Document:

Exhibit
10.9

 

Overland Storage PPA
1585-042103

 

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

 

 

PRODUCT
PURCHASE AGREEMENT

 

 

NO.
1585-042103

 

1

 

	
  TABLE OF CONTENTS

  	
   

  
	
   

  	
   

  	
   

  
	
  1.

  	
  SCOPE OF
  AGREEMENT

  	
   

  
	
  1.1 General.

  	
   

  
	
  1.2
  Eligible Purchasers

  	
   

  
	
  1.3
  Term of Agreement

  	
   

  
	
  1.4
  Committed Volume

  	
   

  
	
   

  	
   

  	
   

  
	
  2.

  	
  DEFINITIONS

  	
   

  
	
  2.1 Definitions 

  	
   

  
	
   

  	
   

  	
   

  
	
  3.

  	
  ORDERING AND SHIPMENT
  OF PRODUCT

  	
   

  
	
  3.1 In General

  	
   

  
	
  3.2 Orders

  	
   

  
	
  3.3 Blanket Purchase
  Orders

  	
   

  
	
  3.4 Order
  Acceptance and Acknowledgment

  	
   

  
	
  3.5
  Emergency Orders

  	
   

  
	
  3.6 Forecasts

  	
   

  
	
  3.7 Lead Times

  	
   

  
	
  3.8 Inventory Requirements

  	
   

  
	
  3.9 Order
  Changes

  	
   

  
	
  3.10
  Purchase Reports

  	
   

  
	
  3.11 Delivery,
  Shipment and Packaging

  	
   

  
	
   

  	
   

  	
   

  
	
  4.

  	
  PRICES
  AND PAYMENT TERMS

  	
   

  
	
  4.1  Prices

  	
   

  
	
  4.2  Payment Terms

  	
   

  
	
  4.3  Offset

  	
   

  
	
  4.4  Discounts and Rebates

  	
   

  
	
  4.5 Sales Taxes and Duties

  	
   

  
	
  4.6
  Financial Condition

  	
   

  
	
   

  	
   

  	
   

  
	
  5.

  	
  [***]

  	
   

  
	
   

  	
   

  	
   

  
	
  6.

  	
  PRODUCT RETURNS;
  NON-CONFORMING PRODUCT

  	
   

  
	
  6.1 Return Materials
  Authorization

  	
   

  
	
  6.2
  Return Charges

  	
   

  
	
  6.3
  Duty to Remove Marks or Destroy Non-conforming Product

  	
   

  
	
  6.4 Correction of
  Non-conforming Product

  	
   

  
	
   

  	
   

  	
   

  
	
  7.

  	
  ENGINEERING
  PROCESS OR DESIGN CHANGES

  	
   

  
	
  7.1 Supplier Proposed Changes

  	
   

  
	
  7.2 Notice of Proposed Change

  	
   

  
	
  7.3
  HP Proposed Changes

  	
   

  
	
  7.4 Safety Standard Changes

  	
   

  
	
   

  	
   

  	
   

  
	
  8.

  	
  QUALITY

  	
   

  
	
  8.1
  Quality System

  	
   

  

 

2

 

	
  8.2 Product
  Holds

  	
   

  
	
  8.3 HP’s Right to
  Inspect Facilities

  	
   

  
	
  8.4  Reports

  	
   

  
	
  8.5
  SUPPLIER RATING

  	
   

  
	
   

  	
   

  	
   

  
	
  9.

  	
  SAFETY

  	
   

  
	
   

  	
   

  	
   

  
	
  10.

  	
  WARRANTIES

  	
   

  
	
  10.1 Product General
  Warranties

  	
   

  
	
  10.2 Product
  Intellectual Property Warranties.

  	
   

  
	
  10.3
  Warranty Periods

  	
   

  
	
  10.4 Software and
  Documentation Warranty

  	
   

  
	
  10.5 Services and Support
  Warranty

  	
   

  
	
  10.6 Compliance with
  Applicable Law

  	
   

  
	
  10.7
  Warranty Exclusions

  	
   

  
	
  10.8 DISCLAIMER

  	
   

  
	
   

  	
   

  	
   

  
	
  11.

  	
  SUPPORT;
  OTHER SERVICES

  	
   

  
	
  11.1 General

  	
   

  
	
  11.2 New
  HP Products

  	
   

  
	
  11.3 HP
  Property

  	
   

  
	
  11.4
  Substitute Products

  	
   

  
	
  11.5 Survival of
  Support Obligations

  	
   

  
	
   

  	
   

  	
   

  
	
  12.

  	
  DISCONTINUANCE OF PRODUCT

  	
   

  
	
  12.1 [***] Buy
  Rights

  	
   

  
	
  12.2 HP’s Right to
  Manufacture

  	
   

  
	
  12.3 Survival
  of [***] Buy Rights

  	
   

  
	
   

  	
   

  	
   

  
	
  13.

  	
  LOSS CONTROL

  	
   

  
	
  13.1
  Business Continuity

  	
   

  
	
  13.2 Safety,
  Security and Fire Protection

  	
   

  
	
   

  	
   

  	
   

  
	
  14.

  	
  MARKETING
  AND LICENSING

  	
   

  
	
  14.1
  Marketing Authority

  	
   

  
	
  14.2
  No Rights in Marks

  	
   

  
	
  14.3
  Private Labeling

  	
   

  
	
  14.4 Software License

  	
   

  
	
  14.5
  Documentation License

  	
   

  
	
   

  	
   

  	
   

  
	
  15.

  	
  INTELLECTUAL PROPERTY
  PROTECTION

  	
   

  
	
  15.1 Supplier’s Duty to
  Defend

  	
   

  
	
  15.2
  HP’s Duty to Notify

  	
   

  
	
  15.3 Actions After
  Injunction or Order

  	
   

  
	
  15.4
  Limitations

  	
   

  
	
  15.5
  Intellectual Property Developed under this Agreement

  	
   

  
	
   

  	
   

  	
   

  
	
  16.

  	
  TRADE
  REQUIREMENTS

  	
   

  
	
  17.

  	
  CLASSIFICATION
  AND LICENSING AUTHORITY

  	
   

  

 

3

 

	
  18.

  	
  GOVERNMENTAL
  COMPLIANCE

  	
   

  
	
  18.1 Duty to Comply

  	
   

  
	
  18.2 Social and
  Environmental Responsibility

  	
   

  
	
  18.3 Environmental
  Requirements

  	
   

  
	
  18.4 Procurement Regulations

  	
   

  
	
  18.5Anti-Terrorism
  Security Measures

  	
   

  
	
   

  	
   

  	
   

  
	
  19.

  	
  FORCE
  MAJEURE EVENTS

  	
   

  
	
  19.1
  Delaying Causes

  	
   

  
	
  19.2 Occurrence of a
  Delaying Cause

  	
   

  
	
  19.3 Resumption of
  Performance

  	
   

  
	
   

  	
   

  	
   

  
	
  20.

  	
  EVENTS OF DEFAULT AND
  REMEDIES

  	
   

  
	
  20.1
  Events of Default

  	
   

  
	
  20.2 Rights and
  Remedies Upon Default

  	
   

  
	
  20.3 Cover
  Costs

  	
   

  
	
   

  	
   

  	
   

  
	
  21.

  	
  CONFIDENTIAL
  INFORMATION

  	
   

  
	
  21.1
  Confidential Information

  	
   

  
	
  21.2 Exclusions

  	
   

  
	
  21.3
  Personal Data

  	
   

  
	
   

  	
   

  	
   

  
	
  22.

  	
  INSURANCE
  AND INDEMNITY

  	
   

  
	
   

  	
   

  	
   

  
	
  23.

  	
  LIMITATION
  OF LIABILITY

  	
   

  
	
  23.1 Liability Disclaimers

  	
   

  
	
  23.2 Liability Limitations

  	
   

  
	
  23.3
  Exceptions to Liability Disclaimers and Limitations

  	
   

  
	
  23.4 EXCLUDED DAMAGES

  	
   

  
	
   

  	
   

  	
   

  
	
  24.

