources of a party, and
its advisors, (iv) to the extent necessary to enforce a party’s rights under
this Agreement, and (v) in confidence in connection with an actual or proposed
merger, acquisition or other similar transaction.  In connection with any filing of this
Agreement with the Securities and Exchange Commission or other regulatory body
pursuant to the provisions in Subsection 18(i) above, the parties will work
together and in good faith to request promptly, and in a manner consistent with
a party’s then-existing filing obligations to permit such filing to occur on a
timely basis, confidential treatment for appropriate sections of this Agreement
that qualify for such confidential treatment.

 

19.          ASSIGNMENT

 

Neither party shall
assign any of its rights nor delegate any of its obligations under this
Agreement to any other persons or firm without the prior written consent of the
other party.  Notwithstanding the
foregoing, a party hereto may assign this Agreement, upon written notice to the
other party, to a successor-in-interest of all or a majority of its outstanding
stock or voting securities or to a purchaser of all or substantially all of its
assets.  Any attempted assignment or
delegation in violation of the foregoing shall be null and void.  The benefits of this 

 

21

 

Agreement shall inure
upon the each party’s respective permitted assigns and successors.

 

20.          TERMINATION
RIGHTS

 

20.1         Termination of this Agreement for any reason
shall not affect the rights and obligations of the parties accrued through, up
to, or prior to the effective date of termination except as expressly set forth
herein.

 

20.2         The parties agree that all reasons for
termination set forth in Section 20.3 constitute just cause for termination.

 

20.3         Each party will have the right to terminate this
Agreement in the event the other party breaches any provision of this Agreement
and fails to correct the breach within [***] of
receiving written notice of such a breach. In the event the breach is not
cured, this Agreement will terminate on the date specified in a separate notice
of termination.

 

20.4         Each party shall have the right to terminate this
Agreement at any time after the first [***] from the Effective Date,
without cause, on the giving of [***]
prior written notice. Except for breach under Section 20.3, neither party shall
be responsible to the other for any costs or damages resulting from the
termination or non-renewal of this Agreement.

 

21.          APPLICABLE
LAW, ESCALATION AND ARBITRATION

 

21.1         This Agreement shall be governed by the laws
of the State of California, except with respect to its conflict of laws
provisions that would result in the application of the laws of a different
state. The parties specifically disclaim the applicability of the United
Nations Convention on the International Sale of Goods.

 

21.2         The parties agree that any material dispute
between the parties relating to this Agreement will be escalated to a panel of
two (2) senior executives, one each from Dot Hill and NetApp.  Either party may initiate this proceeding by
notifying the other party pursuant to the notice provisions of this
Agreement.  Within [***] from the date of
receipt of the notice, the parties’ executives shall confer (via telephone or
in person) in an effort to resolve such dispute. In the event the executives
are unable to resolve such dispute within [***] after the submission to them,
then, upon the written request of a party, such dispute may be settled by means
of arbitration as provided below.  Each party’s
executives shall be identified by written notice to the other party, and may be
changed at any time by written notice pursuant to the notice provisions of this
Agreement.

 

21.3         Any dispute between the parties named in this
Agreement that is not resolved by escalation shall be settled by arbitration
under the then-current rules of the Judicial Arbitration and Mediation Services
(“JAMS”), including the right of either 

 

22

 

party to conduct discovery in accordance with
the laws of the State of California.  The
site for any arbitration proceeding shall be Santa Clara County,
California.  The parties shall agree and
select a single arbitrator. The arbitrator so chosen shall be knowledgeable in
the field of computer hardware and software, and in the field of commercial
law. The decisions of the arbitrator shall be deemed final, without appeal:
provided however, that either party may seek judicial resolution of any issue
involving such party’s Intellectual Property Rights or Technology, and such
judicial resolution shall take precedence over any decision of the arbitrators.
All questions of law shall be decided in accordance with the laws of the State
of California. In the event that one party breaches any of its obligations
under this Agreement, in addition to all other remedies provided in this
Agreement, the prevailing party shall be entitled to all costs and expenses of
enforcement reasonably incurred as a result of said breach, including
arbitration costs, court costs and reasonable attorney’s fees.

 

22.          LIMITED
LIABILITY

 

22.1         STRICT LIABILITY INDEMNITY

 

Each
party agrees to indemnify the other harmless from and against all costs and
liabilities, including reasonable attorney’s fees, which such party may be required
to pay to the extent arising out of bodily injuries to third persons or
physical damage to tangible personal property that is caused by the gross
negligence, recklessness or willful misconduct of such party, its agents or
employees.

 

22.2         LIMITATION OF REMEDY

 

EXCEPT FOR DOT HILL’S INDEMNITY LIABILITIES UNDER SECTION 24.1 AND ANY
BREACHES BY DOT HILL OF CONFIDENTIALITY PROVISIONS IN THE MUTUAL NON-DISCLOSURE
AGREEMENT INCORPORATED BY REFERENCE INTO THIS AGREEMENT, ANY LIABILITY OF DOT
HILL RESULTING FROM ANY PRODUCTS SOLD OR SERVICES PROVIDED BY DOT HILL PURSUANT
TO THIS AGREEMENT SHALL BE LIMITED SOLELY TO THE REMEDIES SET FORTH IN THE
WARRANTY PROVISIONS OF THIS AGREEMENT. 
IN NO EVENT SHALL DOT HILL BE LIABLE FOR COSTS OF PROCUREMENT OF
SUBSTITUTE GOODS BY NETAPP, NETAPP’S CUSTOMERS, OR ANY OTHER OWNER OR USER OF
THE PRODUCTS OR ANY SERVICES, OR FOR LOST PROFITS OR LOSS OF ANY DATA. EXCEPT
WITH RESPECT TO DOT HILL’S INDEMNITY LIABILITIES UNDER SECTION 24.1 OR ANY
BREACHES BY DOT HILL OF CONFIDENTIALITY PROVISIONS IN THE MUTUAL NON-DISCLOSURE
AGREEMENT INCORPORATED BY REFERENCE INTO THIS AGREEMENT, DOT HILL’S MAXIMUM
LIABILITY UNDER THIS AGREEMENT, HOWEVER ARISING, SHALL IN NO EVENT EXCEED [***]
PERIOD PRECEDING THE EVENT THAT CAUSED THE DAMAGE AND WHICH CAUSED THE
LIABILITY TO OCCUR.  IN NO EVENT 

 

23

 

SHALL THIS AGREEMENT BE CONSTRUED SO AS TO REDUCE THE PROPRIETARY
RIGHTS OF DOT HILL.

 

22.3         LIMITATION OF DAMAGES

 

EXCEPT FOR ANY FAILURE TO COMPLY
WITH THE PROPRIETARY OR LICENSE RIGHTS PROVISIONS IN THIS AGREEMENT, THE
REQUIREMENTS PROVISIONS WHICH APPLY TO THE PURCHASE BY NETAPP OF PRODUCTS IN
THIS AGREEMENT, OR ANY CONFIDENTIALITY PROVISIONS IN THE MUTUAL NON-DISCLOSURE
AGREEMENT INCORPORATED BY REFERENCE INTO THIS AGREEMENT, IN NO EVENT SHALL
EITHER PARTY BE LIABLE FOR ANY INJURY OR DAMAGE TO BUSINESS, PROFITS, REVENUES
OR GOODWILL OF ANY PARTY OR FOR ANY SPECIAL, CONSEQUENTIAL, INDIRECT, EXEMPLARY
OR INCIDENTAL DAMAGES, HOWEVER CAUSED, AND WHETHER FOR BREACH OF WARRANTY,
BREACH OF CONTRACT, REPUDIATION OF CONTRACT, TERMINATION, NEGLIGENCE, OR
OTHERWISE, EVEN IF A PARTY SHALL HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH
DAMAGES.

 

22.4         ESSENTIAL PURPOSE

 

THE PARTIES ACKNOWLEDGE AND AGREE THAT THE AMOUNTS PAYABLE UNDER THIS
AGREEMENT HAVE BEEN ESTABLISHED BASED UPON THE LIABILITY LIMITATIONS
ESTABLISHED ABOVE, AND FURTHER AGREE THAT THESE LIMITATIONS SHALL APPLY
NOTWITHSTANDING ANY FAILURE OF ESSENTIAL PURPOSE OR OF ANY LIMITED REMEDY.

 

23.          WARRANTIES

 

23.1         Dot Hill warrants to NetApp that all hardware
Products that NetApp and NetApp DCMs purchase from Dot Hill under this
Agreement shall for a period of [***] from the date of their delivery by Dot
Hill to NetApp or a NetApp Designated Contract Manufacturer (the “Warranty Period”),: (i) be free in all material respects
from any defects in materials as defined in Exhibit E and workmanship as
defined in Exhibit K, (ii) conform in all material respects to the
Engineering Specifications in Exhibit A, and (iii) comply with all
applicable laws relating to the restriction on the use of hazardous substances
in electrical and electronic equipment (“ROHS”) in
connection with the manufacture by or for Dot Hill of such Products, and
collection, treatment, recycling and disposal of waste electrical and
electronic equipment (“WEEE”) in
connection with any disposal activities conducted by Dot Hill for such
Products.  Notwithstanding the foregoing,
the Warranty Period for any replacement Products that are provided by Dot Hill
under this warranty shall be no longer than the remaining Warranty Period for
the original replaced Products [***]. The foregoing warranty shall include
parts and labor for the Products, [***]. 
If a Product provided by Dot Hill to NetApp under this Agreement (a)
fails to conform to this warranty during the Warranty 

 

24

 

Period,
(b) is subject to repair or replacement in accordance with the foregoing
warranty, and (c) is returned to Dot Hill within the Warranty Period, then Dot
Hill will use reasonable efforts to, at Dot Hill’s option, repair or replace
such Product to resolve the reported non-conformance in warranty within the
applicable period established in Exhibit F, or, [***] to NetApp under
this Agreement.  Notwithstanding anything
to the contrary in this Agreement, any re-invoicing by Dot Hill for a Product
provided by Dot Hill in connection with its warranty responsibilities herein
shall be at the same amount as the corresponding credit set forth in the
immediately preceding sentence.  Any
replacement Product provided by Dot Hill to NetApp in exchange for a Product
provided by NetApp to Dot Hill pursuant to these warranty provisions shall be
new if provided back to Dot Hill as new or as “Dead on Arrival”, and
refurbished or new, at Dot Hill’s discretion, if provided back to Dot Hill as
used.  For purpose of interpretation of
the immediately preceding sentence, the term “new” shall mean title has not
transferred from NetApp to a third party. NetApp or a NetApp Designated
Contract Manufacturer shall provide prompt written notification to Dot Hill of
all failures of any Products to conform to warranty promptly after NetApp has
been notified of the occurrence of such failures.  Any Product that is returned during the
Warranty Period to Dot Hill pursuant to this warranty (1) [***] in a mutually
agreed format, contains sufficient information to permit Dot Hill to understand
the warranty non-conformance and includes a Dot Hill Return Materials
Authorization (“RMA”) number, and (2) shall be
delivered, [***], to Dot Hill’s nearest repair or distribution location Dot
Hill’s warranty obligations hereunder shall be contingent upon the fulfillment
of each of the foregoing obligations. In no event shall Dot Hill’s warranty
obligations under this Agreement extend to any Products that NetApp has not
purchased for intended delivery to a third party customer, for demonstration or
evaluation purposes, or for internal production use within NetApp. Upon written
request by NetApp and to the extent applicable to those activities undertaken
by Dot Hill in connection with the manufacture or disposal of Products, Dot
Hill shall provide to NetApp all applicable ROHS, WEEE and other environmental
regulation compliance certifications for the Products sold by Dot Hill to
NetApp under this Agreement.

 

23.2         This warranty is contingent upon proper use
of Products in NetApp’s systems, and does not cover any Products: (i) that are
altered or modified without Dot Hill’s written approval; (ii) that are
subjected by NetApp or NetApp’s customer to unusual physical or electrical
stress; (iii) that are the subject of misuse, negligence, accident or abuse;
(iv) that are used or maintained in a manner other than as required by NetApp’s
customer documentation for Products; (v) for which serial numbers or other
markings have been altered, removed or rendered illegible; or (vi) which do not
qualify for warranty coverage under any warranty that NetApp provides to a
customer for the Products.

 

23.3         EXCEPT AS SET FORTH IN SECTION
23.1 ABOVE, DOT HILL DISCLAIMS AND EXCLUDES ALL WARRANTIES FOR THE
PRODUCTS.  IF DOT HILL HAS RECEIVED A
WARRANTY FROM A THIRD PARTY VENDOR FOR 

 

25

 

COMPONENTS INCLUDED IN PRODUCT, DOT HILL SHALL PASS ANY SUCH WARRANTY
THROUGH TO NETAPP TO THE EXTENT DOT HILL IS PERMITTED TO DO SO BY LAW AND BY
CONTRACT. HOWEVER, THE COMPONENTS CONTAINED IN OR DISTRIBUTED FOR USE IN THE
PRODUCTS OR OTHERWISE PROVIDED ARE WITHOUT WARRANTY AND “AS IS”.  ALSO, EXCEPT AS IS OTHERWISE EXPLICITLY
PROVIDED IN THIS AGREEMENT, THE GRANT BY A PARTY OF ANY RIGHTS UNDER ANY DOT
HILL IPR, DOT HILL TECHNOLOGY, NETAPP IPR AND NETAPP TECHNOLOGY IS MADE WITHOUT
WARRANTY AND ON AN “AS IS” BASIS.

 

23.4         DOT HILL’S OBLIGATIONS AS SET
FORTH ABOVE SHALL BE NETAPP’S SOLE AND EXCLUSIVE REMEDY FOR DOT HILL’S BREACH
OF THE WARRANTIES SET FORTH ABOVE.  DOT
HILL MAKES NO OTHER WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, AND HEREBY
DISCLAIMS THE IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE AND NON-INFRINGEMENT OF THIRD PARTY RIGHTS, IN CONNECTION WITH ANY
PRODUCTS SOLD OR SERVICES PROVIDED BY DOT HILL UNDER THIS AGREEMENT, EVEN IF
THESE REMEDIES FAIL OF THEIR ESSENTIAL PURPOSE.

