Document:

Exhibit 10.18

 

DEFERRED
COMPENSATION PLAN

 

prepared
for

 

DURATEK,
INC.

 

 

DURATEK, INC.

 

DEFERRED
COMPENSATION PLAN

 

ARTICLE I - PURPOSE;
EFFECTIVE DATE

 

1.1.                              Purpose.
The purpose of this Deferred Compensation Plan (hereinafter, the “Plan”) is to permit
a select group of management and highly compensated employees of DURATEK, INC.
and its subsidiaries to defer the receipt of income which would otherwise
become payable to them.  It is intended
that this plan, by providing this deferral opportunity, will assist the Company
in retaining and attracting individuals of
exceptional ability by providing them with these benefits.

 

1.2.                              Effective Date.  The Plan shall be effective
as of February 1, 2003.

 

ARTICLE II - DEFINITIONS

 

For
the purpose of this Plan, the following terms shall have the meanings
indicated, unless the context clearly indicates otherwise:

 

2.1.                              Account(s).  “Account(s)” means the account or accounts
maintained on the books of the Company used solely to calculate the amount
payable to each Participant under this Plan and shall not constitute a separate
fund of assets.  The Accounts available
for each Participant shall be identified as:

a)             Retirement Account

b)            In-Service Account; each Participant may maintain
up to two (2) In-Service Accounts based on selecting different times of
payments as selected under Article 5, below.

 

2.2.                              Actuarial Equivalent. “Actuarial Equivalent” means an equivalence in value between two (2)
or more forms and/or times of payment based on a determination by an actuary chosen
by the Company, using sound actuarial assumptions at the time of such
determination, and may be modified
from time to time consistent with sound actuarial assumptions at that time.

 

2.3.                              Beneficiary.  “Beneficiary” means the person, persons or
entity as designated by the Participant, entitled under Article VI to receive any Plan benefits payable after the
Participant’s death.

 

2.4.                              Board.  “Board” means the Board of Directors of the
Company.

 

2.5.                              Change in Control.  A “Change in Control” means a
merger, consolidation, or reorganization of the Company with one or more other entities in which the Company is not
the surviving entity, a

 

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sale
of substantially all of the assets of the Company to another entity, or any
transaction (including, without limitation, a merger or reorganization in which
the Company is the surviving entity) that results in any person or entity (or
persons or entities acting as a group or otherwise in concert) other than The
Carlyle Group and/or its affiliates, becoming the beneficial owner of fifty
percent (50%) or more of the combined voting power of all classes of securities
of the Company or obtaining (through stock ownership, proxies, or otherwise)
the right to elect a majority of the Board of Directors of the Company.

 

2.6.                              Committee.  “Committee” means the Committee appointed by
the Board to administer the Plan pursuant to Article VII.

 

2.7.                              Company.  “Company” means DURATEK, INC., a Delaware
corporation, and any directly or indirectly affiliated subsidiary corporations,
any other affiliate designated by the Board, or any successor to the business
thereof.

 

2.8.                              Compensation.  “Compensation” means the base salary payable
to and bonus or incentive compensation earned by a Participant with respect to
employment services performed for the Company by the Participant during a
particular calendar year and considered to be “wages” for purposes of federal
income tax withholding.  For purposes of
this Plan only, Compensation shall be calculated before reduction for any
amounts deferred by the Participant pursuant to the Company’s tax qualified
plans which may be maintained under Section 401(k) or Section 125 of the
Internal Revenue Code of 1986, as amended, (the “Code”), or pursuant to this
Plan or any other non-qualified plan which permits the voluntary deferral of
compensation.  Inclusion of any other
forms of compensation is subject to Committee Approval.

 

2.9.                              Deferral Commitment.  “Deferral Commitment” means a
commitment made by a Participant to defer a portion of Compensation as set
forth in Article III.  The Deferral
Commitment shall apply to each payment of salary and/or bonus payable to a
Participant, and shall specify the Account or Accounts to which the
Compensation deferred shall be credited. 
Such designation shall be made in whole percentages and shall be made in
a form acceptable to the Committee.  A
Deferral Commitment shall remain in effect until amended or revoked as provided
under Sections 3.3, or 3.5, below.

 

2.10.                        Deferral Period..“Deferral Period” means each calendar year.

 

2.11.                      Determination Date.  “Determination Date” means
each day.

 

2.12.                      Disability.  “Disability” means a physical or mental
condition that prevents the Participant from satisfactorily performing the
Participant’s usual duties for Company and qualifies as a “disability” under
the terms of the Company’s Long Term Disability program as then in existence at
that time.

 

2.13.                        Discretionary Contribution. 
“Discretionary Contribution” means the Company contribution credited to
a Participant’s Account(s) under Section 4., below.