  	
  TERMINATION

  	
   

  
	
  24.1 Termination for
  Convenience

  	
   

  
	
  24.2 Termination for Default

  	
   

  
	
  24.3 Termination for
  Assignment

  	
   

  
	
  24.4 Termination
  Pursuant to Other Power

  	
   

  
	
  24.5 Effect of Termination

  	
   

  
	
  24.6
  Termination Claim

  	
   

  
	
   

  	
   

  	
   

  
	
  25.

  	
  MISCELLANEOUS

  	
   

  
	
  25.1 Notices

  	
   

  
	
  25.2 Exhibits; Other
  Documents

  	
   

  
	
  25.3 Independent Contractors

  	
   

  
	
  25.4 Assignment

  	
   

  
	
  25.5 No Waiver

  	
   

  
	
  25.6 No Third Party Beneficiary

  	
   

  
	
  25.7 Headings; Interpretation

  	
   

  
	
  25.8 Publicity

  	
   

  
	
  25.9
  Severability

  	
   

  

 

4

 

	
  25.10
  Entire Agreement

  	
   

  
	
  25.11 [***]

  	
   

  
	
  25.13
  Counterparts

  	
   

  
	
  25.14
  Authority of Signatory

  	
   

  
	
  25.15 Disputes/Escalation
  Process

  	
   

  
	
   

  	
   

  	
   

  
	
  Signature
  Authorization

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBIT A..PRODUCT
  DESCRIPTION AND SPECIFICATION

  	
   

  
	
   

  	
   

  
	
  EXHIBIT B..DELIVERY,
  PACKAGING AND SHIPPING REQUIREMENTS

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBIT C..SERVICE AND
  SUPPORT REQUIREMENTS

  	
   

  
	
   

  	
   

  
	
  EXHIBIT D..CONFIDENTIAL
  DISCLOSURE AGREEMENT

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBIT F..RECIPIENTS FOR
  NOTICES

  	
   

  
	
   

  	
   

  
	
  EXHIBIT
  G..MARKETING REQUIREMENTS

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBIT
  H..SOFTWARE AND DOCUMENTATION WARRANTY

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBIT I..FLEXIBILITY
  AGREEMENT

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBIT J..QUALITY, WARRANTY
  and WARRANTY COMPENSATION

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBIT K..PRICING

  	
   

  
	
   

  	
   

  
	
  EXHIBIT M..HP REGIONAL TRADE
  GUIDELINES

  	
   

  

 

5

 

PRODUCT PURCHASE AGREEMENT

 

NO. 1585-042103

 

 

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

 

ý               
corporation

 

o            limited liability company

 

other,

 

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

 

4820 Overland
Avenue

San Diego,
California 92123.

 

 

RECITALS

 

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

 

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

 

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

 

1.                                       SCOPE OF AGREEMENT

 

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

 

 

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

 

6

 

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

 

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

 

1.2.1 [***];

 

1.2.2 [***];and

 

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

 

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

 

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

 

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

 

7

 

2.                                       DEFINITIONS

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

8

 

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

 

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

 

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

 

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

 

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

 

“Eligible Purchaser”
means [***].

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

9

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

10

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

11

 

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

 

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

 

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

 

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

 

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

 

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

 

3.                                       ORDERING AND SHIPMENT OF PRODUCT

 

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

 

12

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

13

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

14

 

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

 

5.                                       [***]

 

                                                5.1                                 [***].

 

                                                5.2                                 [***].

 

                                                5.3                                 [***].

 

                                                5.4                                 [***].

 

                                                5.5                                 [***].

 

6.                                       PRODUCT RETURNS; NON-CONFORMING PRODUCT

 

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

 

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

 

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

 

15

 

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

 

7.                                       ENGINEERING PROCESS OR DESIGN CHANGES

 

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

 

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

 

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

 

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

 

16

 

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

 

8.                                       QUALITY

 

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

 

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

 

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

 

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

 

•   Has successfully passed HP’s supplier
qualification audits

 

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

 

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

 

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

 

17

 

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

 

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

 

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

 

9.                                       SAFETY

 

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

 

10.                                 WARRANTIES

 

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

 

10.1.1                  [***].

 

10.1.2                  [***].

 

10.1.3                  [***].

 

10.1.4                  [***].

 

10.1.5                  [***].

 

10.1.6                  [***].

 

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

 

10.2.1 [***].

 

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

 

18

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

11.                                 SUPPORT; OTHER SERVICES

 

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

 

19

 

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

 

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

 

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

 

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

 

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

 

12.                                 DISCONTINUANCE OF PRODUCT

 

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

 

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

 

20

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

13.                                 LOSS CONTROL

 

13.1 Business Continuity

 

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

 

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

 

21

 

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

 

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

 

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

 

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

 

14.                                 MARKETING AND LICENSING

 

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

 

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

 

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

 

22

 

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

 

14.4 [***].

 

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

 

15.                                 INTELLECTUAL PROPERTY PROTECTION

 

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

 

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

 

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

 

15.3.1 [***].

 

15.3.2 [***].

 

15.3.3 [***].

 

23

 

15.3.4 [***].

 

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

 

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

 

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

 

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

 

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

 

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

 

24

 

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

 

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

 

16.                                 TRADE REQUIREMENTS

 

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

 

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

 

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

 

•                  Country
of Origin (line item level)

•                  Import
Country HTS Classification (line item level)

•                  ECCN
(line item level)

•                  License
(line item level)

•                  Destination
Control Statement

•                  HP
Part Number

•                  Appropriate
INCOTERM

 

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

 

25

 

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

 

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

 

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

 

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

 

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

 

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

 

26

 

17.                                 CLASSIFICATION AND LICENSING AUTHORITY

 

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

 

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

 

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

 

18.                                 GOVERNMENTAL COMPLIANCE

 

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

 

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

 

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

 

27

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

28

 

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

 

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

 

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

 

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

 

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

 

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

 

FAR 52.222-26, Equal
Opportunity (February 1999)

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

 

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

 

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

 

29

 

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

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

 

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

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

 

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

 

19.                                 FORCE MAJEURE EVENTS

 

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

 

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

 

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

 

30

 

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

 

20.                                 EVENTS OF DEFAULT AND REMEDIES

 

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

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

 

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

 

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

 

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

 

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

 

31

 

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

 

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

 

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

 

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

 

21.                                 CONFIDENTIAL INFORMATION

 

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

 

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

 

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

 

32

 

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

 

22.                                 INSURANCE AND INDEMNITY

 

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

 

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

 

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

 

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

 

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

 

33

 

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

 

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

 

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

 

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

 

34

 

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

 

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

 

23.                                 LIMITATION OF LIABILITY

 

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

 

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

 

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

 

35

 

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

 

24.                                 TERMINATION

 

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

 

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

 

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

 

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

 

24.5 Effect of Termination. [***].

 

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

 

25.                                 MISCELLANEOUS

 

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

 

36

 

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

 

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

 

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

 

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

 

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

 

37

 

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

 

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

 

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

 

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

 

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

 

38

 

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

 

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

 

25.11 [***]

 

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

 

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

 

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

 

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

 

39

 

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

 

40

 

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

 

	
  OVERLAND STORAGE

  	
   

  	
  HEWLETT-PACKARD
  COMPANY

  	
   

  
	
  Supplier

  	
   

  	
  HP

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By

  	
   

  	
   

  	
   

  	
  By

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Print Name: Vernon A.
  LoForti

  	
   

  	
  Print Name:  Richard Gentilini

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
  Vice President and
  Chief

  Financial Officer

  	
   

  	
  Title: Director NSS
  Procurement

  	
   

  
									

 

41

 

EXHIBIT
A

 

TO PRODUCT
PURCHASE AGREEMENT

BETWEEN HP AND
OVERLAND STORAGE

 

