\nEnd of Month
\n– ——————————————————————————————————–<\/p>\n Install Base ** ** ** **
\n– ——————————————————————————————————–<\/p>\n
Impact Errors ** ** ** **
\n– ——————————————————————————————————–<\/p>\n
– ——————————————————————————————————–<\/p>\n
Failure Rate **
\n– ——————————————————————————————————–
\n<\/c><\/c><\/c><\/c><\/s><\/caption>\n<\/table>\n
Impact Error measurements for Kodiak will not count
\n toward any criteria until the earlier of: (i) the first
\n quarter in which ** units of Kodiak have been
\n installed by IBM, or (ii) the second quarter of 1997,
\n provided that at least ** units have been installed by
\n IBM as of the last day of such quarter.<\/p>\n
Impact Error measurements for Iceberg will not count
\n toward any criteria until ** units of Iceberg have
\n been installed by IBM.<\/p>\n
The RAS measurements shall exclude impacts or failures
\n of Products where a microcode or engineering change is
\n available which, if installed, would have prevented the
\n impact or failure from occurring; provided, however,
\n that such microcode or engineering change was made
\n available by StorageTek for<\/p>\n
– ———————————–<\/p>\n
** Confidential portions omitted and filed separately with the Securities
\n and Exchange Commission under an application for confidential treatment.<\/p>\n
25
\n 33
\n installation pursuant to a nonemergency (i.e., generally
\n distributed) engineering change at least three (3)
\n months prior to the date of an Impact Error or Service
\n Call. The RAS measurements will exclude any Impact
\n Errors and Service Calls that arise from ** concurrent
\n Drive failures in the same array, and any Service Calls
\n and Impact Errors for units of Iceberg and Kodiak
\n installed as part of the ESP, as defined in the SOW.<\/p>\n
For the first ninety (90) days following the
\n availability of a Major Enhancement, IBM will exercise
\n reasonable efforts to install within 30 days engineering
\n changes that StorageTek designates as “critical.”<\/p>\n
Calculations of the actual Service Call Rate and Error
\n Rate will be made based on U.S. installations only.<\/p>\n
b. Error Free Installation Criteria. StorageTek shall
\n maintain a ** Error Free Installation rate for
\n Products and Upgrades (separately calculated) until the
\n date on which IBM no longer markets Products and
\n Upgrades. These measurements will be calculated
\n separately for Products and Upgrades. This rate assumes
\n that an average IBM-customer subsystem installation is
\n comprised of an Iceberg subsystem, or a Kodiak control
\n unit and one connecting storage cabinet. If the average
\n IBM-customer installation for the Kodiak Product
\n involves more than one connecting storage cabinet, then
\n the ** rate for Kodiak will be reduced by ** for
\n each connecting storage cabinet in calculating such
\n average.<\/p>\n
c. Levels for Future Functions. Features or functions
\n added after the initial shipment in volume of Iceberg
\n and Kodiak will be measured against specific
\n reliability, availability and service criteria that is
\n to be documented and addressed in each applicable
\n product development plan and related specification for
\n the future feature or function, but in any event they
\n must meet the Iceberg and Kodiak criterion as specified
\n herein.<\/p>\n
d. Guardband. StorageTek shall not be considered to be
\n failing to meet the criterion unless the percentage by
\n which IBM’s actual measurements exceeds the criterion is
\n at least higher than the Guardband percentage set forth
\n above in Section 9.3a for Service Calls or Impact
\n Errors.<\/p>\n
e. Action Plan. If StorageTek fails to meet the Service
\n Call Rate, Impact Error Rate, or Error Free Installation
\n Rate, then StorageTek shall promptly investigate the
\n cause of the failures, and generate and provide to IBM
\n within ten (10) days a root cause failure analysis that
\n describes the cause of the failures. StorageTek will
\n promptly develop and implement an action plan acceptable
\n to IBM to resolve such failures, which plan shall
\n include remedies for failure to<\/p>\n
– ———————————–<\/p>\n
** Confidential portions omitted and filed separately with the Securities
\n and Exchange Commission under an application for confidential treatment.<\/p>\n
26
\n 34
\n meet the Service Call Rate, Impact Error Rate, or Error
\n Free Installation Rate in such action plan.<\/p>\n
StorageTek shall provide all support necessary to meet
\n an agreed upon repair turnaround time that is
\n established in the action plan to maintain IBM’s
\n customers’ satisfaction. StorageTek’s plan may include,
\n but is not limited to increased repair capacity (i.e.,
\n labor, equipment, facilities); expedited freight; and
\n providing new, repaired and\/or upgraded buffer stock to
\n IBM’s stocking locations, distributors and customer
\n sites.<\/p>\n
f. Price Reduction for FRU Costs. StorageTek shall provide
\n a price reduction to IBM ** after the date of last
\n Delivery of each type of Products in an amount that is
\n equal to ** (“Excess FRU Cost”). The calculation of
\n this price reduction shall specifically exclude ** .
\n The price reduction provided hereunder may ** . Any
\n claim to such price reduction will be deemed waived if
\n not made by IBM no later than ** days after the **
\n in which such Excess FRU Cost occurred.<\/p>\n
g. Reporting of FRU Consumption. IBM will provide a
\n quarterly report to StorageTek that summarizes
\n IBM-reported fault symptom information for the
\n consumption of FRUs in repair actions that are
\n undertaken by IBM in the United States. The summarized
\n information in this report will be adjusted by IBM to
\n exclude those items which qualify as Cost Exclusions.
\n This information is considered to be IBM confidential,
\n and StorageTek agrees to keep such information
\n confidential under the terms of the Agreement for
\n Exchange of Confidential Information between the
\n Parties.<\/p>\n
h. Credit for Labor Costs. The target for labor required
\n for repair actions (including ** during a Machine
\n Month. StorageTek shall provide a credit to IBM **
\n after the date of last Delivery of Product, upon
\n StorageTek’s receipt of appropriate supporting
\n documentation, for average labor costs per Machine Month
\n incurred by IBM in connection with repair actions that
\n are in excess of ** of that ** target (“Excess Labor
\n Cost”). The amount of this credit will be calculated by
\n multiplying the number of hours in excess of ** of
\n that ** target by a rate of ** per hour. In the
\n event that IBM incurs labor costs in excess of ** of
\n that ** target ** . The calculation of Excess Labor
\n Cost will be based on ** . The credit provided
\n hereunder may ** . Any claim to such credit will be
\n deemed waived if not made by IBM no later than **
\n days after the ** in which such Excess Labor Cost
\n occurred.<\/p>\n
i. Attainment. The RAS criteria will be separately
\n calculated and applied to Iceberg and Kodiak. If
\n StorageTek fails to meet the established RAS criteria<\/p>\n
– ———————————–<\/p>\n
** Confidential portions omitted and filed separately with the Securities
\n and Exchange Commission under an application for confidential treatment.<\/p>\n
27
\n 35
\n for Service Calls or Impact Error rates set forth in
\n Section 9.3a for Iceberg and Kodiak in any calendar
\n quarter (after taking into consideration the applicable
\n Guardbands), then StorageTek shall be given until the
\n end of the next succeeding quarter to implement the
\n action plan described in Section 9.3e, above.<\/p>\n
If the RAS criteria is missed again during such next
\n quarter, then **<\/p>\n
**<\/p>\n
9.4 QUALITY ASSURANCE<\/p>\n
StorageTek shall maintain at its sole cost and expense an
\n effective quality control system to maintain under continuous
\n control the entire process of design, manufacture and FRU
\n repairs, including the packaging and shipping of Equipment.
\n This system shall include checks to verify that all
\n requirements of the Specifications are satisfied.<\/p>\n
StorageTek is responsible to insure that workmanship,
\n construction and other standards specified by this system
\n satisfy the requirements of the Specifications. StorageTek’s
\n quality assurance shall be applied in a manner that will
\n maintain a consistent level of quality. StorageTek’s quality
\n control procedures and instructions shall be made available to
\n StorageTek’s employees, agents, contractors and
\n subcontractors, and to IBM, at the place of manufacture.<\/p>\n
Upon request, IBM may conduct inspections on a
\n non-interference basis at StorageTek’s manufacturing and
\n repair plants at any time during normal working hours provided
\n that, within 24 hours if an emergency situation exists or at
\n least three (3) days under non-emergency situations, prior
\n written notice is given by IBM. StorageTek will use
\n reasonable efforts to accommodate visits on shorter notice.
\n Such inspection may, at IBM’s option, include the witnessing
\n of tests and inspection of Equipment, whether completed or
\n not. StorageTek will promptly take appropriate corrective
\n action with regard to any deficiencies found by IBM and
\n reasonably agreed to by StorageTek.<\/p>\n
9.5 ISO 9000 CERTIFICATION AND USE OF SUBCONTRACTORS<\/p>\n
StorageTek shall maintain ISO 9000 certification, and use
\n statistical process control systems to monitor quality, for
\n its manufacturing and development processes for Equipment
\n supplied to IBM during the term of the Agreement.<\/p>\n
StorageTek shall ensure that its subcontractors that are
\n involved with the manufacturing and development of Equipment
\n shall maintain ISO 9000 certification,<\/p>\n
__________________________________<\/p>\n
** Confidential portions omitted and filed separately with the Securities
\n and Exchange Commission under an application for confidential treatment.<\/p>\n
28
\n 36
\n and use similar statistical process control systems to monitor
\n quality. StorageTek shall also ensure that its suppliers who
\n provide parts, assemblies or subassemblies that are used in the
\n manufacturing and development of Equipment shall maintain ISO
\n 9000 certification or use reasonable process control systems to
\n monitor quality.<\/p>\n
It is the sole responsibility of StorageTek to select and
\n manage its suppliers. StorageTek will make available to IBM,
\n upon request, a list of all suppliers that are used to supply
\n parts or components in StorageTek’s manufacturing process for
\n Equipment. StorageTek agrees to use its best efforts to
\n notify IBM of any additions or changes made in its suppliers.