 

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2.14.                        Distribution Election.  “Distribution Election” means
the form prescribed by the Committee and completed by the Participant,
indicating the chosen form of payment for benefits payable from each Account
under this Plan, as elected by the Participant.

 

2.15.                        Financial Hardship.  “Financial Hardship” means a
severe financial hardship of the Participant resulting from a Disability of the
Participant, a sudden and unexpected illness or accident of the Participant or
of a dependent of the Participant, loss of the Participant’s property due to
casualty, or other similar extraordinary and unforeseeable circumstance arising
as a result of events beyond the control of the Participant.  Financial Hardship shall be determined based
upon such standards as are, from time to time, established by the Committee,
and such determination shall be in the sole discretion of the Committee.

 

2.16.                        401(k) Plan.  “401(k) Plan” means the Duratek 401(k) Plan,
or any other successor defined contribution plan maintained by the Company that
qualifies under Section 401(a) of the Code and satisfies the requirements of
Section 401(k) of the Code.

 

2.17.                        Interest.  “Interest” means the amount credited to a
Participant’s Account(s) on each Determination Date, which shall be based on
the Valuation Funds chosen by the Participant as provided in Section 2.22,
below and in a manner consistent with Section 4.3, below. Such credits to a
Participant’s Account may be either positive or negative to reflect the
increase or decrease in value of the Account in accordance with the provisions
of this Plan.

 

2.18.                        Participant.  “Participant” means any employee who is
eligible, pursuant to Section 3.1, below, to participate in this Plan, and who
has elected to defer Compensation under this Plan in accordance with Article
III, below.  The Participant shall be
designated as being a Group 1 Participant or a Group 2 Participant.   Except as provided in Section 3.6, below,
such employee shall remain a Participant in this Plan for the period of
deferral and until such time as all benefits payable under this Plan have been
paid in accordance with the provisions hereof.

 

2.19.                        Plan.  “Plan” means this Deferred Compensation Plan
as amended from time to time.

 

2.20.                        Retirement.  “Retirement” means the termination of
employment with the Company of the Participant after attaining age sixty (60).

 

2.21.                        Predecessor Plan.  “Predecessor Plan” means any
supplemental executive retirement plan, executive severance plan or like plan
maintained by the Company from which account credits are transferred to the
Plan in a manner and at a time specified by the Committee.

 

2.22.                        Valuation Funds.  “Valuation Funds” means one
or more of the independently established 
funds or indices that are identified and listed by the Committee.  These Valuation Funds are used solely to
calculate the Interest that is credited to each Participant’s Account(s) in
accordance with Article IV, below, and does not represent, nor should it be
interpreted to convey any beneficial interest on the part of the Participant in
any asset or other property of the Company. 
The

 

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determination
of the increase or decrease in the performance of each Valuation Fund shall be
made by the Committee in its reasonable discretion.  The Committee shall select the various Valuation Funds available
to the Participants with respect to this Plan and shall set forth a list of
these Valuation Funds attached hereto as Exhibit A, which may be amended from
time to time in the discretion of the Committee.

 

2.23.                       Years of Service.  “Years of Service” shall have
the meaning provided for such term for purposes of vesting under the 401(k)
Plan, whether or not the Participant is a participant in such plan.

 

ARTICLE III - ELIGIBILITY
AND PARTICIPATION

 

3.1.                             Eligibility and Participation.

 

a)         Eligibility.                    Eligibility
to participate in the Plan shall be limited to those select key employees of
Company who are designated by management, from time to time, and approved by
the Committee.

b)        Participation.  An
employee’s participation in the Plan shall be effective upon notification to
the employee by the Committee of eligibility to participate, and completion and
submission of a Deferral Commitment, an Allocation Form, and a Form of Payment
Designation to the Committee prior to the beginning of the Deferral Period.

c)         First-Year
Participation.   When an individual first becomes eligible
to participate in this Plan during a Deferral Period, a Deferral Commitment may
be submitted to the Committee within thirty (30) days after the Committee
notifies the individual of eligibility to participate.  Such Deferral Commitment will be effective
only with regard to Compensation earned and payable following submission of the
Deferral Commitment to the Committee.