 

PRODUCT DESCRIPTION AND SPECIFICATIONS

 

 

1.  Product
Description

 

Storage tape
libraries, related accessories, options and spares

 

2.  Product
Specifications

 

Product will conform to
Specifications.  Specifications include
without limitation:

 

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

b)             HP
Safety and regulatory agency requirements

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

d)             HP’s
General Specification for Environment

e)              Technical
requirements specified in Accepted Orders

 

42

 

EXHIBIT
B

 

TO PRODUCT
PURCHASE AGREEMENT

BETWEEN HP AND
OVERLAND STORAGE

 

DELIVERY,
PACKING AND SHIPPING REQUIREMENTS

 

1.0                     General
Shipping Terms

 

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

 

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

 

1.3                       [***]

 

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

 

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

 

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

 

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

 

43

 

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

 

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

 

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

 

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

 

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

 

2.0                     Outbound
Logistics Operational Requirements

 

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

 

A.           Customs & Legal
Requirements

 

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

 

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

 

44

 

B.             Physical Shipping
Requirements

 

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

•                  Commercial
Invoice – multiple type

•                  International
Packing list

•                  Bill
of Lading/ Airway Bill

•                  Shipping
labels

 

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

 

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

 

4.               [***]

 

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

 

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

 

•                  New customer requirements

•                  Trade laws (customs)

•                  Process integration and improvements

 

45

 

C.             Security Requirements

 

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

 

D.            Carrier/ Freight
Forwarder Requirements

 

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

 

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

 

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

 

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

 

E.              IM System
Requirements

 

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

 

F.              Compliance &
Audits

 

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

 

46

 

3.0                                 Duties
Minimization

 

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

 

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

 

47

 

EXHIBIT
C

 

TO PRODUCT
PURCHASE AGREEMENT

BETWEEN HP AND OVERLAND STORAGE

 

SERVICE & SUPPORT REQUIREMENTS

 

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

 

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

 

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

 

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

 

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

 

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

 

48

 

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

 

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

 

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

 

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

 

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

 

[***]

 

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

 

49

 

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

 

Quality Reporting

 

See Exhibit J; “Reporting
Requirements”.

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

 

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

 

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

 

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

 

50

 

Schedule of Spares

 

 

[***]

 

51

 

EXHIBIT D

 

TO PRODUCT
PURCHASE AGREEMENT

BETWEEN HP AND OVERLAND STORAGE

 

 

CONFIDENTIAL DISCLOSURE AGREEMENT

 

 

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

 

52

 

EXHIBIT
F

 

TO PRODUCT
PURCHASE AGREEMENT

BETWEEN HP AND OVERLAND STORAGE

 

 

RECIPIENTS FOR NOTICES

 

 

For HP:

 

	
  Name

  	
   

  	
  [***]

  
	
  Title

  	
   

  	
  Commodity Manager

  
	
  Address

  	
   

  	
  Hewlett Packard Company

  
	
   

  	
   

  	
  200 Forest Street

  
	
   

  	
   

  	
  Marlboro, MA 01752

  
	
  Phone 

  Number

  	
   

  	
  [***]

  
	
  FAX Number

  	
   

  	
  [***]

  
	
  Email

  	
   

  	
  [***]

  

 

For Supplier:

 

	
  Name

  	
   

  	
  [***]

  
	
  Title

  	
   

  	
  Account Manager

  
	
  Address

  	
   

  	
  4820 Overland Ave

  
	
   

  	
   

  	
  San Diego, CA 92123

  
	
  Phone 

  Number

  	
   

  	
  [***]

  
	
  FAX Number

  	
   

  	
  [***]

  
	
  Email

  	
   

  	
  [***]

  

 

53

 

RELATIONSHIP MANAGERS

 

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

 

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

 

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

 

	
  HP TITLE

  	
   

  	
  HP Name,
  Address,

  Phone, Fax, E-Mail

  	
   

  	
  SUPPLIER

  Equivalent

  TITLE

  	
   

  	
  SUPPLIER
  Name, Address,

  Phone, Fax, E-Mail

  
	
  Commodity 

  Manager

  	
   

  	
  [***]

  	
   

  	
  HP Account 

  Manager

  	
   

  	
  [***]

  
	
  Quality 

  Engineer

  	
   

  	
  [***]

  	
   

  	
  Quality 

  Engineer

  	
   

  	
  [***]

  
	
  Engineering 

  Program 

  Manager

  	
   

  	
  [***]

  	
   

  	
  Program 

  Manager

  	
   

  	
  [***]

  
	
  Marketing 

  Manager

  	
   

  	
  [***]

  	
   

  	
  Director 

  Marketing 

  Programs

  	
   

  	
  [***]

  
	
  Service 

  Commodity 

  Manager

  	
   

  	
  [***]

  	
   

  	
  Customer 

  Service 

  Supervisor

  	
   

  	
  [***]

  
	
  Product Safety 

  Representative

  	
   

  	
  [***]

  	
   

  	
  Product 

  Safety 

  Representative

  	
   

  	
  [***]

  
	
  Procurement

  Manager

  	
   

  	
  [***]

  	
   

  	
  Director OEM 

  Sales

  	
   

  	
  [***]

  
	
  Business 

  Segment 

  Manager

  	
   

  	
  [***]

  	
   

  	
  VP WW Sales

  	
   

  	
  [***]

  

 

54

 

EXHIBIT G

 

TO PRODUCT PURCHASE
AGREEMENT

BETWEEN HP AND OVERLAND STORAGE

 

 

MARKETING SUPPORT AND DEVELOPMENT FUNDS

NEW PRODUCT REQUIREMENTS

 

1.               [***]

 

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

 

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

 

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

 

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

 

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

 

7                [***].

 

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

 

55

 

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

 

10.         [***].

 

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

 

12.         [***].

 

13.         [***].

 

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

 

56

 

EXHIBIT H

 

TO PRODUCT
PURCHASE AGREEMENT

BETWEEN HP AND OVERLAND STORAGE

 

 

SOFTWARE AND DOCUMENTATION WARRANTY

 

 

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

 

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

 

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

 

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

 

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

 

[***]

 

57

 

EXHIBIT
I

 

TO PRODUCT
PURCHASE AGREEMENT

BETWEEN HP AND OVERLAND STORAGE

 

 

Flex / Buffer Model

 

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

 

Flex is defined as ability to accept incremental demand.

 

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

 

HP’s flex requirements are:

 

	
  Number of Calendar 

  Days Prior to Scheduled 

  Demand Date

  	
   

  	
  HP’s
  Maximum

  % Increase

  	
   

  	
  HP’s
  Maximum

  % Decrease

  	
   

  	
  Maximum
  USD 

  liability for 

  Decreases of HP 

  Unique Product **

  
	
  0
  – 30

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  
	
  31
  – 60

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  
	
  61
  – 90

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  
	
  91
  +

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  

 

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

 

[***]

 

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

 

58

 

EXHIBIT
J

 

TO PRODUCT PURCHASE AGREEMENT

BETWEEN HP AND OVERLAND STORAGE

 

 

QUALITY
ASSURANCE REQUIREMENTS AND

ADDITIONAL PRODUCT WARRANTIES

 

 

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

 

1.                                      Warranty

 

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

 

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

 

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

 

[***]

 

3.                                      Epidemic Failure

 

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

 

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

 

59

 

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

 

b. Epidemic failure
process definition and compensation

 

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

 

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

 

3.               [***]

 

4.               [***]

 

5.               [***]

 

4.                                      Firmware Controls

 

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

 

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

 

5.                                      Product
Traceability

 

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

 

6.                                      Safety
and Regulatory Agency Reports

 

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

 

60

 

7.                                      New
Material Requirements

 

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

 

8.                                      Supply
Interruptions

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

11.                               Ongoing
Reliability Testing

 

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

 

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

 

12.                               Failure
Analysis

 

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

 

61

 

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

 

13.                               Closed
Loop Corrective Action Process

 

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

 

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

 

The Supplier is expected
to respond with the following information:

 

[***]

 

[***]

 

[***]

 

[***]

 

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

 

14.                               Process/Product
Change Notification Process

 

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

 

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

•                  Changes
in the primary manufacturing site/location

•                  Changes
in Supplier’s final acceptance test process

•                  Changes
in critical components

 

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

 

62

 

•                  [***]

•                  [***]

•                  [***]

•                  [***]

•                  [***]

•                  [***]

•                  [***]

•                  [***]

 

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

 

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

 

15.                               Reporting
Requirements

 

Supplier will adhere to
the following reporting timelines.