 

23.5         Each party represents and warrants to the
other that it has the full and complete right and power to enter into and fully
perform this Agreement and, to the knowledge of its counsel and executive
officers as of the Effective Date, to grant the rights and licenses contained
in this Agreement.

 

23.6         Ultra-Hazardous Use. 
NetApp shall not use or sell any Products for use in operation of
nuclear facilities, in aircraft navigation, in aircraft communication, in
aircraft flight control, in aircraft air traffic control systems, in weapons devices
or systems, or in other devices or systems in which a malfunction of the
Products (including, without limitation, software related delay or failure)
would result in foreseeable risk of injury or death to the operator of the
device or system, or to others.

 

24.          INDEMNIFICATION

 

24.1         Dot Hill Indemnity.   Subject to the terms,
conditions and limitations set forth below, Dot Hill, at its own expense,
shall indemnify, hold harmless, defend, or at its option settle, NetApp or
the NetApp Designated Contract Manufacturer from and against any third party
claim, suit or proceeding brought against NetApp or the NetApp Designated
Contract Manufacturer to the extent based upon any of the following “Dot Hill Infringement Claims”:

 

(a)           the misappropriation by Dot Hill or a Dot
Hill Designated Contract Manufacturer of any trade secret recognized as such
under Uniform Trade Secret Acts in the U.S. pertaining to the Products,

 

26

 

(b)           the infringement of any Dot Hill trademark
applied to or associated with the Products, or

 

(c)           the infringement of any United States or
foreign patent or copyright by any of the following:

 

(i)            a method or process used in the manufacture
of the Product as existing upon transfer of Manufacturing Rights after the
Initial Purchase Period,

 

(ii)           a method or process used by Dot Hill or the
Dot Hill DCM in the manufacture of the Product, or

 

(iii)          the Product, unless such infringement is
based on an embodiment in the Product of NetApp’s Background Intellectual
Property, NetApp Derivative IP or NetApp IP covered by the patent or copyright.

 

The
foregoing Dot Hill indemnification obligations are conditioned upon the
following: (i) upon receipt of notice of any such claim, suit or proceeding,
the indemnified party shall immediately inform Dot Hill in writing of the
claim, suit or proceeding, and give Dot Hill sole and
complete authority to proceed as contemplated above, and, at Dot Hill’s expense,
shall give Dot Hill proper and full information and assistance to
evaluate, settle and/or defend any such Dot Hill Infringement Claims.  Dot
Hill shall not be liable for any costs or expenses incurred without its
prior written authorization.   The
indemnifying party shall not enter into any settlement of the claim, suit or
proceeding that entails any obligation or non-indemnified cost or expenses on
the part of Dot Hill without obtaining the prior written authorization of Dot
Hill.

 

Dot
Hill shall use commercially reasonable efforts to obtain intellectual property
indemnification from its suppliers, including the Dot Hill Designated Contract
Manufacturer, at least with respect to components used in the Products.

 

24.2         Certain Remedies.               Following notice of any actual or threatened
Infringement Claim, Dot Hill may, at Dot Hill’s option and sole discretion,
either procure for NetApp the right to continue to use and sell the infringing
Products or replace the Products to make them non-infringing without impairing
their functionality.

 

24.3         Limitation of Liability. 
Notwithstanding anything to the contrary, Dot Hill shall assume no
liability for any:

 

24.3.1         infringement of patent claims covering
completed equipment of any assembly, circuit, combination, method or process in
which any of the Products may be used only as a component part, or solely on
account of

 

27

 

use
of any Products in combination with any other hardware, software or firmware;
or

 

24.3.2         claim of trademark infringement involving any
marking or branding of a party other than Dot Hill or involving any marking or
branding applied at the request of NetApp; or

 

24.3.3         modification of the Products, or any part
thereof, unless such modification was made by Dot Hill other than pursuant to
any directions or specifications provided or given by NetApp.

 

24.4         Exclusive Remedy. THE FOREGOING IS THE
ENTIRE OBLIGATION OF DOT HILL, AND THE SOLE AND EXCLUSIVE REMEDY OF NETAPP AND
ITS DESIGNATED CONTRACT MANUFACTURER WITH RESPECT TO ANY ACTUAL OR THREATENED
DOT HILL INFRINGEMENT CLAIMS.

 

24.5         NetApp Indemnity. 
Subject to the terms, conditions and limitations set forth below,
NetApp, at its own expense, shall indemnify, hold harmless, defend, or
at its option settle, Dot Hill and the Dot Hill Designated Contract
Manufacturer from and against any third party claim, suit or proceeding brought
against Dot Hill or the Dot Hill Designated Contract Manufacturer to the extent
based upon any of the following “NetApp Infringement Claims”:

 

(a)           the misappropriation by NetApp or its
Designated Contract Manufacturer of any trade secret recognized as such under
Uniform Trade Secret Acts in the United States pertaining to the Product, or

 

(b)           the infringement of any NetApp trademark or
other trademark that NetApp directs Dot Hill to apply or associate with the
Products, or

 

(c)           the infringement of any United States or
foreign patent or copyright by the Product, but only to the extent the claim is
based on an embodiment in the Product of NetApp’s Background Intellectual
Property, NetApp Derivative IP or NetApp IP infringing the patent or copyright.

 

The
foregoing NetApp indemnification obligations are conditioned upon the
following: (i) upon receipt of notice of any such claim, suit or proceeding,
the indemnified party shall immediately inform NetApp in writing of the claim,
suit or proceeding, and give NetApp sole and complete authority to
proceed as contemplated above, and, at NetApp’s expense, shall
give NetApp proper and full information and assistance to evaluate,
settle and/or defend any such NetApp Infringement Claims. 
NetApp shall not be liable for any costs or expenses incurred without its
prior written authorization.  The
indemnifying party shall not enter any settlement of the claim, suit or
proceeding that entails any obligation or non-indemnified cost or expenses on
the part of NetApp without obtaining the prior written authorization of NetApp.

 

28

 

24.6         Exclusive remedy. THE FOREGOING IS THE
ENTIRE OBLIGATION OF NETAPP, AND THE SOLE AND EXCLUSIVE REMEDY OF DOT HILL AND
THE DOT HILL DESIGNATED CONTRACT MANUFACTURER, WITH RESPECT TO ANY ACTUAL OR
THREATENED NETAPP INFRINGEMENT CLAIMS.

 

25.          SEVERABILITY AND WAIVER

 

25.1         If any provision of this Agreement shall be
found to be invalid, illegal or unenforceable, then, the parties will negotiate
a replacement for such provision which will be consistent with the original
intent of the parties, but will be valid, legal and enforceable in all respects.  If this is not possible, then notwithstanding
the same, this Agreement shall remain in full force and effect, and such
provision shall be deemed stricken to the extent if the provisions of this
Agreement can be maintained in a manner consistent with the parties’ original
intent and the original purpose of the agreement.

 

25.2         Any and all waivers of this Agreement must be
in writing and signed by an authorized representative of the party to whom such
waiver is sought.  The failure of either
party to enforce, at any time or for any period, any provision of this
Agreement shall not be deemed or construed to be a waiver of the provision or
of the right to subsequent enforcement of that or any other provision.

 

26.          FORCE MAJEURE

 

Neither party shall be
liable by reason of any failure or delay in performance of obligations on
account of strikes, riots, fires, explosions, acts of God, war, terrorism,
governmental action, or any other cause which is beyond the reasonable control
of the party except for payment for delivered Product.  In the event that the reason for such delay
is greater than [***], the non-affected party shall have the right to terminate
the agreement with no further obligation to the other party.

 

27.          COMPLIANCE
WITH LAW AND REGULATIONS

 

27.1         Export Controls.  Export of Products, Confidential
Information, and related technical data and software is subject to compliance
with the United States Export Administration Act of 1979 and the Export
Administration Amendment Act of 1985, and the Export Administration Regulations
adopted and administered by the United States Department of Commerce
(collectively, “Export Controls”).  To the extent required under such Export
Controls, the parties agree to obtain and to inform customers of the obligation
to obtain a validated or general license, as the case may be prior to any such
export and to identify the to other, as appropriate, the name and location of
the customer.  The parties understand
that certain Products are to be qualified under certain agreed governmental

 

29

 

standards.  In order for the parties to maintain their
qualification under such governmental standards for such Products and any
products for which the Products are to be incorporated therein, certain
requirements may need to be met, including, but not necessarily limited to,
reporting and documentation requirements and inventory, handling and
traceability control requirements.  Each
party agrees to take steps to comply with all such agreed governmental
standards as and to the extent set forth in Exhibit E or Exhibit K.

 

27.1.1         NetApp represents that, as of the Effective
Date, the actual office address of the principal place of business of Network
Appliance, Inc. is: 495 East Java Drive, Sunnyvale, CA 94089. Dot Hill
represents that, as of the Effective Date, the actual office address of the
principal place of business of Dot Hill Systems Corporation is:  6305 El Camino Real, Carlsbad, CA 92009.

 

27.1.2         Each party understands its obligations to report all matters
relating to any potential violation of the United States Foreign Corrupt
Practices Act encountered in any performance under this Agreement to the other,
according to the notice provisions of this Agreement.

 

27.1.3         Each party understands that shipments of
Products (including without limit any repair/replacement Products) to Sudan, Syria, Cuba, Iran, North Korea, and
Yugoslavia (Montenegro & Serbia) are prohibited or substantially restricted
and that this prohibition may change from time to time and will be reviewed
frequently by each party at http://www.ustreas.gov/ofac.

 

27.1.4         Each party understands that shipments of Products (including, without
limitation, any repair/replacement Products) to certain organizations in India, Pakistan, Russia, and Peoples Republic of
China are prohibited or substantially restricted and that this prohibition may
change from time to time and will be reviewed frequently by each party at http://www.gpo.gov/bxa  (See part
744).

 

27.1.5         Each party understands that shipments of Products (including without
limit any repair/replacement Products) to certain
organizations or individuals listed in the Table of Denial Orders (“TDO”) are prohibited or substantially restricted and that
this prohibition may change from time to time and will be reviewed frequently
by each party at http://www.bxa.doc.gov/DPL/2_denial.htm).

 

27.1.6         Each party understands that shipments of Products (including without
limit any repair/replacement Products) may be subject to certain record keeping
requirements, including without limit those record keeping requirements
outlined at http://www.bxa.doc.gov/PDF/Admin3.pdf.

 

30

 

27.1.7         Each party understands its obligations to
report all matters relating to any potential violation of the United States
Anti-Boycott Law encountered in any performance under this Agreement to the
other, according to the notice provisions of this Agreement.

 

27.1.8          Upon written request by NetApp and to the
extent applicable to those activities undertaken by Dot Hill in connection with
the manufacture or disposal of Products, Dot Hill will provide to NetApp a
certificate of compliance which certifies Dot Hill’s compliance with applicable
ROHS and WEEE laws and regulations for the Products that are to be sold by Dot
Hill to NetApp under this Agreement.

 

27.2         Foreign Corrupt Practices Act.  The
parties are subject to the laws and regulations of the United States relating
to the Foreign Corrupt Practices Act (“FCPA”).  Neither party shall pay any money, gift or
any other thing of value to any person for the purpose of influencing any
official governmental action or decision affecting this Agreement or with the
intention of obtaining or maintaining any business related to this Agreement,
while knowing or having reason to know that any portion of such money, gift or
thing will, directly or indirectly, be given, offered therefore to:

 

27.2.1         An employee, officer or other person acting
in an official capacity for any government or its instrumentalities to
influence any such official governmental action or decision; or

 

27.2.2         Any political party, party official or
candidate for political office to influence any such official governmental
action or decision.

 

Further,
each party shall maintain books, records, and systems of accounting and control
adequate to insure that assets and operations are accounted for and that the
business of each party under this Agreement is carried out according to the
directions of their respective executive officers.

 

27.3         Assurances and Compliance.  Each
party shall provide the other with the assurances and official documents that        may periodically be requested to verify,
where applicable, its compliance with the Export Controls, FCPA, ROHS, WEEE, or
other environmental laws and regulations. 
To the extent applicable to the activities to be conducted by a party
under this Agreement, actions by a party which violate the Export Controls,
FCPA, ROHS, WEEE, or other environmental laws and regulations shall be deemed
to be material breaches of this Agreement and may result in civil or criminal
penalties.

 

28.          NOTICES

 

Any notice to be given
under this Agreement by NetApp or Dot Hill shall be in writing and sent by
registered or certified, return requested, mail to the address for Dot Hill
Systems Corporation or Network Appliance, Inc., respectively, set

 

31

 

forth in the
introductory paragraph to this Agreement or to such other address as Network
Appliance, Inc. or Dot Hill Systems Corporation may later designate for NetApp
or Dot Hill, respectively, by written notice in accordance with this Section
28.

 

28.1
        For NetApp, the notice shall be
directed to the Vice President of Supply Chain Management and the General
Counsel of Network Appliance, Inc.

 

28.2         For Dot Hill, the notice shall be directed to the Senior Vice
President, Worldwide Sales and Marketing and the Chief Financial Officer of Dot
Hill Systems Corporation.

 

Notice shall be deemed
given five (5) days after being sent as prescribed above.