 

3.2.                             Form of Deferral Commitment.  A
Participant may elect to make a Deferral Commitment in the form permitted by
the Committee.  The Deferral Commitment
shall specify the following:

 

a)         Deferral
Amounts; Accounts.   A Deferral Commitment shall be made with
respect to each payment of salary and/or bonus payable by the Company to a
Participant during the Deferral Period, and shall designate the portion of each
deferral that shall be allocated among the various Accounts, except that no
deferral shall be made to an Account at the same time that a distribution is to
be made from that Account.  The Participant
shall set forth the amount to be deferred as a full percentage of salary and/or
bonus (the Participant may designate a different percentage of salary and bonus
that is to be deferred under this Plan). 
Salary Deferral Commitments shall be made in roughly equal amounts over
the Deferral Period.

b)        Allocation to
Valuation Funds.  The Participant shall specify in a separate
form (known as the “Allocation Form”) filed with the Committee, the
Participant’s initial allocation of the amounts deferred into each Account
among the various available Valuation Funds.

c)         Maximum
Deferral.  The maximum
amount of each payment of base salary that may be 

 

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deferred by a Group 1 Participant shall be fifty percent (50%); Group 2
Participants shall not be permitted to defer any portion of base salary.   The maximum amount of each payment of bonus
or incentive compensation that may be deferred by any Participant shall be one
hundred percent (100%).

 

 

3.3.                             Period of Commitment.  Once a Participant has made a
Deferral Commitment, that Commitment shall remain in effect for the next
succeeding Deferral Period and shall remain in effect for all future Deferral
Periods unless revoked or amended in writing by the Participant and delivered
to the Committee no later than fifteen (15) days prior to the beginning of a
subsequent Deferral Period.

 

3.4.                             Commitment Limited by Termination or Disability.  If a
Participant suffers a Disability or terminates employment with Company prior to
the end of the Deferral Period, the Deferral Period shall end as of the date of
Disability or termination.

 

3.5.                             Modification of Deferral Commitment.  Except
as provided in Sections 3.3, 3.4, above, 
and 5.4 below, a Deferral Commitment shall be irrevocable by the Participant during a Deferral
Period, except that a Participant may choose to cease in its entirety the
deferral of salary at any time during a Deferral Period.  This cessation will be effective as soon as
practical after the receipt by the Committee of such a request and shall apply
only with respect to salary earned and payable after the time that this request
is filed with the Committee.  Any
resumption of such a Participant’s deferrals shall be permitted by the
Committee only by the election of the Participant in accordance with the
provisions of this Article III.

 

3.6.                             Change in Employment Status.  If the
Committee determines that a Participant’s employment performance is no longer
at a level that warrants reward through participation in this Plan, but does
not terminate the Participant’s employment with Company, the Participant’s
existing Deferral Commitment shall terminate at the end of the Deferral Period,
and no new Deferral Commitment may be made by such Participant after notice of
such determination is given by the Committee, unless the Participant later
satisfies the requirements of §3.1, above. 
If the Committee, in its sole discretion, determines that the
Participant no longer qualifies as a member of a select group of management or
highly compensated employees, as determined in accordance with the Employee
Retirement Income Security Act of 1974, as amended, the Committee may, in its
sole discretion terminate any Deferral Commitment for that year, prohibit the
Participant from making any future Deferral Commitments and/or distribute the
Participant’s Account Balances in accordance with Article V of this Plan as if
the Participant had terminated employment with the Company as of that time.

 

3.7.                             Defaults in Event of Incomplete or Inaccurate Deferral
Commitments.  In the event that a Participant submits a
Deferral Commitment to the
Committee that contains information necessary to the smooth operation of this
Plan which, in the sole discretion of the Committee, is incomplete or
inaccurate, the Committee shall be authorized to assume the following, and such
assumptions shall be communicated to the Participant:

 

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a)         If no Account is listed – assume Retirement Account was selected;

b)        If Accounts listed equal less than 100% - assume balance is deferred
into Retirement Account;

c)         If Accounts listed equal more than 100% – assume proportionate
reduction to each Account selected;

d)        If no Valuation Fund is selected – assume Money Market Fund was
selected;

e)         If Valuation Fund(s) selected equal less than 100% - assume that Money
Market Fund was selected for balance;

f)           If Valuation Fund(s) selected equal more than 100% - assume
proportionate reduction to each Valuation Fund selected;

g)        If no Distribution Election is chosen – assume lump sum for In-Service
Account and three (3) year for Retirement Account was selected; and,

h)        If no time of payment is chosen for In-Service Account – assume the
earliest possible date available under the provisions of Section 5.2, below was
selected.

 

ARTICLE IV - DEFERRED
COMPENSATION ACCOUNT

 

4.1.                             Accounts.  The Compensation deferred by a Participant
under the Plan, any Discretionary Contributions and Interest shall be credited
to the Participant’s Account(s). 
Separate accounts may be maintained on the books of the Company to
reflect the different Accounts chosen by the Participant, and the Participant
shall designate the portion of each deferral that will be credited to each
Account as set forth in Section 3.2(a), above. 
These Accounts shall be used solely to calculate the amount payable to
each Participant under this Plan and shall not constitute a separate fund of
assets.