 

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

 

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

 

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

 

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

 

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

 

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

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

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

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

•                  Product/Process Change Notification Log (SCR)

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

•                  SRR
and SFR data

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

 

63

 

•                  Updated 8D for
the following if required:

•
Purges/Product Hold

•
OBA failures

•
ORT failures

 

16.                                 [***]

 

64

 

EXHIBIT
K

 

TO PRODUCT
PURCHASE AGREEMENT

BETWEEN HP AND OVERLAND STORAGE

 

 

PRICING

 

 

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

 

Supplier agrees that
pricing [***].

 

65

 

EXHIBIT
M

 

TO PRODUCT
PURCHASE AGREEMENT

BETWEEN HP AND
OVERLAND STORAGE

 

HP REGIONAL TRADE GUIDELINES

TABLE OF CONTENT

 

	
  SECTION 1 

  	
  HP Trade Basics (Overview)

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  1.1

  	
  Compliance

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.2

  	
  Terms
  of Sale

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.3

  	
  Country of Origin

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.4

  	
  Valuation

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.5

  	
  Shipping Documentation

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.6

  	
  Records

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 2 

  	
  COO Marking/Labeling

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  2.1

  	
  Country of Origin

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.2

  	
  Marking

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.3

  	
  COO Checklist

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 3 

  	
  Shipping Documentation

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  3.1

  	
  Documentation Requirements

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.2

  	
  Commercial Invoice

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 4

  	
  Reporting/Recordkeeping

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  4.1

  	
  Reporting/Data
  Transmissions

  	
   

  
					

 

66

 

	
   

  	
  4.2

  	
  Records

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.3

  	
  Trade Incidents

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.4

  	
  Audit

  	
   

  

 

SECTION 1                                   HP Trade Basics

 

1.1                               Trade Compliance

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

 

1.2                               Terms of Sale

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

•                  Warehouse
storage at point of origin

•                  Warehouse
labor at point of origin

•                  Export
packing

•                  Loading
at point of origin

•                  Inland
freight to origin port

•                  Port
receiving

•                  Loading
on vessel

•                  International
freight/transport

•                  Customs
clearance at destination port

•                  Delivery
to final destination

 

1.3                               Country of Origin

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

 

67

 

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

 

1.4                               Valuation

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

 

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

 

1.5                               Shipping Documentation

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

 

1.6                               Recordkeeping/Reporting

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

 

SECTION 2                                   Labeling/ Marking

 

2.1                               Country of Origin

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

 

[***]

 

2.2                               Marking

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

 

68

 

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

 

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

 

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

 

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

 

2.3.1                     COO Checklist

Supplier must
adhere to the following COO requirements:

 

•                  Must
implement processes to determine correct COO for Products.

 

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

 

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

 

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

 

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

 

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

 

69

 

SECTION 3                                   Shipping Documentation

 

3.1                               Documentation Requirements

Supplier must adhere to
the following trade requirements:

 

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

 

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

 

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

 

3.2                               Commercial Invoice

 

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

 

	
  •

  	
  Ship To Address

  	
  Address to which the
  Goods are being shipped.

  Provided
  by EDI feed from HP.*

  
	
   

  	
   

  	
   

  
	
  •

  	
  Bill To Address

  	
  Address to which
  billing information will be sent.

  Provided
  by EDI feed from HP.*

  
	
   

  	
   

  	
   

  
	
  •

  	
  Ship To ID #

  	
  Specific ID # assigned
  to each Ship To address.

  Provided by EDI feed from HP.*

  
	
   

  	
   

  	
   

  
	
  •

  	
  Bill To ID #

  	
  Specific ID # assigned
  to each Bill To address.

  Provided
  by EDI feed from HP.*

  
	
   

  	
   

  	
   

  
	
  •

  	
  Ship ID/Invoice No.

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

  Assigned
  by the Supplier site.

  
	
   

  	
   

  	
   

  
	
  •

  	
  Date

  	
  Actual shipment date.

  Assigned
  by the Supplier site.

  

 

70

 

	
  •

  	
  Page

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

  Assigned
  by the Supplier site.

  
	
   

  	
   

  	
   

  
	
  •

  	
  Bill of Lading No.

  	
  Air waybill number
  utilized for transport.

  Assigned
  by the Supplier site.

  
	
   

  	
   

  	
   

  
	
  •

  	
  Shipped Via

  	
  HP-approved
  courier/freight forwarder handling the transport.

  Provided
  by EDI feed from HP.*

  
	
   

  	
   

  	
   

  
	
  •

  	
  Freight Terms

  	
  Party responsible for
  freight charges.

  (Eg. “Pre-paid,”  “collect”)

  Provided
  by EDI feed from HP.*

  
	
   

  	
   

  	
   

  
	
  •

  	
  Terms of Sale

  	
  Incoterm designating
  responsibilities of the parties.

  (Eg. EXW, FCA, DDP)

  Provided
  by EDI feed from HP.*

  
	
   

  	
   

  	
   

  
	
  •

  	
  Terms of Payment

  	
  Agreed upon payment
  terms.

  [***]

  Provided
  by EDI feed from HP.*

  
	
   

  	
   

  	
   

  
	
  •

  	
  Customer P.O. No.

  	
  Purchase order  number  assigned
  to the transaction

  Provided
  by EDI feed from HP.*

  
	
   

  	
   

  	
   

  
	
  •

  	
  Sales Order No.

  	
  Sales Order number
  under which the shipment is placed.

  Provided
  by EDI feed from HP.*

  
	
   

  	
   

  	
   

  
	
  •

  	
  Line Item

  	
  Sales Order line item
  fulfilled by the item shipped.

  
	
   

  	
   

  	
  Provided by EDI feed from HP.*

  
	
   

  	
   

  	
   

  
	
  •

  	
  Product No.

  	
  HP part number assigned
  to the Product.

  
	
   

  	
   

  	
  Provided by EDI feed from HP.

  
	
   

  	
   

  	
   

  
	
  •

  	
  Description

  	
  Description of the Good(s).

  
	
   

  	
   

  	
  Provided by EDI feed from HP.*

  
	
   

  	
   

  	
   

  
	
  •

  	
  Quantity

  	
  Number of units of the particular part shipped.

  
	
   

  	
   

  	
  Provided by EDI feed from HP.*

  
	
   

  	
   

  	
   

  
	
  •

  	
  Unit Price

  shipper 

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

  Provided
  by EDI feed from HP.*

  

 

71

 

	
  •

  	
  Extended Price

  	
  Sum of quantity field
  multiplied by unit price.

  Provided by EDI feed from HP.*

  
	
   

  	
   

  	
   

  
	
  •

  	
  Total
  Value

  	
  Sum of extended values for all line items.

  Provided
  by EDI feed from HP.*

  
	
   

  	
   

  	
   

  
	
  •

  	
  Country of Origin

  	
  The country in which
  the Goods were manufactured.

  DETERMINED
  AND APPLIED BY THE SUPPLIER SITE.

  
	
   

  	
   

  	
   

  
	
  •

  	
  License

  	
  Export License
  exception determined by HP trade.

  Provided
  by EDI feed from HP.*

  
	
   

  	
   

  	
   

  
	
  •

  	
  ECCN

  	
  Export Commodity
  Control # determined by HP.