\n If IBM reasonably determines that there is a supplier that may
\n be of concern to it, then StorageTek shall develop and
\n implement a mutually agreeable plan to address IBM’s concerns.<\/p>\n
StorageTek shall provide, upon written request by IBM, all
\n information pertaining to the measurements of quality that are
\n made for Equipment, and generated or derived from StorageTek’s
\n statistical process control systems.<\/p>\n
StorageTek is solely responsible for the quality of Equipment
\n supplied to IBM. Review and approval by IBM of StorageTek’s
\n or any of its subcontractor’s quality process systems does not
\n relieve StorageTek of this responsibility.<\/p>\n
StorageTek agrees to notify IBM of any planned significant
\n changes that may adversely affect its manufacturing processes
\n or could adversely affect the form, fit, function, quality,
\n reliability, serviceability or safety of the Equipment to be
\n supplied to IBM no later than ninety (90) days before planned
\n implementation.<\/p>\n
10. PRODUCT LEAD TIMES AND FORECAST<\/p>\n
10.1 IBM will provide a monthly build forecast to StorageTek for a
\n ** period (or a period equal to the remaining term of this
\n Agreement if less than ** ). The current quarter forecast
\n will be broken down by week and by Delivery location.
\n Volumes, specified in units of Product and Upgrades by
\n Delivery location, for the quarter following the then-current
\n quarter will be established and provided to StorageTek no
\n later than ** prior to the start of any given quarter. At
\n such time, the forecast for the upcoming quarter will be
\n binding, subject to the quarterly volume modifications
\n referred to in Sections 10.2 and 10.3. Except as otherwise
\n provided in the preceding sentence, volume forecasts are
\n provided as good faith estimates of IBM’s anticipated
\n requirements for Products and Upgrades for the periods
\n indicated based on current market conditions and do not
\n constitute commitments to purchase any fixed quantity of
\n Products.<\/p>\n
– ———————————-<\/p>\n
** Confidential portions omitted and filed separately with the Securities
\n and Exchange Commission under an application for confidential treatment.<\/p>\n
29
\n 37
\n 10.2 StorageTek agrees to supply, and IBM agrees to take Delivery
\n of, during any current quarter, and to pay in accordance with
\n Section 7, above, for not less than the Minimum Percentage (as
\n shown in the table below) of the units forecasted as of the
\n date the volumes became binding as provided in Section 10.1.
\n StorageTek agrees to use the Remainder Percentage (as shown in
\n the table below) to satisfy the next quarter’s orders.
\n StorageTek will hold additional units in excess of the
\n Remainder Percentage provided that IBM purchases and pays for
\n such additional units. Any units of inventory not required
\n under this section to be purchased and delivered in the
\n then-current quarter will be applied to and delivered to
\n fulfill the next-following quarter’s volume requirements
\n before any new orders for such next-following quarter are
\n fulfilled.<\/p>\n
1996 1Q-3Q 1997 4Q 1997-end
\n —- ———- ———–
\n Minimum Percentage ** ** **
\n Remainder Percentage ** ** **<\/p>\n
With ** prior written notice, IBM may elect to adjust the
\n flexibility for ** to correspond to the other elements of
\n the above table, as well as the Maximum Percentage described
\n for the same quarters in Section 10.3, below, by changing the
\n payment terms set forth for those quarters in Section 7.10
\n from 45 to 30 days.<\/p>\n
Initial purchases of Iceberg Product shall exclusively be **
\n until such time as IBM has purchased up to **<\/p>\n
10.3 IBM may also require StorageTek to deliver during the current
\n quarter, for which IBM shall pay in accordance with Section 7,
\n above, up to the Maximum Percentage as shown in the table
\n below of the units forecasted as of date the volumes became
\n binding as provided in Section 10.1, except as adjusted as set
\n forth in the penultimate paragraph of Section 10.2, above.<\/p>\n
Q4 1996 1Q-3Q 1997 4Q 1997-end
\n ——- ———- ———–
\n Maximum Percentage ** ** **<\/p>\n
– ———————————–<\/p>\n
** Confidential portions omitted and filed separately with the Securities
\n and Exchange Commission under an application for confidential treatment.<\/p>\n
30
\n 38
\n 10.4 CURRENT QUARTER<\/p>\n
Subject to Sections 10.2 and 10.3, in order to assist
\n StorageTek in planning its manufacturing operations, IBM will
\n provide modifications to the previously submitted weekly
\n schedules in the current forecast, as follows:<\/p>\n
FLEXIBILITY NOTICE REQUIRED
\n TARGET (in days from anticipated
\n Delivery date)
\n ———– ————————-
\n +\/- ** within **
\n +\/- ** within **
\n +\/- ** within **
\n +\/- ** within **
\n +\/- ** within **
\n +\/- ** beyond **<\/p>\n
All volume increases will be allowable per the matrix above up
\n to StorageTek’s maximum capacity. StorageTek’s initial maximum
\n capacity is stated in the following table:<\/p>\n
CAPACITY IN UNITS OF PRODUCT PER WEEK, FOR:<\/p>\n
Iceberg Kodiak
\n ——- ——
\n 1996 ** | **
\n 1997 ** | **
\n 1998 ** | **<\/p>\n
Upon mutual agreement, StorageTek will add additional capacity
\n if IBM increases its forecasted volumes beyond the current
\n maximum capacity with at least six months’ prior written
\n notice to StorageTek. StorageTek agrees to use reasonable
\n efforts to accommodate variations greater than those stated
\n above, including but not limited to accepting assistance from
\n IBM.<\/p>\n
10.5 STORAGETEK’S CAPACITY\/ALLOCATION<\/p>\n
a. StorageTek expressly represents that StorageTek has, as
\n of the Effective Date of this Agreement, and will
\n maintain throughout the term of this Agreement, adequate
\n product and manufacturing capacity to fulfill in a
\n timely fashion all its existing contractual commitments
\n as well as the quantities committed to in this Agreement
\n by IBM (when taking into account Section 10.4) and any<\/p>\n
– ———————————–<\/p>\n
** Confidential portions omitted and filed separately with the Securities
\n and Exchange Commission under an application for confidential treatment.<\/p>\n
31
\n 39
\n commitments StorageTek subsequently enters into, without
\n allocation of production among its customers. However,
\n if StorageTek is unable to meet its Delivery commitments
\n and must allocate its capacity, inventory, test
\n equipment, resources, use of personnel, parts,
\n components, supplier resources and capabilities, etc.,
\n that are used to produce Equipment, then StorageTek
\n agrees to:<\/p>\n
(1) act in good faith; and<\/p>\n
(2) allocate its capacity, supplier resources and
\n capabilities, inventory, test equipment,
\n resources, use of personnel, parts, components,
\n and available supply of Equipment to fill orders
\n for IBM in the following order of priorities:<\/p>\n
(i) ** ; and<\/p>\n
(ii) **<\/p>\n
b. StorageTek will allocate parts, components and materials
\n in accordance with the following priorities:<\/p>\n
(1) Code A FRUs order\/requirements are filled first;
\n and<\/p>\n
(2) then a fair allocation between manufacturing
\n orders and nonemergency maintenance parts
\n order\/requirements.<\/p>\n
11. PURCHASE ORDERS, ALTERATIONS & RESCHEDULING<\/p>\n
11.1 IBM may submit purchase orders at any time; provided, however,
\n that subject to Section 11.6, any order shall be binding on
\n both Parties if such order is within the forecast range set
\n forth in Sections 10.2 and 10.3, and is submitted not less
\n than ten (10) business days before IBM’s requested date of
\n Delivery. IBM may request that StorageTek deliver in fewer
\n than ten (10) business days and StorageTek may agree to do so.<\/p>\n
11.2 This Agreement does not constitute a purchase order. IBM may
\n issue purchase orders from time to time during the term of
\n this Agreement in either electronic (EDI) or written form.
\n Authorization to StorageTek to perform any work or produce any
\n Equipment under this Agreement will be through IBM purchase
\n orders only. Alterations to the quantity, delivery date,
\n engineering level, or other items on purchase orders may be
\n made by IBM from time to time, subject to StorageTek’s<\/p>\n
– ———————————–<\/p>\n
** Confidential portions omitted and filed separately with the Securities
\n and Exchange Commission under an application for confidential treatment.<\/p>\n
32
\n 40
\n agreement. Purchase orders will be considered noncancelable
\n within ten (10) days of the scheduled Delivery date.<\/p>\n
11.3 IBM shall submit its purchase orders to StorageTek at the
\n address set forth in the Notices section of this Agreement.