 

29.          ENTIRE
AGREEMENT AND AMENDMENT

 

This Agreement, together
with the Exhibits listed in Section 3 above, constitute the entire agreement
between the parties with respect to its subject matter and supersedes and
replaces all prior agreements, memoranda of understanding, letters of intent
and/or other communications, whether in written or verbal form, between the
parties as to the subject matter herein. The terms and conditions of this
Agreement shall supersede and replace the terms and conditions of all
agreements, memoranda of understanding, letters of intent and/or other
communications, whether in written or verbal form, between the parties which
have been executed or otherwise entered into on or prior to the Effective Date
and which relate to the subject matter contained herein.  This Agreement may be changed only by mutual
agreement between the parties expressed in writing.  All conditions, warranties or other terms
implied by statute or common law are hereby excluded to the fullest extent
permitted by law.

 

30.          SURVIVAL

 

The provisions of this Agreement regarding (i) License
Rights, Restrictions and Ownership, (ii) Escrow, (iii) Payment Terms (i.e.,
first paragraph), (iv) Confidentiality, (v) Assignment, (vi) Limited Liability,
(vii) Warranty, (viii) Indemnification, (ix) Severability and Waiver, (x) Force
Majeure, (xi) Applicable Law, Escalation and Arbitration, (xii) Survival, (xii)
Entire Agreement, (xiii) No Solicitation, (xiv) Freedom of Independent
Development, (xv) Order of Precedent (xvi) Headings and (xvii) Advice of Legal
Counsel will survive the expiration or earlier termination of this Agreement.

 

31.          NO SOLICITATION

 

While this Agreement is in effect and for a period of [***]
thereafter, each party agrees not to solicit for employment, either directly or
indirectly through any third party, any employees or independent contractors of
the other party which are directly involved in any marketing, sales, support,
development, manufacturing or

 

32

 

engineering activities with respect to the Products,
without obtaining the written consent for such solicitation from the other
party.  However, the parties acknowledge
and agree that this provision shall not apply to any: (i) job postings, help
wanted listings or other general employment advertisements which are issued by
a party and are not targeted directly to specific employees or independent
contractors of the other party for the Products, or (ii) initiation of
employment by an individual with the other party, where such other party can
reasonably show that this initiation of employment has not been encouraged or
induced by it.

 

32.          FREEDOM OF INDEPENDENT
DEVELOPMENT

 

Each
party understands that the other party develops and acquires technology for its
own products, and that existing or planned technology independently developed
or acquired by it, without access to the other party’s technology, may contain
ideas and concepts similar to those contained in the Products. The parties, therefore,
agree that[***] this Agreement shall not preclude either party from developing
and acquiring such technology.

 

33.          ORDER OF PRECEDENCE

 

In
the event of any conflict or inconsistency between the base provisions in this
Agreement and those of any exhibit to this Agreement, the base provisions in
this Agreement shall govern and prevail over such conflicting or inconsistent
provisions in such exhibit to this Agreement in order to address and resolve
such conflict or inconsistency to the extent that such order of precedence is
not overridden by any subsequent mutually agreed amendment expressly stating
so.

 

33

 

34.          HEADINGS

 

Each
party acknowledges and agrees that heading and subheadings used in this Agreement,
including any exhibits hereto, have been inserted for the purpose of
convenience in referring to provisions of this Agreement and, therefore, they
shall not be used to interpret or construe any of the provisions of this
Agreement.

 

35.          ADVICE OF LEGAL COUNSEL

 

Each
party acknowledges and represents that, in executing this Agreement, it has had
the opportunity to seek advice regarding its legal rights from legal counsel
and that the provisions of this Agreement shall not be construed against either
party by virtue of its drafting or preparation by such party.

 

36.           COUNTERPARTS AND FACSIMILE
TRANSMISSION

 

This
Agreement may be executed in counterparts, each of which shall be deemed an
original and all of which together shall constitute a single instrument.  Each party acknowledges and agrees that such
executed counterparts may be delivered by a party to the other party through
the use of facsimile transmission.

 

[Remainder of Page Intentionally Left Blank]

 

34

 

IN WITNESS WHEREOF, the parties have executed
this Agreement through their duly authorized representatives to become
effective on the date on which the last signatory below has signed this
Agreement:

 

	
  Signed for and on behalf of Network Appliance Inc.:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael W. Wais

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name: Michael W. Wais

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title: VP Supply Chain
  Management

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Date: July 26, 2005

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Signed for and on behalf of Network Appliance B.V.:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Patrick Linehan

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name: Patrick Linehan

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title: Senior Vice President
  and General Manager

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Date: July 26, 2005

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Signed for and on behalf of Dot Hill Systems Corporation:

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Dana W. Kammersgard

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name: Dana W. Kammersgard

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title: President

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Date: July 26, 2005

  	
   

  
	
   

  	
   

  	
   

  
	
  Signed for and on behalf of Dot Hill Systems B.V.:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Preston Romm

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name: Preston Romm

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title: CFO

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Date: July 26, 2005

  	
   

  

 

35

 

	
  Exhibit

  
	
  A

  	
  [***] Specification

  

 

1. DESCRIPTION

 

[***]  Components of the shelf include:

 

[***]

 

2. SPECIFICATIONS

 

The complete specification for the [***]
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 Effective Date of the
Agreement.

 

[***]

 

 

Exhibit B

 

Product Price and Bill of
Materials Breakdown

 

1.             If there is a slip to
any date or deliverable for a Product documented in the SOW and Acceptance
Criteria, each party will use reasonable efforts to promptly notify the other
of any issues relating thereto within [***] after the date on which such party
becomes aware thereof.  Upon this
notification, the parties will confer to discuss a course of action in order to
try to recover and attempt to achieve the delivery of the SQA units or pilot
units for a Product in accordance with the date or deliverable described in the
SOW for such Product. With respect to delivery of the SQA units and pilot units,
as defined in the SOW and Acceptance Criteria, for a Product Dot Hill will use
its best efforts to deliver, and NetApp will use its best efforts to enable Dot
Hill to deliver, such units in order for NetApp to attempt to achieve its
time-to-market goal for such Product.

 

In the event that Dot Hill does not deliver the
Development Units, SQA units, the pilot units, and all deliverable verification
reports as defined and established in Exhibit C, and in the
Engineering Specifications, for a Product due to causes which are entirely
within the reasonable control of Dot Hill or a Dot Hill DCM, then NetApp
reserves the right in its sole discretion to:

 

(a)           Renegotiate in good
faith with Dot Hill any applicable portion of the Agreement for such Product;
or

 

(b)           Require Dot Hill to
[***], as reflected herein, in a manner such that the applicable [***].
Furthermore, the same formula for [***] shall also apply to such Product in the
event that NetApp’s FCS for such Product is [***].

 

2.             In the event that
NetApp: [***], then Dot Hill reserves the right in its sole
discretion to:

 

(a)           [***]; or

 

(b)           In the event that
NetApp’s FCS for such Product is delayed due to any of the foregoing causes,
[***], as reflected herein, so that they are [***] from NetApp’s FCS caused by
any of the foregoing causes.

 

Notwithstanding the foregoing, this Section shall
not apply to a Product for which the parties are able to accelerate the
development and/or test schedule for such Product so that it meets its
originally agreed NetApp FCS date.

 

 

[***] STATEMENT OF WORK (SOW)

 

DELIVER TO NETAPP A PRODUCT,

[***]

 

1

 

	
  Date

  	
   

  	
  Revision #

  	
   

  	
  Explanation of Changes

  	
   

  	
  Approved by:

  	
   

  
	
  6/2/2005

  	
   

  	
  0.1

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  6/6/05

  	
   

  	
  0.2

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  6/27

  	
   

  	
   

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  6/29

  	
   

  	
  0.3

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  6/30

  	
   

  	
  0.4

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  7/8

  	
   

  	
  0.5

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  7/15

  	
   

  	
  0.6

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  

 

2

 

[***]

 

3

 

1.     Project Definition and Scope

 

1.1.         Scope
of the Statement of Work

 

The SOW is intended to
define the working relationship and deliverables between Dot Hill and NetApp
from initiation of product definition, through product development and
verification, until NetApp achieves product First Customer Ship (FCS).

 

The design Specifications
have been defined in the Engineering Specifications (Exhibit A),
collectively referred to as the “Spec”, jointly developed by Dot Hill and
NetApp.  Any product definition changes
made will be reflected in these documents.

 

Dot Hill will design and
implement to the requirements as defined in the Spec.

 

Notwithstanding anything to the contrary in this
Agreement, including this exhibit, all target dates in this exhibit represent a
good faith estimate by the parties of potential completion of certain tasks as
of the Effective Date, and are tentative and preliminary and, therefore,
subject to change.  Under no circumstances shall Dot Hill be in breach of
this Agreement, including the provisions of this exhibit, or liable for any
damages to NetApp based upon any failure by Dot Hill to meet any target date
set forth herein if: (i) Dot Hill has exercised reasonable efforts to
attempt to meet such target date; or (ii) such failure to meet such target
date arises or results from any (a) NetApp act or omission, (b) failure
by NetApp to fulfill on a timely basis any dependent obligation to Dot Hill, or
(c) failure by the parties to agree upon new or modified NetApp
requirements for the Products, despite the parties attempt to do so.

 

1.2.         Names
and Acronyms

 

	
  Acronym

  	
   

  	
  Name

  	
   

  	
  Description

  	
   

  
	
  DMT

  	
   

  	
  Design Maturity
  Testing

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  DVT

  	
   

  	
  Design
  Validation Testing

  	
   

  	
   

  	
   

  
	
  ECO

  	
   

  	
  Engineering
  Change Order

  	
   

  	
   

  	
   

  
	
  EVT

  	
   

  	
  Engineering
  Validation Test

  	
   

  	
   

  	
   

  
	
  FCS

  	
   

  	
  First Customer
  Shipment

  	
   

  	
  [***]

  	
   

  
	
  FFT

  	
   

  	
  Features &
  Functionality Testing

  	
   

  	
  [***]

  	
   

  
	
  FRU

  	
   

  	
  Field
  Replaceable Unit

  	
   

  	
   

  	
   

  
	
  NetApp, NT

  	
   

  	
  NetApp

  	
   

  	
   

  	
   

  
	
  P0

  	
   

  	
  Prototype level
  0

  	
   

  	
  [***]

  	
   

  
	
  P1

  	
   

  	
  Prototype level
  1

  	
   

  	
  [***]

  [***]

  [***]

  	
   

  
	
  P2

  	
   

  	
  Prototype level
  2

  	
   

  	
  [***]

  [***]

  [***]

  	
   

  
	
  Pilot

  	
   

  	
  Pre-production
  pilot unit

  	
   

  	
  [***]

  [***]

  [***]

  	
   

  
	
  RCA

  	
   

  	
  Root Cause
  Analysis

  	
   

  	
   

  	
   

  
	
  RRT

  	
   

  	
  Regression and
  Reliability Testing (of Software)

  	
   

  	
   

  	
   

  
	
  RTS

  	
   

  	
  Ready To Ship

  	
   

  	
  [***]

  	
   

  
	
  SOW

  	
   

  	
  Statement of
  Work

  	
   

  	
   

  	
   

  
	
  Spec

  	
   

  	
   

  	
   

  	
  [***]

  	
   

  

 

4

 

1.3.         NetApp
Product Objectives

 

NetApp product objectives
are to deliver to market a [***].

 

Dot Hill is to design and
deliver the [***] in compliance with the Spec, this SOW, and all other contract
exhibits and attachments in the [***] contract.

 

2.     High Level Schedule

 

2.1.         Key
Milestones

 

Key milestones and
deliverables are to be documented by Dot Hill within a Project Schedule that
is maintained by Dot Hill.

 

5

 

	
  Phase

  	
   

  	
  Date

  	
   

  	
  Contents

  	
   

  	
  Method

  	
   

  
	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  

 

6

 

3.     Program Responsibilities

 

3.1.         Dot
Hill Development Responsibilities

 

	
  Item

  	
   

  	
  Dot Hill Responsibility

  
	
  [***]

  	
   

  	
  [***]

  

 

3.2.         NetApp
Development Responsibilities

 

	
  Item

  	
   

  	
  NetApp Responsibility

  
	
  [***]

  	
   

  	
  [***]

  

 

4.     Deliverables

 

4.1.         Deliverables
by milestone

 

	
  Contract Level

  Milestone

  	
   

  	
  Owner

  	
   

  	
  Target Date

  	
   

  	
   

  	
   

  	
  Deliverables

  	
   

  	
   

  	
   

  	
  Acceptance

  Criteria

  	
   

  	
  Notes

  	
   

  
	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  

 

4.2.         System
Deliverables

 

4.2.1.       Systems
to be delivered by Dot Hill

 

The following systems
will be delivered by Dot Hill, based upon purchase orders from NetApp.

 

	
   Systems

   	
   System
   Description

   	
   Qty
   Required — NetApp

   

	
  [***]

  	
  [***]

  	
  [***]

  

 

7

 

4.3.         Firmware
Deliverables

 

The following table lists
the major firmware functions, responsibilities, and the firmware release in
which the functions are implemented.

 

	
   

  	
   

  	
   

  	
   

  	
  Release number

  	
   

  
	
  Firmware

  Function

  	
   

  	
  Owner

  	
   

  	
  1

  	
   

  	
  2

  	
   

  	
  3

  	
   

  	
  4

  	
   

  	
  5

  	
   

  	
  6

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  

 

5.     Major Testing Requirements

 

Testing during
engineering development has two major phases:

Engineering Validation
Testing

Design Validation Testing

 

Detailed test plans will
be jointly developed by Dot Hill and NetApp before the initiation of
testing.  The general scope and purposes
of the test phases are:

 

5.1.         Engineering
Validation Testing (EVT)

 

The purpose of EVT is to
thoroughly test and measure the prototypes compliance with the Spec for
individual subcomponents, measuring and validating the internal operation of
the product.  Items include but are not
limited to:

 

Quality
of electrical design, including signal integrity measurement

Operation
over specified temperature, voltage, and vibration limits

Internal
temperature measurements.

Initial
testing for compliance and regulatory requirements

 

A detailed EVT Plan will
be jointly developed and agreed upon by Dot Hill and NetApp.