  Provided
  by EDI feed from HP.*

  
	
   

  	
   

  	
   

  
	
  •

  	
  HTS

  	
  Harmonized tariff
  scheduleclassification determined by HP.

  Provided
  by EDI feed from HP.*

  
	
   

  	
   

  	
   

  
	
  •

  	
  Destination Control

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

  Provided by EDI feed from HP.*

  

 

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

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

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

 

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

 

72

 

SECTION 4                                   Reporting/ Recordkeeping 

 

4.1                               Reporting/Data Transmissions

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

•                  Country
of Origin (line item level)

•                  HTS
Classification (line item level)

•                  ECCN
(line item level)

•                  License
(line item level)

•                  Destination
Control Statement

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

 

4.2                               Records

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

 

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

 

4.3                               Trade Incidents

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

 

[***]

 

4.4                               Audit

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

 

73

 

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

 

74Exhibit
10.10

 

Confidential
Treatment Requested

 

 

Base
Agreement # 4902RL1317

 

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

 

1.0          Definitions

 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

 

 

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

 

 

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

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

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

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

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

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

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

1.  identifies itself as a statement of work;

2.  is signed by both parties;

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

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

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

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

 

2.0          Statement
of Work

 

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

 

3.0          Pricing

 

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

 

4.0          Payments
and Acceptance

 

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

 

2

 

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

 

5.0          Electronic Commerce

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

 

6.0                               Warranties

 

6.1          Ongoing Warranties

Supplier makes the
following ongoing representations and warranties:

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

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

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

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

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

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

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

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

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

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

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

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

 

3

 

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

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

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

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

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

 

6.2          Warranty
Redemption

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

 

6.3          Post
Warranty Service

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

 

6.4          Epidemic
Defects

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

 

4

 

 

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

 

7.0                               Delivery

 

7.1          Delivery Logistics

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

 

7.2          On-Time
Delivery

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

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

2.  ***; and

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

 

7.3          Replenishment

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

 

8.0          Intellectual Property

 

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

 

5

 

9.0          Supplier Liability for Third Party
Claims

 

9.1          General Indemnification

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

 

9.2          Intellectual
Property Indemnification

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

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

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

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

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

 

9.3          Exceptions
to Indemnification

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

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

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

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

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

 

10.0        Limitation of Liability

 

***

 

11.0        Supplier and Supplier Personnel

 

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

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

 

6

 

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

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

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

 

12.0        Insurance

 

Supplier will
maintain at its expense:

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

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

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

 

13.0                        Term and Termination

 

13.1        Termination of this Base Agreement

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

 

13.2        Termination
of a SOW or WA

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

 

7

 

14.0        General

 

14.1        Amendments

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

 

14.2        Assignment

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

 

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

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

 

14.4        Communications

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

 

14.5        Counterparts

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

 

14.6        Exchange
of Information

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

 

14.7        Freedom
of Action

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

 

8

 

14.8        Force
Majeure

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

 

14.9        Obligations
of Affiliates

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

 

14.10      Prior
Communications and Order of Precedence

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

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

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

3.  the remaining provisions of
the relevant SOW;

4.  this Base Agreement; and

5.  the remaining terms of the relevant WA.

 

14.11      Record
Keeping and Audit Rights

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

 

14.12      Severability

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

 

14.13      Survival

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

 

14.14      Waiver

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

 

9

 

	
  ACCEPTED AND AGREED TO:

  	
  ACCEPTED AND AGREED TO:

  
	
  BUYER

  	
  SUPPLIER

  
	
  By:  /s/ Kevin J. Beichner

  	
  11/20/02

  	
   

  	
   

  	
  By:  /s/ Robert J. Scroop

  	
  11/25/02

  	
   

  	
   

  
	
  Buyer
  Signature

  	
  Date

  	
   

  	
   

  	
  Supplier
  Signature

  	
  Date

  	
   

  	
   

  
	
  Kevin J.
  Beichner

  	
   

  	
   Robert
  J. Scroop

  	
   

  
	
  Printed Name

  	
   

  	
  Printed Name

  	
   

  
	
   GCM
  Removable Storage

  	
   

  	
  VP & GM
  Storage Resource Business Unit

  	
   

  
	
  Title &
  Organization

  	
   

  	
  Title &
  Organization

  	
   

  

 

10

 

Confidential
Treatment Requested

 

STATEMENT OF WORK # 4902RL1340

 

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

 

1.0                               DEFINITIONS

 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

 

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

 

1

 

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

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

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

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

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

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

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

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

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

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

 

2.0                               PRODUCT
DEFINITION

 

2.1                               Product Description.

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

 

2.2                               Product Specifications & Certifications.

Products will comply with all the requirements set forth below:

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

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

•                  ISO 2859,
Sampling Procedures for Inspection by Attributes

•                  ISO 3951,
Sampling Procedures for Inspection by Variables

•                  EIA - 599 - A,
Continuous Improvement

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

•                  EIA - 670,
Quality System Assessment

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

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

•                  EIA - JESD - 46,
Product Change Notice

•                  EIA - JESD - 50,
Maverick Product Elimination

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

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

 

2

 

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

 

2.3                               COO Product Certification.

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

 

2.4                               Product
Modifications.

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

 

2.5                               Product Software and Documentation.  

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

 

3

 

2.6                               Tamper Evident
Protection.

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

 

3.0                               PURCHASHING

 

3.1                               Electronic
Commerce.

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

 

3.2                               WA
Issuance.

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

 

3.3                               Invoices.

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

 

3.4                               Acceptance
or Rejection

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

 

4

 

4.0                               SUPPLY
RESPONSIBILITIES

 

4.1                               Taxes and Duties

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

 

4.2                               Spare
Parts Availability.

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

 

4.3                               Use
of Subcontractors.

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

 

5.0                               TECHNICAL
SUPPORT

 

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

 

5.1                               Level
1.

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

•                  create the PMR;

•                  obtain from Customer a description of
the Problem;

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

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

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

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

 

5.2                               Level
2.

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

•                  receive the PMR/APAR from Level 1;

 

5

 

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

•                  recreate Problem on the Developer
Test System;

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

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

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

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

•                  update the PMR documenting Level 2
actions.

 

5.3                               Level
3.

Supplier will perform the
following Level 3 support responsibilities:

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

•                  analyze Problem
symptoms and diagnose Problem;

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

•                  attempt to
recreate Problem on the Developer Test System;

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

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

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

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

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

 

5.4                               Other
Technical Support Responsibilities.

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

 

6.0                               QUALITY

 

6.1                               Nonconforming
Product.

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

 

6.2                               ISO
Requirements.

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

 

6

 

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

 

6.3                               Document
Control and Records.

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

 

6.4                               Audits.

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

 

6.5                               Product
Traceability Requirements.

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

 

6.6                               Periodic
Quality Reviews.

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

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

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

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

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

 

7

 

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

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

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

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

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

 

7.0                               EMERGENCY
ORDERS

 

7.1                               Emergency
Order Placement Process.

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

 

7.2                               Emergency
Order Shipment Responsibilities.

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

 

8.0                               WARRANTY SUPPORT

 

8.1                               Epidemic Defects.

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

 

8.2                               Warranty
Period.

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

 

8

 

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

 

8.3                               Warranty
Redemption Logistics.

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

 

8.4                               Data
Integrity.

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

 

9.0                               REPAIR

 

9.1                               Required
Replacement.

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

 

9.2                               Scope
of Repair Services.

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

 

9.3                               CSP
Requirements.

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

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

 

9

 

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

 

9.4                               Engineering
Deliverables.

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

•                  Product drawings

•                  Schematics / diagrams

•                  Engineering specifications

•                  Performance specifications

•                  Component placement listings

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

•                  Debug / fault isolation test
procedures

•                  Special tooling drawings /
specifications if applicable

•                  Rework / upgrade instructions

•                  Test procedures / software  / equipment

•                  Repair verification procedures / test
software / equipment

•                  Hazardous
materials listings

 