\n IBM’s purchase orders will include:<\/p>\n
a. IBM’s part, model or feature numbers, configuration and
\n description of Equipment;<\/p>\n
b. quantity required;<\/p>\n
c. unit or item price and total order price;<\/p>\n
d. required delivery date(s);<\/p>\n
e. delivery instructions (including a carrier who will
\n accept delivery at StorageTek’s address); and<\/p>\n
f. reference to this Agreement.<\/p>\n
Unless otherwise specifically agreed to in writing, additional
\n terms and conditions on IBM’s purchase orders or on
\n StorageTek’s acknowledgment, whether in conflict with this
\n Agreement or not, are superseded hereby and are of no force
\n and effect.<\/p>\n
11.4 StorageTek agrees to accept conforming IBM purchase orders and
\n to manufacture, supply and Deliver Equipment in accordance
\n with the terms and conditions of this Agreement. StorageTek
\n agrees to provide written acknowledgment of IBM’s purchase
\n orders within two (2) days, for volumes within IBM’s forecast,
\n or within five (5) days, for volumes in excess of IBM’s
\n forecast, as measured from StorageTek’s actual receipt of the
\n purchase order (without regard to the Notices section of this
\n agreement, except for EDI) which purchase order may be made
\n verbally and\/or in advance of StorageTek’s receipt of a hard
\n copy confirming such order. If StorageTek’s acknowledgment is
\n not received by IBM within the two (2) or five (5) day period,
\n as described above, from the date of receipt of the purchase
\n order from IBM, then the purchase order, including the
\n requested delivery date(s) will be deemed to be accepted by
\n StorageTek. StorageTek may not reject any IBM purchase order
\n that conforms to the requirements of this Agreement and covers
\n quantities forecasted by IBM, as described in Section 10.<\/p>\n
11.5 Orders for FRUs needed on a “Code A” basis (i.e.,
\n emergency-customer down) will be shipped by StorageTek within
\n twenty-four (24) hours at a price not to exceed the lesser of
\n ** of the price in Exhibit 5 or such price plus ** , with
\n IBM designating<\/p>\n
– ———————————–<\/p>\n
** Confidential portions omitted and filed separately with the Securities
\n and Exchange Commission under an application for confidential treatment.<\/p>\n
33
\n 41
\n the carrier and being responsible for freight and insurance
\n costs. However, IBM will not pay any premium (i.e. pay only
\n 100%) for Code A FRUs necessitated because StorageTek has
\n failed to deliver nonemergency FRU orders within the lead
\n times set forth in Exhibit 5.<\/p>\n
11.6 IBM may cancel purchase order(s) or any portions thereof for
\n any reason by notifying StorageTek in writing at least ten
\n (10) days prior to the scheduled Delivery date. Cancellation
\n will be effective upon StorageTek’s receipt of the written
\n cancellation notice from IBM. StorageTek will immediately
\n cease building such units for the affected purchase order(s)
\n in accordance with the cancellation notice. IBM will have no
\n liability for canceled purchase orders other than as set forth
\n in Section 10.2, and, if applicable, any Recovery Payment as
\n described in Section 7.6 hereof.<\/p>\n
11.7 If for any reason StorageTek is unable to Deliver as required
\n by accepted IBM purchase order(s), and fails to correct such
\n inability within ** of such failure, IBM will have the right
\n to cancel such purchase order(s) or portions thereof by
\n notifying StorageTek in writing. If IBM cancels purchase
\n orders under this Section 11.7, IBM’s only obligation will be
\n to pay for Products or Upgrades already delivered at the time
\n of IBM’s cancellation notice ** .<\/p>\n
11.8 Due to ongoing and unpredictable market conditions, StorageTek
\n agrees to permit IBM, upon written notice to StorageTek, to
\n require StorageTek to reconfigure units of Products and
\n Upgrades as follows:<\/p>\n
a. Configuration changes that do not change a unit model
\n number may be made without additional cost until **
\n before scheduled Delivery; and<\/p>\n
b. Any other configuration changes may be made at any time
\n (including Product and Upgrades that require
\n reconfiguration after Delivery) and such configuration
\n changes will be ** . StorageTek and IBM will agree in
\n advance on a schedule of lead times and costs that will
\n apply to such configurations.<\/p>\n
11.9 Subject to Section 10, IBM may reschedule purchase order(s) or
\n any portions thereof for any reason by notifying StorageTek in
\n writing at least ** prior to the Delivery Date specified on
\n the purchase order(s).<\/p>\n
11.10 For the last quarter of this Agreement, the purchase orders
\n submitted by IBM to StorageTek shall be noncancelable unless
\n StorageTek is manufacturing Devices.<\/p>\n
11.11 Products and Upgrades that are supplied to IBM hereunder will
\n consist of new parts and components. FRUs that IBM returns
\n will be reworked by StorageTek to an equivalent-to-new
\n reliability level. Such reworked FRUs will not be used in any
\n new<\/p>\n
– ———————————–<\/p>\n
** Confidential portions omitted and filed separately with the Securities
\n and Exchange Commission under an application for confidential treatment.<\/p>\n
34
\n 42
\n Products or Upgrades Delivered to IBM hereunder, but may
\n instead be returned to IBM as reworked FRUs.<\/p>\n
12. CONSIGNMENT<\/p>\n
12.1 IBM will consign certain disk drives (“Drives”) to StorageTek
\n for use in Equipment. Drives supplied by IBM to StorageTek
\n shall only be used by StorageTek to build Equipment for IBM
\n and shall remain the property of IBM.<\/p>\n
12.2 StorageTek agrees to sign and adhere to the terms and
\n conditions of the IBM Consignment Agreement, attached hereto
\n as Exhibit 4, provided, however, that the terms of this
\n Section 12 prevail over those of Exhibit 4.<\/p>\n
12.3 IBM agrees to consign Drives to StorageTek in accordance with
\n a mutually agreed Profile based on at least a five-day buffer
\n ahead of StorageTek’s build cycle, and including a yield
\n factor based upon the previous quarter’s experience and
\n calculated using a mutually agreed formula. Any Drives, or
\n other IBM-supplied parts and components, that are not used by
\n StorageTek due to integration fall-out will be returned to IBM
\n within ten (10) days after such fall-out.<\/p>\n
12.4 If IBM fails to provide consigned Drives to StorageTek in
\n accordance with Section 12.3, and StorageTek’s manufacturing
\n line is down such that StorageTek cannot meet its Delivery
\n dates to IBM, then StorageTek will agree, per Section 10.2, to
\n hold up to ** , as the case may be, of such undelivered and
\n forecasted Products and Upgrades, without Drives, in inventory
\n for up to ** . If the amount of such Products and Upgrades
\n held in inventory exceeds ** of the forecasted volumes then
\n StorageTek will notify IBM, and IBM will ** .<\/p>\n
12.5 If IBM Drives are not available for an extended period of
\n time, IBM may request assistance from StorageTek in securing
\n drives from other drive manufacturers in lieu of using IBM
\n Drives. StorageTek agrees, on a best effort basis, to assist
\n in securing the most cost effective, high quality alternative,
\n and with the agreement of IBM, to take the steps necessary to
\n integrate such drives into the Product. In such event, the
\n parties will agree in advance on an equitable division of
\n StorageTek’s cost of securing, qualifying and integrating such
\n drives, including any cost relating to inventory or required
\n firm purchase commitments even if such substitution is only
\n temporary in nature.<\/p>\n
12.6 StorageTek agrees to return to IBM freight collect any IBM
\n consigned Drives in StorageTek’s inventory, within five (5)
\n days of receipt of IBM’s written (or EDI) request.<\/p>\n
– ———————————–<\/p>\n
** Confidential portions omitted and filed separately with the Securities
\n and Exchange Commission under an application for confidential treatment.<\/p>\n
35
\n 43
\n13. DELIVERY<\/p>\n
13.1 ON-TIME DELIVERY<\/p>\n
a. StorageTek shall use its best efforts to ensure that
\n every scheduled Delivery date is met. StorageTek must
\n notify IBM in advance if a scheduled Delivery date will
\n not be met. StorageTek will make every reasonable
\n effort at its expense to ensure the earliest possible
\n Delivery date and quantities for late Equipment,
\n including, but not limited to, overtime and expedite
\n charges. “On schedule” means ** . Unless delay is
\n caused by IBM’s delay in its supply of Drives or
\n IBM-supplied parts and components, StorageTek will
\n arrange for premium transportation and pay, at
\n StorageTek’s sole cost and expense, for the difference
\n between normal transportation and such premium
\n transportation, including, but not limited to, air
\n transportation and expedited freight charges. StorageTek
\n also agrees to provide, at IBM’s request, an action plan
\n to correct late shipments and to resolve any Delivery
\n problems.<\/p>\n
b. If, during any ** period, StorageTek fails, on a
\n one-time basis only, to Deliver more than ** , but not
\n more than ** , of the units of Equipment that are
\n scheduled for Delivery in a calendar month by their
\n scheduled Delivery dates, then StorageTek shall be
\n required to expedite shipment of such units in
\n accordance with Section 13.1. ** .<\/p>\n
c. If StorageTek fails to Deliver more than ** of the
\n units of Equipment that are scheduled for Delivery by
\n their scheduled Delivery dates in the next following
\n month, and except for Volumes subject to the one time
\n per ** provision defined in 13.1b, above, then ** .<\/p>\n
d. If, in the month following any month in which a **
\n adjustment was credited to ** Volumes under this
\n Section 13.1, StorageTek fails to Deliver more than **
\n of the units of Equipment that are scheduled for
\n Delivery by their scheduled Delivery dates, then ** .<\/p>\n
e. If, in the next following month, StorageTek fails to
\n Deliver more than ** of the units of Equipment that
\n are scheduled for Delivery by their scheduled Delivery
\n dates, ** .<\/p>\n
f. If, in the next following month, and for each additional
\n consecutive month, StorageTek fails to Deliver more than
\n ** of the units of Equipment that are scheduled for
\n Delivery by their scheduled Delivery dates, then ** .<\/p>\n
– ———————————–<\/p>\n
** Confidential portions omitted and filed separately with the Securities
\n and Exchange Commission under an application for confidential treatment.<\/p>\n
36
\n 44
\n g. Notwithstanding anything to the contrary in this
\n Section, and in lieu of credits provided in other
\n paragraphs of this Section, if, in any calendar month,
\n and subject to Section 13.1b. above, StorageTek fails to
\n Deliver more than ** of the units of Equipment that
\n are scheduled for Delivery by their scheduled Delivery
\n dates, then ** .<\/p>\n
h. **<\/p>\n
i. Notwithstanding anything to the contrary in this
\n Section, units of Equipment which StorageTek fails to
\n Deliver by the Delivery date will not be counted as
\n failures to Deliver if StorageTek causes such units to
\n be delivered to IBM customers by the delivery date IBM
\n has committed to such customers (the “Commit Date”).