 

5.2.         Design
Validation Testing (DVT)

 

DVT has multiple
purposes:

Large
quantity testing

Interoperability
testing

Compliance
and regulatory validation testing

 

A detailed DVT Plan will
be jointly developed and agreed upon by Dot Hill and NetApp.  [***].

 

8

 

EXHIBIT D

 

Initial Manufacturing Volume Forecast

 

[***]

 

 

Exhibit E

 

Dot Hill Quality
Requirements

 

1.             Definitions:

 

1.1           “Epidemic Failure” shall mean, with respect to a Product that
is delivered by Dot Hill to NetApp under the Agreement, the occurrence of any
of the following actual or potential failures to the extent that they
(i) occur after NetApp’s FCS, (ii) can be shown to be identical and
reproducible based on the occurrence of the same or substantially similar cause
in the same series of such Product, (iii) impair in any material respect
the use of such Product, (iv) are the result of a defect in materials or
workmanship occurring no later than [***] following the delivery by Dot Hill of
such Product to NetApp, and (v) are equal to or in excess of [***] of the
total number of units of such Product obtained from any production lot or
delivered to NetApp during any [***] period:

 

•      A non-conformance of the Product to the
Bill of Material (“BOM”);

 

•      A non-conformance to Engineering
Specifications in Exhibit A, including but not limited to a
mechanical and electrical non-conformance.

 

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

 

•      The non-operation of the Product,
including but not limited to mechanical and electrical non-operation.

 

Notwithstanding
the foregoing, any failure that arises or results from [***], shall be excluded
from the definition of Epidemic Failure. 
For avoidance of doubt, [***] shall be included within the definition of
an Epidemic Failure.

 

1.2           “Failure” shall mean, with respect to a Product that is
delivered by Dot Hill to NetApp under the Agreement, the occurrence of any of
the following failures to the extent that they (i) occur after delivery to
NetApp of SQA units and (ii) are the result of a defect in materials or
workmanship occurring no later than [***] following the delivery by Dot Hill of
such Product to NetApp:

 

•      A non-conformance of the Product to the
Bill of Material (“BOM”);

 

•      A non-conformance to Engineering
Specifications in Exhibit A, including but not limited to a
mechanical and electrical non-conformance.

 

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

 

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

 

 

•      A cosmetic or workmanship non-conformance
of a Product to those requirements that Dot Hill has agreed to perform for such
Product as set forth in Exhibit K.

 

1.3           “Failure
Analysis” or “FA” - Investigation
of field Failures by means of diagnostic testing within a standardized test
environment that is performed by Dot Hill or its service providers. Test
results will identify the [***] assignable cause of a component’s failure where
applicable.

 

1.4           “Root
Cause Analysis” or “RCA” - Consists
of Failure Analysis as described above followed by a thorough investigation by
Dot Hill’s Engineering and/or Dot Hill’s suppliers to diagnose failures to the
appropriate component level.

 

1.5           “Defective
Parts Per Million” or “DPPM” - shall
be the basis for determining factory integration issues.  DPPM is the first pass Failure rate seen by
NetApp at integration.  Test sample size
will be defined in individual sections below. This is one metric that will be
used by NetApp to rate the performance of Dot Hill.

 

[***]

 

1.6           “On-Going Reliability Test” or “ORT”
- shall be a test that is conducted in Dot Hill’s or a Dot Hill DCM’s factory
for the purpose of monitoring Product reliability.

 

1.7           “Out Of Control” shall mean a condition when any of the
following exist with respect to Dot Hill or a Dot Hill Designated Contract
Manufacturer:

 

•      DPPM exceeds the level set forth in
Section 4 of this Exhibit E.

 

•      Dot Hill’s cumulative yield decreases
below the level set forth in Section 4 of this Exhibit E.

 

•      ORT failures exceed a predetermined level
that has been agreed between the parties.

 

1.8           “Stop Ship Order” – shall mean a process by which NetApp
stops a released Product or other item from being shipped from Dot Hill or a Dot
Hill DCM to NetApp or any NetApp DCM.

 

1.9           “Dead On Arrival” or “DOA” - shall
mean, for purposes of this Exhibit E, a Failure of a Product which
occurs within [***] after delivery by Dot Hill to NetApp, NetApp DCM or a
NetApp Authorized Purchaser.

 

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

 

1.11         [***]

 

1.12         “Key Component Level” — A list of certain components included
in a Product, which list is to be agreed upon by NetApp and Dot Hill.  This list will define those critical
sub-assemblies and

 

 

components
for which backward component traceability requirements apply.  This list will include only those
sub-assemblies and critical devices mutually and jointly agreed to in writing
by Engineering and Operations technical teams of the parties.

 

2.             Test Procedures.  The Products
are subject to certain mutually agreed inspection test procedures by NetApp,
NetApp DCMs and/or NetApp Authorized Service Providers.  If a unit of Product has a Failure as
determined by such mutually agreed inspection test criteria, then NetApp shall
notify Dot Hill of such Failure, the parties will promptly discuss remedial
actions to resolve any such Failure, and such Product may be returned by
NetApp, NetApp DCMs and/or NetApp Authorized Services Providers to Dot Hill
pursuant to the agreed DOA or warranty provisions, as applicable, for such
Product.

 

3.             Inspection rights.  [***], Dot
Hill will allow NetApp to perform vendor qualifications and/or on-site source inspections
at Dot Hill[***].  NetApp shall provide
reasonable advance written notice of its desire to perform an inspection, with
at least [***] prior notice for routine visits and with at least [***] notice
for Dot Hill Out of Control or Stop Ship Order situations.  If an inspection or test is made on Dot
Hill’s premises[***], Dot Hill shall provide [***], NetApp with reasonable
access and assistance at no additional charge.

 

4.             Product and Process Quality Requirements.  Manufacturing and quality processes will
be implemented at Dot Hill and Dot Hill’s suppliers with the goal to produce
Products that meet NetApp’s zero defect quality requirements.

 

If
the minimum acceptable quality level defined in the table below is not met in
NetApp or a NetApp DCM’s line due to causes within the reasonable control of
Dot Hill and which are not otherwise attributable to NetApp, then a service fee
of [***] will be levied on Dot Hill for each affected defective Product
returned to Dot Hill during the period that such quality level is not met.  [***]

 

Dot
Hill will require that its Dot Hill DCM meet the minimum acceptable quality
levels in the table below in the manufacturing process of the Dot Hill DCM for
the Products sold by Dot Hill under this Agreement.

 

	
  DPPM Table

  	
   

  	
  First [***] units

  beginning with delivery

  of NetApp Pilot units

  	
   

  	
  Thereafter

  	
   

  
	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  

 

•      Dot Hill and
Dot Hill’s suppliers must be ISO 9001 certified and all manufacturing locations
for the Product and its components must be identified and specified to NetApp.

 

 

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

 

•      Processes for
defect reduction and continuous improvement for the Products to be supplied by
Dot Hill to NetApp must be established and implemented at Dot Hill and Dot
Hill’s Suppliers.

 

•      The Products
must have backward component traceability from the finished Product supplied by
Dot Hill to NetApp for Key Component Levels.

 

•      All operators
of a Dot Hill DCM must be fully trained for their responsible processes.

 

•      Dot Hill shall
pass all mutually agreed upon 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.

 

•      Dot Hill shall
perform industry standard operations such as Environmental Stress Screen (“ESS”), Highly Accelerated Stress Screen (“HASS”) and ORT to ensure a high quality Product.

 

•      All exposed
PCBA surfaces must be protected from handling damage in a mutually agreed
manner.

 

•      Dot Hill shall
provide onsite Supplier Quality Engineering support to NetApp, as described in Exhibit M.

 

NetApp
will have the right to reject those Products that constitute a Failure.  Dot
Hill and NetApp will discuss any opportunities to improve DPPM levels
and will mutually agree on any corrective actions.

 

5.             Out of Control.  If an Out of
Control condition occurs, NetApp reserves the right to require Dot Hill to
implement corrective actions which include, without limitation, a Stop Ship
Order or agreed additional manufacturing processes, screens, tests, and/or
burn-in processes, at Dot Hill’s expense.

 

6.             Stop Ship process

 

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

 

•      At NetApp’s discretion, NetApp or a
NetApp DCM may chose to return any affected Product in transit or in its
inventory which contains a Failure .

 

 

•      Affected Product containing a Failure in
inventory at Dot Hill will not be delivered by Dot Hill to NetApp or a NetApp
DCM unless the Stop Ship Order is rescinded.

 

•      Dot Hill will provide serial numbers of
systems that are anticipated to be affected by the potential non-conformance
mode.

 

•      Dot Hill will provide urgent root cause
analysis of the non-conformance in accordance with the provisions of
Section 10 of this exhibit.

 

•      Dot Hill will provide a Stop Ship Order
release plan within [***] of Stop Ship Order being communicated to Dot
Hill.  The release plan will propose a
potential process to attempt to fix the non-conformance of any affected Product
and the resumption of shipments of the affected Products.  The release plan will attempt to resume
shipment of the Product within an agreed number of days after the submission
and acceptance by Network Appliance of such plan.

 

7.             Intentionally
left blank.

 

8.             Intentionally
left blank.

 

9.             Epidemic
Failures. In the event of a
suspected Epidemic Failure, NetApp shall promptly notify Dot Hill, and shall
provide the following information, if known and as may then exist: a
description of the defect, and the suspected lot numbers, serial numbers or
other identifiers, and delivery dates to NetApp of the affected defective
Products.  NetApp shall deliver or make available to Dot Hill samples of
the defective or potentially defective Products for testing and analysis.

 

Within [***] of receipt of
written notice from NetApp, Dot Hill shall provide its preliminary findings to
NetApp regarding the potential cause of the Epidemic Failure.  Thereafter,
Dot Hill shall perform RCA in accordance with Section 10 and provide the
results of its RCA to NetApp, together with Dot Hill’s proposed plan for the
identification of and the repair and/or replacement of the affected Products
and such other reasonable and appropriate information.

 

The parties shall cooperate and
work together to expeditiously devise and implement a mutually acceptable
corrective action program which is commercially reasonable under the
circumstances and minimizes disruption to the end users and NetApp’s direct and
indirect distribution channels (the “Corrective
Action Program”).  The Corrective Action Program shall identify
all costs related to the Epidemic Failure including material costs, labor costs
(and associated housing and travel costs), freight costs, equipment costs and
screen costs.

 

For any such Epidemic Failure
which occurs in the Products, Dot Hill shall be responsible for the following
costs, expenses and liabilities under the Corrective Action Program incurred
within NetApp’s service and distribution chain, including end user locations:
[***].

 

 

10.          Field
Returned Failure Analysis and Root Cause Analysis Turnaround Times.  NetApp will assign a level of urgency to each
failure analysis / root cause analysis request as “routine” or “urgent”.

 

In
a “routine” request for FA Dot Hill
shall make commercially reasonable efforts to provide Failure Analysis for
returned material within [***].  In a
“routine” request for RCA Dot Hill
shall make commercially reasonable efforts to provide RCA for returned material
within [***].

 

In
an “urgent” request for FA Dot Hill
shall use best efforts to provide Failure Analysis for returned material within
[***].  In an “urgent” request for RCA Dot Hill shall use best efforts to provide
RCA for returned material within [***].

 

A
corrective action request (“CAR”) issued to
Dot Hill must be fully addressed
and returned to NetApp by due date indicated in the CAR.  Depending on the situation, if either party
finds any difficulty in such target lead-time, NetApp and Dot Hill may discuss in good faith a mutually
agreeable alternative schedule on a case-by-case basis.

 

During the term of the
warranty for a Product, Dot Hill at
its expense shall perform RCA for each such Product that NetApp submits.  After this warranty period, NetApp may
request RCA of any discovered defects for such Product, and Dot Hill shall
perform the requested RCA and charge for time and materials for such RCA
activities that are requested by NetApp.

 

11.          Quality Metrics.  Dot
Hill will provide NetApp with quality metrics [***] about Dot Hill and Dot
Hill’s suppliers.  Metrics will include,
but are not limited to:

 

[***]

[***]

[***]

[***]

[***]

[***]

[***]

 

ORT testing metrics shall
be provided [***] and shall include, but are not limited to:

 

[***]

[***]

[***]

[***]

[***]

 

12.          Component
and Process Traceability.  Serial numbers of key components which are
included on the list of the Key Component Level must be available from Dot Hill
or a Dot Hill DCM, upon written request from NetApp, in order to conduct any
potential field recall by NetApp of the Products or for other purposes.  Upon written request by NetApp and the
provision by NetApp of

 

 

all necessary
information, serial number data of affected key components on the Key Component
Level list, and the successful completion of key manufacturing processes for
the Products that are documented below in Section 14, will be provided by
Dot Hill to NetApp within [***] after the date of any such NetApp request.  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 from the finished product for components on the Key Component
Level list.

 

13.          ORT.  Dot Hill will
perform ORT testing of the Product on an ongoing basis and provide data as
required in the Quality Metrics Section 11 of this Exhibit E.  The parties shall meet and confer to develop
agreed test procedures and sample sizes for ORT.  Any changes to the agreed ORT plan are
subject to mutual agreement by the parties and may involve changes to the NRE
covering such ORT plan.

 

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

 

•              During
the development phase of the Product, Dot Hill shall establish the following:

•      Supplier
qualifications,

•      Critical
parameters/ specifications,

•      Assurance of
critical parameter conformance, and

•      FMEA.

•              During the data qualification phase, Dot Hill
shall perform the following:

•      HALT test results of pre-production product,

•      DVT test procedure and results,

•      RDT report,

•      Production DPPM targets of major assys, and

•      Field DPPM targets of major assys.