10.0                        CONSIGNED
MATERIALS

 

10.1                        Handling
of Consigned Materials.

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

 

10

 

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

 

10.2                        Return
of Consigned Materials.

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

 

11.0                        LIMITATION
OF SUPPLIER LIABILITY UNDER THE SOW

 

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

 

 

	
  ACCEPTED AND AGREED TO:

  	
   

  	
  ACCEPTED AND AGREED TO:

  	
   

  
	
  BUYER

  	
  SUPPLIER

  
	
   

  	
   

  
	
  By: 

  	
  /s/ Paul
  Pitarra for Ron Clarke

  	
   

  	
  3/14/03

  	
   

  	
  By: 

  	
  /s/ Vernon
  A. LoForti

  	
   

  	
  3/17/03

  	
   

  
	
  Buyer
  Signature

  	
  Date

  	
  Supplier
  Signature

  	
  Date

  
	
   

  	
   

  
	
  Paul Pitarra
  for Ron Clarke

  	
   

  	
  Vernon A.
  LoForti

  	
   

  
	
  Printed Name

  	
  Printed Name

  
	
   

  	
   

  
	
  Procurement
  Director

  	
   

  	
  VP and CFO

  	
   

  
	
  Title

  	
  Title

  
													

 

11

 

PRODUCT UNIQUE ATTACHMENT #1 EFFECTIVE BEGINNING NOVEMBER 1,
2002

 

1.0                               PRODUCT DESCRIPTION

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

 

2.0                               PART NUMBER UNIQUE TERMS

 

	
  Buyer P/N

  	
   

  	
  Description

  	
   

  	
  ***

  	
   

  	
  Delivery
  Term

  	
   

  	
  ***

  	
   

  	
  Country of
  Origin and

  Complete Street Address

  	
   

  	
  ***

  	
   

  	
  Repair
  Price

  (USD)*

  	
   

  	
  TAT

  	
   

  	
  Yield

  
	
  4560SLX

  	
   

  	
  BASE
  EXPANDER UNIT

  	
   

  	
  ***

  	
   

  	
  FOB
  KINGSTON US LOCAL WAREHOUSE

  	
   

  	
  ***

  	
   

  	
  USA
  4820 OVERLAND AVENUE, SAN DIEGO, CA 92123

  	
   

  	
  ***

  	
   

  	
  TBD

  	
   

  	
  30
  days

  	
   

  	
  100%

  
	
  59P6656

  	
   

  	
  BASE
  EXPANDER UNIT

  	
   

  	
  ***

  	
   

  	
  DDU
  Greenock Hub

  	
   

  	
  ***

  	
   

  	
  USA
  4820 OVERLAND AVENUE, SAN DIEGO, CA 92123

  	
   

  	
  ***

  	
   

  	
  TBD

  	
   

  	
  30
  days

  	
   

  	
  100%

  
	
  59P6657

  	
   

  	
  FIBER
  CHANNEL CARD

  	
   

  	
  ***

  	
   

  	
  FOB
  KINGSTON US LOCAL WAREHOUSE DDU Greenock Hub

  	
   

  	
  ***

  	
   

  	
  USA
  4820 OVERLAND AVENUE, SAN DIEGO, CA 92123

  	
   

  	
  ***

  	
   

  	
  TBD

  	
   

  	
  30
  days

  	
   

  	
  100%

  
	
  59P6658

  	
   

  	
  LTO
  UPGRADE DRIVE

  	
   

  	
  ***

  	
   

  	
  FOB
  KINGSTON US LOCAL WAREHOUSE DDU Greenock Hub

  	
   

  	
  ***

  	
   

  	
  USA
  4820 OVERLAND AVENUE, SAN DIEGO, CA 92123

  	
   

  	
  ***

  	
   

  	
  TBD

  	
   

  	
  30
  days

  	
   

  	
  100%

  
	
  59P6659

  	
   

  	
  LTO
  MAGAZINE

  	
   

  	
  ***

  	
   

  	
  FOB
  KINGSTON US LOCAL WAREHOUSE DDU Greenock Hub

  	
   

  	
  ***

  	
   

  	
  USA
  4820 OVERLAND AVENUE, SAN DIEGO, CA 92123

  	
   

  	
  ***

  	
   

  	
  TBD

  	
   

  	
  30
  days

  	
   

  	
  100%

  
	
  59P6660

  	
   

  	
  SDLT
  UPGRADE DRIVE

  	
   

  	
  ***

  	
   

  	
  FOB
  KINGSTON US LOCAL WAREHOUSE DDU Greenock Hub

  	
   

  	
  ***

  	
   

  	
  USA
  4820 OVERLAND AVENUE, SAN DIEGO, CA 92123

  	
   

  	
  ***

  	
   

  	
  TBD

  	
   

  	
  30
  days

  	
   

  	
  100%

  
	
  59P6661

  	
   

  	
  SDLT
  MAGAZINE

  	
   

  	
  ***

  	
   

  	
  FOB
  KINGSTON US LOCAL WAREHOUSE DDU Greenock Hub

  	
   

  	
  ***

  	
   

  	
  USA
  4820 OVERLAND AVENUE, SAN DIEGO, CA 92123

  	
   

  	
  ***

  	
   

  	
  TBD

  	
   

  	
  30
  days

  	
   

  	
  100%

  
	
  59P6662

  	
   

  	
  EXPRESS
  CHANNEL 1

  	
   

  	
  ***

  	
   

  	
  FOB
  KINGSTON US LOCAL WAREHOUSE DDU Greenock Hub

  	
   

  	
  ***

  	
   

  	
  USA
  4820 OVERLAND AVENUE, SAN DIEGO, CA 92123

  	
   

  	
  ***

  	
   

  	
  TBD

  	
   

  	
  30
  days

  	
   

  	
  100%

  
	
  59P6663

  	
   

  	
  EXPRESS
  CHANNEL 2

  	
   

  	
  ***

  	
   

  	
  FOB
  KINGSTON US LOCAL WAREHOUSE DDU Greenock Hub

  	
   

  	
  ***

  	
   

  	
  USA
  4820 OVERLAND AVENUE, SAN DIEGO, CA 92123

  	
   

  	
  ***

  	
   

  	
  TBD

  	
   

  	
  30
  days

  	
   

  	
  100%

  
	
  59P6698

  	
   

  	
  LTO
  DRIVE SLED FRU

  	
   

  	
  ***

  	
   

  	
  FOB
  Overland Storage, San Diego

  	
   

  	
  ***

  	
   

  	
  USA
  4820 OVERLAND AVENUE, SAN DIEGO, CA 92123

  	
   

  	
  ***

  	
   

  	
  TBD

  	
   

  	
  30
  days

  	
   

  	
  100%

  

 

12

 

	
  59P6699

  	
   

  	
  SDLT
  DRIVE SLED FRU

  	
   

  	
  ***

  	
   

  	
  FOB
  Overland Storage, San Diego

  	
   

  	
  ***

  	
   

  	
  USA
  4820 OVERLAND AVENUE, SAN DIEGO, CA 92123

  	
   

  	
  ***

  	
   

  	
  TBD

  	
   

  	
  30
  days

  	
   

  	
  100%

  
	
  59P6703

  	
   

  	
  LEFT
  LTO LIBRARY MAGAZINE FRU

  	
   

  	
  ***

  	
   

  	
  FOB
  Overland Storage, San Diego

  	
   

  	
  ***

  	
   

  	
  USA
  4820 OVERLAND AVENUE, SAN DIEGO, CA 92123

  	
   

  	
  ***

  	
   

  	
  TBD

  	
   

  	
  30
  days

  	
   

  	
  100%

  
	
  59P6704

  	
   

  	
  RIGHT
  LTO LIBRARY MAGAZINE FRU

  	
   

  	
  ***

  	
   

  	
  FOB
  Overland Storage, San Diego

  	
   

  	
  ***

  	
   