 

4.2.                             Timing of Credits; Withholding.  A
Participant’s deferred Compensation shall be credited to each Account
designated by the Participant as of the date which the compensation deferred
would have otherwise been payable to the Participant, or a soon thereafter as
is practical and as provided by the Committee. 
Any Discretionary Contributions shall be credited to the appropriate
Account(s) as provided by the Committee. 
Any withholding of taxes or other amounts with respect to deferred
Compensation that is required by local, state or federal law shall be withheld
from the Participant’s corresponding non-deferred portion of the Compensation to
the maximum extent possible, and any remaining amount shall reduce the amount
credited to the Participant’s Account in a manner specified by the Committee.

 

4.3.                             Valuation Funds.

a)         Designation of
Funds.  A Participant shall designate, at a time and
in a manner acceptable to the Committee, one or more Valuation Funds for each
Account for the sole purpose of determining the amount of Interest to be
credited or debited to such Account. 
Such election shall designate the portion of each deferral of Compensation
made into each Account that shall be allocated among the available Valuation
Fund(s), and such election shall apply to each succeeding deferral of
Compensation until such time as the Participant shall file a new 

 

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election with the Committee.

b)        Reallocation of
Fund Balances.  Upon notice to the Committee, the
Participant may also reallocate the balance in each Valuation Fund among
the other available Valuation Funds as of
the next succeeding Determination Date, and the reallocation shall become
effective as of the first day of the following month.

c)         Company Stock
Valuation Fund.  Notwithstanding the prior subparagraph, no
Participant shall be permitted to reallocate any portion of an Account balance which
had previously been allocated into a Valuation Fund designated as a Company
Stock Valuation Fund.

 

4.4.                             Discretionary Contributions.  Company
may make Discretionary Contributions to a Participant’s Account.  Discretionary Contributions shall be
credited at such times and in such amounts
as recommended by the Committee and approved by the Compensation Committee of
the Board, or the Board in its sole discretion.  Unless the Committee specifies otherwise, such Discretionary
Contribution shall be allocated among the various Accounts in the same
proportion as set forth in section 4.1, above. 
Discretionary Contributions shall include any Account credits
transferred from a Predecessor Plan pursuant to an action by the Company or
pursuant to a timely election by a Participant in the manner prescribed by the
Committee.  In accordance with rules
established by the Committee, a Participant who is entitled to a benefit under
a Predecessor Plan may agree with the Company to have the Company credit to the
Plan an amount equal to the amount credited on behalf of the Participant under
the Predecessor Plan in exchange for the relinquishment by the Participant of
all rights and interests in and under the Predecessor Plan, provided that the
agreement is executed by the Company and the Participant before the amounts
accrued by the Participant under the Predecessor Plan is first made available
to the Participant.  Amounts so credited
under the Plan will be considered Discretionary Contributions under the Plan.

 

4.5.                             Determination of Accounts.  Each
Participant’s Account as of each Determination Date shall consist of the
balance of the Account as of the immediately preceding Determination Date,
adjusted as follows:

 

a)         New Deferrals.  Each
Account shall be increased by any deferred Compensation credited since such
prior Determination Date in the proportion chosen by the Participant, except
that no amount of new deferrals shall be credited to an Account at the same
time that a distribution is to be made from that Account.

b)        Discretionary
Contributions.  Each Account shall be increased by any
Discretionary Contributions credited since such prior Determination as set
forth above in sections 4.1 and 4.4 or as otherwise directed by the Committee.

c)         Distributions.  Each
Account shall be reduced by the amount of each benefit payment made from that
Account since the prior Determination Date. 
Distributions shall be deemed to have been made proportionally from each
of the Valuation Funds maintained within such Account based on the proportion
that such Valuation Fund bears to the sum of all Valuation Funds maintained
within such Account for that Participant as of the Determination Date
immediately preceding the date of payment.

d)        Interest.  Each
Account shall be increased or decreased by the Interest credited to such

 

8

 

Account since such Determination Date as though the
balance of that Account as of the beginning of the current month had been
invested in the applicable Valuation Funds chosen by the Participant.

 

4.6.                             Vesting of Accounts.  Each Participant shall be
vested in the amounts credited to such Participant’s Account and Interest
thereon as follows:

a)         Amounts
Deferred.  A Participant shall be one hundred percent
(100%) vested at all times in the amount of Compensation elected to be deferred
under this Plan and Interest thereon.

b)        Discretionary
Contributions.  A Participant’s Discretionary Contributions
and Interest thereon shall become vested as determined by the Compensation
Committee of the Board, or the Board. 
Discretionary Contributions transferred from a Predecessor Plan shall be
vested as and to the extent the credits would have vested under the terms of
the Predecessor Plan.

Notwithstanding the preceding,
in the event of a Change in Control, a Participant’s Discretionary
Contributions and Interest shall immediately become one hundred percent (100%)
vested (if not already vested).