•              During the production phase, Dot Hill shall
perform the following:

•      Assure of conformance to Network Appliance
Specifications,

•      Define plan for proactive communication of
problems at Dot Hill,

•      Define Dot Hill cross functional team/ points of
contact,

•      Define a process flow definition/ capacity
analysis (see sample attached below)

•      Receiving audit plan,

•      Statistical Process control of critical/
non-inspected parameters,

•      Inspection checklist for all QA locations, and

•      Out of box audit plan,

•      Plan for isolation of failed material,

•      Define plan/frequency of audits of Dot Hill’s
suppliers,

•      Define process for customer
approval/communication of Dot Hill initiated Engineering Change Notifications (“ECNs”),

•      Process for customer approval/communication of
Mfg location changes,

•      Provide Dot Hill’s ICT coverage,

 

 

•      Provide FVT coverage, procedure,

•      Provide serial number traceability,

•      Provide date code tracking of key components,

•      Provide burn-in test plan,

•      Provide ORT test plans,

•      Provide employee training process/ records, and

•      Define failure analysis, RCA & CA
process.

 

•              Dot Hill shall provide the quality metric
requirements [***]

 

[***]

 

 

Exhibit F

 

Order
Replenishment and Logistics Requirements

 

1              PURCHASE
OF PRODUCTS, FORECASTS AND LEAD-TIMES

 

1.1           Overview.  In accordance with the terms and subject to
the conditions set forth in this Agreement, Dot Hill agrees to sell the
Products to NetApp and NetApp agrees to buy Products from Dot Hill.  It is expressly understood that[***] NetApp
has no obligation to purchase any Products, or any minimum number of Products,
hereunder.  This provision shall,
however, not limit, diminish or affect any obligations that NetApp has to Dot
Hill under Exhibit J or Sections 1.13, 1.14 and 1.15 of this Exhibit F.

 

1.2           Supply
Constraint and Allocation.  If Dot Hill becomes aware of a potential
supply constraint of Product to NetApp, Dot Hill will notify promptly NetApp of
such potential supply constraint and the parties will work together in good
faith to attempt to resolve such matter.

 

In the event that
the supply of a Product to NetApp under this Agreement becomes
constrained and Dot Hill cannot meet NetApp’s forecasted requirements for such
Product during the period of the supply constraint, Dot Hill shall provide
NetApp during this period with [***], or (ii) [***].

 

For the purpose of interpretation of the
immediately preceding sentence, any units of Product that a Dot Hill DCM (a) [***] and (b) [***].  Dot Hill represents to NetApp that as of the
Effective Date of this Agreement, [***], Dot Hill will notify promptly NetApp
of any [***].

 

1.3           [***].  Dot Hill shall
provide to NetApp, after NetApp’s First
Customer Shipment, [***], as
mutually agreed to by the parties, to allow for the following conditions:

 

•        a [***] to be delivered within
[***] of a NetApp request occurring
no earlier than [***] after the date
of any previous NetApp [***];

 

•        a [***] to be delivered within
[***] of a NetApp request occurring
no earlier than [***] after the date
of any previous NetApp [***]; and

 

•        a [***] to be delivered within
[***] of a NetApp request occurring
no earlier than [***] after the date
of any previous NetApp [***].

 

Those units of
Products that Dot Hill maintains for delivery or delivers to NetApp as part of
the AutoSwap process described in Attachment 2 to this Exhibit F
shall count toward the attainment by Dot Hill [***].

 

1

 

Also, if Dot
Hill is unable to achieve such [***] due to a Force Majeure Event or the failure by any vendor or supplier
operating under any NetApp supply arrangement to deliver on a timely and
sufficient basis to Dot Hill any drives or components which NetApp requires for
incorporation into Products that are to be made and sold by Dot Hill to NetApp,
then Dot Hill’s [***].

 

1.4           [***].  In
the event that NetApp desires to [***] Products covered under Purchase Orders, then NetApp shall inform Dot
Hill immediately in writing of its desires and provide accurate and complete
information to Dot Hill of its [***].  In the event of any [***], then Dot Hill shall undertake some or all
of the following mutually agreed actions for the affected Products:

 

(i)            except as otherwise provided in Section 1.13,
[***];

 

(ii)           [***];

 

(iii)          promptly [***];

 

(iv)          discontinue any [***] provided, however, that NetApp [***];

 

(v)           notify Dot Hill’s DCM and its suppliers to [***], and use best efforts to have Dot Hill’s
DCM [***];

 

(vi)          use best efforts to have Dot Hill’s DCM
attempt to [***];

 

(vii)         at NetApp’s written request and with the
assistance of NetApp, use commercially reasonable efforts to [***];

 

(viii)        perform
or have performed a [***], and supply to NetApp reasonably requested
documentation of such [***] after completion thereof.

 

Notwithstanding anything to the contrary, Dot
Hill shall not be required to continue any of the activities described above
beyond a period of [***] after the date on which a [***] occurs.

 

1.5           Forecasts.  NetApp shall
submit forecasts to Dot Hill [***],
and more frequently on an as-needed basis. These forecasts will provide
visibility into NetApp’s forecasted supply demand for Products for [***],
with updates made to such forecasts [***].
Within [***] after receipt
of the forecast, Dot Hill shall provide NetApp with an acknowledgement of the
forecast (“Supply Availability”) for the
requested quantity of the Products in the forecast or propose a revised
quantity or schedule for supply of the Products.  If a revised quantity or schedule is
proposed by Dot Hill, the parties shall confer in good faith and attempt in
good faith to agree upon a final Supply Availability for each applicable month.

 

2

 

1.6           Submittal
of Purchase Orders.  NetApp shall initiate purchases of Products
by submitting to Dot Hill quarterly blanket Purchase Orders via e-mail to a
designated Dot Hill email address based upon the mutually agreed forecast.  These Purchase Orders will be submitted by
NetApp to Dot Hill at least [***]
prior to the beginning of each fiscal NetApp quarter.  All quarterly blanket Purchase Orders shall (a) specify
the quantities, applicable Total Price, payment terms, and shipping
instructions for each of the Products; and (b) refer to and be governed by
the terms and conditions of this Agreement. 
Blanket Purchase Orders shall be updated, as needed, to reflect
agreed-upon Price adjustments and agreed Products revision changes (including,
but limited to, agreed engineering changes and deviations).

 

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

 

1.8           Kanban Replenishment Process

 

1.8.1          The “Kanban Replenishment Process” is defined as a [***]
issued by NetApp or a NetApp DCM to Dot Hill, which is managed by Dot Hill, to
request [***].

 

1.8.1.1        
    [***].

 

[***]

 

1.8.1.2                     [***].

 

[***]

 

1.8.1.3                 
[***].

 

[***]

 

1.8.1.4                 
[***].

 

[***]

 

1.8.1.5             NetApp
may require [***] as needed. If [***] are
required, then NetApp shall provide notice to Dot Hill by [***].

 

3

 

1.8.2          The
Kanban replenishment process will be managed within the NetApp or a NetApp DCM
manufacturing location and will issue [***]. A
representative of Dot Hill or a Dot Hill DCM will monitor the process to manage
and identify the quantity of [***] in
order to satisfy the requirements of the Kanban Replenishment Process. The
status of the [***] by Dot Hill or a Dot Hill DCM in a [***].

 

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

 

1.8.4        For [***]
Kanban needs, NetApp requires Dot Hill to have a [***]. The
Dot Hill [***].

 

1.8.5          Dot
Hill’s [***].

 

1.8.6          Dot
Hill and NetApp will mutually agree on all [***]. All
Products must be [***] unless otherwise specified by NetApp, and must be [***].
(See Attachment 1) Upon each [***] back to
Dot Hill. Dot Hill is also responsible for [***].

 

1.9           Notification of [***].  In the event that Dot Hill is unable to
support NetApp’s Kanban Replenishment Process [***], then Dot Hill shall notify
NetApp or NetApp’s DCM before the [***].

 

1.10         Changes to Purchase Orders.  NetApp shall provide notice to Dot Hill of
any changes or cancellations to blanket Purchase Orders that NetApp desires.
Dot Hill shall notify NetApp of acceptance or rejection of change orders within
[***]
after receipt of NetApp’s notification of change or change order request.

 

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

 

1.12         Unanticipated Consumption.  If the consumption
rate for the current month is greater than that described under the [***], Dot
Hill shall use commercially reasonable efforts to support the greater demand
provided, however, that the parties have mutually agreed in advance upon the
[***].

 

4

 

1.13         Rescheduling.  Each party
will attempt to identify and notify the other party of any Excess Material, as
defined below, [***].  For
Products whose delivery is rescheduled later than [***]
from the original anticipated delivery date to NetApp or a NetApp DCM[***] provided these Products were manufactured pursuant to an accepted
Purchase Order or manufactured to satisfy NetApp’s upside requirements.  On the [***],
NetApp will take Excess Material or Dot Hill will [***] on
and after such [***] and determined based on the Dot Hill [***] NetApp will use its best efforts to clear Excess Material at [***] within a maximum period of [***].  If any Excess Material is not cleared within
such [***] period, a non-cancelable Purchase Order to buy all
such Excess Material shall be issued by NetApp to Dot Hill prior to the end of
such period.  NetApp will [***] after the end of such [***]
period.

 

1.14         Cancellation of Purchase Orders.  Upon
cancellation of any Purchase Orders and after the completion by Dot Hill of the
agreed upon mitigation efforts in Section 1.4 that are associated with
such cancellation, Dot Hill will submit to NetApp a claim for an amount equal
to the sum of:

 

(1)           the amount for [***];

 

(2)           the amount for [***]; and

 

(3)           the amount for [***].

 

NetApp shall not be responsible for any liability for those units of
Products which are not (i) covered under Purchase Orders accepted by Dot
Hill, or (ii) manufactured by or for Dot Hill to meet NetApp’s [***]. 
Under no circumstances shall NetApp be liable for [***]. 
Also, NetApp’s liability for [***] will be limited to those ordered within agreed lead times that Dot
Hill has established and agreed to with third parties for use in the production
of Products for intended supply to NetApp. 
Dot Hill has notified NetApp of such lead times.  These lead times are included in Exhibit B,
and will be updated from time to time by Dot Hill.

 

NetApp shall acknowledge in writing Dot Hill’s claim within [***] after NetApp’s receipt thereof, and pay Dot
Hill on any such claim made under this section within [***] after NetApp’s receipt thereof.  NetApp shall be entitled to audit the details
behind any claim that may be made by Dot Hill under this section.  If an audit reveals an overpayment by NetApp
of any such claim, then Dot Hill will immediately refund or credit such
overpayment to NetApp and, if such overpayment is in excess of [***] of such claim, reimburse NetApp for the
actual costs incurred in the performance of the audit.

 

5

 

1.15         Expiration or Earlier Termination.  Upon the expiration or earlier termination of
this Agreement, Dot Hill will provide to NetApp a summary of descriptions and
quantities of Products, including any FRU’s, available at [***] locations which are
maintained by or for Dot Hill.  Upon
written request by NetApp, Dot Hill will perform mitigation efforts for a
period of [***] by
attempting to sell the components Products, including any FRU’s, to other
parties at then-current prices available to NetApp under the Agreement outside
of units to be retained for Warranty coverage under Section 23 of the
Agreement.  Upon the expiration of such [***] period and the
completion of any such requested efforts, Dot Hill will inform NetApp of the
amount of units remaining, including any FRUs, at such time and NetApp will
issue a non-cancelable Purchase Order to Dot Hill for such units, and will
purchase such units at their then-current price for immediate delivery to
NetApp.

 

2.             END
OF LIFE NOTIFICATION

 

2.1           Subject
to the provisions of the Agreement, Dot Hill agrees to manufacture and supply
to NetApp the Products, and NetApp agrees to procure from Dot Hill the
Products, during the term of this Agreement. Dot Hill shall provide NetApp written
notification of its intention to assign the Products to an End of Life Status (“Notice of EOL”) at least [***]
prior to the date upon which said Products shall enter an EOL status. NetApp
shall be allowed to place final orders for all Products with Dot Hill [***]
period. Dot Hill shall honor the final Purchase Orders, notifying its suppliers
of the EOL status and managing final component purchases such that pricing for
the final Purchase Orders shall be [***].

 

3.             LOGISTICS

 

3.1           The NetApp logistics requirements for the Product
are as follows:

 

3.1.1        Dot Hill will [***] following the Kanban Replenishment Process
described in Section 1.8 from the Dot Hill [***]. The
[***] will be managed and owned by Dot Hill or Dot Hill’s DCM.

 

3.1.2        Dot Hill will own the Products until the [***], which will occur at the time
such Products are [***].

 

3.1.3        All [***] costs are included in the Total Price of each of the Products, as
documented in Exhibit B.

 

3.1.4        NetApp requires an EIA (i.e., Electronics
Industry Association) label on all inbound material delivered to NetApp or to
NetApp’s designated manufacturing location. All packaging and labeling of
Products shall comply to the NetApp Inbound Packaging Specifications. (See
provisions in Attachment 1, which is attached below to this Exhibit F)

 

6

 

4.             REVERSE LOGISTICS

 

4.1           Returned Products.  For
units of Product returned by NetApp to Dot Hill that do not conform to the
warranty provided by Dot Hill to NetApp in Section 23 of the base terms of
the Agreement, Dot Hill will perform its warranty responsibilities as described
therein, upon Dot Hill’s authorization for the return of by NetApp of such
units of Product. Dot Hill’s response to a properly submitted NetApp-submitted
request for authorization for the return of Products that do not conform to
such warranty shall be made by Dot Hill within [***] after Dot Hill’s receipt of any such
request.  Upon completion of its warranty
responsibilities for the repair or replacement of a Product, Dot Hill will
return back a Product, freight prepaid, to NetApp.

 

4.2           Credit and Re-Invoice Process. Solely to track defective units of Products
returned by NetApp to Dot Hill under the warranty provisions in Section 23
of the base terms of the Agreement and the subsequent delivery by Dot Hill of
repaired or replacement Products therefore, Dot Hill will: (i) issue a
credit to NetApp upon Dot Hill’s authorization for the return of such units;
and (ii) re-invoice NetApp in full for the repaired or replacement units
of Products delivered by Dot Hill.