\n IBM will notify StorageTek in writing of each unit of
\n Equipment which fails to arrive by the Commit Date
\n within ten (10) business days after StorageTek notifies
\n IBM that such shipment was expedited.<\/p>\n
j. **<\/p>\n
k. If StorageTek fails to deliver to IBM more than ** of
\n the units of Equipment scheduled for Delivery by the
\n scheduled Delivery dates in a month, for **
\n consecutive calendar months then the payment terms in
\n Section 7.10a will be immediately extended to ** days
\n until ** after the first month in which StorageTek
\n Delivers ** or more of Equipment on its scheduled
\n Delivery date.<\/p>\n
l. IBM expressly reserves the right to assert that any
\n failure to ship Equipment on a timely basis, including,
\n but not limited to, failures for which volume
\n adjustments are provided for in this section, could
\n constitute a material breach of StorageTek’s obligations
\n under this Agreement.<\/p>\n
13.2 CARRIER<\/p>\n
It is understood and agreed that IBM shall make all
\n arrangements for shipments of the Equipment. It shall be the
\n responsibility of IBM, at its own expense, to supply
\n StorageTek with detailed documentation and instructions and
\n all necessary export licenses, customs declarations and
\n certificates in properly executed form required for successful
\n shipment of Equipment from the Manufacturing Site and entry
\n into foreign territories. StorageTek shall notify IBM when
\n Equipment is ready for shipment from StorageTek’s plant. IBM
\n will pay all shipping and transportation charges directly to
\n the carrier or freight forwarder as long as shipped in
\n accordance with IBM’s routing instructions. If IBM requests
\n that StorageTek arrange shipping, IBM shall reimburse
\n StorageTek for the shipping charges pursuant to StorageTek’s
\n invoice. In no event will IBM reimburse StorageTek for, or pay
\n any C.O.D. charges, should StorageTek<\/p>\n
– ———————————–<\/p>\n
** Confidential portions omitted and filed separately with the Securities
\n and Exchange Commission under an application for confidential treatment.<\/p>\n
37
\n 45
\n ship by another carrier without prior IBM approval. If
\n StorageTek ships using other than an IBM- approved carrier,
\n StorageTek is responsible for any incremental increase in
\n freight charges.<\/p>\n
13.3 TITLE\/RISK OF LOSS<\/p>\n
Title to Equipment and risk of loss shall pass to IBM at
\n StorageTek’s plant of manufacture loading dock. [F.O.B. by
\n UCC\/ExWorks by INCOTERMS]; provided, however, that
\n notwithstanding anything to the contrary in this Agreement
\n title to all Licensed Works will remain with StorageTek,
\n except as provided in the IDA and its related Attachments. All
\n claims for shipping damage shall be resolved between IBM,
\n carriers or freight forwarders handling the Equipment and the
\n insurance companies and agents responsible for adjusting such
\n claims, and StorageTek shall have no responsibility with
\n respect thereto. However, at IBM’s request, StorageTek agrees
\n to cooperate reasonably with IBM in filing and settling such
\n claims.<\/p>\n
13.4 PACKAGING<\/p>\n
StorageTek will package each unit of Equipment according to an
\n agreed-upon Specification for packaging. The prices for
\n Equipment include all packaging costs.<\/p>\n
14. EQUIPMENT WARRANTY<\/p>\n
14.1 StorageTek warrants that units of Equipment (excluding Drives
\n and nonserialized FRUs) that are to be provided to IBM
\n hereunder conform to the Specifications and are and shall
\n remain free from defects in materials and workmanship, for the
\n time periods specified in this Section 14.1.<\/p>\n
a. The warranty period for each unit of Products and
\n Upgrades shall be ** after the earlier of:<\/p>\n
(1) **<\/p>\n
(2) **<\/p>\n
b. StorageTek will serialize the FRUs identified as
\n serialized on Exhibit 5, and as to those FRUs the
\n warranty period shall be ** after the earlier of:<\/p>\n
(1) **<\/p>\n
(2) **<\/p>\n
– ———————————–<\/p>\n
** Confidential portions omitted and filed separately with the Securities
\n and Exchange Commission under an application for confidential treatment.<\/p>\n
38
\n 46
\n 14.2 All warranties provided by StorageTek to IBM hereunder shall
\n survive any inspection, delivery, acceptance and payment and
\n shall not be affected by the fact that IBM has resold, rented
\n or leased units of Equipment to others.<\/p>\n
14.3 IBM will maintain failure records for Products and Upgrades to
\n the same extent as IBM maintains such records for similar
\n high-end direct access storage device products marketed by it.
\n If IBM believes failures for a given serial number unit of
\n Equipment warrants replacement, IBM may request and StorageTek
\n may agree to replace the same at no cost to IBM. StorageTek’s
\n agreement will not unreasonably be withheld. In order to
\n improve Equipment quality and minimize costs, StorageTek may
\n request relevant information from the data which IBM retains
\n regarding failure by machine serial number. IBM may agree to
\n provide such information to StorageTek. Such agreement will
\n not be unreasonably withheld.<\/p>\n
14.4 StorageTek’s liability under warranty pursuant to Section 14.1
\n is limited to: Delivery to the IBM regional stocking
\n locations specified by IBM of retrofit kits (containing FRUs)
\n with installation instructions (at no charge to IBM) as
\n necessary to make Equipment conform to the Specifications, or
\n otherwise be free from defects in materials and workmanship;
\n or repair or replacement, at StorageTek’s option, without cost
\n to IBM, of the defective Equipment. IBM will use reasonable
\n efforts to resolve customer issues through use of FRUs or
\n retrofit kits before requesting repair or replacement of the
\n defective Product or Upgrade. Labor to remove defective FRUs
\n and install replacement FRUs under this warranty shall be
\n supplied by IBM at no charge to StorageTek, subject to Section
\n 9.3h. Where warranty can be provided by replacing a FRU,
\n StorageTek will provide and IBM will install the replacement
\n FRU.<\/p>\n
14.5 All warranty claims shall be made by IBM, regardless of any
\n transfer of title or possession of the Equipment by IBM to
\n other parties, and StorageTek agrees that IBM may make
\n warranty claims against StorageTek on the behalf of any
\n rightful user or possessor of the Equipment.<\/p>\n
14.6 StorageTek’s liability to perform warranty under this Section
\n 14 shall not apply to failures of any unit of Equipment
\n caused by:<\/p>\n
a. Physical abuse or use that is not consistent with
\n operating instructions for the Equipment; or<\/p>\n
b. Modification (by other than StorageTek’s personnel or
\n agents) in any way other than approved by StorageTek;
\n provided, however, that the warranty shall not be voided
\n by repair or replacement of FRUs or the attachment of
\n items in the manner described in maintenance or
\n installation instructions provided by StorageTek.<\/p>\n
14.7 Claims under the terms of this warranty shall be submitted to
\n StorageTek in writing (including EDI) and shall clearly state
\n the Product or Upgrade serial number. Where<\/p>\n
39
\n 47
\n available, IBM shall send StorageTek its field defect report.
\n Defective FRUs replaced under this warranty become the
\n property of StorageTek.<\/p>\n
14.8 Both Parties will ensure that FRUs returned to the other Party
\n are properly and adequately packaged, and IBM agrees to use
\n the same or equivalent packaging as StorageTek uses to package
\n such FRUs.<\/p>\n
14.9 StorageTek shall use reasonable commercial efforts to complete
\n repairs of FRUs for in-warranty units within thirty (30)
\n business days after the date StorageTek receives the defective
\n FRUs, but in any case, it will complete repairs of the FRUs at
\n no charge to IBM within sixty (60) days after receipt. If,
\n upon receipt, StorageTek determines that such defective FRUs
\n are not repairable or if StorageTek has not completed its
\n failure analysis on any FRU within ten (10) business days
\n after StorageTek’s receipt, then replacement FRUs will be
\n provided at no charge by StorageTek to IBM within ten (10)
\n business days. If StorageTek cannot find a defect or
\n assignable cause in a FRU that is returned by IBM as
\n defective, StorageTek will replace the received FRU and will
\n ensure that the FRU is not included in Equipment and cannot be
\n returned in the future to IBM.<\/p>\n
14.10 LICENSED PROGRAMS, MICROCODE AND MAINTENANCE CODE WARRANTY<\/p>\n
a. StorageTek warrants that the Licensed Programs and
\n Microcode will conform to the Specifications, as such
\n Specifications may be modified by any Product
\n Development Plan, and are and shall remain free from
\n defects in workmanship. The Maintenance Code shall
\n remain free from defects in workmanship. The warranties
\n set forth in this Section 14.10 shall not apply to:<\/p>\n
(1) **<\/p>\n
(2) **<\/p>\n
(3) **<\/p>\n
(4) **<\/p>\n
(5) **<\/p>\n
(6) **<\/p>\n
StorageTek does not warrant that the functions contained
\n in the Licensed Program and Maintenance Code will **<\/p>\n
– ———————————–<\/p>\n
** Confidential portions omitted and filed separately with the Securities
\n and Exchange Commission under an application for confidential treatment.<\/p>\n
40
\n 48
\n b. In the event of a breach of the warranties contained in
\n this Section 14.10, StorageTek will exercise reasonable
\n commercial efforts to implement appropriate procedures
\n to correct such breach in accordance with Section 16.8,
\n for Licensed Programs and Microcode and Section 16.7 for
\n Maintenance Code.<\/p>\n
14.11 StorageTek warrants that it will competently perform all work
\n relating to the Deliverables in a manner consistent with
\n ordinary Microcode programmers skilled in the art, and,
\n further, all Deliverables will conform to the mutually
\n agreed-upon Specifications.<\/p>\n
14.12 THE WARRANTIES IN SECTIONS 14 AND 18 OF THIS OEM AGREEMENT,
\n AND IN PART 6 OF THE SOURCE CODE CUSTODY AGREEMENT, ARE IN
\n LIEU OF ALL OTHER WARRANTIES EITHER WRITTEN, ORAL OR IMPLIED
\n WITH RESPECT TO THE EQUIPMENT, DELIVERABLES, LICENSED PROGRAMS
\n AND MAINTENANCE CODE.<\/p>\n
STORAGETEK DISCLAIMS THE IMPLIED WARRANTIES OF
\n MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. EXCEPT
\n AS OTHERWISE PROVIDED IN SECTION 18.2, STORAGETEK ALSO