 

4.7.                             Statement of Accounts.  The Committee shall give to
each Participant a statement showing the balances in the Participant’s Account
on a quarterly basis.

 

ARTICLE V - PLAN
BENEFITS

 

5.1.                             Retirement Account.  The vested portion of a
Participant’s Retirement Account shall be distributed to the Participant upon
the termination of employment with the Company.  Benefits under this section shall be payable as soon as
administratively practical after termination of employment.  The form of benefit payment shall be that
form selected by the Participant pursuant to Section 5.6, below, unless the
Participant terminates employment prior to Retirement, in which event, the
Retirement Account shall be paid in the form of a lump sum payment.  Payment of any benefit from the Retirement
Account shall commence as soon as practical after the date of the Participant’s
termination of service with the Company, and subsequent payments, if the Form
of Payment selected provides for subsequent payments, shall be made on the
anniversary of the initial payment.

 

5.2.                             In-Service Account. The vested portion of a Participant’s In-Service Account shall be
distributed to the Participant upon the date chosen by the Participant in the
first Deferral Commitment which designated a portion of the Compensation
deferred be allocated to the In-Service Account, but in no event shall the date
selected be earlier than the first day of the fourth calendar year following
the initial filing of the Deferral Commitment with respect to that In-Service
Account.  The benefit payment shall be
that form selected by the Participant pursuant to Section 5.6, below.  However, if the Participant terminates
employment with the Company prior to the date so chosen by the Participant, the
vested portion of the In-Service Account shall be

 

9

 

added to the Retirement Account as of the date of termination of
service and shall be paid in accordance with the provisions of Section 5.1,
above.  Payment shall commence as soon
as practical after the date selected by the Participant under this Section, and
subsequent payments, if the Form of Payment selected provides for subsequent
payments, shall be made on the anniversary of the initial payment.

 

5.3.                             Death Benefit.  Upon the death of a Participant prior to the
commencement of benefits under this Plan from any particular Account, Company
shall pay to the Participant’s Beneficiary an amount equal to the vested
Account balance in that Account in the form of a lump sum payment, except that
the Committee may, in its sole discretion, approve a request for payment in an
Actuarial Equivalent form.  In the event
of the death of the Participant after the commencement of benefits under this
Plan from any Account, the benefits from that Account(s) shall be paid to the
Participant’s designated Beneficiary from that Account at the same time and in
the same manner as if the Participant had survived.

 

5.4.                             Hardship Distributions.  Upon a finding that a
Participant has suffered a Financial Hardship or Disability, the Committee may,
in its sole discretion, amend the existing Deferral Commitment, or make
distributions from any or all of the Participant’s Accounts. The amount of such
distribution shall be limited to the amount reasonably necessary to meet (1)
the Participant’s needs resulting from the Financial Hardship or Disability,
and (2) any federal, state or local income taxes or penalties reasonably
anticipated to result from the hardship distribution, and will not exceed the
Participant’s vested Account balances. 
If payment is made due to Financial Hardship, the Participant’s
deferrals under this Plan shall cease for the period of the Financial Hardship
or Disability and for twelve (12) months thereafter.  Any resumption of the Participant’s deferrals under the Plan
after such twelve (12) month period shall be made only at the election of the
Participant in accordance with Article III herein.

 

5.5.                             Effect of Change in Control. 
Notwithstanding anything herein to the contrary, upon a Change in
Control, each Participant shall become entitled to receive the entire balance
of his or her Account(s) in a single lump sum payment on the ninetieth (90th)
day following the Change in Control (or as soon thereafter as administratively
feasible).  Notwithstanding the
preceding, the Participant may irrevocably elect, prior to the end if such
ninety (90) day period, to waive his or her right to receive such Change in
Control distribution.  If such waiver
election is timely made, the Participant shall receive his or her benefits
under this Plan as otherwise provided under the terms of the Plan.

 

5.6.                             Form of Payment.  Unless otherwise specified in
paragraphs 5.1, 5.2, 5.3 or 5.5,  the
benefits payable from any Account under this Plan shall be paid in the form of
benefit as provided below, and specified by the Participant in the Distribution
Election.  The most recently submitted
Distribution Election shall be effective for the entire vested Account balance
unless amended in writing by the Participant and delivered to the Committee.
If, at the time payment of benefits under this Plan become due and payable, the
Participant’s most recent election as to the form of payment was made within
one (1) year of such payment, then the most recent election made by the
Participant more that one year prior to the time of payment shall be used to
determine the

 

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form of payment.  The permitted forms of benefit payments are:

a)         A lump sum amount which is equal to the vested Account balance; and,

b)        Annual installments for a
period of up to ten (10) years (or in the event of payment of the In-Service
Account, a maximum of five (5) years) where the annual payment shall be equal to the balance of the Account
immediately prior to the payment, multiplied by a fraction, the numerator of
which is one (1) and the denominator of which commences at the number of annual
payment initially chosen and is reduced by one (1) in each succeeding year.  Interest
on the unpaid balance shall be based on the most recent allocation among the
available Valuation Funds chosen by the Participant, made in accordance with
Section 4.3, above.