 

4.3           AutoSwap Process. Notwithstanding any inconsistent provisions in
Sections 4.1 and 4.2 above, the AutoSwap process in Attachment 2
to this Exhibit F will apply to Products that meet all of the following
requirements: (i) they are purchased by NetApp from Dot Hill under this
Agreement, (ii) they are delivered by Dot Hill to the NetApp Sunnyvale
delivery location [***] or such other mutually agreed NetApp locations, (iii) they
fail to conform to the warranty provided by Dot Hill as determined by NetApp
prior to their intended delivery to third parties, and (iv) they are
returned to Dot Hill within [***] after NetApp obtains knowledge of a warranty
non-conformance for such Products.

 

4.4           Induced Damage to Products.  If Dot
Hill reasonably determines that a Product which is returned by NetApp to Dot
Hill has customer-induced or NetApp production-induced damage arising from or
resulting in a non-conformance of Products to the warranty provided by Dot Hill
under this Agreement, then Dot Hill will notify NetApp of such matter, and
invoice to NetApp the material and labor costs that Dot Hill incurs for
out-of-warranty repair for such units of Products.

 

4.5           Packaging.  Each
Product that is authorized for return by Dot Hill will be packaged by NetApp in
a mutually agreed manner and returned to Dot Hill [***].

 

4.5           Address Changes.  Dot Hill
may change, modify or update the address of the [***], at any time and from time to time, upon
written notice to NetApp provided, however, that the [***] of this Exhibit F are met.

 

7

 

Attachment 1

 

[***]

 

8

 

Attachment
2

 

AutoSwap
Process

 

Purpose: To define
the methods and responsibilities relating to the exchange of defective
purchased Products, using the AutoSwap process.

 

Scope: This process
pertains to those Products that meet the following requirements: (i) they
are purchased by NetApp from Dot Hill under this Agreement, (ii) they are
delivered by Dot Hill to the [***] or such other mutually agreed NetApp
locations, (iii) they fail to conform to the warranty provided by Dot Hill
as determined by NetApp prior to their intended delivery to third parties, and (iv) they
are returned to Dot Hill within [***] after NetApp obtains knowledge of a
warranty non-conformance for such Products.

 

Procedure: The
following steps provide guidelines for a generic AutoSwap process and may be
modified, through mutual agreement, to accommodate the specific needs of either
NetApp or Dot Hill.

 

1.             All Products that
have been purchased by NetApp and are eligible for return in the AutoSwap
process must fall within the above-described Scope and reside in NetApp’s
Materials Review Board (“MRB”), have an
associated Incoming Material Discrepancy Report (“IDR”)
and have been dispositioned for return to Dot Hill’s designated location.

 

2.             Upon completion of
the dispositioning process, the MRB clerk will forward the IDR list to the
respective buyer that is responsible for acquiring Products for NetApp
hereunder.

 

3.             The buyer that is
responsible for acquiring Products for NetApp hereunder will solicit a RMA
number from Dot Hill and generate a Purchase Order for [***] that fall within
the above-described Scope from NetApp inventories to Dot Hill.

 

4.             Dot Hill will replace
the discrepant material through a [***] which will take place at a
mutually agreed predetermined location.

 

5.             Delivery of the
Products for AutoSwap will occur within the context of a predetermined weekly schedule or
as negotiated on a case-by-case basis.

 

6.             Dot Hill will assess
quality for the defective Products and the parties will mutually agree on [***]
for the defective Products.  All [***]
will be completed within [***] from the date of failure analysis reporting.

 

9

 

Exhibit G

 

NetApp Customer Support Requirements

 

1.             RMA
Requirements

 

1.1           For the purpose of the
construction and interpretation of this Exhibit, the term “Authorized
Service Provider” shall mean a third party that performs repair
services for NetApp on returned Products that were purchased by NetApp from Dot
Hill under this Agreement and sold by NetApp to a NetApp customer.

 

1.2           The
parties shall jointly define a RMA Process workflow among NetApp, NetApp’s
Authorized Service Provider(s) and Dot Hill.

 

1.3           Dot
Hill shall provide to NetApp mutually agreed FRU replacement training, and the
Parties shall mutually agree upon handling requirements for Field Replacement
Units (“FRUs”).

 

1.4           If Dot Hill ceases to
provide repair services for those Products acquired from Dot Hill by NetApp,
then Dot Hill shall [***], and NetApp and NetApp’s Authorized Service
Provider(s) may [***].  NetApp
acknowledges and agrees that such Dot Hill Technology is [***].

 

1.5           The
Parties shall define a RMA test process and failure criteria for the
Products.  NetApp may return Products
that NetApp or its Authorized Service Provider(s) have tested (via a standard
troubleshooting process to be mutually agreed) and determined to fail the
agreed failure criteria.

 

1.6           NetApp
or its Authorized Service Provider(s) will screen Products for failures in
accordance with a mutually-agreed test process prior to delivery of units of
Products with failures to Dot Hill.

 

1.7           If
Dot Hill receives Products that Dot Hill determines are [***], after having
been screened by NetApp or its Authorized Service Provider(s) of more than
[***] during any [***] within the [***] or more than [***] during any [***] in
any [***] following the Effective Date, then the parties will review the test
processes used for screening used by NetApp, it Authorized Service Provider(s),
Dot Hill and the Dot Hill DCM to identify failures and take appropriate actions
in a prompt and timely manner to attempt to [***].

 

1.8           NetApp
will cause an Authorized Service Provider(s) to allow Dot Hill to perform
on-site audits of the Authorized Service Provider’s operations to determine
whether it has performed its responsibilities in accordance with the mutually
agreed test process.

 

 

1.9           Dot
Hill shall replace rather than refurbish any Product that has been properly
returned [***], and retire such RMA Product permanently.

 

1.10         The
parties shall jointly develop a specification for cosmetic defects on RMA
returns.

 

1.11         As
of the Effective Date, the repair locations for Product delivered under RMA are
as follows:

 

[***]

 

A party may change its applicable
location.  In the event of such change,
the party making such change will notify the other.

 

1.12         For
RMA returns under this Agreement, unless otherwise agreed by the parties,
repaired or replacement Products shall be delivered to NetApp at the
then-current engineering change order (‘ECO”) level.

 

2.             Dead
on Arrival

 

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

 

2.2           The
parties shall jointly define DOA Process workflow between NetApp and Dot Hill.

 

2.3           Dot
Hill shall accept RMAs associated with any DOA Product acquired by NetApp from
Dot Hill under this Agreement for a period of [***]. Dot Hill shall [***] to
NetApp and NetApp Designated Contract Manufacturers with [***].

 

3.             End
of Life Support

 

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

 

3.2           NetApp
End of Life (“NetApp EOL”) begins the day NetApp
no longer makes the Product acquired from Dot Hill available to NetApp’s
customers.

 

3.3           Product
repair, RCA and RMA support outside of the applicable warranty for a Product
purchased by NetApp under the Agreement shall, upon request by NetApp, be
provided on a time-and-material basis at a rate to be mutually agreed by the
parties.  Post-Dot Hill EOL support for
Products

 

 

acquired under this Agreement from Dot Hill
beyond the applicable warranty period [***].

 

3.4           NetApp
will [***] for a mutually agreed number of Products.  For avoidance of doubt, NetApp shall not be
obligated to [***].  Dot Hill will
provide monthly information to NetApp as to the status of [***].

 

3.5           Upon written request by Dot Hill, NetApp will
[***], all then-outstanding [***]. 
Prior to any such [***],
Dot Hill will:

 

(i)            use commercially reasonable efforts to [***];

 

(ii)           use best efforts to have Dot Hill’s DCM
attempt [***]; and

 

(iii)          at NetApp’s written request and with the
assistance of NetApp, use commercially reasonable efforts to [***].

 

Dot Hill shall initiate the foregoing [***]
before NetApp has any obligation to [***].

 

3.6           Limitations on [***] Responsibilities.  Notwithstanding anything to the contrary, Dot
Hill shall not be in breach of any obligations it may have to NetApp under this
Agreement to [***] arises or results from the inability by Dot Hill to [***].

 

 

EXHIBIT H

 

[***] Plan

 

1.             Overview.  This exhibit sets forth and contains the
following information for each Product that Dot Hill intends to make available
to NetApp under this Agreement: (i) [***], (ii) Price Roll-up, (iii) [***],
(iv) Production Volume Analysis, (v) [***], and (vi) Tooling,
Product, Return Material Authorization (“RMA”) and
NetApp Global Services Expense Details, which information will be updated from
time to time by the parties, as set forth below.

 

2.             NRE
Forecasts and Updates.  The
[***] will contain the total forecasted amount of NRE that Dot Hill expects to
incur to produce a certain amount of units of Product collectively for NetApp
and other third parties, and for which Dot Hill expects to [***].  The [***] and per unit rate used for [***] in
this Exhibit will be adjusted from time to time, but in no event less
frequently than [***], by the parties to take into consideration the actual
[***] incurred by Dot Hill.  To this end,
[***].

 

3.             [***].  Any [***], as defined below, that Dot Hill
incurs for an applicable Product sold by Dot Hill to NetApp hereunder [***]. Exhibit B,
which documents the Total Price to be charged by Dot Hill to NetApp for each
Product under this Agreement, will be updated to include a [***] in each such
Product for [***] [***].

 

4.             [***].  For units containing a [***], the allocation
of NRE for [***] to such units will [***] [***], and be based upon [***].  However, NetApp shall be responsible for and
shall pay Dot Hill for any [***].  If the
[***], then Dot Hill will [***], and NetApp shall pay to Dot Hill [***].

 

5.             [***].  For test equipment and other fixed assets,
other than tooling (collectively, “Test Equipment”),
a [***].  This [***] will begin on the
later of (i) [***] or (ii) [***], and ends when [***].  [***] will be [***] in the following [***]; (i) from
[***]; (ii) from [***]; and (iii) from [***].  Each of the parties will use its best efforts
to permit Dot Hill to [***].

 

6.             Additional
Products.  For additional
Products which are added to this Agreement upon the parties’ mutual agreement,
the parties will update this Exhibit H and the [***] for the
applicable Product in Exhibit B to reflect projected [***] that Dot
Hill [***].  This update will be
performed when such additional Products are added to this Agreement.

 

 

EXHIBIT I

 

MUTUAL
NON-DISCLOSURE AGREEMENT

 

This agreement
is entered into between Network Appliance Inc., a Delaware corporation located
at 495 East Java Drive, Sunnyvale, CA 94089 (“NetApp”), and Dot Hill Systems
Corp, a Delaware corporation with offices at 6305 EI Camino Real; Carlsbad,
California 92009 hereinafter (“Dot Hill”)

 

Dot Hill and
NetApp are considering disclosing information for the following purpose:

 

[***]

(i.e. specific to the scope of
the project to enable the parties to clearly identify for what purposes the
confidential information may be used, “business relationship”).  In order to aid each other in the furtherance
of the business relationship, each party may disclose Confidential Information
to the other.

 

THEREFORE, the
parties agree as follows:

 

1.             “Confidential
Information” means (1) any information disclosed by either party, that is
marked “confidential” or “proprietary” in the manner provided by this
agreement, (2) information disclosed orally or visually that is designated
“confidential” or “proprietary” at the time of disclosure, and that the
disclosing party summarizes in reasonable detail in a writing delivered to the
other party within [30 days], and (3) any information whether or not marked
“confidential” which is specifically designated as such by either party.

 

Each party may
disclose to the other current and future product plans and specifications,
design information, product architecture, product strategies, cost and profit
date, distribution and marketing plans, and other technical, business and
financial information that a party maintains as confidential, and that is
designated as such in the manner provided by this agreement.

 

2.             This
agreement applies to all Confidential Information disclosed in connection with
the Development and OEM Supply Agreement for the duration of its term.  All written Confidential Information will be
labeled conspicuously as “confidential” or “proprietary” or with words of
similar import at the time of delivery. 
Confidential Information may only be used for the purpose identified in
this agreement.

 

3.             Confidential
information will remain the property of the disclosing party.  Each party agrees that for a period of [***]
from the date of disclosure [***] the disclosing party’s Confidential
Information will be disclosed or disseminated only to the receiving party’s
employees and consultants who have a need to know and who are under a similar
written obligation limiting the use and disclosure of disclosing party’s
Confidential Information to the same extent provided in this agreement.  Neither party will copy, duplicate, reverse
engineer, reverse compile or attempt to derive the composition or underlying
information of any Confidential Information.

 

4.             Each
party agrees to use the same degree of care to protect the confidentiality of
the information it receives from the other party, as it would use to protect
its own Confidential information. 
However, in no event shall such degree of care be less than a reasonable
degree of care.

 

5.             The
terms of confidentiality under this agreement shall not be construed to limit
either party’s right to independently develop or acquire products, as long as
such development or acquisition is not in violation of the obligations of
confidence of this agreement.

 

6.             This
agreement shall not apply to such information that the receiving party can
document:

 

(a)           is
in or enters the public domain through no fault of the receiving party;

(b)           is
disclosed to the receiving party by a third party without an obligation of
confidentiality;

(c)           is
independently developed by the receiving party;

(d)           is
already known to the receiving party at the time of disclosure under this
agreement;

(e)           is required to be
disclosed pursuant to any judicial or administrative proceeding, provided that
the receiving party immediately after receiving notice of such action notifies
the disclosing party

 

 

of such action
to give the disclosing party the opportunity to seek any other legal remedies
to maintain such information in confidence;

 

(f)            is disclosed with the
prior written consent of the disclosing party.

 

7.             Except
as expressly provided herein, no license or right is granted by either party to
the other under any patent, patent application, trademark or copyright.  Neither party has made any commitment to the
other, except as expressly set forth herein, and each party will bear its own
costs and expenses in connection with this agreement whether or not such a
relationship comes into being. 

