OEM AGREEMENT
1.0 INTRODUCTION. This is a Master OEM Provider
Agreement and attachments
(this "Agreement") by and between XYZ Products L.P., a
partnership ("XYZ "), and YYY ......... Division Corporation, a
corporation ("YYY "). As of June 8, 2000 (the "Effective
Date"), XYZ and
YYY (each a "Party" and collectively, the "Parties")
establish binding
terms under which XYZ may purchase and YYY may sell Products, Licensed
Products and Parts (defined below), that XYZ may resell directly, and
indirectly through resellers and distributors, to end-user customers.
A.
A.
Renewal Rights. X
B.
XYZ may resell Products, Licensed Products and Parts to XYZ 's OEM
customers for resale
by such OEM customers under their own brand names. Any costs and expenses
associated with modifications required to support XYZ 's OEM customers will be
borne by XYZ or XYZ 's OEM customers.
C.
Therefore, XYZ and YYY agree as follows:
D.
2.0 DEFINITIONS
E.
As used in this Agreement, the following terms shall have the following
meanings:
F.
"Affiliates" shall mean the affiliated entities of XYZ listed on
Attachment A.
Affiliates may purchase Products under this Agreement, but YYY agrees that
all liabilities and obligations under this Agreement will remain the sole
responsibility of XYZ .
G.
"APCC" shall mean XYZ 's manufacturing facilities for Asian
countries, other
than
designate under this Agreement (see Section 4 of this Agreement).
H.
"Day(s)" shall mean a calendar day(s) unless otherwise specified in a
particular Section of this Agreement.
XYZ as provided in writing by XYZ to YYY on or around the first business
day of each month (see Section 6 of this Agreement).
J.
"XYZ Offering" shall mean Products and Licensed Products, including
any
additional hardware or Software installed by or for XYZ , that XYZ may sell to
XYZ 's customers.
K.
"DAO" shall mean XYZ 's manufacturing facilities for the
and around .........,
Agreement (see Section 4 of this Agreement).
L.
"........." means XYZ 's manufacturing facilities for
under this Agreement (see Section 4 of this Agreement).
M.
"Intellectual Property" shall mean all patents, applications for
patents,
copyrights, mask works, trade secrets, confidential information, know-how and
any other intellectual or proprietary rights recognized by any jurisdiction.
N.
"Licensed Product" shall mean products manufactured by XYZ pursuant
to the
conditional manufacturing license granted in Section 12.7.
O.
"NRE" shall mean non-recurring engineering.
P.
"Order" shall mean any purchase order for Products placed by XYZ or
XYZ 's
Affiliates.
Q.
"Part(s)" shall mean those components, subassemblies, power supplies
and other
materials and spare part items that are used to manufacture or maintain the
Products. The terms of this Agreement that apply to Products shall also apply
to Parts.
R.
"Product(s)" shall mean the products listed in Attachment A, including
Parts
and related Software. As used in this Agreement, Products includes Parts
delivered to XYZ separately and not as a component of the Products listed in
Attachment A.
S.
"Software" shall mean all device drivers, firmware and other software
necessary
to operate and support the
T.
*Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has
been requested with respect to the omitted portions.
U.
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Products, except for YYY 's Hard Disk Drive ("HDD") firmware.
W.
3. YYY 'S ROLE IN THE XYZ DIRECT MODEL
X.
3.1 XYZ -Focused Team. YYY will maintain a XYZ -focused team consisting
of at least: (a) a dedicated XYZ account manager; and (b) a XYZ
quality/engineering resource person who will serve as a primary contact for
XYZ 's engineers. YYY will provide XYZ employees with reasonable points of
contact for other key areas, including at a minimum testing, process and
quality.
Y.
3.2 Quarterly Business Review. XYZ will be entitled to participate in the
formulation and direction of YYY 's future Product and technology roadmaps.
YYY and XYZ will conduct quarterly business review meetings to discuss
business performance, Product quality, manufacturing capacity, cost reduction
plans, technology roadmaps, overview plans and any other relevant factors that
might affect either Party's ability to perform under this Agreement.
Z.
3.3 Cost Reductions and Price Reductions. YYY understands that XYZ 's
selection of YYY as a provider of the Products to XYZ is based in part on
XYZ 's belief that YYY is committed to continuing to improve the Products
and to find cost savings for the Products over the term of this Agreement.
Savings may relate to development and implementation of manufacturing
efficiencies, feature improvements, component purchase price reductions,
engineering breakthroughs and/or delivery and distribution enhancements that
result in lower cost of goods sold and/or operating expenses for YYY .
YYY shall review with XYZ , on an ongoing basis (for each Product) the
noncosted bill of materials ("BOM"). Modifications of the supply
chain by
YYY after commencement of shipments of Products to XYZ are subject to XYZ
approval.
AA.
3.4 Quality Goals. Quality is a material term of this Agreement. YYY will
maintain objective quality programs for all Products and will achieve or exceed
agreed quality goals as outlined in Attachment A (the "Quality
Goals"). In
addition, YYY will develop a comprehensive quality plan for all Products as
specified in Attachment A. YYY will maintain accurate and legible records
of all Product manufacturing methods and specifications. If YYY fails to
achieve the Quality Goals, YYY will promptly put into place a corrective
action plan, as agreed to in writing by XYZ , designed to bring YYY 's
quality performance back into conformity with the Quality Goals.
Notwithstanding any other provision in this Agreement, if YYY fails to
meet the Quality Goals, within forty-five (45) Days after written notice to
YYY , XYZ may cancel any outstanding Orders without any liability
whatsoever. If YYY fails to meet the Quality Goals, then YYY shall
refund, repair or replace Products that fail to meet Quality Goals; provided,
however, that nothing in this Section 3.4 shall in any way limit the warranty
provisions stated in Section 8 or the epidemic failure and Product Hazards
provisions set forth in Section 10 and Attachment A. During the term of this
Agreement, YYY will grant XYZ reasonable access to and XYZ may audit any
information reasonably requested by XYZ with respect to YYY 's quality
performance under this Agreement (see Section 23.1 of this Agreement).
BB.
3.5 Electronic Communication. YYY will maintain electronic communications
with XYZ via e-mail or the Internet, and will establish and maintain such
other commercial communication methods as XYZ may reasonably request from time
to time. In an effort to minimize lead times, the Parties agree to investigate
the Internet as a means for XYZ to submit Orders to YYY . The terms and
conditions of the Agreement shall apply to Orders placed through Internet
transactions; however, the details of Internet transactions may be the subject
of additional terms and conditions agreed to in writing between the Parties.
CC.
3.6 YYY 's Service Obligations. YYY 's general service obligations
beyond those in particular Sections of this Agreement are set forth in
Attachment A.
DD.
3.7 XYZ Service Tags and Test Plans. YYY will place XYZ Service Tags on
Products per XYZ Specifications. YYY will integrate XYZ 's test plan into
its manufacturing process for Products upon mutual agreement. XYZ will be
permitted to audit YYY 's manufacturing process upon reasonable notice.
EE.
4.0 MANUFACTURING LOCATIONS
FF.
4.1 Approved YYY Manufacturing Locations. YYY 's XYZ -approved
manufacturing facilities for Products as of the Effective Date are listed in
Attachment A. All Products that YYY delivers to XYZ will be manufactured
at the locations listed in Attachment A. YYY will provide XYZ with ninety
(90) Days advance written notice (except in Force Majeure situations or as
otherwise agreed in writing by the Parties) of any proposed changes of
manufacturing locations. Changes in such manufacturing locations are subject to
XYZ 's approval and right to audit (see Section 23.1), but XYZ will not
unreasonably withhold approval of a new manufacturing location. XYZ 's failure
to object to or approve the new manufacturing location in writing within the
ninety (90)-Day period specified above will constitute XYZ 's approval of the
new manufacturing location. YYY will give due consideration to XYZ 's input
on matters including, without limitation, inventory velocity (hubs and revolver
GG.
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requirements), quality, timeliness of delivery and manufacturability.
KK.
4.2 XYZ Manufacturing Locations. [*] YYY
agrees that so long as
YYY receives ninety (90) Days written notice of changes or additions to
XYZ 's manufacturing locations, YYY will deliver Products to all XYZ
manufacturing locations under the terms and conditions of this Agreement and
provided that such new manufacturing location is in a country where YYY
ships product.
LL.
5.0 PRICE AND PAYMENTS
MM.
5.1 Product Pricing. The prices, payment
terms, lead times and buffer
inventory requirements for Products are set forth in Attachment A.
NN.
5.2 Taxes and Other Charges. Prices will be
stated and payments made in
U.S. Dollars. Prices are exclusive of applicable sales taxes, freight, freight
insurance, duties and all other taxes, but are inclusive of all other charges
including any charges for labeling, packing and crating, any finishing or
inspecting fees and any applicable royalties. XYZ will have no liability for
any tax for which it has an appropriate exemption). Prices include all other
charges, including without limitation any charges for: (a) labeling, (b)
packaging and crating, (c) any finishing or inspecting fees, and (d) any
applicable royalties. XYZ has the right to withhold any applicable taxes from
any payments due under this Agreement if required by any government authority.
XYZ will have no liability for any tax for which it has an appropriate
exemption. Both Parties agree to make reasonable efforts to help reduce the
inventory in the ......... SLC to zero (0) at the end of any calendar year, so
as
to minimize exposure to property tax assessment by the State of
OO.