 

5.7.                             Small Account.  If the total of a Participant’s vested,
unpaid Account balance as of the time the payments are to commence from the
Participant’s Account is less than $15,000, the remaining unpaid, vested
Account shall be paid in a lump sum, notwithstanding any election by the
Participant to the contrary.

 

5.8.                             Withholding; Payroll Taxes.  Company
shall withhold from any payment made pursuant to this Plan any taxes required
to be withheld from such payments under local, state or federal law.  A Beneficiary, however, may elect not to
have withholding of federal income tax pursuant to Section 3405(a)(2) of the
Code, or any successor provision thereto.

 

5.9.                             Payment to Guardian.  If a Plan benefit is payable
to a minor or a person declared incompetent or to a person incapable of
handling the disposition of the property, the Committee may direct payment to
the guardian, legal representative or person having the care and custody of
such minor, incompetent or person.  The
Committee may require proof of incompetency, minority, incapacity or
guardianship as it may deem appropriate prior to distribution.  Such distribution shall completely discharge
the Committee and Company from all liability with respect to such benefit.  

 

5.10.                       Effect of Payment.  The full payment of the
applicable benefit under this Article V shall completely discharge all
obligations on the part of the Company to the Participant (and the
Participant’s Beneficiary) with respect to the operation of this Plan, and the
Participant’s (and Participant’s Beneficiary’s) rights under this Plan shall
terminate.

 

ARTICLE VI - BENEFICIARY
DESIGNATION

 

6.1.                             Beneficiary Designation.  Each Participant shall have
the right, at any time, to designate one (1) or more persons or entity as
Beneficiary (both primary as well as secondary) to whom benefits under this
Plan shall be paid in the event of Participant’s death prior to complete
distribution of the Participant’s vested Account balance.  Each Beneficiary designation shall be in a
written form prescribed by the Committee and shall be effective only when filed
with the Committee during the Participant’s lifetime.

 

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6.2.                             Changing Beneficiary.   Any Beneficiary designation
may be changed by a Participant without the consent of the previously named
Beneficiary by the filing of a new Beneficiary designation with the Committee.

 

6.3.                             No Beneficiary Designation.   If any
Participant fails to designate a Beneficiary in the manner provided above, if
the designation is void, or if the Beneficiary designated by a deceased
Participant dies before the Participant or before complete distribution of the
Participant’s benefits, the Participant’s Beneficiary shall be the person in
the first of the following classes in which there is a survivor:

a)         The Participant’s surviving spouse;

b)        The Participant’s children in equal shares, except that if any of the
children predeceases the Participant but leaves surviving issue, then such
issue shall take by right of representation the share the deceased child would
have taken if living;

c)         The Participant’s estate.

 

6.4.                             Effect of Payment.   Payment to the Beneficiary
shall completely discharge the Company’s obligations under this Plan.

 

ARTICLE VII - ADMINISTRATION

 

7.1.                             Committee; Duties.   This Plan shall be
administered by the Committee, which shall consist of not less than three (3)
persons appointed by the Board, except in the event of a Change in Control as
provided in Section 7.5 below.  The
Committee shall have the authority, in its discretion, to make, amend,
interpret and enforce all appropriate rules and regulations for the
administration of the Plan and decide or resolve any and all questions,
including interpretations of the Plan, as they may arise in such
administration.  A majority vote of the
Committee members shall control any decision. 
Members of the Committee may be Participants under this Plan.

 

7.2.                             Agents.   The Committee may, from time to time,
employ agents and delegate to them such administrative duties as it sees fit,
and may from time to time consult with counsel who may be counsel to the
Company.

 

7.3.                             Binding Effect of Decisions.   The
decision or action of the Committee with respect to any question arising out of
or in connection with the administration, interpretation and application of the
Plan and the rules and regulations promulgated hereunder shall be final,
conclusive and binding upon all persons having any interest in the Plan.

 

7.4.                             Indemnity of Committee.   The Company shall indemnify
and hold harmless the members of the Committee against any and all claims,
loss, damage, expense or liability arising from any action or failure to act
with respect to this Plan on account of such member’s service on the Committee,
except in the case of gross negligence or willful misconduct.

 

12

 

7.5.                             Election of Committee After Change in Control.   After
a Change in Control, vacancies on the Committee shall be filled by majority
vote of the remaining Committee members and Committee members may be removed
only by such a vote.  If no Committee
members remain, a new Committee shall be elected by majority vote of the
Participants in the Plan immediately preceding such Change in control.  No amendment shall be made to Article VII or
other Plan provisions regarding Committee authority with respect to the Plan
without prior approval by the Committee.