\n DISCLAIMS THE IMPLIED WARRANTY OF NONINFRINGEMENT.<\/p>\n
STORAGETEK’S WARRANTY OBLIGATIONS SHALL EXTEND ONLY TO IBM,
\n AND STORAGETEK SHALL HAVE NO LIABILITY ARISING OUT OF ANY
\n WARRANTIES PROVIDED BY IBM WHICH ARE BEYOND STORAGETEK’S
\n WARRANTY OBLIGATIONS IN THIS AGREEMENT.<\/p>\n
IBM’S EXCLUSIVE REMEDY FOR A BREACH OF THE WARRANTY SET FORTH
\n IN THIS SECTION 14 IS SET FORTH IN SECTION 14.4 FOR EQUIPMENT,
\n AND SECTION 14.10(b); FOR LICENSED PROGRAMS, MICROCODE AND
\n MAINTENANCE CODE, PROVIDED, HOWEVER, THAT STORAGETEK PROMPTLY
\n PERFORMS ITS WARRANTY OBLIGATIONS PURSUANT TO SECTION 14.<\/p>\n
15. FRUS<\/p>\n
15.1 During the term of this Agreement and for ** after the last
\n Delivery of Product or Upgrades, or for so long as StorageTek
\n makes FRUs available to any other entity, whichever is later,
\n StorageTek agrees to provide FRUs to IBM. The list of FRUs
\n and their respective prices and lead times are described in
\n Exhibit 5, which Exhibit will be updated semiannually (in
\n January and July).<\/p>\n
– ———————————–<\/p>\n
** Confidential portions omitted and filed separately with the Securities
\n and Exchange Commission under an application for confidential treatment.<\/p>\n
41
\n 49
\n 15.2 Notwithstanding anything herein to the contrary, if StorageTek
\n intends to discontinue producing or making available any FRU
\n after the ** obligation set forth above, StorageTek agrees to
\n provide IBM with twelve (12) months’ prior written notice of
\n such intent and permit IBM to purchase as many FRUs as IBM
\n reasonably believes it will need for the Products. In the
\n alternative, and at IBM’s option, StorageTek agrees to grant
\n IBM the right to manufacture such FRUs in accordance with
\n Section 23.6.<\/p>\n
15.3 FRUs shall be packaged in the same or equivalent packaging as
\n StorageTek used to package such FRUs. Return of FRUs for
\n repair or replacement is subject to a reasonable material
\n return procedure to be mutually agreed between the Parties.<\/p>\n
15.4 FRU REWORK PROCEDURES AND PRICES<\/p>\n
a. StorageTek will attempt to rework\/repair all FRUs
\n returned from IBM and return them to IBM within 30 days
\n of receipt. At IBM’s request, StorageTek will also ship
\n to IBM any unrepairable FRUs.<\/p>\n
b. Except as otherwise provided in Section 9, Quality, and
\n Section 14, Equipment Warranty, StorageTek will invoice
\n IBM, and IBM agrees to pay, ** for FRUs as described
\n in Section 7.7, plus normal transportation charges
\n unless IBM requests special handling. Such costs will be
\n subject to IBM’s Audit Rights.<\/p>\n
16. FIELD SERVICE & SUPPORT<\/p>\n
16.1 INSTALLATION SUPPORT<\/p>\n
a. Upon IBM’s written request, StorageTek will, at no
\n charge to IBM, assist IBM in installing units purchased
\n under this Agreement, including on-site installation if
\n necessary, in accordance with the table below provided
\n ** . IBM’s written requests will specify the
\n installation site, date of installation, whether the
\n site is classified and any special installation
\n instructions. StorageTek may provide at IBM’s request
\n additional installation services beyond those required
\n in this section at the rates described in Section 16.5.<\/p>\n
– ———————————–<\/p>\n
** Confidential portions omitted and filed separately with the Securities
\n and Exchange Commission under an application for confidential treatment.<\/p>\n
42
\n 50
\n PERCENTAGE OF INSTALLATIONS STORAGETEK WILL SUPPORT (BY PRODUCT)<\/p>\n
\n\n TIME PERIOD ICEBERG KODIAK
\n ———– ————————
\n
\n 3Q96 ** **
\n 4Q96 ** **
\n 1Q97 ** **
\n<\/c><\/c><\/s><\/caption>\n<\/table>\n b. The services and charges referred to in this
\n section ** .<\/p>\n
16.2 TRAINING<\/p>\n
a. ** :<\/p>\n
(1) **<\/p>\n
(2) **<\/p>\n
(3) **<\/p>\n
(4) **<\/p>\n
(5) **<\/p>\n
In addition, StorageTek will conduct ** training
\n sessions for IBM’s ** personnel at StorageTek’s
\n expense ** . The goal of this training will be to
\n ** .<\/p>\n
b. At IBM’s request, StorageTek will provide up to **
\n additional initial training sessions beyond the
\n sessions described above at a fee of ** , plus
\n reasonable travel and living expenses for StorageTek
\n trainers if such sessions are held at a location other
\n than StorageTek’s training facility. StorageTek also
\n agrees to make its training facilities available to IBM
\n at StorageTek’s cost for IBM to provide education to its
\n personnel through the end of 1996.<\/p>\n
c. StorageTek will also provide “on-the-job” training for
\n IBM customer engineering personnel by assisting them, at
\n IBM’s option, in any Product and Upgrade installations
\n as described in Section 16.1.<\/p>\n
d. For all new Products and Upgrades StorageTek makes
\n available to IBM during the term of this Agreement,
\n StorageTek agrees to provide IBM personnel with
\n assistance at no charge to develop training for IBM’s
\n customer engineering personnel at the same level as the
\n training StorageTek provides to its own personnel on its
\n other products.<\/p>\n
– ———————————–<\/p>\n
** Confidential portions omitted and filed separately with the Securities
\n and Exchange Commission under an application for confidential treatment.<\/p>\n
43
\n 51
\n 16.3 SERVICE OF EQUIPMENT<\/p>\n
To assist IBM in product transition, ** at IBM’s request,
\n StorageTek agrees to **<\/p>\n
a. **<\/p>\n
b. **<\/p>\n
At the beginning of each quarter, IBM agrees to commit to, and
\n to pay for as set forth in Section 16.5, and StorageTek
\n thereafter agrees to provide, the number of hours of such
\n customer engineering support IBM will require at the beginning
\n of each quarter. The maximum fee StorageTek will charge IBM
\n for each hour of such customer engineering support actually
\n provided (except for the no charge installation support) is
\n set forth in the table found in Section 16.5. To the extent
\n StorageTek is unable to provide service hereunder, StorageTek
\n will promptly refund unearned payments.<\/p>\n
16.4 EMERGENCY AND EXPERT MAINTENANCE COVERAGE<\/p>\n
In every country\/territory where IBM installs Products and
\n Upgrades, StorageTek agrees to make available upon IBM’s
\n request and on the shortest possible notice customer service
\n engineers to support critical customer situations. The maximum
\n fee StorageTek will charge IBM for each hour of such support
\n actually provided is set forth in the table in Section 16.5.
\n In addition, IBM will reimburse StorageTek for actual and
\n reasonable travel expenses incurred by StorageTek’s personnel
\n in providing this support in countries where StorageTek does
\n not have a service organization.<\/p>\n
16.5 LABOR RATE TABLE<\/p>\n
\n\n Calendar Quarter Maximum Hourly Rate
\n ————————————————
\n
\n ** **
\n ** **
\n ** **
\n ** **
\n ** **
\n and beyond **
\n<\/c><\/c><\/s><\/caption>\n<\/table>\n 16.6 NEW PRODUCT DEVELOPMENT CENTER SUPPORT<\/p>\n
a. StorageTek will provide its New Product Development
\n Center Support (“NPDC”) ** . In addition, **
\n StorageTek will ** . StorageTek agrees to provide IBM
\n ** . StorageTek grants IBM a license to ** in
\n accordance with the Description of Licensed Works.<\/p>\n
– ———————————–<\/p>\n
** Confidential portions omitted and filed separately with the Securities
\n and Exchange Commission under an application for confidential treatment.<\/p>\n
44
\n 52
\n b. To assist IBM in transitioning to its own service
\n center, StorageTek agrees that ** .<\/p>\n
c. StorageTek shall provide comparable levels of response
\n times for NPDC support to IBM as those that StorageTek
\n provides to its own customer service base (including
\n StorageTek’s tape and service products).<\/p>\n
16.7 MAINTENANCE AND INSTALLATION TOOLS<\/p>\n
To assist IBM in providing optimum hardware and software
\n maintenance service to customers, StorageTek agrees to:<\/p>\n
a. **<\/p>\n
b. Promptly provide to IBM ** . StorageTek grants IBM a
\n license to the ** in accordance with the Description
\n of Licensed Works.<\/p>\n
StorageTek also agrees to provide ** .<\/p>\n
16.8 MAINTENANCE AND TECHNICAL SUPPORT<\/p>\n
a. Maintenance. IBM will be responsible to provide Level
\n 1, Level 2 and Level 3 support to its customers. IBM
\n agrees to use its commercially reasonable efforts to
\n perform the following:<\/p>\n
(1) **<\/p>\n
(2) **<\/p>\n
(3) **<\/p>\n
(4) **<\/p>\n
(5) **<\/p>\n
b. Technical Support. StorageTek agrees, upon IBM’s
\n request, ** to provide technical support to IBM for
\n the Equipment, Licensed Programs and Microcode,
\n including without limitation, assistance in problem
\n determination, problem source identification and problem
\n diagnosis, in the following manner:<\/p>\n
(1) Equipment. StorageTek will provide IBM with
\n reasonable assistance for the Equipment ** .<\/p>\n
– ———————————–<\/p>\n
** Confidential portions omitted and filed separately with the Securities
\n and Exchange Commission under an application for confidential treatment.<\/p>\n
45
\n 53
\n In addition, if a malfunction or failure in
\n Equipment ** then StorageTek shall, ** .
\n Prior to honoring a request ** . Upon receipt
\n of appropriate supporting documentation, ** .<\/p>\n
StorageTek agrees to use its commercially
\n reasonable efforts to assist IBM in resolving
\n problems within the time frames set forth below:<\/p>\n
(a) Any Severity 1 level problem: Within **
\n after notification by IBM of any such
\n problem;<\/p>\n
(b) Any Severity 2 level problem: Within **
\n after notification by IBM of any such
\n problem;<\/p>\n
(c) Any Severity 3 level problem: Within **
\n after notification by IBM of any such
\n problem; and<\/p>\n
(d) Any Severity 4 level problem: Within **
\n after notification by IBM of any such
\n problem.<\/p>\n
For purposes of this Section 16.8b(1), ** .<\/p>\n
(2) Licensed Programs and Microcode. The following
\n is a description of the support that StorageTek
\n shall provide to IBM:<\/p>\n
(a) **<\/p>\n
(b) **<\/p>\n
(c) **<\/p>\n
(d) **<\/p>\n
(e) **<\/p>\n
(f) **<\/p>\n
(g) **<\/p>\n
(h) **<\/p>\n
– ———————————–<\/p>\n
** Confidential portions omitted and filed separately with the Securities
\n and Exchange Commission under an application for confidential treatment.<\/p>\n
46
\n 54
\n 16.9 ** ACCESS<\/p>\n
During the term of the Agreement, IBM agrees to allow
\n StorageTek to have access to ** solely to support ** .