5.3 Most Favored Customer Guarantee. The
unit prices for each Product unit
will be reviewed as required during the term of this Agreement. If YYY
offers Products to any other purchaser on prices and terms more favorable than
those offered to XYZ for similar quantities of the Products, YYY shall
offer those same prices and terms to XYZ . To refresh Products and prices,
YYY will issue a Price Release Letter to XYZ . The Price Release Letter will
contain revised prices and their effective dates and will be transmitted via
facsimile or electronic mail to XYZ within twenty-four (24) hours of verbal
confirmation. In the event XYZ receives multiple, conflicting prices from
YYY , XYZ may take advantage of the lowest price for each Product. Price
decreases will apply to all Shipments on or after the effective date of the
price change, unless either Party notifies the other in writing within ten (10)
days of receipt of an error in the Price Release Letter. XYZ shall pay pursuant
to the currently effective Price when Products are shipped to XYZ . XYZ 's
agent, may audit YYY 's compliance with this Section 5 as provided for
financial audits in Section 23.1 of this Agreement.
PP.
On a quarterly basis, or more frequently as requested by XYZ and as
necessitated by market conditions, YYY 's pricing for the Products shall be
adjusted based on YYY 's cost reductions and competitive market conditions.
QQ.
5.4 Form of Invoices. Invoices shall be in
sufficient detail for XYZ to
determine the quantity and quality of Products.
RR.
5.5 Payment.
SS.
5.5.1 Payment for Orders issued by ......... will be
made net thirty (30) Days
end of month from the later of the date of YYY 's invoice.
TT.
5.5.2 Payment for Orders issued by all other XYZ
manufacturing locations
will be made net thirty (30) Days from the date of YYY 's invoice, with
payment within forty-five (45) Days of such date deemed timely.
UU.
6.0
VV.
6.1 Revolver. YYY agrees to use the
approved by XYZ , at XYZ 's expense, for each XYZ manufacturing location for
all Products as follows:
WW.
6.1.1 Forecast. On a monthly basis, XYZ will provide
rolling six (6) month
forecasts of projected purchases of Products to YYY for each XYZ
manufacturing location, but any such forecasts provided by XYZ to YYY are
for planning purposes only, and do not constitute a commitment of any type by
XYZ or YYY .
XX.
6.1.2 Forecast Confirmation. No later that five (5)
days from receipt of
the XYZ forecast, YYY will confirm supply for a rolling three (3) month
period (current month plus two).
YY.
6.1.3 Frame Order. XYZ will issue to YYY a non-binding
individual frame
Order in writing (via fax or email) to cover XYZ 's demand for the next month
based on XYZ 's most recent forecast. With each new monthly forecast, XYZ will
extend this frame Order accordingly, so that the frame Order will continue to
cover at least the next month of XYZ 's forecasted demand. The quantity of
Product for each delivery period will be determined by
ZZ.
*Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has
been requested with respect to the omitted portions.
AAA.
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XYZ on the first (1st) calendar workday of the month prior to the beginning of
a delivery period. By way of example, and not limitation, the quantity for the
month of June will be determined by XYZ on the first (1st) workday of May.
EEE.
6.1.4 Order Confirmation. No later than five (5) Days from receipt of the XYZ
frame Order, YYY shall issue an Order acceptance confirming the quantity
and Ship Date if YYY accepts the Order. YYY may only reject Orders that
are not in compliance with the Agreement. YYY shall notify XYZ of the
reasons for rejection of an Order within two business days of receipt of such
Order.
FFF.
6.1.5 Inventory. YYY will establish a capability to deliver additional
Product to XYZ at the SLC for each XYZ manufacturing location in quantities
equal to XYZ 's two (2) week forecasted use requirements (the "Revolver
Inventory"). After four (4) weeks of operation, the Revolver Inventory
will be
calculated as follows: one (1) week based on the average of XYZ 's Pull Orders
for the preceding four (4) weeks and the second week based on the most recent
XYZ forecast). If XYZ requests delivery of any or all of the Revolver
Inventory, YYY shall provide to XYZ a schedule by which it shall replenish
Revolver Inventory within two (2) business days.
GGG.
6.1.6 Pull Order. XYZ will transmit a Pull Order by fax or other agreed upon
means to communicate to YYY , at the applicable SLC, the part number and
quantity of each Product required ("Pull Order"). XYZ 's transmission
of a Pull
Order is authorization for YYY to ship and invoice XYZ against the frame
Order for the part numbers and quantities set forth in the transmission. YYY
will deliver Product from the SLC upon receipt of the Pull Order.
HHH.
6.1.7 End of Life ("EOL") Situations. The Parties agree to determine
the
appropriate Revolver Inventory required for EOL situations. The Parties will
work together to reduce Revolver Inventory to zero in EOL situations.
III.
6.2 Form of Orders. XYZ may place Orders for Products during the term of this
Agreement. All Orders must be: (a) in writing; (b) reference this Agreement; and
(c) contain the following:
JJJ.
(1) description of the Product;
(2) quantity;
(3) price;
(4) requested delivery schedule;
(5) destination (ship-to address);
(6) requested method of shipment; and
(7) shipping instructions.
KKK.
6.3 Acceleration, Rescheduling and Cancellation of Orders. XYZ may accelerate,
reschedule or cancel Orders on the terms and conditions stated in Attachment A.
LLL.
7.0 DELIVERY AND ACCEPTANCE
MMM.
7.1 Delivery. The terms and conditions of sale and delivery of Products are as
stated in Attachment A.
NNN.
7.2 Packaging. YYY will handle, pack, mark and ship Products in accordance
with XYZ 's packaging specifications as stated in the then-current XYZ
Packaging and Labeling Manual (the "Manual"). XYZ agrees to timely
notify
YYY of changes to the Manual and will provide YYY with updated copies of
the revised Manual as new versions become available. A revised Manual takes
effect upon mutual agreement.
OOO.
7.3 Delivery Documentation. Each delivery of Products must be accompanied by
YYY 's delivery document, located in a clearly marked plastic shipping
wallet, attached to each appropriate shipping carton. Each delivery document
must clearly state the following data: (a) XYZ 's Order number; (b) YYY 's
Product number; and (c) the quantity shipped. YYY agrees to develop and use
a joint YYY /XYZ part number identification method. XYZ 's name shall not
appear on any labels.
PPP.
7.4 Delivery Schedules. If YYY believes any shipment may not be delivered on
schedule (and without waiver of any rights by either Party), YYY must
provide advance notification to XYZ , along with proposed solutions and
recovery
plans. Except for late shipments due to Force Majeure (see Section 23.11),
YYY will pay expedited freight cost (defined as the cost difference as
compared to standard shipping cost) for Products shipped late. If any Products
will be delivered more than five (5) business days late, without XYZ having
been the primary cause of the delay, XYZ may cancel or reschedule such Order
without any liability whatsoever. Failure or delay by XYZ 's carrier to pick up
Products is not deemed to be a late delivery.
QQQ.
7.5 Open Order Logs. On a weekly basis, YYY will provide to each XYZ
manufacturing location a report that details the status of all open Orders.
RRR.
7.6 Inspection and Acceptance of Products. Before shipment, YYY will
inspect, test and qualify Products for XYZ . XYZ may, but is not required to,
repeat inspection and acceptance tests. Non-complying Products with fewer than
one-hundred and fifty (150) power-on hours and less than thirty (30) Days after
XYZ 's shipment to XYZ 's customer, may be returned for credit, replacement or
repair at YYY 's expense. All other in-warranty returns will be handled in
accordance with the terms and conditions of Section 9.2. YYY will repair or
replace non-
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conforming Products as stated in the warranty provisions of this Agreement, and
no payment shall be due to YYY until non-conforming Products are repaired or
replaced. XYZ will make returns of non-conforming Products within a reasonable
time.
UUU.
8.0 WARRANTIES
VVV.
8.1 General Warranty. YYY warrants that all Products
(hardware content)
will meet all specifications set forth in Attachment A. YYY warrants that
all Products (software content) will substantially meet all specifications set
forth in Attachment A [*] YYY warrants that all Products delivered hereunder
to XYZ will be new (except for repaired or returned Products), free and clear
of all liens, claims and encumbrances. YYY warrants that XYZ will acquire
good and marketable title to all Products upon delivery to XYZ . YYY
warrants that all Products will be free from defects in material and
workmanship
for a period of [*] from the date the Products are shipped by YYY . This [*]
month warranty may be extended as follows: if XYZ or XYZ 's customer returns
Products to YYY and YYY delivers repaired Products to XYZ or XYZ 's
customer in satisfaction of this warranty, then the repaired Products shall be
covered under the remaining portion of the original warranty period; provided
however, that the specific repair shall be subject to a minimum [*] warranty
even if the original warranty period expires sooner.
WWW.
8.2 Date Data Warranty. YYY warrants that all Products,
at no additional
cost to XYZ and without human or other intervention, will accurately process
date data (including, but not limited to, calculating, comparing and
sequencing)
between the twentieth and twenty-first centuries.
XXX.
8.3 Good and Workmanlike Fashion Warranty. YYY warrants
that YYY
possesses the skills to and will perform services and obligations hereunder in
a
good and workmanlike fashion.
YYY.