  	
  USA
  4820 OVERLAND AVENUE, SAN DIEGO, CA 92123

  	
   

  	
  ***

  	
   

  	
  TBD

  	
   

  	
  30
  days

  	
   

  	
  100%

  
	
  59P6705

  	
   

  	
  LEFT
  SDLT LIBRARY MAGAZINE FRU

  	
   

  	
  ***

  	
   

  	
  FOB
  Overland Storage, San Diego

  	
   

  	
  ***

  	
   

  	
  USA
  4820 OVERLAND AVENUE, SAN DIEGO, CA 92123

  	
   

  	
  ***

  	
   

  	
  TBD

  	
   

  	
  30
  days

  	
   

  	
  100%

  
	
  59P6706

  	
   

  	
  RIGHT
  SDLT LIBRARY MAGAZINE FRU

  	
   

  	
  ***

  	
   

  	
  FOB
  Overland Storage, San Diego

  	
   

  	
  ***

  	
   

  	
  USA
  4820 OVERLAND AVENUE, SAN DIEGO, CA 92123

  	
   

  	
  ***

  	
   

  	
  TBD

  	
   

  	
  30
  days

  	
   

  	
  100%

  
	
  59P6707

  	
   

  	
  ROBOT
  BARCODE READER FRU

  	
   

  	
  ***

  	
   

  	
  FOB
  Overland Storage, San Diego

  	
   

  	
  ***

  	
   

  	
  USA
  4820 OVERLAND AVENUE, SAN DIEGO, CA 92123

  	
   

  	
  ***

  	
   

  	
  TBD

  	
   

  	
  30
  days

  	
   

  	
  100%

  
	
  59P6708

  	
   

  	
  LIBRARY
  CNTRLLR FRU

  	
   

  	
  ***

  	
   

  	
  FOB
  Overland Storage, San Diego

  	
   

  	
  ***

  	
   

  	
  USA
  4820 OVERLAND AVENUE, SAN DIEGO, CA 92123

  	
   

  	
  ***

  	
   

  	
  TBD

  	
   

  	
  30
  days

  	
   

  	
  100%

  
	
  59P6709

  	
   

  	
  POWER
  SUPPLY FRU

  	
   

  	
  ***

  	
   

  	
  FOB
  Overland Storage, San Diego

  	
   

  	
  ***

  	
   

  	
  USA
  4820 OVERLAND AVENUE, SAN DIEGO, CA 92123

  	
   

  	
  ***

  	
   

  	
  TBD

  	
   

  	
  30
  days

  	
   

  	
  100%

  
	
  59P6713

  	
   

  	
  LCD
  DISPLAY ASSEMBLY FRU

  	
   

  	
  ***

  	
   

  	
  FOB
  Overland Storage, San Diego

  	
   

  	
  ***

  	
   

  	
  USA
  4820 OVERLAND AVENUE, SAN DIEGO, CA 92123

  	
   

  	
  ***

  	
   

  	
  TBD

  	
   

  	
  30
  days

  	
   

  	
  100%

  
	
  59P6715

  	
   

  	
  FIBER
  CARD FRU

  	
   

  	
  ***

  	
   

  	
  FOB
  Overland Storage, San Diego

  	
   

  	
  ***

  	
   

  	
  USA
  4820 OVERLAND AVENUE, SAN DIEGO, CA 92123

  	
   

  	
  ***

  	
   

  	
  TBD

  	
   

  	
  30
  days

  	
   

  	
  100%

  
	
  71P9121

  	
   

  	
  CARTRIDGE
  ELEVATOR

  	
   

  	
  ***

  	
   

  	
  Overland
  Storage, San Diego

  	
   

  	
  ***

  	
   

  	
  USA
  4820 OVERLAND AVENUE, SAN DIEGO, CA 92123

  	
   

  	
  ***

  	
   

  	
  TBD

  	
   

  	
  30
  days

  	
   

  	
  100%

  
	
  71P9122

  	
   

  	
  CARTRIDGE
  ELEVATOR

  	
   

  	
  ***

  	
   

  	
  FOB
  Overland Storage, San Diego

  	
   

  	
  ***

  	
   

  	
  USA
  4820 OVERLAND AVENUE, SAN DIEGO, CA 92123

  	
   

  	
  ***

  	
   

  	
  TBD

  	
   

  	
  30
  days

  	
   

  	
  100%

  

 

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

 

3.0                               WA
FLEXIBILITY

 

	
  Number of
  Days prior to a 

  WA

  Scheduled Delivery Date

  	
   

  	
  Increase of Product Quantity to a WA

  Scheduled Delivery Date

  (% of WA Quantity)

  	
   

  	
  Cancellation of Product Quantity to a WA

  Scheduled Delivery Date

  (% of WA Quantity)

  	
   

  	
  Rescheduling of Product Quantity to a

  WA Scheduled Delivery Date

  (% of WA Quantity)

  	
   

  
	
  Less than 15 days

  	
   

  	
  0

  	
  %

  	
  0

  	
  %

  	
  0

  	
  %

  
	
  From 15 days to 30 days

  	
   

  	
  50

  	
  %

  	
  50

  	
  %

  	
  50

  	
  %

  
	
  From 30 days to 45 days

  	
   

  	
  100

  	
  %

  	
  100

  	
  %

  	
  100

  	
  %

  
	
  More than 45 days

  	
   

  	
  Unlimited

  	
   

  	
  100

  	
  %

  	
  100

  	
  %

  

 

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

 

13

 

4.0                               REPLENISHMENT

4.1                               Product
Pull Profile.

 

	
  Buyer P/N

  	
   

  	
  Package

  Quantity

  	
   

  	
  Pallet

  Quantity

  	
   

  	
  Container

  Quantity

  	
   

  	
  Bulk

  Pull

  	
   

  	
  Rounding

  Indicator

  	
   

  	
  Pull Start

  Date

  	
   

  	
  ***

  	
   

  	
  Transit

  Time

  	
   

  	
  Process

  Time

  	
   

  	
  ***

  	
   

  	
  Upside

  Flexibility

  	
   

  	
  Liability

  Horizon

  
	
  4560SLX

  	
   

  	
  1

  	
   

  	
  6

  	
   

  	
  NA

  	
   

  	
  G

  	
   

  	
  6

  	
   

  	
  11/22/02

  	
   

  	
  ***

  	
   

  	
  7days

  	
   

  	
  1
  DAY

  	
   

  	
  ***

  	
   

  	
  Sec
  3.0

  	
   

  	
  2
  WEEKS

  
	
  59P6657

  	
   

  	
  1

  	
   

  	
  10

  	
   

  	
  NA

  	
   

  	
  G

  	
   

  	
  10

  	
   

  	
  11/22/02

  	
   

  	
  ***

  	
   

  	
  7days

  	
   

  	
  1
  DAY

  	
   

  	
  ***

  	
   

  	
  Sec
  3.0

  	
   

  	
  2
  WEEKS

  
	
  59P6658

  	
   

  	
  1

  	
   

  	
  10

  	
   

  	
  NA

  	
   

  	
  G

  	
   

  	
  10

  	
   

  	
  11/22/02

  	
   

  	
  ***

  	
   

  	
  7days

  	
   

  	
  1
  DAY

  	
   

  	
  ***

  	
   

  	
  Sec
  3.0

  	
   

  	
  2
  WEEKS

  
	
  59P6659

  	
   

  	
  1

  	
   

  	
  25

  	
   

  	
  NA

  	
   

  	
  G

  	
   

  	
  25

  	
   

  	
  11/22/02

  	
   

  	
  ***

  	
   

  	
  7days

  	
   

  	
  1
  DAY

  	
   

  	
  ***

  	
   

  	
  Sec
  3.0

  	
   

  	
  2
  WEEKS

  
	
  59P6660

  	
   

  	
  1

  	
   

  	
  10

  	
   

  	
  NA

  	
   

  	
  G

  	
   

  	
  10

  	
   