\n StorageTek’s use of and access to ** and may be terminated
\n if such use or access ** .<\/p>\n
17. MARKETING RIGHTS & SUPPORT<\/p>\n
17.1 On the Effective Date, the Parties will announce that they
\n have entered into an agreement under which IBM will market
\n Products worldwide that it purchases on an OEM basis from
\n StorageTek.<\/p>\n
17.2 MARKETING SUPPORT ORGANIZATION<\/p>\n
StorageTek agrees to establish a marketing support
\n organization to provide timely sales and marketing support to
\n IBM on a worldwide basis. This organization will **<\/p>\n
a. **<\/p>\n
b. **<\/p>\n
17.3 TRAINING<\/p>\n
StorageTek agrees to provide marketing training and support to
\n IBM to facilitate IBM’s sales of Products and Upgrades.<\/p>\n
a. Initial Training.<\/p>\n
(1) Sales. During ** StorageTek will provide,
\n ** .<\/p>\n
(2) Systems Engineering. During ** StorageTek
\n will provide, ** .<\/p>\n
17.4 ADDITIONAL INITIAL TRAINING<\/p>\n
StorageTek will provide up to ** .<\/p>\n
17.5 ONGOING TRAINING<\/p>\n
StorageTek agrees to provide IBM with material, documentation,
\n and support from StorageTek’s Engineering and Technical
\n Support Staff similar to that provided as of<\/p>\n
– ———————————–<\/p>\n
** Confidential portions omitted and filed separately with the Securities
\n and Exchange Commission under an application for confidential treatment.<\/p>\n
47
\n 55
\n the Effective Date on StorageTek’s new products, for IBM to
\n provide its personnel with training for all new Products and
\n Upgrades.<\/p>\n
17.6 MARKETING MATERIALS<\/p>\n
StorageTek will promptly provide IBM with electronic and paper
\n copies, to the extent available, of all marketing materials
\n used by StorageTek within one year prior to the Effective Date
\n of this Agreement, to market StorageTek products similar to
\n Products and Upgrades, including without limitation all “white
\n papers,” materials describing the advantages and benefits of
\n such StorageTek products, and materials related to
\n comparisons of such StorageTek products with competitive
\n products.<\/p>\n
In, addition StorageTek will provide samples, artwork, and
\n camera ready copy (to the extent available) of all collateral
\n materials (e.g., brochures and product guides) and advertising
\n related to StorageTek products similar to Products and
\n Upgrades.<\/p>\n
**<\/p>\n
To the extent that StorageTek has the right to do so,
\n StorageTek hereby grants IBM ** worldwide right and license
\n to all of the marketing and collateral materials relating to
\n the Products and Upgrades it receives from StorageTek, during
\n the term of this Agreement, to use, reproduce, display,
\n distribute, create and have created Derivative Works of any
\n or all such materials without attribution and grant
\n sublicenses of equivalent scope to its Subsidiaries but not
\n otherwise; provided IBM does not use StorageTek’s trademarks
\n or trade names except as specifically permitted. StorageTek
\n will identify portions of the materials which are subject to
\n third-party rights.<\/p>\n
17.7 MARKETING TOOLS<\/p>\n
StorageTek will provide all of its marketing tools, software
\n and related documentation related to the Products and
\n Upgrades, excluding third-party confidential materials, ** .
\n In addition, StorageTek will reasonably assist IBM in updating
\n its own tools to support Products and Upgrades. StorageTek
\n agrees to provide IBM such tools and software (in Source Code
\n form, to the extent not prevented by supplier license
\n transferability restrictions and if StorageTek discontinues
\n its support of such tools and software, and in Object Code
\n form). StorageTek hereby grants IBM ** worldwide right and
\n license to the tools, software and related documentation it
\n receives from StorageTek during the terms of this Agreement,
\n to use, reproduce, display, distribute, and create, and have
\n created Derivative Works of any or all such tools and software
\n without attribution, and grant sublicenses of equivalent scope
\n to its Subsidiaries but not otherwise.<\/p>\n
– ———————————–<\/p>\n
** Confidential portions omitted and filed separately with the Securities
\n and Exchange Commission under an application for confidential treatment.<\/p>\n
48
\n 56
\n 17.8 SYSTEMS ENGINEERING SUPPORT<\/p>\n
StorageTek agrees to provide IBM ** . To the extent
\n StorageTek is unable to provide hours hereunder, StorageTek
\n will promptly refund unearned payments.<\/p>\n
18. REPRESENTATIONS AND WARRANTIES<\/p>\n
18.1 Each Party represents and warrants that it has the authority
\n and right to enter into this Agreement, and has no existing
\n obligations, and shall not assume any obligations, that
\n conflict with its obligations or the rights granted to it in
\n this Agreement. Each Party also represents and warrants that
\n it has the authority to convey the rights granted or assigned
\n by it in this Agreement. Each Party will provide, upon
\n request, copies of agreements or other documentation necessary
\n to establish such rights. If a Party is unable to supply a
\n copy of such agreements or other documentation, then such
\n Party shall use its best efforts to obtain such agreements or
\n other documentation to sufficiently establish that it has been
\n granted these rights.<\/p>\n
18.2 **<\/p>\n
18.3 StorageTek represents and warrants that, with respect to the
\n Deliverables, Licensed Programs and Maintenance Code created
\n outside the United States, all authors have waived their moral
\n rights in all Deliverables, Licensed Programs and Maintenance
\n Code to the extent permitted by law.<\/p>\n
18.4 StorageTek represents and warrants that the Equipment (or
\n Devices if manufactured by IBM pursuant to Section 23.6), when
\n used in accordance with the Specifications, will not present a
\n health or safety risk to persons or property; and the
\n Equipment shall comply with all applicable regulatory health
\n and safety standards, including UL, CSA, VDE, IEC, FCC,
\n European Economic Community CE-mark standards, any other
\n standards that are described in the Specifications or as
\n required by law. StorageTek agrees to provide IBM with copies
\n of all reports, certifications, and other relevant documents
\n related to such standards at StorageTek’s expense.<\/p>\n
18.5 StorageTek represents that ** .<\/p>\n
– ———————————–<\/p>\n
** Confidential portions omitted and filed separately with the Securities
\n and Exchange Commission under an application for confidential treatment.<\/p>\n
49
\n 57
\n19. TRADEMARK & ADVERTISING<\/p>\n
19.1 TRADEMARK AND DESIGN RIGHTS<\/p>\n
Except as provided in Section 8, but notwithstanding any other
\n provisions of this Agreement, neither party hereto is granted
\n the right to use the trademarks, trade names, or service marks
\n of the other party (including those of Subsidiaries), directly
\n or indirectly, in connection with any product, promotion or
\n publication without the prior written approval of the other
\n party, except that IBM may use StorageTek’s trademarks and
\n trade names for the aforementioned purposes on any Equipment
\n shipped by StorageTek which bears such trademarks or trade
\n names. Any approved use of one Party’s trademark or trade
\n name shall enure to the benefit of the Party owning such
\n trademark or trade name.<\/p>\n
19.2 ADVERTISING\/DISCLOSURE<\/p>\n
Neither party shall, without first obtaining the written
\n consent of the other party, in any manner disclose any details
\n of the work to be performed herein, the terms, conditions and
\n subject matter of this Agreement, or documents issued
\n hereunder, except as may be required by law or government rule
\n or regulation. To the extent that a party is compelled to
\n make a disclosure due to government rule or regulation, such
\n disclosure shall be limited to the extent required, and the
\n other party shall have an opportunity to review the
\n information prior to its release. Each party may independently
\n and without the consent of the other party inform customers of
\n the fact that an OEM distribution arrangement exists between
\n the Parties; however, to the extent that such communication
\n includes any additional information about the other party,
\n such party shall have an opportunity to review such
\n information prior to disclosure.<\/p>\n
19.3 Upon request by IBM, StorageTek shall apply IBM’s, its
\n Subsidiaries’, its distributors’ and\/or its OEMs’ trademarks,
\n logos and other information designated by IBM for the Product
\n and Upgrades as may be provided to StorageTek by IBM.<\/p>\n
19.4 **<\/p>\n
19.5 Use of a Party’s trademarks by the other Party shall not
\n diminish the owner’s right, title or interest to such
\n trademarks.<\/p>\n
– ———————————–<\/p>\n
** Confidential portions omitted and filed separately with the Securities
\n and Exchange Commission under an application for confidential treatment.<\/p>\n
50
\n 58
\n20. CONFIDENTIALITY<\/p>\n
20.1 It is anticipated that confidential information will be
\n exchanged between the Parties. Where confidential information
\n must be exchanged, it will be exchanged under an IBM Agreement
\n for the Exchange of Confidential Information (hereafter
\n “AECI”).<\/p>\n
20.2 With respect to all nonconfidential information disclosed by
\n one party (hereafter the “Disclosing Party”) to the other
\n party (hereafter the “Receiving Party”), except to the extent
\n such information is protected by the Disclosing Party’s patent
\n or copyright rights, the Disclosing Party grants to the
\n Receiving Party, to the extent, if any, of its interest
\n therein, a nonexclusive, royalty-free, irrevocable,
\n unrestricted, worldwide license to use, have used, disclose to
\n others, make copies in the case of documents, and dispose of,
\n all without limitation, such nonconfidential information in
\n any manner as it determines, including the use of such
\n nonconfidential information in the development, manufacture,
\n marketing and maintenance of products and services
\n incorporating such nonconfidential information.<\/p>\n
21. ASSIGNMENT & CHANGE OF CONTROL<\/p>\n
Neither Party shall assign or subcontract this Agreement, or any right