8.4 Prompt Satisfaction of Warranties. XYZ 's remedy
for breach of the
warranties in this Agreement is repair or replacement of Products. YYY will
promptly repair or replace all Products that do not meet the terms of all
warranties in this Agreement. If YYY does not remedy a breach of warranty
under this Agreement within ten (10) Days of notice, XYZ may seek money damages
from YYY and XYZ may immediately terminate this Agreement.
ZZZ.
8.5 Warranties Non-transferable. YYY extends the
warranties in this
Agreement only to XYZ and XYZ may not transfer these warranties.
AAAA.
8.6 No Other Warranties. EXCEPT AS EXPRESSLY STATED IN
THIS AGREEMENT, THERE
ARE NO OTHER WARRANTIES, EXPRESS OR IMPLIED, BY OPERATION OF LAW OR OTHERWISE,
FOR PRODUCTS FURNISHED HEREUNDER OR IN CONNECTION HEREWITH. YYY DISCLAIMS
ALL IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND
NONINFRINGEMENT.
BBBB.
9.0 REPAIRS AND RETURNS
CCCC.
9.1 General Repair Obligation of YYY . Products may
need repair or
replacement: (a) during applicable warranty periods (see Sections 8.1-8.3 of
this Agreement) because of the failure of the Product to meet YYY 's
warranties; (b) after a warranty has expired; or (c) for a problem not caused
by
any failure of YYY 's warranties. In any of these cases, Products may fail in
the field or XYZ may discover the need for Product repair or replacement at
XYZ 's manufacturing locations. Products in need of repair or replacement may
be
returned to YYY from the field or directly from XYZ 's manufacturing
locations or XYZ may receive credit as detailed below. During the term of this
Agreement, YYY will repair or replace all Products according to the terms
and conditions in this Section 9.
DDDD.
9.2 Warranty Repairs and Replacement. XYZ may return
defective Products
under warranty to YYY immediate repair or replacement as specified in this
Section 9.2. XYZ will ship defective Products under warranty to YYY at
YYY 's expense. YYY must return repaired or replacement Products to any
XYZ manufacturing location that XYZ specifies at no charge to XYZ . YYY
agrees to ship a repaired or replacement Product to XYZ within two (2) business
days after YYY 's receipt of the defective Product, or for Products that
cannot be repaired within two (2) business days of XYZ 's request to YYY .
YYY must clearly mark repaired Products and will segregate repaired Products
from other Product shipments to XYZ .
EEEE.
9.3 Out of Warranty Repairs. YYY will make
out-of-warranty repair
service and Products available to XYZ for at least two (2) years after the
expiration of the warranty period following the last delivery of each model of
Product to XYZ under this Agreement. Our-of-warranty repairs will be at prices
that the Parties will reasonably agree to before five (5) years from the
Effective Date. In addition, at XYZ 's request, YYY agrees to discuss with
XYZ the possible certification of a third party repair center
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*Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has
been requested with respect to the omitted portions.
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to perform repair of Products. Such discussion would be triggered by concerns
over insufficient repair capacity, poor response time, or repair quality. XYZ
shall consult with YYY prior to certifying such third party repair center.
JJJJ.
9.4 End of Life. At the end of a Product's life cycle, XYZ and YYY will
collaborate on a periodic forecast of requirements for Parts for Products. If a
Part vendor cannot support a Product for five (5) years after delivery of
Products to XYZ , YYY will notify XYZ of opportunities to procure Parts
for those Products on behalf of XYZ and inventory such Parts at XYZ 's expense.
KKKK.
9.5 Price Protection. All replacement Product prices shall be listed in a
standard YYY Products price list, which may be changed by YYY once
annually. YYY will provide XYZ with at least sixty (60) Days prior notice
of price changes.
LLLL.
9.6 Field Returns.
MMMM.
9.6.1 XYZ may make field returns directly to YYY . At YYY 's request, or
XYZ 's option, XYZ will consolidate field returns into five (5) regions and
send them back to YYY 's manufacturing locations on a monthly basis without
testing: (a) the Americas; (b) Europe, Middle East and Africa; (c) Japan; (d)
China; and (c) Asia, other than Japan and China. YYY will perform tests
within [*] after receipt of failed Products and ship replacement Products as
provided in Section 9.2.
NNNN.
9.6.2 As a goal, the Parties agree to collaborate on a process where YYY
would give XYZ access to a web-based return material authorization
("RMA")
delivery procedure that will provide XYZ with immediate access to RMA Numbers
on an as-needed basis. At a minimum, XYZ will have access to and use of blocks
of at least 500 RMA numbers at any time.
OOOO.
9.6.3 YYY will perform all testing required by this Agreement. The
Parties
will work together to segregate and separately report line and field returns by
XYZ 's manufacturing locations. At XYZ 's request, YYY will provide a
preliminary failure analysis report within [*] after receipt of Products.
YYY will complete a final failure analysis report within [*] after receipt
of Products and a second level (to component level) analysis within [*] after
receipt of Products. XYZ will provide YYY with relevant failure date and
error logs, as necessary. YYY will provide a monthly failure analysis
report, including (at a minimum) the following information as available: (a)
serial number; (b) XYZ -provided symptom; (c) YYY subsystem; (d) defect
found, if any; (e) root cause; (f) short term fix; and (g) long term corrective
action.
PPPP.
9.6.4 If YYY has reasonable cause to believe that XYZ 's quality control
process has allowed [*] or more of No Fault Found ("NFF") Products to
be
returned to YYY , YYY will notify XYZ . XYZ and YYY will cooperate
to examine XYZ 's process and work to improve service delivery to reduce NFF
Products. The Parties will confer to address appropriate steps to correct XYZ
's
quality control process. The Parties will establish an acceptable verification
process for NFF Products.
QQQQ.
9.6.5 For Products failing in the field, XYZ will pay transportation
charges
for shipping Products to YYY 's manufacturing locations and YYY will pay
transportation charges for shipping repaired or replacement Products to XYZ 's
designated location.
RRRR.
10.0 EPIDEMIC FAILURE, PRODUCT HAZARDS AND ENGINEERING CHANGES
SSSS.
10.1 Epidemic Defect. YYY is responsible for all loss, liability, cost
and
expense (whether inside or outside the warranty period) with respect to defects
caused by design, manufacturing process or material that constitute epidemic
defects. "Epidemic Defect" is defined as the same defect found in [*]
or more of
the units delivered during any [*] period. Epidemic Defects may be identified
by
XYZ , XYZ 's designated service provider, YYY 's test procedures or may
appear as customer-reported failures. YYY and XYZ will cooperate to
promptly determine the root cause of the failures. If the root cause is
determined, then YYY and XYZ will cooperate in good faith on a corrective
action plan. If an Epidemic Defect occurs, XYZ may stop delivery of Products
without penalty or liability until the root cause is determined. In addition to
any applicable warranty, YYY will be responsible for all costs associated
with resolving an Epidemic Defect, where the root cause is YYY 's negligence,
fault or error, including without limitation all Product recall costs.
TTTT.
In addition, in the event Epidemic Defects are identified in the hard disk
drives, XYZ may elect to procure HDDs from other vendors and consign them to
YYY for use in manufacturing Products. The Product price will be adjusted
by subtracting YYY 's cost for HDDs. YYY shall be responsible for all
incremental costs necessary to enable the consignment of HDDs by XYZ . In the
event of any use of non-YYY HDDs, YYY shall not have any responsibility
for any perceived problem in the Product constituted with such HDDs, if the
perceived problem cannot be demonstrated on Product constituted with YYY
HDDs. YYY shall have no responsibility to test, alter, rework, or otherwise
technically interact with non-YYY HDDs or to share
UUUU.
*Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has
been requested with respect to the omitted portions.
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any YYY HDD information with any YYY HDD competitor. XYZ will not be
released from any obligation of confidentiality as to information related to
YYY HDDs. The Parties shall discuss the feasibility of the above described
consignment provision for each new Product.
XXXX.
10.2 Product Hazards. If either YYY or XYZ becomes aware of any information
that reasonably supports a conclusion that a hazard may exist in any Product,
and the hazard could cause death or bodily injury to any person or property
damage (a "Hazard"), the Party becoming aware of this information
shall
immediately notify the other Party of the Hazard. Whenever possible and if
permitted by law, notification to the other Party will precede notice to any
governmental agency. YYY and XYZ will promptly exchange all relevant data
and then, as promptly as possible, meet to review and discuss the information,
tests and conclusions relating to the Hazard. The Parties will discuss the
bases
for any action, including without limitation a recall, and the origin or
causation of the Hazard. YYY will be responsible for all costs associated
with resolving a Hazard, including without limitation any recall costs. Each
Party shall, on request, provide to the other Party reasonable assistance in
determining how best to deal with the Hazard and preparing for and making any
presentation before any governmental agency that may have jurisdiction over the
Hazard.
YYYY.
10.3 Engineering Change Orders. YYY will provide sixty (60) Days prior
written notice of proposed changes that affect the industrial design, form,
fit,
function or maintainability of the Products. No such changes may be made
without
XYZ 's written consent in the form of an agreed-to Engineering Change Order
("ECO"). If XYZ wishes to reject a proposed ECO, XYZ must provide
written
notice of rejection within thirty (30) Days after receipt of the proposed ECO.