 

ARTICLE VIII - CLAIMS
PROCEDURE

 

8.1.                             Claim.   Any person or entity claiming a benefit,
requesting an interpretation or ruling under the Plan (hereinafter referred to
as “Claimant”), or requesting information under the Plan shall present the
request in writing to the Committee, which shall respond in writing as soon as
practical.

 

8.2.                             Denial of Claim.  If the claim or request is
denied, the written notice of denial shall state:

 

a)         The reasons for denial, with specific reference to the Plan provisions
on which the denial is based;

b)        A description of any additional material or information required and an
explanation of why it is necessary; and

c)         An explanation of the Plan’s claim review procedure.

 

8.3.                             Review of Claim.  Any Claimant whose claim or
request is denied or who has not received a response within sixty (60) days may
request a review by notice given in writing to the Committee.  Such request must be made within sixty (60)
days after receipt by the Claimant of the written notice of denial, or in the
event Claimant has not received a response sixty (60) days after receipt by the
Committee of Claimant’s claim or request. 
The claim or request shall be reviewed by the Committee which may, but
shall not be required to, grant the Claimant a hearing.  On review, the claimant may have
representation, examine pertinent documents, and submit issues and comments in
writing.

 

8.4.                             Final Decision.  The decision on review shall
normally be made within sixty (60) days after the Committee’s receipt of
claimant’s claim or request.  If an
extension of time is required for a hearing or other special circumstances, the
Claimant shall be notified and the time limit shall be one hundred twenty (120)
days.  The decision shall be in writing
and shall state the reasons and the relevant Plan provisions.  All decisions on review shall be final and
bind all parties concerned.

 

13

 

ARTICLE IX - AMENDMENT
AND TERMINATION OF PLAN

 

9.1.                             Amendment.   The Board may at any time amend the Plan by
written instrument, notice of which is given to all Participants and to
Beneficiary receiving installment payments, subject to the following:

a)                   Preservation of Account Balance.   No
amendment shall reduce the amount accrued in any Account as of the date such
notice of the amendment is given.

b)                  Changes in Interest Rate.   No
amendment shall reduce, either prospectively or retroactively, the rate of
Interest to be credited to the amount already accrued in any of the
Participant’s Account and any amounts credited to the Account under Deferral
Commitments already in effect on that date, except as may be provided in
section 2.22, above as a result of a selection or deletion of available
Valuation Funds.

 

9.2.                             Company’s Right to Terminate.   The
Board may at any time partially or completely terminate the Plan if, in its
judgement, the tax, accounting or other effects of the continuance of the Plan,
or potential payments thereunder would not be in the best interests of Company.

a)                   Partial Termination.   The Board may partially
terminate the Plan by instructing the Committee not to accept any additional Deferral
Commitments.  If such a partial
termination occurs, the Plan shall continue to operate and be effective with
regard to Deferral Commitments entered into prior to the effective date of such
partial termination.

b)                  Complete Termination.   The Board may completely
terminate the Plan by instructing the Committee not to accept any additional
Deferral Commitments, and by terminating all ongoing Deferral Commitments.  In the event of complete termination, the
Plan shall cease to operate and Company shall distribute each Account to the
appropriate Participant. Payment shall be made as a lump sum or in the
number of annual installments indicated below based on the sum of the
Participant’s Account Balances at the time of termination of the Plan by the
Board where the annual payment shall be equal to the balance of the Accounts
immediately prior to the payment, multiplied by a fraction, the numerator of
which is one (1) and the denominator of which commences at the number of annual
payment indicated below and is reduced by one (1) in each succeeding year:

 

	
  Account
  Balance

  	
   

  	
  Payout Period

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Less than $10,000

  	
   

  	
  Lump
  Sum

  	
   

  
	
  $ 10,000 but less than $50,000

  	
   

  	
  3
  Years

  	
   

  
	
  More than $50,000

  	
   

  	
  5
  Years

  	
   

  

 

Interest on the unpaid
balance shall be based on the most recent allocation among the available
Valuation Funds chosen by the Participant in accordance with Section 4.3.

 

14

 

ARTICLE X - MISCELLANEOUS

 

10.1.                       Unfunded Plan.   This plan is an unfunded plan maintained
primarily to provide deferred compensation benefits for a select group of
“management or highly-compensated employees” within the meaning of Sections
201, 301, and 401 of the Employee Retirement Income Security Act of 1974, as
amended (“ERISA”), and therefore is exempt from the provisions of Parts 2, 3
and 4 of Title I of ERISA.  Accordingly,
the Board may terminate the Plan and make no further benefit payments or remove
certain employees as Participants if it is determined by the United States
Department of Labor, a court of competent jurisdiction, or an opinion of
counsel that the Plan constitutes an employee pension benefit plan within the
meaning of Section 3 (2) of ERISA (as currently in effect or hereafter amended)
which is not so exempt.