\n or obligation hereunder, without the prior written consent of the
\n other Party, except that subcontracts pursuant to StorageTek’s normal
\n manufacturing procedures may be assigned, provided, however, that
\n StorageTek may not subcontract final assembly and test without IBM’s
\n prior written consent. Any attempted assignment or subcontract not in
\n compliance with this paragraph shall be void.<\/p>\n
StorageTek shall promptly notify IBM in writing of any Change of
\n Control **<\/p>\n
21.1 In the event that a Change in Control occurs whereby control
\n of StorageTek is acquired by (i) ** .<\/p>\n
21.2 In the event that a Change of Control occurs **<\/p>\n
**<\/p>\n
22. DISPUTE RESOLUTION<\/p>\n
22.1 ESCALATION PROCESS<\/p>\n
The Parties will attempt in good faith to promptly resolve any
\n controversy or claim arising out of or relating to this
\n Agreement by negotiations between executives of the Parties.<\/p>\n
– ———————————–<\/p>\n
** Confidential portions omitted and filed separately with the Securities
\n and Exchange Commission under an application for confidential treatment.<\/p>\n
51
\n 59
\n If a controversy or claim should arise, the Agreement
\n Administrators, or their respective successors, or their
\n superiors, will meet in person or phone, as they decide, at
\n least once and will attempt to resolve the matter. Either
\n Agreement Administrator may require the other to meet within
\n seven days at a mutually agreed upon time and location.<\/p>\n
If the matter has not been resolved within ten days of their
\n first meeting, or a request for such meeting if no meeting
\n occurs, the Agreement Administrators shall refer the matter to
\n senior executives, who shall have authority to settle the
\n dispute (hereafter “Senior Executives”). The Senior Executive
\n for IBM shall be the General Manager of IBM’s Storage System
\n business or his\/her designee and the Senior Executive of
\n StorageTek shall be its Chief Executive Officer, or his\/her
\n designee. Thereupon, the Agreement Administrators shall
\n promptly prepare and exchange memoranda stating the issues in
\n dispute, and their positions, summarizing the negotiations
\n which have taken place, and attaching relevant documents. The
\n Senior Executives will meet in person or by telephone within
\n seven (7) days of the end of the ten- (10) day period referred
\n to above, at a mutually agreed time.<\/p>\n
The first meeting shall be held at the offices of the
\n Agreement Administrator receiving the request to meet. If more
\n than one meeting is held, the meetings shall be held in
\n rotation at the offices of IBM and StorageTek.<\/p>\n
If the matter has not been resolved within fifteen (15) days
\n of the first meeting of the Senior Executives (which period
\n may be extended by mutual agreement), the Parties will attempt
\n in good faith to resolve the controversy or claim in
\n accordance with the following mediation process. During the
\n course of negotiations between the representatives, all
\n reasonable requests made by one party to the other for
\n nonprivileged information will be honored in order that each
\n of the parties may be fully informed of the circumstances
\n relevant to the dispute.<\/p>\n
22.2 MEDIATION PROCESS<\/p>\n
If the escalation process fails to resolve a dispute in
\n connection with this Agreement, any such dispute shall be
\n submitted to expedited mediation prior to the commencement of
\n any litigation with respect to such dispute. In the event
\n either party intends to seek recourse against the other by an
\n action at law or in equity, such party shall first give notice
\n to the other party. Within ten (10) business days of such
\n notice, the Parties shall attempt to agree on one mediator who
\n shall be a person mutually agreeable to both Parties and who
\n shall be experienced in the DASD industry. In the event the
\n Parties cannot agree on one mediator, each shall have the
\n right to appoint one mediator, and the two mediators shall
\n appoint a third. Mediation shall commence within twenty (20)
\n business days of the notice of request for mediation. Each
\n party agrees to cooperate fully with the mediator(s) in an
\n attempt to resolve any disputes. The mediator(s) shall use the
\n rules of the American Arbitration Association in conducting
\n the mediation. Any decision reached through mediation shall be
\n in writing but shall not be legally binding upon the Parties
\n nor admissible as evidence in any legal<\/p>\n
52
\n 60
\n proceedings. If the Parties cannot resolve their differences
\n to their mutual satisfaction within thirty (30) business days
\n of the request for mediation, either Party shall be free to
\n pursue any and all other remedies available to such Party,
\n including, but not limited to, litigation. Costs of the
\n Mediator shall be born equally by the Parties.<\/p>\n
23. TERMINATION\/REMEDIES<\/p>\n
23.1 TERMINATION BY MUTUAL CONSENT<\/p>\n
This Agreement shall be subject to termination prior to the
\n expiration of the term at any time by mutual consent of the
\n parties, evidenced by a written agreement providing for
\n termination. Such agreement will include provisions to allow
\n StorageTek access to IBM disk drives of the same type as are
\n then being consigned to StorageTek and to provide IBM ongoing
\n maintenance, FRUs and Product Engineering Services if
\n StorageTek offers such items to any other entity.<\/p>\n
23.2 TERMINATION BY BANKRUPTCY<\/p>\n
This Agreement may be immediately terminated by either Party
\n if any of the following events (“Triggering Events”) occur:
\n (1) the other Party files a voluntary petition under any
\n provision of the U.S. Bankruptcy Code or under any similar
\n insolvency law, makes an assignment for the benefit of its
\n creditors, (2) any involuntary petition in bankruptcy under
\n any provision of the U.S. Bankruptcy Code or under any similar
\n insolvency law is filed against such other Party, or (3) a
\n receiver is appointed for, or a levy or attachment is made
\n against all or substantially all of its assets, and such
\n involuntary petition is not dismissed or such receiver or levy
\n or attachment is not discharged within sixty (60) days after
\n the filing, appointment or making thereof.<\/p>\n
To the extent that applicable bankruptcy law does not permit
\n the exercise of rights under the immediately preceding
\n paragraph, the bankrupt party agrees that adequate assurance
\n of performance by the bankrupt party of the balance of this
\n Agreement as a “Debtor-in-possession” or any similar entity
\n under successor bankruptcy laws will include assurances both
\n of such entity’s ability to adequately produce products for
\n the specifically permitted Agreement and such entity’s
\n willingness and ability to protect the other party’s
\n proprietary rights. As a personal contract, exercise of
\n rights by a trustee or assignment of rights hereunder would
\n not be appropriate and such understanding is an essential part
\n of each Party’s willingness to enter into this Agreement.<\/p>\n
23.3 TERMINATION FOR CAUSE<\/p>\n
a. If either Party is in material breach of this Agreement,
\n the other Party may give written notice to the
\n defaulting Party specifying the respects in which the
\n defaulting Party has failed to perform or comply with
\n the terms and conditions<\/p>\n
53
\n 61
\n of this Agreement. In the event that any defaults so
\n indicated shall not be remedied by the defaulting Party
\n within sixty (60) days (ten (10) days as to a failure to
\n pay any amounts indisputably due) unless a different
\n period is provided for elsewhere in this Agreement after
\n such notice, the party not in default may, by written
\n notice to the defaulting Party, terminate this
\n Agreement.<\/p>\n
b. Either Party may submit disputes related to the notice
\n of termination to the Escalation Process or Mediation
\n Process described in Section 22 but such termination
\n notice shall not be stayed by submission to escalation
\n or mediation and termination shall take effect as set
\n forth above. Failure of either Party to terminate this
\n Agreement due to a breach on the part of the other Party
\n shall not prejudice its rights to terminate for a
\n subsequent breach on the part of the defaulting Party.<\/p>\n
c. The right of a Party to terminate this Agreement, and
\n the exercise of such right by such Party, shall be in
\n addition to any other remedies or rights granted in this
\n Agreement or which a Party would have in law or equity.<\/p>\n
d. If IBM terminates this Agreement for cause:<\/p>\n
(1) **<\/p>\n
(2) **<\/p>\n
(3) **<\/p>\n
(4) **<\/p>\n
(5) **<\/p>\n
e. If StorageTek terminates this Agreement for cause:<\/p>\n
(1) **<\/p>\n
(2) **<\/p>\n
(3) **<\/p>\n
(4) **<\/p>\n
(5) **<\/p>\n
– ———————————–<\/p>\n
** Confidential portions omitted and filed separately with the Securities
\n and Exchange Commission under an application for confidential treatment.<\/p>\n
54
\n 62
\n 23.4 MATERIAL BREACH<\/p>\n
A material breach shall include, but not be limited to, a
\n material failure to:<\/p>\n
a. pay any amounts that are undisputably due;<\/p>\n
b. deliver Equipment or to supply software, tools and
\n licenses in accordance with this Agreement;<\/p>\n
c. comply with the reliability, availability, and service
\n levels specified in the Agreement;<\/p>\n
d. manufacture Equipment in accordance with the Agreement;<\/p>\n
e. supply Deliverables in accordance with Attachment 1 to
\n Exhibit 3; or<\/p>\n
f. comply with Section 18, Representations and Warranties.<\/p>\n
A Party may not be declared to be in material breach of any
\n provision of this Agreement if, and to the extent that its
\n failure to perform has been caused by the other Party’s breach
\n of this Agreement.<\/p>\n
23.5 ** LICENSE<\/p>\n
StorageTek hereby grants to IBM a fully paid-up license to
\n ** .<\/p>\n
23.6 MANUFACTURING MAKE OR HAVE MADE RIGHTS<\/p>\n
**<\/p>\n
a. **<\/p>\n
b. **<\/p>\n
c. **<\/p>\n
d. **<\/p>\n
e. **<\/p>\n
f. **<\/p>\n
– ———————————–<\/p>\n