If XYZ rejects an ECO, YYY will continue to provide Products without
implementing the proposed ECO. If either Party determines that implementation
of
an ECO is critical to the proper manufacture of Products or if such
implementation is required to satisfy government standards or for safety, the
Parties agree to waive the notice requirements of this Section 10 and work
cooperatively to resolve the implementation of the ECO. YYY will reasonably
notify XYZ of ECOs that do not affect the industrial design, form, fit,
function or maintainability of Products. YYY agrees to supply XYZ for
evaluation purposes with up to twenty-five (25) samples of family of Products
and a completed test plan that incorporates the agreed to ECO. Under no
circumstances shall XYZ resell any samples of the Product.
ZZZZ.
10.4 XYZ -Originated ECO. XYZ may request ECOs to correct deficiencies or
improve the Product. Such XYZ -originated ECOs shall be handled in accordance
with Section 10.3 above. If, however, XYZ requires YYY to implement a
XYZ -originated ECO solely for XYZ 's convenience (a "Convenience
ECO"), XYZ
will be responsible for any Parts rendered scrap or surplus solely as a result
of the Convenience ECO, provided that the implementation date of such
Convenience ECO has been agreed to by the Parties and YYY has provided XYZ
with reasonable written estimates of the scrap or excess. In addition, XYZ will
pay reasonable expediting charges to implement the Convenience ECO if XYZ
requires implementation faster than the normal lead times for the affected
Products.
AAAAA.
10.5 Changes to Parts/Suppliers. YYY will provide XYZ with sixty (60) Days
notice of proposed changes in Parts or suppliers, to provide XYZ an opportunity
to approve the new Parts or suppliers. XYZ will provide a response within
fifteen (15) Days after receipt of notice of the proposed change in Parts or
suppliers. If XYZ does not respond within fifteen (15) Days, such changes shall
be deemed to be accepted by XYZ .
BBBBB.
11.0 LICENSE NEGOTIATIONS
CCCCC.
Promptly after the Effective Date of this Agreement, the Parties shall discuss,
in good faith, the Parties' interest in negotiating a license agreement
covering
certain intellectual property of the Parties. The scope of and other terms and
conditions governing any such license shall be as mutually agreed upon by and
between the parties in writing.
DDDDD.
12.0 LICENSES TO XYZ
EEEEE.
12.1 Software. XYZ is granted a non-exclusive, royalty free, worldwide, right
and license, to use, reproduce and distribute the Product's Software, in binary
code form, by any method of distribution, solely in connection with XYZ 's
sales
and support of the Products and Licensed Products. YYY agrees to provide any
commercially released updates and modifications to the Software for the
Products
purchased by XYZ hereunder and the Licensed Product during the Term of the
Agreement. XYZ shall not reverse engineer, reverse assemble or otherwise derive
the source code of any Software provided hereunder and shall otherwise use and
permit its customers to use the Software solely as provided in the license
agreement provided by YYY with the Software.
FFFFF.
12.2 Customer Documentation. YYY agrees to provide XYZ with Product
documentation ("Documentation"). The structure and content of the
Documentation
will be as specified by XYZ . The
GGGGG.
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HHHHH.
Documentation shall be provided in PDF or HTML formats, unless otherwise
requested by XYZ . Any references to YYY in the Documentation will be
replaced by references to XYZ . XYZ may reproduce and distribute the
Documentation in hard copy or softcopy form as well as in electronic form on
bulletin boards. YYY agrees to provide Documentation to XYZ in the
following national languages: English, German, French, and Spanish. With
respect to translations, YYY 's obligation to modify the graphical user
interface ("GUI") and Help text is excluded.
IIIII.
12.3 Marketing Materials. YYY hereby grants to XYZ the
nonexclusive,
non-assignable, royalty-free right to use, possess, derive, copy, modify,
display, publish, and distribute YYY marketing materials; provided that all
applicable YYY copyright notices, licenses, and proprietary notices are
fully reproduced on each copy. YYY marketing materials shall be re-branded
"XYZ ". In addition, XYZ may not use the marketing materials licensed
under
this Section to position YYY 's branded version of Products as competitive
to XYZ 's branded version of Products.
JJJJJ.
12.4 Field Service Documentation. YYY hereby grants to XYZ the
nonexclusive, non-assignable, royalty-free right to use, possess, derive, copy,
modify, display, publish and distribute the YYY field service documentation
and information necessary to sell, distribute, lease and maintain Products and
Licensed Products (excluding such materials for HDDs); provided that such field
service documentation shall be used solely for XYZ 's internal purposes or that
of third party maintainers subject to confidentiality provisions at least as
restrictive as those set forth in the Agreement for the maintenance and upgrade
of the Products or Licensed Products sold, leased or distributed by or for XYZ
.
KKKKK.
12.5 Trademarks. During the term of this Agreement, YYY hereby
grants XYZ
a nonexclusive, non-assignable, royalty-free, worldwide right to use YYY
Trademarks in connection with advertising, promotion and sale of Products and
Licensed Products. "YYY Trademarks" shall mean those trademarks,
trade
names, service marks, slogans, designs, distinctive advertising, labels, logos
and other trade-identifying symbols as are, have been or will be developed and
used by YYY on the Products anywhere in the world and which YYY has a
right to license, upon which the Parties shall mutually agree in writing.
LLLLL.
12.6 Revocability of Licenses. Except for the Conditional
Manufacturing
License described in Section 12.7 below, the licenses set forth herein, to the
extent such licenses cover Product purchased by XYZ prior to the expiration or
termination of this Agreement, shall continue for a period of five (5) years
after the expiration or termination of the Agreement. The licenses set forth
herein shall otherwise terminate concurrently with the expiration or
termination
of this Agreement or shall terminate immediately in the event the licensee
files
a voluntary petition in bankruptcy, or under any similar insolvency law makes
an
assignment for the benefit of licensee's creditors, or if any involuntary
petition in bankruptcy or under any similar insolvency law is filed against
licensee or a receiver is appointed for, or a levy or attachment is made
against, substantially all of such licensee's assets.
MMMMM.
12.7 Conditional Manufacturing License.
NNNNN.
12.7.1 Conditional License Grant. Subject to Section 12.7.2 of this Agreement,
YYY hereby grants to XYZ a limited, personal, non-assignable, worldwide,
nonexclusive, royalty-bearing license to make, have made, use, have used,
manufacture and have manufactured Products (Licensed Products) and to test,
assemble, repair, modify (hardware only) and sell to XYZ 's customers the
Licensed Products (the "Conditional Manufacturing License"). In
addition, the
grant of manufacturing rights includes the right of XYZ to procure directly
from YYY , or any YYY contract manufacturer, any or all of the parts or
assemblies related to the Products. Upon XYZ 's exercise, as described in
Section 12.7.2 below, of the Conditional Manufacturing License, YYY shall
immediately provide notice to such contract manufacturers permitting them to
sell such parts or assemblies directly to XYZ .
OOOOO.
12.7.2 Conditional Exercise by XYZ . XYZ may exercise the
Conditional
Manufacturing License granted in Section 12.7.1 above only: i) in the event
that YYY 's Revolver Inventory is materially out of stock for twenty-one
(21) consecutive Days, for any reason not caused by XYZ or a Force Majeure
event; ii) in the event that a majority interest of the equity or assets of
YYY is transferred to an unrelated third party, except through IPO; or iii)
in the event that YYY attempts to assign the Agreement without XYZ 's prior
written consent, except to YYY Corporation. In the event XYZ exercises the
Conditional Manufacturing License because YYY 's Revolver is materially out
of stock, the License shall be limited in scope only to the Products that were
out of stock. XYZ shall notify YYY in writing of the date on which it
intends to exercise the Conditional Manufacturing License. The Conditional
Manufacturing License shall expire eighteen (18) months after the date it is
exercised by XYZ .
PPPPP.
12.7.3 Escrow. Within ninety (90) Days after the Effective Date, the Parties
shall enter into an agreement (the "Escrow Agreement") with a third
party
escrow agent, at XYZ 's expense. YYY shall provide to such escrow agent all
specifications, designs, discoveries, inventions,
QQQQQ.
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RRRRR.
modifications, computer programs (in binary and source form), technical
information, procedures, improvements, developments, drawings, notes,
documents,
information, manufacturing methods and materials, in any form, that YYY then
currently uses to manufacture Products purchased hereunder by XYZ , excluding
any HDD information (the "Manufacturing Packages"); provided,
however, that
YYY shall not be obligated to provide any information related to the design,
development, or manufacture of HDDs. YYY shall provide updates to the
Manufacturing Packages as necessary, but no less frequently than every three
(3)
months. The Manufacturing Packages shall be provided in such form and media as
may be implemented using XYZ 's then existing systems, to the extent YYY is
reasonably able to do so. The Escrow Agreement shall provide that the escrow
agent shall deliver to XYZ the Manufacturing Packages immediately upon XYZ 's
bonafide election to exercise, as described in Section 12.7.2 above, the
Conditional Manufacturing License. YYY shall reasonably assist XYZ with the
installation and implementation of such Manufacturing Packages in the event XYZ
exercises the Conditional Manufacturing License. The Parties shall equally
share
the costs of such implementation. XYZ shall not use any Software source code
for any purpose other making bug fixes to the Software that are necessary to
enable XYZ to ship the Licensed Product during the eighteen (18) month term of
the Conditional Manufacturing License. YYY shall own all right, title and
interest in and to such bug fixes.