 

10.2.                       Company Obligation.   The obligation to make
benefit payments to any Participant under the Plan shall be an obligation
solely of the Company with respect to the deferred Compensation receivable
from, and contributions by, that Company and shall not be an obligation of
another company.

 

10.3.                       Unsecured General Creditor.  
Notwithstanding any other provision of this Plan, Participants and
Participants’ Beneficiary shall be unsecured general creditors, with no secured
or preferential rights to any assets of Company or any other party for payment
of benefits under this Plan.  Any
property held by Company for the purpose of generating the cash flow for
benefit payments shall remain its general, unpledged and unrestricted assets.  Company’s obligation under the Plan shall be
an unfunded and unsecured promise to pay money in the future.

 

10.4.                       Trust Fund.   Company shall be responsible for the
payment of all benefits provided under the Plan.  At its discretion, Company may establish one (1) or more trusts,
with such trustees as the Board may approve, for the purpose of assisting in
the payment of such benefits.  Although
such a trust shall be irrevocable, its assets shall be held for payment of all
Company’s general creditors in the event of insolvency.  To the extent any benefits provided under
the Plan are paid from any such trust, Company shall have no further obligation
to pay them.  If not paid from the
trust, such benefits shall remain the obligation of Company.

 

10.5.                       Nonassignability.  Neither a Participant nor any other person shall
have any right to commute, sell, assign, transfer, pledge, anticipate, mortgage
or otherwise encumber, transfer, hypothecate or convey in advance of actual
receipt the amounts, if any, payable hereunder, or any part thereof, which are,
and all rights to which are, expressly declared to be unassignable and
non-transferable.  No part of the
amounts payable shall, prior to actual payment, be subject to seizure or
sequestration for the payment of any debts, judgements, alimony or separate
maintenance owed by a Participant or any other person, nor be transferable by
operation of law in the event of a Participant’s or any other person’s
bankruptcy or insolvency.

 

10.6.                       Not a Contract of Employment.   This
Plan shall not constitute a contract of employment between Company and the
Participant.  Nothing in this Plan shall
give a Participant the right to be

 

15

 

retained in the service of
Company or to interfere with the right of the Company to discipline or discharge
a Participant at any time.

 

10.7.                       Protective Provisions.   A Participant will cooperate
with Company by furnishing any and all information requested by Company, in
order to facilitate the payment of benefits hereunder, and by taking such
physical examinations as Company may deem necessary and taking such other
action as may be requested by Company.

 

10.8.                       Governing Law.   The provisions of this Plan shall be
construed and interpreted according to the laws of the State of Maryland,
except as preempted by federal law.

 

10.9.                       Validity.   If any provision of this Plan shall be held
illegal or invalid for any reason, said illegality or invalidity shall not
affect the remaining parts hereof, but this Plan shall be construed and
enforced as if such illegal and invalid provision had never been inserted
herein.

 

10.10.                 Notice.   Any notice required or permitted under the
Plan shall be sufficient if in writing and hand delivered or sent by registered
or certified mail.  Such notice shall be
deemed given as of the date of delivery or, if delivery is made by mail, as of
the date shown on the postmark on the receipt for registration or
certification.  Mailed notice to the
Committee shall be directed to the company’s address.  Mailed notice to a Participant or Beneficiary shall be directed
to the individual’s last known address in company’s records.

 

10.11.                 Successors.   The provisions of this Plan shall bind and
inure to the benefit of Company and its successors and assigns.  The term successors as used herein shall
include any corporate or other business entity which shall, whether by merger,
consolidation, purchase or otherwise acquire all or substantially all of the
business and assets of Company, and successors of any such corporation or other
business entity.

 

16Confidential Treatment Requested

Exhibit 10.1

 

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.

“Pull

Notification” means Buyer’s only authorization (WA) for

Supplier to deliver a specified quantity of Pull Products.

 

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

 

“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 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

 

2

 

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;

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

 

3

 

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 AGREMENT, STATE BUYER’S SOLE REMEDIES FOR ANY BREACH OF WARRANTY IN

SECTION 6.1 OF THE BASE AGREEMENT.

 

4

 

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.

 

9.0                               Supplier

Liability for Third Party Claims

 

***

 

10.0                        Limitation

of Liability

 

***

 

5

 

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;

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

 

6

 

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.

 

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.

 

7

 

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.

 

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”.

 

8

 

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.

 

 

	

  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

  

 

9

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-00051-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00051-of-00352.parquet"}]]