  	
  11/22/02

  	
   

  	
  ***

  	
   

  	
  7days

  	
   

  	
  1
  DAY

  	
   

  	
  ***

  	
   

  	
  Sec
  3.0

  	
   

  	
  2
  WEEKS

  
	
  59P6661

  	
   

  	
  1

  	
   

  	
  25

  	
   

  	
  NA

  	
   

  	
  G

  	
   

  	
  25

  	
   

  	
  11/22/02

  	
   

  	
  ***

  	
   

  	
  7days

  	
   

  	
  1
  DAY

  	
   

  	
  ***

  	
   

  	
  Sec
  3.0

  	
   

  	
  2
  WEEKS

  
	
  59P6662

  	
   

  	
  1

  	
   

  	
  24

  	
   

  	
  NA

  	
   

  	
  G

  	
   

  	
  24

  	
   

  	
  11/22/02

  	
   

  	
  ***

  	
   

  	
  7days

  	
   

  	
  1
  DAY

  	
   

  	
  ***

  	
   

  	
  Sec
  3.0

  	
   

  	
  2
  WEEKS

  
	
  59P6663

  	
   

  	
  1

  	
   

  	
  10

  	
   

  	
  NA

  	
   

  	
  G

  	
   

  	
  10

  	
   

  	
  11/22/02

  	
   

  	
  ***

  	
   

  	
  7days

  	
   

  	
  1
  DAY

  	
   

  	
  ***

  	
   

  	
  Sec
  3.0

  	
   

  	
  2
  WEEKS

  

 

4.2                               Transaction Documents.

 

	
  TRANSACTION
  DOCUMENT

  	
   

  	
  EDI/ANSI  EDIFACT

  	
   

  	
  E-Mail

  	
   

  	
  Fax

  	
   

  	
  Frequency

  
	
  Invoice
  (810/INVOIC)

  	
   

  	
  X

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  AS REQUIRED

  
	
  Remittance
  Advice (820/REMADV)

  	
   

  	
  X

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  AS REQUIRED

  
	
  Planning
  Schedule (830/DELFOR)

  	
   

  	
  X

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  AS REQUIRED

  
	
  Forecast
  Response (830/DELFOR)

  	
   

  	
  X

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  AS REQUIRED

  
	
  Purchase
  Order (850/ORDERS)

  	
   

  	
  X

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  AS REQUIRED

  
	
  PO
  Acknowledgment (855/ORDRSP)

  	
   

  	
  X

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  AS REQUIRED

  
	
  Advance Ship
  Notice (856/DESADV)

  	
   

  	
  X

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  AS REQUIRED

  
	
  PO Change
  (860/ORDCHG)

  	
   

  	
  X

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  AS REQUIRED

  
	
  Pull
  Notification (862/DELJIT)

  	
   

  	
  X

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  AS REQUIRED

  
	
  Product
  Transfer & Resale Report (867)

  	
   

  	
  X

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  AS REQUIRED

  
	
  Functional
  Acknowledgment (997/CONTRL)

  	
   

  	
  X

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  AS REQUIRED

  
	
  Inventory
  Inquiry/Advice (846/INVRPT)

  	
   

  	
  X

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  AS REQUIRED

  

 

5.0                               COMMUNICATIONS

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

 

5.1                               Business
Coordinators.

 

	
  SUPPLIER

  	
   

  	
   

  	
   

  	
  BUYER

  	
   

  	
   

  
	
  Name

  	
   

  	
  ***

  	
   

  	
  Name

  	
   

  	
  ***

  
	
  Title

  	
   

  	
  IBM Account Manager

  	
   

  	
  Title

  	
   

  	
  X Series Tape Commodity Manager

  
	
  Address

  	
   

  	
  4820 Overland Avenue

  San Diego, CA 92123

  	
   

  	
  Address

  	
   

  	
  3093 Cornwallis Road

  Research Triangle Park, NC 27709

  
	
  Phone

  	
   

  	
  ***

  	
   

  	
  Phone

  	
   

  	
  ***

  
	
  Fax

  	
   

  	
  ***

  	
   

  	
  Fax

  	
   

  	
  ***

  
	
  E-mail

  	
   

  	
  ***

  	
   

  	
  E-mail

  	
   

  	
  ***

  

 

5.2                               Technical
Coordinators.

 

	
  SUPPLIER

  	
   

  	
   

  	
   

  	
  BUYER

  	
   

  	
   

  
	
  Name

  	
   

  	
  ***

  	
   

  	
  Name

  	
   

  	
  ***

  
	
  Title

  	
   

  	
  IBM Account
  Manager

  	
   

  	
  Title

  	
   

  	
  X Series
  Procurement Engineer

  
	
  Address

  	
   

  	
  4820
  Overland Avenue

  San Diego, CA 92123

  	
   

  	
  Address

  	
   

  	
  3093
  Cornwallis Road

  Research Triangle Park, NC 27709

  
	
  Phone

  	
   

  	
  ***

  	
   

  	
  Phone

  	
   

  	
  ***

  
	
  Fax

  	
   

  	
  ***

  	
   

  	
  Fax

  	
   

  	
  ***

  
	
  E-mail

  	
   

  	
  ***

  	
   

  	
  E-mail

  	
   

  	
  ***

  

 

14

 

MONTHLY WARRANTY ANALYSIS REPORT

 

	
  Supplier Name:

  	
   

  	
   

  
	
  Month: 

  	
   

  	
   

  
				

 

 

	
  Buyer P/N

  	
   

  	
  Description

  	
   

  	
  Barcode

  	
   

  	
  Symptoms

  	
   

  	
  Actual

  Finding

  	
   

  	
  Explanation

  Code

  	
   

  	
  Root Cause Analysis Action Taken to Fix

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

	
  SUMMARY REPORT

  
	
  Total Units
  Repaired in Current Month

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Total
  Warranty Claims Received

  	
   

  	
   

  
	
  Actual
  Warranty Accepted

  	
   

  	
   

  
	
  Warranty %

  	
   

  	
   

  
	
  High Flyers
  (more than       %)

  	
   

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

  
	
   

  	
   

  	
   

  

 

	
  EXPLANATION
  CODE

  	
   

  	
  DESCRIPTION

  
	
  Code 03

  	
   

  	
  Warranty
  Expired

  
	
  Code 04

  	
   

  	
  Missort

  
	
  Code 07

  	
   

  	
  Cannibalized
  or Missing Parts

  
	
  Code 08

  	
   

  	
  Warranty
  Product Received

  
	
  Code 09

  	
   

  	
  Physical
  Damage

  
	
  Code 10

  	
   

  	
  No Defect
  Found

  
	
  Code 11

  	
   

  	
  Other

  

 

15

 

	
  International Business Machines Corporation

  	
   

  	
  Fax completed form to Accounts Payable:

  
	
  1701 North
  Street

  	
   

  	
  (607)
  755-6124

  
	
  Endicott, NY
  13760

  	
   

  	
   

  

 

AUTHORIZATION FOR ELECTRONIC FUNDS TRANSFER

 

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

 

	
  Trading
  Partner Name

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Payment
  Remit Address

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Account
  Payee

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Payee Address

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  EFT Domestic
  Banking Institution

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Contact Name
  / Title

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Contact
  Phone Number

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Bank Address

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Account
  Number

  	
   

  	
   

  	
  (MAX 17)

  
	
   

  	
   

  	
   

  	
   

  
	
  Bank Routing
  / Transit CD

  	
   

  	
   

  	
  (MAX 9)

  
	
   

  	
   

  	
   

  	
   

  
	
  Remit Advice
  Option

  	
   

  	
   

  	
  1

  	
   

  	
  2

  	
   

  
	
   

  	
   

  	
  DUNS Number / User ID / Account Number

  
	
  Tax ID
  Number

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Name

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Title

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Phone Number

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Date

  	
   

  	
   

  
								

 

16

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00060-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00060-of-00352.parquet"}]]