SSSSS.
12.7.4 Sublicensing. The license in Section 12.7.1 and Manufacturing Packages
may, at XYZ 's sole discretion, be sublicensed to a contract manufacturer, that
is not a competitor of YYY , selected by XYZ to assist XYZ in the
manufacture or preparation of the Licensed Products; provided, however, that
XYZ shall impose confidentiality and Intellectual Property restrictions on the
contract manufacturer that are at least as restrictive as those set forth in
Section 17 and Non-Disclosure Agreement #3688. Any sublicense granted by XYZ
pursuant to this Section 12.7.4 shall be in writing and contain terms that
otherwise protect YYY 's right, title and interest in and to the Product and
Software at least to the extent of this Agreement. XYZ hereby agrees to ensure
the performance of any contractor manufacturer receiving a sublicense from XYZ
.
TTTTT.
12.7.5 Per Unit Royalty for Licensed Products. Subject to the royalty
accounting
and payment provisions of Section 14, XYZ shall pay YYY a per unit royalty
for each Licensed Product sold by XYZ in an amount that is equal to [*]
UUUUU.
12.8 License Exclusions. Nothing contained in this Agreement shall be construed
as:
VVVVV.
(a) conferring by implication, estoppel or otherwise any license or right
except
the licenses or rights expressly granted to a Party hereunder;
WWWWW.
(b) an obligation to modify the design or operation of any part of the
Intellectual Property licensed under this Agreement;
XXXXX.
(c) an obligation to bring or prosecute actions or suits against third parties
for infringement;
YYYYY.
(d) an obligation to grant by implication, estoppel or otherwise a
manufacturing
license to XYZ for any YYY Product other than as expressly stated herein;
ZZZZZ.
(e) impairing any right of YYY or XYZ to market, directly or indirectly,
other products or services competitive with those offered by YYY or XYZ
YYY and XYZ shall be free to market, directly or indirectly, to other
customers; or
AAAAAA.
(f) implicitly limiting XYZ 's freedom and flexibility to distribute and market
the Products and Licensed Products, including, without limitation, the decision
whether to distribute or discontinue distribution of the Products or Licensed
Products; or
BBBBBB.
(g) transferring ownership of any intellectual property in the Software from
YYY .
CCCCCC.
12.9 All licenses and other rights granted under or pursuant to this Agreement
are, and shall otherwise be deemed to be, for purposes of Section 365(n) of the
U.S. Bankruptcy Code, or replacement provisions thereof (the "Code"),
licenses
of rights to "intellectual property" as defined under Section 101 of
the Code.
The Parties hereto agree that the licensee or holder of such rights under this
Agreement shall retain and may fully exercise all of its rights and elections
under the Code.
DDDDDD.
*Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has
been requested with respect to the omitted portions.
EEEEEE.
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FFFFFF.
13.0 Indemnification.
GGGGGG.
If a third party claims that any Product, Software or Licensed Product
("Indemnified Item") infringes that party's patents, copyrights,
trademarks,
trade secrets or other intellectual property rights, YYY will defend,
indemnify and hold XYZ harmless against that claim at YYY 's expense and pay
all costs, damages, and attorney's fees that a court finally awards, provided
that XYZ : (a) provides reasonable notice to YYY of the claim; and (b)
allows YYY to have sole control (XYZ , however, may be represented at its
expense by counsel of its own choice), and reasonably cooperates with YYY in
the defense and any related settlement negotiations. If such a claim is made or
appears likely to be made about an Indemnified Item in XYZ 's inventory, XYZ
agrees to permit YYY to either enable XYZ to continue to market the
Indemnified Item, or to modify or replace it. If YYY determines that none of
these alternatives is reasonably available, XYZ will return the Indemnified
Item freight collect at YYY 's request for a credit at the purchase price.
YYY has no obligation to the extent any claim is based on: (i) any
modification of an Indemnified Item by or on behalf of XYZ or its use in other
than its specified operating environment; or (ii) the combination, operation,
or
use of an Indemnified Item with any product, data, or apparatus that YYY did
not provide under this Agreement (this exclusion under (ii) does not include
infringement solely from the Indemnified Item, as opposed to its combination,
operation, or use with any product, data, or apparatus that YYY did not
provide under this Agreement); or (iii) infringement by a non-YYY product
alone as opposed to its combination with the Indemnified Item.
HHHHHH.
14.0 ROYALTY PAYMENTS AND AUDITS
IIIIII.
14.1 Royalty Payments. Royalties due to YYY under this Agreement shall
accrue at the time XYZ invoices a customer for a Licensed Product. XYZ shall
furnish a royalty report to YYY within thirty (30) Days after the end of
each of XYZ 's fiscal quarters for so long as royalties are due under this
Agreement. Such royalty reports shall specify the total amount of royalties
payable to YYY with respect to all Licensed Products sold, leased, licensed
or otherwise disposed of (excluding Licensed Products which are used by XYZ for
evaluation, testing, and demonstration purposes) by or on behalf of XYZ during
such XYZ fiscal quarter. Payments shall be provided at the same time royalty
reports are provided to YYY . All computations relating to determination of
the amount of royalties due shall be made in accordance with generally accepted
accounting principles. Each royalty report shall contain information in
sufficient detail to verify the accuracy of each royalty payment due and
payable
pursuant to this Agreement. Royalty payments due from XYZ to YYY for
Licenced Products shall be calculated in accordance with Section 12.7.5.
Royalty
reports and payment shall be made to YYY as follows:
JJJJJJ.
YYY Corporation
500 McCarthy Blvd.
Milpitas, CA 95035
Attn: Accounts Receivable
cc: Account Executive, XYZ
KKKKKK.
14.2 Royalty Records and Audits. XYZ shall keep adequate records of XYZ 's
sales and licensing of Licensed Products from which it shall be possible to
audit the accuracy of the royalties remitted to YYY pursuant to this
Agreement. YYY shall have the right, at mutually agreeable times during
normal working hours of XYZ , to examine such books and records for audit
purposes no more often than once each twelve (12) month period from the
execution of this Agreement. YYY shall provide XYZ with at least thirty
(30) Days advance notice of YYY 's intent to conduct an audit. Such audit
shall be performed at YYY 's expense by independent, nationally recognized
auditors selected by YYY and approved by XYZ . XYZ shall not unreasonably
withhold such approval. Audits will be conducted in such a manner as not to
interfere with XYZ 's normal business activities. Audits hall be conducted
pursuant to the confidentiality provisions of Section 17 of this Agreement and
NDA #3688. XYZ shall keep files and books of account containing the data
reasonably required for the full computation and verification of XYZ 's sale
sand royalties paid hereunder for two (2) years after the date of submission of
each royalty report.
LLLLLL.
15.0 BRANDING, MARKETING, FULFILLMENT, NRE AND SUPPORT
MMMMMM.
15.1 Branding. YYY will place the XYZ brand or the brand of a XYZ OEM
customer, on the product per XYZ 's ID specification. Any costs and expenses
associated with modifications required to support XYZ 's OEM customers will be
borne by XYZ or XYZ 's OEM customers. XYZ will provide scalable artwork to
YYY to enable the above requirement.
NNNNNN.
15.2 Marketing. YYY shall provide XYZ personnel access to a YYY
pre-sales support desk. YYY and XYZ shall participate in cooperative
demand generation activities, to be funded by a jointly funded market
development fund ("MDF"). XYZ shall be required to provide a detailed
marketing
plan showing how the MDF is to be utilized prior to disbursement of any funds
by
YYY . XYZ Product Marketing shall recommend that XYZ 's sales segments use
YYY 's minimum advertised pricing guidelines with respect to the Products.
Notwithstanding the above, XYZ 's sales segments shall be solely and
independently responsible for establishing end-user pricing to XYZ 's
customers.
OOOOOO.
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RRRRRR.
SSSSSS.
15.3 Fulfillment. The Parties agree to work together to develop an acceptable
alternative order entry and fulfillment process, at XYZ 's expense.
TTTTTT.
The Parties agree that the preferred fulfillment method would be a system where
XYZ would accept the customer order and pass the order specifics to YYY ,
including the customer name and ship-to address. YYY would then fulfill the
order within 48 hours of receipt from XYZ and ship the Product directly to the
XYZ customer. Customer returns will be handled by YYY issuing a RMA and
drawing from a XYZ -specific swap pool. YYY will ship an advance replacement
unit after taking credit card or order information to ensure return of a broken
unit. When YYY ships a replacement unit, YYY will provide an order
update to correct Service Tag information.
UUUUUU.
Alternatively, XYZ will place Orders with YYY as described in this
Agreement.
VVVVVV.
15.4 NRE. Unless otherwise agreed by the Parties, YYY will fully fund all
NRE for all Products sold to XYZ .
WWWWWW.
15.5 Support. XYZ will handle Level 1 service calls. YYY will handle level
2, level 3 and level 4 service calls, all of which shall be more fully
described
in a separate support agreement. YYY will fix in a timely manner all
Software bugs reported by XYZ .
XXXXXX.
YYY will provide support for Software to XYZ at no additional charge.
YYY will provide a blind FTP site for XYZ specific software downloads.