 

8.             Upon
the disclosing party’s request, all Confidential Information of that party will
be returned or destroyed and the receiving party will provide certification of
such destruction in writing.

 

9.             Each
party agrees not to export from the United States, directly or indirectly, any
of the other party’s Confidential Information, or any products using the other
party’s Confidential Information, to any country for which the United States
government, or any agency thereof, at the time of export, requires an export
license or other government approval, without first obtaining the written
consent of the relevant government agency.

 

10.           This
agreement is between the parties and neither party will assign or transfer any
rights or obligations under this agreement without the prior written consent of
the other party.  This agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and lawful assigns.

 

11.           Either
party upon [***] prior written notice may terminate this agreement.  The obligation to protect the confidentiality
of information received prior to termination shall survive for [***] from the
date(s) of disclosure [***].

 

12.           This
agreement will be governed by the laws of the State of California excepting its
conflicts of law provisions.  This
agreement and any amendment thereto, must be in writing and signed by an
authorized representative of each party. 
No failure or delay in exercising any right under this agreement will
operate as a waiver of any term or condition hereunder.

 

13.           Both
parties acknowledge that the above-described Confidential Information is
claimed to be a valuable, special, and unique asset of the party disclosing the
information and monetary damages would not be sufficient should there be any
breach of this agreement.  Therefore, the
disclosing party shall also be entitled to seek an injunction from a court of
competent jurisdiction for the purpose of stopping or preventing any existing
or anticipated breach of this agreement, in addition to any other remedies at
law.  Should there be a dispute of this
agreement, the prevailing party shall be entitled to reasonable attorneys’ fees
and costs.

 

 

	
  Effective
  Date

  	
  25 July 2005

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Network
  Appliance Inc.:

  	
  Dot Hill
  Systems Corporation:

  
	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
  Laurie Fuller

  	
   

  	
  Name:

  	
  Dana
  Kammersgard

  	
   

  
	
   

  	
  (Print)

  	
   

  	
   

  	
  (Print)

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Laurie Fuller

  	
   

  	
  By:

  	
  /s/ Dana
  Kammersgard

  	
   

  
	
   

  	
  (Signature)

  	
   

  	
   

  	
  (Signature)

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
  Senior
  Manager Supply Chain Development

  	
   

  	
  Title:

  	
  President

  	
   

  
										

 

 

Exhibit J

 

Requirements
Obligations

 

1.             Initial
Purchase Period for Procurement and Manufacture of Products.  For each Product in the table below, NetApp
hereby agrees that, during the period corresponding to such Product in the
table below, NetApp shall purchase [***] for such Product [***] from Dot Hill
[***] and shall have Dot Hill manufacture or have manufactured such Product for
intended supply to NetApp or NetApp DCMs (for a Product below, such period will
be referred to as the “Initial Purchase Period”
for such Product).  For avoidance of
doubt, NetApp hereby agrees that it and its Affiliates shall [***], determined
regardless of whether such products have [***] and/or [***], during the [***]
for each such Product and NetApp shall purchase for itself and its Affiliates
such products under this Agreement [***].

 

	
   

  	
   

  	
  For a
  Product in the left-hand column, the period

  starting on NetApp’s FCS of such Product and ending

  on the first occurrence of one of stated events in the

  corresponding row that applies to such Product

  
	
  Description
  of Product to

  be purchased from Dot

  Hill under this Agreement

  	
   

  	
  The Following Total Units

  of Product are Sold*

  	
  The Following Number of

  Months elapse after

  NetApp’s FCS of Product

  
	
  [***]

  	
   

  	
  [***]

  	
  18 months

  

 

*              For purpose of
interpretation of this table and the determination of the Initial Purchase
Period, the “Total Number of Units of Product” shall mean the total combined
number of systems of a listed Product that are to be [***]

 

Prior to the
end of the [***] for each Product, Dot Hill agrees to help support NetApp in
establishing a second source for the manufacture of such Product. If requested by
NetApp, Dot Hill will negotiate in good faith to support the bring-up of a
second source NetApp Designated Contract Manufacturer to manufacture such
Product until the time at which a NetApp [***] from the second source NetApp
Designated Contract Manufacturer.  Upon
written request by NetApp, Dot Hill will also provide certain mutually agreed
training in troubleshooting and failure analysis to test technicians and
engineers for such Product.

 

2.             Acceleration
Event affecting Duration of Initial Purchase Period.  Notwithstanding the provisions of Section 1
of this Exhibit J, in the event that any of the following
conditions occurs:

 

(i)            the defective parts per million
falls for a Product listed in Section 1 of this Exhibit J
falls below the quality requirements set forth in Exhibit E of this
Agreement and stays below such quality requirements for a continuous period of
[***],

 

 

(ii)           Dot Hill is unable to meet on
or after NetApp’s FCS a request for the supply of [***] of NetApp’s Product
demand included in a Purchase Order that is accepted and agreed to by Dot Hill
(including any [***] included in such Purchase Order accepted and agreed to by
Dot Hill, but excluding any Product demand resulting from [***] NetApp’s Product
demand included in such Purchase Order) for a Product listed in Section 1 of this Exhibit J
within agreed lead times during a [***] and provided, however, that such
failure is (a) not the result of an event of Force Majeure, and (b) not
caused by NetApp, a NetApp DCM, a [***],

 

(iii)          over [***] of Dot Hill’s [***]
during any period of [***], or

 

(iv)          Dot Hill obtains a qualified
financial opinion from its independent auditors, which is not later remedied
(i.e. retracted, modified, or upgraded) prior to April 2006,

 

then
the Initial Purchase Period for such affected Product, as set forth in Section 1
of this Exhibit J, shall be modified to reflect an updated and
modified Initial Purchase Period for such Product, which will correspond to the
applicable row for such Product below:

 

	
   

  	
   

  	
  For a Product in the left-hand column, the
  period

  starting on NetApp’s FCS of such Product and ending

  on the first occurrence of one of stated events in the

  corresponding row that applies to such Product

  
	
  Description
  of Product to

  be purchased from Dot

  Hill under this Agreement

  	
   

  	
  The Following Total Units

  of Product are Sold*

  	
  The Following Number of

  Months elapse after

  NetApp’s FCS of Product

  
	
  [***]

  	
   

  	
  [***]

  	
  [***]

  

 

*              For purpose of
interpretation of this table and the determination of the Initial Purchase
Period, the “Total Number of Units of Product” shall mean the total combined
number of systems of a listed Product that are to be [***]

 

3.             Termination of
Initial Purchase Period.  Notwithstanding anything to the contrary in
Sections 1 and 2 of this Exhibit J, in the event that a Trigger
Event applicable to such Product occurs, then the Initial Purchase Period for such
affected Product, as set forth in Sections 1 and 2 of this Exhibit J,
shall terminate effective as of the date on which such condition occurs.

 

4.             Obligations
Following Initial Purchase Period. 
Following the Initial Purchase Period for each Product, and provided
that the Agreement is still in effect and Dot Hill is not in material breach of
this Agreement, NetApp agrees that the following vendor schedule will
apply for each Product:

 

(i)            For
the [***] immediately following the expiration of the Initial Purchase Period
(the “[***] Period”), NetApp will purchase
from Dot Hill, and Dot Hill shall be

 

 

granted, not less than [***] of the supply demand of NetApp for all
products that are the same or substantially similar to such Product;

 

(ii)           For
the [***] immediately following the [***] Period (the “[***] Period”),
NetApp will purchase from Dot Hill, and Dot Hill shall be granted not less than
[***] of the supply demand of NetApp for all products that are the same or
substantially similar to such Product; and

 

(iii)          After
the expiration of the [***] Period, NetApp will be [***].

 

5.  Other Potential Obligations
following Initial Purchase Period.  If Network Appliance, Inc. or any of its affiliates [***] to:

 

(a)      [***],

 

(b)      [***] to Network Appliance, Inc. or any of its
affiliates, or

 

(c)      [***] with the same or a substantially similar
product to a Product which Dot Hill supplies to NetApp under this Agreement,

 

then, provided that the
Agreement is still in effect and Dot Hill is not in material breach of this
Agreement, in addition to the vendor schedule in Section 4 of this Exhibit J,
the following additional vendor schedule will also apply for the same or
substantially similar product to a Product that Dot Hill or any of its
affiliates [***] following the Initial Purchase Period for such Product:

 

(i)      
For the [***] Period applicable thereto, NetApp will purchase from Dot Hill,
and Dot Hill shall be granted, a quantity of products not less than [***] of
the supply demand of NetApp and its Affiliates [***] which is the same or
substantially similar to such Product;

 

(ii)      
For [***] Period applicable thereto, NetApp will purchase from Dot Hill, and
Dot Hill shall be granted, a quantity of products not less than [***] of the
supply demand of NetApp and its Affiliates [***] which is the same or
substantially similar to such Product; and

 

(iii)     
After the expiration of the [***] Period applicable thereto, NetApp will be
[***].

 

For avoidance of doubt, the parties agree that those units of a product
which: (1) are the same or substantially similar to a Product, (2) are
acquired by NetApp from Dot Hill under this Agreement and (3) count toward
the achievement by NetApp of the [***], shall also count toward the achievement
by NetApp of the [***] which apply to such Product [***]

 

 

Exhibit K

 

	
  

  	
  Title: 

  	
   

  
	
  Workmanship
  Standards Mechanical Assemblies and Parts 

  
	
  Sheet:

  	
  1

  	
  Of

  	
  17

  
	
  Number: 

  	
  263 - 00352 

  	
  Rev: 

  	
  D0

  
									

 

1.0          PURPOSE

 

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

 

This Standard defines the
specifications used in design, 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
Network Appliance.

 

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 Network Appliance suppliers, as well as Network Appliance personnel
involved in engineering, first article inspection, purchasing, assembly,
and final audits at all Network Appliance manufacturing sites.

 

3.0          RESPONSIBILITY

 

It
shall be the responsibility of Supplier Quality Engineering, Quality Assurance
and  Engineering in
conjunction with Network Appliance personnel involved in Purchasing, Designand Assembly to adhere to the
guidelines established herein.

 

[***]

 

4.0
DEFINITIONS

 

4.1      [***]

 

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

 

[***]
Visible occasionally or N/A.

 

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

 

 

	
  

  	
  Title: 

  	
   

  
	
  Workmanship
  Standards Mechanical Assemblies and Parts 

  
	
  Sheet:

  	
  2

  	
  Of

  	
  17

  
	
  Number: 

  	
  263 - 00352 

  	
  Rev: 

  	
  D0

  
									

 

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

 

Desktop Server/ Other Commodities

[***]
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 when installed into a cabinet or enclosure for top,
bottom, and sides of unit. This encompasses all other surfaces, which are not Class 1,
2 or 3.

 

4.2      Specific Terms:

 

Refer
to Appendix A

 

5.0          REFERENCE

 

5.1     IPC-A-610C

 

6.0          INSTRUCTIONS

 

6.1      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.

 

 

	
  

  	
  Title: 

  	
   

  
	
  Workmanship
  Standards Mechanical Assemblies and Parts 

  
	
  Sheet:

  	
  3

  	
  Of

  	
  17

  
	
  Number: 

  	
  263 - 00352 

  	
  Rev: 

  	
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6.2      Grading system

 

Category: Three types of Category shall identify the
final location of the surface being inspected:

 

	
  CATEGORY

  	
   

  	
  SURFACE

  
	
  I

  	
   

  	
  Plastic windows (see-through)

  
	
  II

  	
   

  	
  External

  
	
  III

  	
   

  	
  Internal

  

 

Class:
The three cosmetic class letters shall 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 part drawing and/or Inspection
Instructions.

 

Judgement: 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 acceptablebecause it was not detected within the
time and conditions at the beginning of the inspection, it shall be acceptable at the end.

 

[***]

 

 

	
  

  	
  Title: 

  	
   

  
	
  Workmanship Standards
  Mechanical Assemblies and Parts 

  
	
  Sheet:

  	
  4

  	
  Of

  	
  17

  
	
  Number: 

  	
  263 - 00352 

  	
  Rev: 

  	
  D0

  
									

 

7.0          SURFACE FINISH

 

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

 

TABLE I: Acceptability Criteria for Painted Surfaces

 

7.1.1   Table I:

 

7.1.2   Nomenclature

 

 

	
  

  	
  Title: 

  	
   

  
	
  Workmanship Standards
  Mechanical Assemblies and Parts 

  
	
  Sheet:

  	
  5

  	
  Of

  	
  17

  
	
  Number: 

  	
  263 - 00352 

  	
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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 must 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 must 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 remainingsurface.

 

7.2 Plated Surfaces

 

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

 

[***]

 

 

	
  

  	
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  Workmanship Standards
  Mechanical Assemblies and Parts 

  
	
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  6

  	
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7.2.2
Comments

 

 

	
  

  	
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  Mechanical Assemblies and Parts 

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

 

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.

 

[***]

 

 

	
  

  	
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  Workmanship Standards
  Mechanical Assemblies and Parts 

  
	
  Sheet:

  	
  8

  	
  Of

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

 

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.

 

Figure 1: Dimension Datum

 

 

Tolerance Guidelines:

 

[***]

 

 

	
  

  	
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  Workmanship Standards
  Mechanical Assemblies and Parts 

  
	
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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

 

 

 

	
  

  	
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General Angular Tolerances:
Applied to shear edges and bent angles

 

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

 

Figure 4:
Shear Edge Angles

 

 

 

	
  

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

 

 

[***]

 

 

	
  

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

 

Bend Radii:

 

 

	
  Sheet Thickness [in]

  	
   

  	
  R max

  	
   

  	
  R min

  	
   

  	
  R max

  	
   

  	
  R min

  	
   

  
	
  Up to .060” (16 GA)

  	
   

  	
  .04”

  	
   

  	
  0

  	
   

  	
  .015”

  	
   

  	
  0

  	
   

  
	
  .060” -.120” (11 GA)

  	
   

  	
  .08”

  	
   

  	
  0

  	
   

  	
  .025”

  	
   

  	
  0

  	
   

  
	
  .120” - Up

  	
   

  	
  .16”

  	
   

  	
  0

  	
   

  	
  .04”

  	
   

  	
  0

  	
   

  

 

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:

 

[***]

 

 

	
  

  	
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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 positionwithout 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 9.0 (Alignment) are not violated.
Broken or bent snaps that in any
way may affect the alignment of the parts are unacceptable.