XYZ will provide a support page on the XYZ site with links to YYY 's blind
FTP site as needed. YYY agrees that XYZ may access and use the YYY
technical support database for the Product for support level analysis of the
Product.
YYYYYY.
YYY will develop a written Support Agreement to be approved by XYZ (the
"Support Agreement"). The Support Agreement will detail YYY 's
support
functions in each of five (5) phases of service:
ZZZZZZ.
(a) before Product launch;
AAAAAAA.
(b) in warranty and production by YYY ;
BBBBBBB.
(c) in warranty but out of production by YYY ;
CCCCCCC.
(d) out of warranty and production by YYY but within the period of time
described in Section 9.3 for each model of Product; and
DDDDDDD.
(e) out of warranty and production by YYY and outside the period of time
described in Section 9.3 for each model of Product.
EEEEEEE.
The Support Agreement will be updated by YYY , subject to XYZ 's approval,
once a year on the anniversary of XYZ 's approval of the original Support Plan.
FFFFFFF.
YYY will provide at no cost to XYZ all training reasonably necessary to
enable XYZ service technicians to repair Products in the field. Training
support will include without limitation repair, manuals and engineering
diagrams
of all Products and training courses on Product repair. Training courses will
be
held a minimum of once a quarter at YYY 's manufacturing locations. XYZ will
bear the expenses for XYZ 's service technicians to travel to and attend
training classes.
GGGGGGG.
15.6 Development Support. The Parties shall cooperate on device driver, file
system and microcode interfaces.
HHHHHHH.
16.0 PRODUCT WITHDRAWAL AND NEW PRODUCTS
IIIIIII.
16.1 Product Withdrawal. YYY will provide XYZ with at least ninety (90)
Days' prior written notice of the planned last date of manufacture of a Product
family. YYY will ship Product for all Orders that YYY has accepted
before the last date of manufacture. Subject to Product inventory after the
last
date of manufacture, YYY will accept Orders from XYZ for Products for an
additional three (3) months after the last date of manufacture. Additionally,
YYY will retain Parts for Products for the warranty period, plus two (2)
years from the date of the last sale of each model of Product to XYZ (or such
longer period as may be required by XYZ ). At the end of such period of time,
YYY will cooperate with XYZ to allow XYZ to make a final large volume
Order for Parts. If Parts supplied by third parties to this Agreement are not
available YYY will use YYY 's best commercial efforts to provide similar
Products with equivalent or better functionality at a commercially reasonable
price, not to exceed 10 percent of the price at which such Product or Part was
most recently sold to XYZ . XYZ shall comply with all provisions set forth in
each EOL letter issued by YYY to XYZ with respect to the Products and
Parts.
JJJJJJJ.
16.2 New Products Must Be Offered to XYZ . The Parties will share relevant
product roadmap information at least every three (3) months. During the term of
this Agreement, YYY will offer to sell to XYZ all YYY ......... Division
Corporation products developed, manufactured, distributed or sold directly to
end-users by YYY , or by YYY to YYY 's resellers. XYZ will have
access to such products early enough in the
KKKKKKK.
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LLLLLLL.
product development cycle to introduce Products simultaneously with YYY 's
introduction of such products to end-users to YYY 's resellers. If XYZ
agrees to purchase new products, the new products will be added to Attachment A
and will become Products subject to the terms and conditions of this Agreement.
YYY will make available and sell Products to XYZ prior to YYY 's FCS
date. Prior to the addition of a Product to Attachment A, the Parties will
agree
on a schedule for XYZ 's introduction of the Product to XYZ 's customers that
will include at a minimum the appointment of business and technical contacts
for
each Party to monitor compatibility issues and other Product release issues. In
the event that YYY is unable to comply with the terms of the agreed upon
schedule for Product introduction, including without limitation YYY 's
failure to meet the agreed upon Product launch date, the Parties will negotiate
in good faith, the amount, if any, that YYY will reimburse XYZ for all
direct costs, expenses and losses incurred by XYZ as a result of such
non-compliance. YYY will supply to XYZ prerelease versions of Products that
are added to this Agreement pursuant to YYY 's standard beta program, but in
no event later than any of YYY 's other customers.
MMMMMMM.
16.3 Training for New Products. Prior to the general
availability of a XYZ
Offering containing any new Product, the Parties will agree upon training that
YYY will provide to XYZ for sales, customer support and technical support.
YYY will obtain Microsoft Corporation's certification to the applicable
current PC specification and WHQL standards, if required, for the Products and
all other certifications required by XYZ .
NNNNNNN.
16.4 Ramp Up Plans. YYY will provide detailed ramp up plans
for all new
Products. YYY agrees to standardize all new Products for XYZ systems. XYZ
will be entitled to participate in all hardware and software design phases for
all new Products, and in the formulation and direction of YYY 's future
product and technical roadmaps.
OOOOOOO.
16.5 New Product Diagnostics. YYY will cooperate with XYZ to
develop
Product diagnostic specifications for all Products. YYY will provide to XYZ
manufacturing, customer and filed diagnostics complying with mutually agreed
upon diagnostic specifications at least ninety (90) Days prior to XYZ 's
shipment of a Product.
PPPPPPP.
16.6 Samples. As reasonably requested by XYZ , YYY will
provide to XYZ
at no charge a mutually agreed number of samples (stated in Attachment A) of
new
Products for XYZ 's validation, compatibility and test processes. Such Products
shall be delivered to XYZ as directed by the XYZ Strategic Commodity Manager.
QQQQQQQ.
17.0 CONFIDENTIAL INFORMATION
RRRRRRR.
Any confidential information that will be disclosed by either Party related to
this Agreement shall be disclosed pursuant to the terms and conditions of the
Non-disclosure Agreement #3688 between the Parties. The terms and conditions of
this Agreement shall be deemed to be confidential information. Neither Party
may
publicly release any information relating to this Agreement, including the
existence of this Agreement, or use the other Party's name (excluding routine
references to the Parties' customer-vendor relationship in marketing
literature,
sales calls and legally required filings) or names of the other Party's
officials, without, with respect to XYZ , first receiving the prior written
approval of XYZ 's Corporate Communications department and, with respect to
YYY , first receiving the prior written approval of an authorized
representative of YYY . No other department within XYZ is authorized to
consent to public releases of information. XYZ 's obligations of non-disclosure
with respect to the Manufacturing Packages shall be as set forth in the Escrow
Agreement.
SSSSSSS.
18.9 TERM AND TERMINATION
TTTTTTT.
18.1 [*] Term. The initial term of this Agreement is [*]
beginning on the
Effective Date. This Agreement will automatically renew for consecutive
additional one (1) year terms unless either Party notifies the other Party of
its intent to terminate the Agreement at least ninety (90) Days before the end
of the then-current term.
UUUUUUU.
18.2 Mutual Agreement Termination. If either Party desires to
terminate this
Agreement prior to the end of the initial term, the Parties agree to enter into
discussion of early termination.
VVVVVVV.
18.3 Termination for Cause. Either Party may, at its option
and upon written
notice to the other Party, terminate this Agreement if: (a) a material breach
of
this Agreement by the other Party is not remedies within thirty (30) Days after
the breaching Party's receipt of written notice of the breach; (b) the other
Party admits in writing its inability to pay its debts generally as they become
due, files a petition for bankruptcy or executes an assignment for the benefit
of creditors or similar document; (c) a receiver, trustee in bankruptcy or
similar officer is appointed for the other Party's property; or (d) or this
Agreement is assigned without the prior written consent of the other Party to
this Agreement.
WWWWWWW.
18.3 Effect of Termination. In the event of any termination
of this
Agreement, the provisions of this Agreement shall continue to apply to all
Orders accepted by YYY prior to the effective date of such termination. Upon
termination by either Party for cause, any monies
XXXXXXX.
*Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has
been requested with respect to the omitted portions.
YYYYYYY.
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ZZZZZZZ.
due to the other Party hereunder shall become promptly due and payable and any
tooling, loaned equipment or test fixtures provided by XYZ to YYY must be
promptly returned unless otherwise requested in writing by XYZ . Except in the
case of a material breach, termination of this Agreement shall not relieve
either Party of any obligation to make payments that may be owed to the other
Party under the terms of this Agreement or any other provisions of this
Agreement that survives pursuant to Section 23.13. Termination shall not
exclude other remedies for failure of a Party to perform its obligations.
AAAAAAAA.
19.0 LIMITATION OF LIABILITY
BBBBBBBB.
EXCEPT FOR THE SPECIFIC INDEMNITIES PROVIDED FOR IN THIS AGREEMENT, XYZ 'S
OBLIGATIONS WITH RESPECT TO THE SOFTWARE AND THE PARTIES' RESPECTIVE
OBLIGATIONS WITH RESPECT TO CONFIDENTIAL INFORMATION, THE PARTIES EXPRESSLY
AGREE THAT IN NO EVENT SHALL EITHER PARTY BE LIABLE OR RESPONSIBLE TO THE
OTHER PARTY FOR ANY INCIDENTAL, INDIRECT, PUNITIVE, SPECIAL OR CONSEQUENTIAL
DAMAGES WHATSOEVER, INCLUDING WITHOUT LIMITATION LOST PROFITS AND DAMAGES
RESULTING FROM LOSS OF USE OR LOST OR CORRUPTED DATA OR SOFTWARE EVEN IF SUCH
PARTY HAS BEEN ADVISED, KNEW OR SHOULD HAVE KNOWN OF THE POSSIBILITY THEREOF.
BOTH PARTIES EXPRESSLY WAIVE ANY CLAIMS DESCRIBED IN THE PRECEDING SENTENCE.
CCCCCCCC.
20.0 [*]
DDDDDDDD.
21.0 COMPLIANCE
EEEEEEEE.
21.1 The Parties, at their expense, will comply with all applicable laws,
orders and regulations of any governmental authority with jurisdiction over
their activities in connection with this Agreement and will furnish to each
other any information required to enable a Party to comply with applicable
laws or regulations related to the Products.
FFFFFFFF.
21.2 Import/Export Requirements. YYY will certify to, and mark Products and
packaging with, the country of origin for each Product so as to satisfy the
requirements of customs authorities of the country of receipt and any other
applicable laws. If any Products are imported, YYY will, at XYZ 's request,
either (i) allow XYZ to be the importer of record or (ii) provide XYZ with any
documents required to prove importation and to transfer any duty drawback
rights
to XYZ . YYY will not, directly or indirectly, export, re-export or
transship Products in violation of any applicable export control laws and
regulations promulgated and administered by the U.S. or the government of any
country with jurisdiction over the Parties or the transactions contemplated by
this Agreement ("Export Laws"). In addition, YYY agrees to indemnify,
defend
and hold XYZ harmless from any loss, expense, penalty or claim against XYZ due
to YYY 's violation or alleged violation of any Export Laws with respect to
Products sold to XYZ hereunder. YYY 's obligation to indemnification
pursuant to his Section 21.2 shall be subject to the limitations set forth in
Section 13.0(a) and (b). XYZ may audit YYY 's compliance with this Section
in accordance with the procedures set forth in 23.1 of this Agreement. Unless
otherwise advised in writing prior to shipment YYY represents and warrants
that all Products are freely exportable to all countries other than those which
are generally subject to U.S. embargo. YYY agrees, (a) immediately upon
request by XYZ , to provide any and all information reasonably required to
comply with all such laws for the importation and exportation of the Products,
including without limitation, applicable Export Control Classification Numbers;
and (b) immediately upon learning of any restrictions or the importation or
exportation related to the Products, to provide such information to XYZ in
writing.
GGGGGGGG.
21.3 YYY is responsible for obtaining and maintaining all necessary U.S. and
foreign regulatory approvals for the Product(s). Additionally, YYY will
assist XYZ in addressing problems with its Products that contribute to a XYZ
system's failure to meet any regulatory requirement due to YYY Products
being integrated into the XYZ system.
HHHHHHHH.
22.0 NOTICES
IIIIIIII.
Any notice given under this Agreement must be in writing in English and
delivered by certified or registered mail, return receipt requested, postage
prepaid and addressed as follows or to such other addresses as may be
designated by notice from one Party to the other, all such notices being
effective on the date received or, if mailed as set forth above, three (3) days
after the date of mailing. The Parties may only change notice addresses by
following the notice provision in this Section.
JJJJJJJJ.
*Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has
been requested with respect to the omitted portions.
KKKKKKKK.
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14
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CONFIDENTIAL
XYZ CONFIDENTIAL
MMMMMMMM.
If to XYZ
:
If to YYY :
NNNNNNNN.
XYZ Product L.P. YYY …..
One XYZ
Way
Corporation
Round Rock, TX 78682 ……….
Attn: Vice President, ………
Worldwide Procurement Attn: Account Executive,
cc: General
Counsel
XYZ
cc: Manager, Corporate
Contracts
OOOOOOOO.
with a copy to:
YYY Corporation
….
………
Deputy General Counsel,
General Legal
PPPPPPPP.
23.0 MISCELLANEOUS
QQQQQQQQ.
23.1 Audits. XYZ may audit the portions of YYY 's manufacturing locations or
corporate headquarters that relate to Products, and review and copy any
information reasonably relevant to the purpose of any audit permitted by this
Agreement. In addition, XYZ may: (a) inspect Products at any stage of
production or testing; (b) review YYY 's facilities and quality control
procedures; and (c) accompany XYZ customers on visits to YYY 's
manufacturing locations. XYZ shall have the right, at mutually agreeable times
during normal working hours of YYY , to examine such books and records for
audit purposes no more often than once each twelve (12) month period from the
execution of this Agreement. For financial audits, XYZ shall provide YYY
with at least sixty (60) Days advance notice of XYZ 's intent to conduct an
audit. Other audits shall be conducted upon prior reasonable notice. Such audit
shall be performed at XYZ 's expense. For financial audits and the most favored
customer guarantee, such audits shall be performed by independent, nationally
recognized auditors selected by XYZ and approved by YYY . YYY shall not
unreasonably withhold such approval. Audits will be conducted in such a manner
as not to interfere with YYY 's normal business activities. Audits shall be
conducted pursuant to the confidentiality provisions of Section 17 of this
Agreement and NDA #3688.
RRRRRRRR.
23.2 Entire Agreement. This Agreement constitutes the entire integrated
agreement between the Parties with respect to its subject matter and supersedes
all prior written or oral understandings or agreements relating to the same
between the Parties. The terms of this Agreement will control and supersede the
terms on any XYZ Order or YYY Order acknowledgment, except to the extent
that the XYZ Order form includes terms specific to an Order such as delivery
schedules, lead times and Product specifications. In those cases, YYY will
be bound to Order-specific terms as stated in Section 6 of this Agreement.
Unless otherwise expressly set forth in an Addendum, Exhibit, Attachment or
Schedule, as so designated, in the event of a conflict between this Master
Purchase Agreement and any Addenda, Exhibit, Attachment or Schedule, the terms
of this Master Purchase Agreement shall prevail.
SSSSSSSS.
23.3 Modification by Writing Only. No modification of this Agreement, including
Attachments, will be binding on either Party unless and until the modification
is set forth in a writing specifically referencing this Agreement and signed by
an authorized agent of each Party (for XYZ , Vice President of World Wide
Procurement level or above; for YYY , Vice President level or above). Such
modification shall be limited to the specific situation for which it is given.
No other action or failure to act (including inspection, failure to inspect,
acceptance of late deliveries, or acceptance of or payment for any Products)
will constitute a waiver of any rights.
TTTTTTTT.
23.4 Waiver of Breach. The waiver by either Party of a breach of any provision
of this Agreement by the other Party shall not operate or be construed as a
waiver of any subsequent breach of this Agreement.
UUUUUUUU.
23.5 No Requirements Contract. This Agreement is not a requirements contract.
By
entering into this Agreement, XYZ does not bind itself to purchase any minimum
or certain quantity of Products. XYZ reserves the right to, and YYY agrees
that XYZ may, purchase similar or identical Products from other suppliers.
Furthermore, YYY agrees to cooperate and work with XYZ and any other
suppliers that XYZ may engage in connection with the provision of Products.
VVVVVVVV.
23.6 Independence of the Parties. XYZ and YYY are independent contractors.
Neither Party will make any warranties or representations or create or assume
any obligations or liabilities of any kind on the other's behalf. Neither Party
is, nor will claim to be, a legal representative, partner, joint venturer,
franchisee, agent or employee of the other Party. Each Party is responsible for
the direction and compensation of, and is liable for the actions of, its
employees.
WWWWWWWW.
23.7 Section Headings. The Section headings and the Table of Contents in this
Agreement are for convenience purposes only and shall not affect interpretation
of this Agreement.
XXXXXXXX.
23.8 Drafting. This Agreement was, and shall be deemed for all purposes to have
been, drafted by both Parties.
YYYYYYYY.
23.9 Governing Law and Venue. This Agreement shall be governed by the
substantive laws of the State of New
ZZZZZZZZ.
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York. The United Nations convention on the Sale of Goods shall not apply. If
XYZ brings an action against YYY related to this Agreement the venue shall
be the state or federal courts of Santa Clara County, California. If YYY
brings an action against XYZ related to this Agreement the venue shall be the
state or federal courts of Travis County, Texas.
BBBBBBBBB.
23.10 Assignment. This Agreement may not be assigned by either
Party, in whole
or in part. If either Party makes any attempt to assign this Agreement without
the other Party's written consent, the nonassigning Party will have the option
to immediately terminate this Agreement or exercise the Conditional
Manufacturing License described in Section 12.7.2, if applicable. No permitted
assignment or subcontract by a Party shall relieve such Party of any
obligations
hereunder. An assigning Party shall always remain jointly and severally liable
with any assignees under this Agreement.
CCCCCCCCC.
23.11 Force Majeure. Neither Party shall be liable to the other
Party for any
failure to perform any of its obligations hereunder during any period in which
such performance is delayed by fire, flood, war, embargo, strike, riot or the
intervention of any governmental authority or similar circumstances (a
"Force
Majeure"). In such event, however, the delayed Party must: (a) promptly
provide
the other Party with written notice of the Force Majeure; and (b) use its best
efforts to resume or commence performance under this Agreement. The delayed
Party's time for performance will be excused for the duration of the Force
Majeure, but if the Force Majeure event lasts longer than forty-five (45) Days,
the other Party may immediately terminate this Agreement.
DDDDDDDDD.