 

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 ismounted. 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 thesurface 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

 

 

	
  

  	
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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 forcushioning 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.

 

10.0        rinted Circuit Board
Requirements

 

10.1 Acceptability

 

10.1.1
All Printed circuit board assemblies shall conform to IPC-A-610C.

 

10.1 ESD handling and packaging

 

10.2.1
All Printed circuit board assemblies and ESD sensitive devices must be handled
and packaged per IPC-A-610C.

 

11.0        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
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.

 

 

	
  

  	
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12.0        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.

 

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

 

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

 

 

	
  

  	
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[***]

 

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.

 

 

	
  

  	
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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.

 

 

Exhibit L:

 

Manufacturing
Test Requirements

 

1.0          SCOPE AND BACKGROUND

 

Network Appliance will define the Manufacturing Test requirements for
the [***] manufacturing process, including testing for Field Replaceable Units
(FRUs), integrated systems, and preparation for shipment, and review with Dot
Hill such Manufacturing Test requirements.  Subject to the agreement by
Dot Hill to perform and undertake such Manufacturing Test requirements, which
agreement will not be unreasonably withheld, delayed or conditioned by Dot
Hill, such Manufacturing Test requirements shall become part of this Exhibit L.  Dot Hill will develop and implement the
specific tests which meet agreed Yield and Quality goals defined elsewhere in
this contract.  This document provides an
overview of the process that will be used, and also identifies the various
capabilities that are needed.

 

The general process and descriptions that follow are developed to
ensure that products which are produced for NetApp will meet the yield and
quality expectations that are defined within this contract.  All attachments and process step definitions
are an initial set of expectations, and are subject change and mutual approval.

 

Manufacturing
Test Requirements Exhibit L

 

Network Appliance Inc. Company Confidential and Proprietary.

 

1

 

General
Production Test Model

 

[***]

 

2.0          Applicable
Documents

 

The test process requirements will be maintained via a controlled
document system.  A number of documents
have been identified for critical process steps.  These documents shall be used to define,
develop, and maintain these process steps to ensure consistent application of
NetApp’s testing expectations.

 

Documents have been identified in the table below, and these documents
shall be maintained by Network Appliance and Dot Hill.  NetApp and Dot Hill will define a process
which shall be used to introduce and control changes to these documents.

 

	
  NetApp Shelf Test Document System

  	
   

  
	
  Document

  	
   

  	
  Current

  Version

  	
   

  	
  Document Name

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  NSTD-02

  	
   

  	
  0.3

  	
   

  	
  [***] IOM Test Requirements

  	
   

  
	
  NSTD-04

  	
   

  	
  0.3

  	
   

  	
  Mid-plane Test Requirements

  	
   

  
	
  NSTD-05

  	
   

  	
  0.3

  	
   

  	
  Dongle Test Requirements

  	
   

  
	
  NSTD-06

  	
   

  	
  0.3

  	
   

  	
  Power System Test Requirements

  	
   

  
	
  NSTD-08

  	
   

  	
  0.3

  	
   

  	
  Shelf Integration Test Requirements

  	
   

  
	
  NSTD-09

  	
   

  	
  0.3

  	
   

  	
  Shelf Run-In Test Requirements

  	
   

  
	
  NSTD-10

  	
   

  	
  0.3

  	
   

  	
  Preparation for Shipment Requirements

  	
   

  

 

Table 1: Applicable Documents

 

These documents will continue to change on a regular basis.  We will utilize the established Engineering
Change Process to control the changes.

 

Dot Hill will be responsible for developing and implementing the tests
described here-in.

 

The ultimate measure of the
validity of these tests is in the process yields at Dot Hill and NetApp as well
as the DPPM levels at NetApp customers. 
It is Dot Hill’s responsibility to meet the yield and reliability goals
stated elsewhere in this contract.

 

2

 

3.0      PROCESS
TESTING REQUIREMENTS

 

3.1          Components & FRUs

 

FRUs shall be tested and meet the requirements that are detailed in
specific FRU attachments.  These
documents shall serve as the set of requirements that Dot Hill will use to
develop their test process.

 

NSTD-02                IOM

 

NSTD-04                Midplane

 

NSTD-05                Dongle

 

NSTD-06                PSU

 

In addition to the production
go/no-go testing, the same FRU level functional tests will be executed as part
of the Return Process.  The test software
needs to be sufficiently robust to isolate faults (minimize NTFs at the RCA
Step) as well as isolate the defective components if possible. Responsibility
for the NTF rate will rely on the effectiveness of these tests.

 

3.2          Functional Testing

 

Functional test is part of the production go/no-go testing. The purpose
of Functional Testing is to ensure that all components are meeting full
functional requirements prior to entering Run-in Test.  All basic functionality will be tested prior
to entering Run-In. Refer to NSTD-08 for details. This test may be executed
with manual interaction such that things like LED’s and fit can be validated.

 

3

 

3.3          Run-In Test

 

Run-In test is part of the production go/no-go testing. The Run-In test
is to be executed after successful completion of Functional Test.  This test is to be run with no manual
interaction. This test is intended to serve the following goals:

 

[***]

 

3.4          Preparation for Shipment

 

The step in the test process will make provisions for the appropriate
configuration of tested products, which may be shipped directly to NetApp
customers from Dot Hill.

 

Refer to NSTD-10 for details.

 

A detailed schedule of data collection requirements will be
prepared as the test process is more defined.

 

It is expected that test information including pass/fail status, yield,
failure identification, failure paretos, will be available online.  That data can be sorted by lots, time
periods, or individual units under test.

 

4

 

4      Summary List of
Functional and Run-in Testing Elements

 

•      Process
development, implementation and capital equipment to enable test coverage as
outlined in Table 2.

 

[***]

 

[***]

 

Table
2: Coverage During FRU Manufacturing and Test

 

5

 

•      Automated test data
collection and analysis capability to provide [***].

 

•      Run-in Test Equipment
shall be capable of [***] Hard Drive/Shelf testing in an environmentally controlled
area [***].

 

6

 

EXHIBIT M

 

ON-SITE
SUPPORT REQUIREMENTS

 

BUYER
PLANNER JOB DESCRIPTION

 

Essential Functions:

 

•      Plan material
and place purchase orders to meet established business goals for NetApp volume
manufacturing. Completes reports, monitors inventory levels and supports build
schedules

•      Maintains the
integrity of all assigned data bases in accordance with established business
control procedures and functional policies and procedures

•      May secure
quotations from Dot Hill [***].

•      Takes a lead
role in working with Engineering or other groups to determine status of
rejected Product. Manages the return of rejected Product to Dot Hill, including
planning and procurement of replacement material.

•      Communicates to
NetApp market conditions for components/commodities within the Product from Dot
Hill that may affect the lead-times, market shortages and/or pricing.

•      Responsible for
critical material supply management for the Dot Hill Product including appropriate
communication and elevation of problems/plans and strategies to NetApp
Management

•      , discrepant
material, supplier delivery performance and potential cost issues. Maintains
daily communication and commitment when Product is on allocation.

•      Reviews Engineering
Change Notifications (“ECNs”) for procurement input and action.  Is involved in ECN implementation strategy
and execution related to Dot Hill Product.

•      Establishes
with NetApp inventory level goals for assigned materials, initiates action for
review and disposition of excess material

•      Establishes and
tracks Dot Hill on-time delivery goals and metrics

•      Prepares a
[***] kanban management report which includes

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

•      Ensure that Dot
Hill meets our [***]

 

 

•      Serves as the
first level escalation path for supply issues.

 

Requirements:

 

•      Must be an
organized, self-starting, results-oriented individual

•      Must have the
ability to multi-task and handle high volume workload

•      Strong written,
oral communication & oral presentation skills

•      Excellent
problem solving, team building, and decision making

•      Must be
Computer literate (Word, Excel, PowerPoint)

•      The individual
should be familiar with Oracle or at least like MRP system.

 

Education:

 

•      BA/BS degree in
Business or related discipline with a minimum of 2-5 years of applicable work
experience in Production Procurement or Customer Support

•      CPM
certification highly desirable

 

Onsite [***] SQE Job Responsibilities

 

The Dot Hill onsite Supplier Quality Engineer
(SQE) for [***] will be based in Network Appliance Sunnyvale.  This individual will assume overall lead
responsibilities for all quality issues at all NetApp manufacturing locations
and act as the primary NetApp quality contact.

 

NetApp Manufacturing

 

•      Manage NetApp
Line Failures and drive failure analysis (“FA”) (within [***]) and associated
corrective actions (“CA”) (within [***]) at Dot Hill’s suppliers.

•      Coordinate Stop
Ships, Purges, Quarantines, and Rework

•      Monitor and
manage NetApp DPPM and drive change as necessary through Dot Hill’s factory and
Dot Hill’s design engineering.

•      Defective
Material Review Board (“MRB”) signoff, failure analysis selection coordination
and corrective action implementation

•      First article inspection
(“FAI”) of changes

•      Proactive
communication of known Dot Hill issues

•      Participate in
weekly quality conference calls

•      Provide NetApp
Line support for Dot Hill issues

•      Coordinate and
manage response to NetApp’s Corrective Action Requests (“CARs”) within [***]
and implement corrective actions within [***].

 

 

•      Coordinate
quality related NetApp plant visits / audits of Dot Hill and Dot Hill’s
Supplier’s and follow up / report back to NetApp, on closing all actions
identified during audit.

 

NetApp
Field / Customers

•      Manage
NetApp top Field failure modes

•      Develop Field
failure Pareto

•      Customer
escalations – coordinate timely failure analysis and corrective action
implementation

 

Weekly Dot
Hill/NetApp Defect Reduction team meeting

•      Ensure quality
targets are being met at NetApp, Dot Hill and Dot Hill’s suppliers

•      Review NetApp
Manufacturing Line DPPM and Pareto

•      Monitor and
manage Dot Hill & Dot Hill’s Supplier’s factory DPPM and Pareto –
Manufacturing line, Out of Box Audit (“OOBA”), Ongoing Reliability Test (“ORT”)

•      Review NetApp
Field Mean Time Between Failure (“MTBF”), Mean Time Between Return (“MTBR”),
and failure Pareto

•      Review Dot Hill’s
global MTBF, MTBR, and failure Pareto

•      Coordinate and
implement defect reduction / continuous improvement at Dot Hill and Dot Hill’s
suppliers.

•      Notification
and management of Product, process, Approved Vendor List (“AVL”), manufacturing
location and test change

•      Review and
implementation of NetApp Engineering Change Notification (“ECN”)

•      Manage
Quarterly Business Review (“QBRs”) quality issues, drive appropriate
improvements, and act as the primary Quality representative at the QBR
meetings.

 

NPI

•      Design Maturity
Test (“DMT”) DPPM monitoring, Pareto generation, FA and Corrective action
closures

•      Coordinate quality
related NetApp plant visits / audits of Dot Hill and Dot Hill’s Supplier’s and
follow up / report back to NetApp, on closing all actions identified during
audit.

•      Review results
of New Product Introduction (“NPI”) builds and provide timely feedback

•      Provide
manufacturing status and quality issue status for all builds

 

 

Exhibit N

 

List of NetApp Designated
Technology

 

	
  What

  	
   

  	
  Comment

  
	
  [***]

  	
   

  	
  [***]

  

 

 

Exhibit O

 

List
of NetApp Other Technology

 

 

	
  What

  	
   

  	
  Comment

  	
   

  	
  Royalties Due, if

  any

  	
   

  	
  Revocation Events

  or Conditions

  
	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  

 

1.             Any royalties due hereunder from Dot Hill to NetApp, to the extent
specifically described in the schedule above, for the use of an applicable
item of NetApp Other Technology [***].

 

2.             Notwithstanding anything to the contrary, no royalties shall be due
and payable from Dot Hill to NetApp under this Agreement for any products which
are sold or otherwise provided by Dot Hill: (i) [***]; (ii) [***];
and/or (iii) [***].

 

3.’            No later than [***] after the end of each of NetApp’s fiscal
quarters during the period that Dot Hill is exercising license rights to those
items of NetApp Other Technology for which a royalty is due pursuant to the schedule above,
Dot Hill shall provide NetApp with a report showing the number of products for
which royalties are due and owing to NetApp during the immediately preceding
quarter and the amount of the applicable royalties that are due and payable to
NetApp under this Agreement.  Concurrent with
the delivery by Dot Hill of this report to NetApp, Dot Hill shall pay the full
amount of the royalties in such report to NetApp.

 

4.             In the event Dot Hill exercises its [***] listed in this Exhibit O, then
NetApp shall reasonably cooperate with Dot Hill in identifying any third party
intellectual property that Dot Hill will need, and otherwise provide other
reasonable assistance to Dot Hill in connection with Dot Hill’s [***].

 

 

	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  
	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  

 

CORPORATE

DISASTER RESPONSE AND RECOVERY

 

	
  [***]

  	
   

  	
  [***]

  
	
  [***]

  	
   

  	
  [***]

  
	
  [***]

  	
   

  	
  [***]

  

 

 

CORPORATE
SAFETY

 

Title: 
Corporate Disaster Response and Recovery Policy

 

	
  [***]

  
	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  

 

 

[***]

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00093-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00093-of-00352.parquet"}]]