23.12 Severability. Whenever possible, each provision of this
Agreement will
be interpreted in such a manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be illegal, invalid or
unenforceable by any law, rule, order or regulation of any government or by the
final determination of any state, federal or foreign court, such invalidity
shall not affect the enforceability of any other provisions not held to be
invalid. Furthermore, in lieu of such illegal, invalid or unenforceable
provision, to the extent possible, there shall be added automatically as part
of
this Agreement a valid provision which is similar in terms.
EEEEEEEEE.
23.13 Survival. The provisions of Section 2 (Definitions), Section
5 (Prices
and Payments), Section 8 (Warranties), Section 10 (Epidemic Failure, Product
Hazards and Engineering Changes), Section 12 (Licenses to XYZ ) but only to the
extent explicitly provided therein), Section 12 (Indemnification), Section 14
(Royalty Payments and Audits) (but only to the extent explicitly provided
therein), Section 17 (Confidential Information), Section 19 (Limitation of
Liability), Section 21.2 (Import/Export Requirements), Section 23
(Miscellaneous) and Attachment A (Material Product Terms) shall survive any
termination or expiration of this Agreement and shall continue to bind the
Parties and their permitted successors and assigns.
FFFFFFFFF.
23.14 Remedies Not Exclusive. Except as may be otherwise provided
in this
Agreement, the rights or remedies of the Parties hereunder are not exclusive
and
either Party shall be entitled alternatively or cumulatively to, subject to the
other provisions of this Agreement, damages for breach, an order requiring
specific performance of any other remedy available at law or in equity.
GGGGGGGGG.
23.15 Good Faith Dispute Resolution. Before either Party initiates
a lawsuit
or other legal proceeding against the other Party relating to this Agreement,
the Parties agree to work in good faith to resolve all disputes and claims
arising out of or relating to this Agreement, the Parties' performance under it
or a breach of this Agreement. Either Party may request, after informal
discussions have failed to resolve a dispute or claim, that each Party
designate
an officer (or other management employee with authority to bind the Party) to
meet in good faith and attempt to resolve the dispute or claim. During their
discussions, each Party will honor the other's reasonable requests for
information relating to the dispute or claim. This paragraph will not apply if
(i) the expiration of the statute of limitations for a cause of action is
imminent, or (ii) injunctive or other equitable relief is necessary to mitigate
damages.
HHHHHHHHH.
23.16 YYY will maintain accurate and legible records for a period
of two
(2) years and will grant to XYZ reasonable access to and copies of any
information reasonably requested by XYZ with respect to YYY 's performance
under this Agreement.
IIIIIIIII.
23.17 XYZ shall have full freedom and flexibility in its decisions
concerning
the distribution and marketing of the Product(s), including without limitation
the decision of whether or not to distribute or discontinue distribution of the
Product(s). XYZ does not guarantee that its marketing, if any, of the
Product(s) will be successful. XYZ may distribute/sell the products on a
stand-alone basis or in conjunction with a system sale or lease.
JJJJJJJJJ.
23.18 Offset Credit Program. Orders issued by XYZ pursuant to this
Agreement
are placed with the expectation of potential acquisition of credit for current
and/or anticipated future offset obligations of XYZ , Del Computer Corporation
or XYZ Computer Corporation's subsidiaries or affiliates, or their designated
assignees to various governments around the world. Supplier agrees to reasonably
assist XYZ , XYZ Computer or XYZ Computer Corporation's subsidiaries or
affiliates, or their designated assignees in their efforts to secure offset
credit from these governments in an amount equal to the value of
KKKKKKKKK.
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the applicable in-country content of the orders placed under this Agreement.
MMMMMMMMM.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement, including
its Attachment A, to be executed by their duly authorized representatives as of
the day and year first written herein.
NNNNNNNNN.
YYY
:
XYZ :
OOOOOOOOO.
By: [/s/ SIGNATURE
ILLEGIBLE] By: [/s/
SIGNATURE ILLEGIBLE]
-------------------------------
------------------------------------
(Authorized
Signature)
(Authorized Signature)
PPPPPPPPP.
Title: VP/GM .........
Corp
Title: ….. Enterprise Products Group
----------------------------
---------------------------------
QQQQQQQQQ.
Date:
………0
Date: ……..
-----------------------------
----------------------------------
RRRRRRRRR.
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SSSSSSSSS.
ATTACHMENT A
TTTTTTTTT.
TO
UUUUUUUUU.
MASTER OEM PROVIDER AGREEMENT
VVVVVVVVV.
MATERIAL PRODUCT TERMS
WWWWWWWWW.
This Attachment A to the Agreement states the Parties' agreement on material
terms related to the purchase and sale of Products under the Agreement.
Capitalized terms in this Agreement shall have the meanings as defined in the
Agreement. All terms and conditions of the Agreement, including the procedures
for modification of this Attachment, control this Attachment.
XXXXXXXXX.
1. PRODUCTS
YYYYYYYYY.
Under the terms of the Agreement and this Attachment, XYZ may order, and when
XYZ 's Order is accepted, YYY will sell Products to XYZ as specified below
or as scheduled in an addendum to this Attachment:
ZZZZZZZZZ.
All agreed to prices are not-to-exceed prices. The initial pricing, effective
July 1, 2000 shall be as follows:
AAAAAAAAAA.
<CAPTION>
Model
Pricing (U.S. Dollars)
-----
----------------------
[*]
[*]
[*]
[*]
[*]
[*]
[*]
[*]
BBBBBBBBBB.
PRODUCT QUALITY GOODS
CCCCCCCCCC.
A separate detailed Quality Agreement will be developed by YYY and XYZ .
DDDDDDDDDD.
3. MANUFACTURING LOCATIONS AND SLCs
EEEEEEEEEE.
The Parties identify the following manufacturing locations in accordance with
Section 4 of the Agreement.
FFFFFFFFFF.
YYY :
--------
[*]
[*]
[*]
[*]
[*]
XYZ :
-----
[*]
[*]
[*]
GGGGGGGGGG.
XYZ 's manufacturing facilities in Brazil and China shall be supported for
Products sold under this Agreement in the same manner that YYY supports HDD
and tape drive products sold to XYZ under separate agreements.
HHHHHHHHHH.
In addition, XYZ and YYY agree to use the established SLCs as follows:
IIIIIIIIII.
*Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has
been requested with respect to the omitted portions.
JJJJJJJJJJ.
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XYZ CONFIDENTIAL
KKKKKKKKKK.
........., Texas
Nashville, Tennessee
Limerick, Ireland
Penang, Malaysia
LLLLLLLLLL.
4. FRAME ORDER FLEXIBILITY
MMMMMMMMMM.
XYZ has the flexibility to increase or decrease frame Orders as follows:
NNNNNNNNNN.
Days from Planned Delivery to
XYZ Maximum Percentage of
Order Quantity
----------------------------------
------------------------------------
0 -
14
[*]
15 -
30
[*]
31
+
[*]
OOOOOOOOOO.
XYZ agrees to allow YYY a sixty (60) Day compliance period, from the first
date of shipment to XYZ . In order to ensure that YYY can meet acceleration
requests, YYY agrees to maintain a safety stock for certain Parts as set
forth below.
PPPPPPPPPP.
Part
Weeks of Supply
----
---------------
HDDs
2
QQQQQQQQQQ.
5. PAYMENT AND DELIVERY TERMS
RRRRRRRRRR.
Products must be delivered to XYZ in accordance with the following terms:
SSSSSSSSSS.
Delivery Terms. Terms of sale and delivery of Products to XYZ are F.O.B. XYZ
SLC. Title and risk of loss shall pass to XYZ upon delivery by YYY to
XYZ 's manufacturing location. Charges for carriage on YYY 's own vehicles
shall not exceed reasonable commercial rates.
TTTTTTTTTT.
6. GENERAL SERVICE OBLIGATIONS
UUUUUUUUUU.
In addition to YYY 's specific service and support obligations in the
Agreement, YYY agrees to provide the following additional general services
for the Products during the term of the Agreement.
VVVVVVVVVV.
6.1 Shipping Reports. On a weekly basis,
YYY will provide shipping
reports for each XYZ manufacturing location, including reference to the
relevant Order, quantity shipped and shipping documentation. YYY and XYZ
will reasonably agree on the information included in shipping reports. XYZ
will designate Recipients of the shipping reports at each manufacturing
location.
WWWWWWWWWW.
6.2 Long Term Service Goal Recognition. YYY
acknowledges that XYZ 's
long term goals include: (a) shorting lead-times for the Products, (b)
increasing volume flexibility, (c) instituting direct shipment from YYY to
XYZ 's customers, (d) achieving ongoing cost reductions, and (e) achieving
specific quality goals, and continuous quality improvement. YYY agrees to
cooperate with XYZ in working toward achieving these goals.
XXXXXXXXXX.
7. EXCLUSIVITY.
YYYYYYYYYY.
[*]
ZZZZZZZZZZ.
*Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has
been requested with respect to the omitted portions.
AAAAAAAAAAA.
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CONFIDENTIAL
XYZ CONFIDENTIAL
CCCCCCCCCCC.
8. XYZ AFFILIATES.
DDDDDDDDDDD.
The XYZ affiliates listed below may purchase Products under the terms of the
Agreement:
EEEEEEEEEEE.
None at this time.
FFFFFFFFFFF.
9. SAMPLES.
GGGGGGGGGGG.
YYY shall provide up to twenty-five (25) samples of each Product family to
XYZ , at no charge.