** Confidential portions omitted and filed separately with the Securities
\n and Exchange Commission under an application for confidential treatment.<\/p>\n
55
\n 63
\n g. **<\/p>\n
h. **<\/p>\n
23.7 TERMINATION FOR CONVENIENCE<\/p>\n
IBM shall also have the right to terminate this Agreement for
\n convenience ** by providing StorageTek with a ** of its
\n election to do so. In the event IBM elects to terminate this
\n Agreement for convenience, ** and based upon IBM’s standard
\n OEM terms and conditions at the time of termination.<\/p>\n
23.8 TERMINATION FOR BURDENSOME CONDITION<\/p>\n
a. Upon the occurrence of a Burdensome Condition **<\/p>\n
(1) **<\/p>\n
(2) **<\/p>\n
(3) **<\/p>\n
(4) **<\/p>\n
(5) **<\/p>\n
(6) **<\/p>\n
(7) **<\/p>\n
b. Upon the occurrence of a Burdensome Condition **<\/p>\n
(1) **<\/p>\n
(2) **<\/p>\n
c. Upon the occurrence of a Burdensome Condition **<\/p>\n
(1) **<\/p>\n
(2) **<\/p>\n
(3) **<\/p>\n
– ———————————–<\/p>\n
** Confidential portions omitted and filed separately with the Securities
\n and Exchange Commission under an application for confidential treatment<\/p>\n
56
\n 64
\n (4) **<\/p>\n
(5) **<\/p>\n
(6) **<\/p>\n
(7) **<\/p>\n
d. For purposes of this Section 23.8, ** .<\/p>\n
e. In no event will either Party’s liability to the other
\n for termination pursuant to this Section 23.8 exceed (i)
\n the sum of ** in the event of a termination of this
\n Agreement only as a result of a circumstance described
\n in Section 1.7(ii); or (ii) the sum of ** in the event
\n of a termination of this Agreement as a result of a
\n circumstance described in Section 1.7(i). **<\/p>\n
23.9 WIND DOWN<\/p>\n
Upon termination of this Agreement by either Party for any
\n reason prior to the expiration of the term set forth in
\n Section 3:<\/p>\n
a. IBM may continue, for ** following the date of notice
\n of such termination, to place noncancelable purchase
\n orders at prices for the quarter in which such notice is
\n effective for Equipment, and StorageTek agrees to accept
\n such orders and to manufacture supply and Deliver such
\n Equipment to IBM if ordered for Delivery within ** of
\n such purchase orders and within appropriate lead times;
\n and<\/p>\n
b. StorageTek may continue for ** following the date of
\n notice of termination (unless a longer period is
\n otherwise provided for in this Agreement), to place
\n noncancelable purchase orders for disk drives of the
\n same type as the Drives that are being consigned, or
\n similar replacements therefor, at a price ** , and
\n based on IBM’s standard terms and conditions; and IBM
\n agrees to accept such purchase orders and to
\n manufacture, supply and deliver such disk drives, if
\n ordered for delivery by StorageTek within appropriate
\n lead times.<\/p>\n
Except for a termination of this Agreement by StorageTek
\n pursuant to Sections 6.5b or 6.5c, Equipment ordered by IBM
\n hereunder, if Delivered after termination, will be<\/p>\n
– ———————————–<\/p>\n
** Confidential portions omitted and filed separately with the Securities
\n and Exchange Commission under an application for confidential treatment<\/p>\n
57
\n 65
\n credited toward IBM’s attainment of its ** Volumes, as the
\n case may be, for the quarter in which the Agreement was
\n terminated.<\/p>\n
23.10 ** AFTER TERMINATION<\/p>\n
Subject to Sections 23.3 and 23.8, ** if either Party
\n terminates this Agreement, ** for Product Engineering
\n Services required under the SOW; or (iii) receive such Product
\n Engineering Services as it may request, up to the levels as
\n then required under the SOW, on a time and materials basis at
\n ** .<\/p>\n
24. INDEMNIFICATION RIGHTS<\/p>\n
24.1 INTELLECTUAL PROPERTY INDEMNITY<\/p>\n
a. **<\/p>\n
b. **<\/p>\n
c. **<\/p>\n
d. **<\/p>\n
(1) **<\/p>\n
(2) **<\/p>\n
24.2 GENERAL INDEMNITY<\/p>\n
a. StorageTek shall indemnify, defend and hold harmless IBM
\n in respect to any cost, expenses, liability or damages,
\n including reasonable attorney’s fees, for any
\n third-party claims arising out of or related to:<\/p>\n
(1) **<\/p>\n
(2) **<\/p>\n
(3) **<\/p>\n
(4) **<\/p>\n
(5) **<\/p>\n
– ———————————–<\/p>\n
** Confidential portions omitted and filed separately with the Securities
\n and Exchange Commission under an application for confidential treatment.<\/p>\n
58
\n 66
\n b. StorageTek shall, however, have no liability to
\n indemnify IBM if and only to the extent that:<\/p>\n
(1) **<\/p>\n
(2) **<\/p>\n
(3) **<\/p>\n
24.3 OBLIGATIONS OF IBM<\/p>\n
The obligation of StorageTek to defend and make payments under
\n Sections 24.1 and 24.2 is conditioned on the following:<\/p>\n
a. **<\/p>\n
b. **<\/p>\n
c. **<\/p>\n
IBM may participate, at its sole cost and expense, in the
\n defense of any action on such claim and any negotiations for
\n its settlement or compromise.<\/p>\n
25. GOVERNING LAW<\/p>\n
25.1 NEW YORK LAW<\/p>\n
The relationship between the Parties and this Agreement are
\n governed by the substantive laws of the state of New York. Any
\n action between the Parties must be brought before a court of
\n competent jurisdiction located in the United States Southern
\n District of New York. Each Party hereby waives any right to a
\n jury trial in any dispute between them. The Parties agree that
\n the United Nations convention on the international sale of
\n goods shall not apply to this Agreement.<\/p>\n
It shall be a condition precedent to the filing of any such
\n actions that the dispute resolution procedure set forth in
\n Section 22 will have been followed prior to the filing of such
\n action, excepting only that a Party may institute an action
\n seeking a preliminary injunction, temporary restraining order,
\n or other equitable relief, if necessary in the opinion of that
\n Party to avoid material harm to its property, rights or other
\n interest, before commencing or at any time during the course
\n of the dispute procedure in Section 22.<\/p>\n
– ———————————–<\/p>\n
** Confidential portions omitted and filed separately with the Securities
\n and Exchange Commission under an application for confidential treatment<\/p>\n
59
\n 67
\n 25.2 LIMITATION OF ACTIONS<\/p>\n
Neither Party will bring a legal action in connection with
\n this Agreement against the other more than ** after the cause
\n of action arose. This limitation does not apply to actions
\n brought to enforce (i) indemnification rights (Section 24) or
\n (ii) violation of intellectual property rights.<\/p>\n
25.3 LIMITATION OF LIABILITY<\/p>\n
Except as may be required pursuant to Section 6.5, in no event
\n shall either Party hereto be liable to the other for more than
\n ** for any and all causes of action and claims of any nature
\n (including, but not limited to, claims that obligations,
\n representations or warranties hereunder have failed of their
\n essential purpose) in connection with this Agreement;
\n provided, however, that:<\/p>\n
(a) **<\/p>\n
(b) **<\/p>\n
26. GENERAL<\/p>\n
26.1 COMPLIANCE WITH LAWS<\/p>\n
Each Party agrees to comply at its own expense with all
\n applicable laws and regulations of the United States, the
\n European Union, and all other countries or country groups.<\/p>\n
26.2 RELATIONSHIP OF THE PARTIES<\/p>\n
Each Party acknowledges and agrees that it is it is
\n independent of the other. Neither Party is, or will claim to
\n be, a partner, employee, joint venturer, agent, or legal
\n representative of the other Party except as specifically
\n stated in this Agreement. Neither Party will assume or create
\n any obligation or responsibility, expressly or by implication,
\n on behalf of or in the name of the other Party. Each Party
\n is responsible for the direction and compensation of its
\n employees.<\/p>\n
Each Party may have similar agreements with others. Each
\n Party may design, develop, manufacture, acquire or market its
\n own or competitive products and services.<\/p>\n
– ———————————–<\/p>\n
** Confidential portions omitted and filed separately with the Securities
\n and Exchange Commission under an application for confidential treatment.<\/p>\n
60
\n 68
\n 26.3 NOTICES<\/p>\n
All notices by one party to the other in connection with this
\n Agreement shall be in writing and will be sent to the
\n following addresses:<\/p>\n
Notices related to forecasts, orders, and shipment will be
\n sent to:<\/p>\n
\n
\n For IBM: For StorageTek: <\/p>\n ** Agreement Administrator
\n Procurement Manager for IBM Agreement
\n IBM Corporation Storage Technology Corporation
\n 5600 Cottle Road 2270 South 88th Street
\n San Jose, CA 95193 Louisville, CO 80028
\n<\/c><\/s><\/table>\n
All other notices, including without limitation notices of
\n breach, default, will be sent to the following addresses:<\/p>\n
\n
\n For IBM: For StorageTek:<\/p>\n ** Agreement Administrator
\n Vice President, Worldwide Materials for IBM Agreement
\n IBM Corporation Storage Technology Corporation
\n 5600 Cottle Road 2270 South 88th Street
\n San Jose, CA 95193 Louisville, CO 80028<\/p>\n
with a copy to: <\/p>\n
For IBM: For StorageTek:<\/p>\n
Legal Department General Counsel
\n IBM Corporation StorageTechnology Corporation
\n 5600 Cottle Road 2270 South 88th Street
\n San Jose, CA 95193 Louisville, CO 80028
\n<\/c><\/s><\/table>\n
Either Party may change any address at which it will receive
\n notices by notifying the other Party in writing.<\/p>\n
Notices and other communications between the Parties in
\n connection with this Agreement shall be deemed given:<\/p>\n
a. three days after being sent by U.S. mail, postage
\n prepaid, certified or registered, to the address listed
\n above; or<\/p>\n
– ———————————–<\/p>\n
** Confidential portions omitted and filed separately with the Securities
\n and Exchange Commission under an application for confidential treatment.<\/p>\n
61
\n 69
\n b. on the date it is sent via facsimile transmission with
\n confirmation from the receiving party that the
\n transmission was completed successfully, with the
\n original document sent as described above in item a.<\/p>\n
Notices related to order, forecast, shipment, and delivery may
\n also be sent via confirmed electronic mail (EDI) to the
\n address listed above and shall be deemed given on the date of
\n confirmation of delivery.<\/p>\n
26.4 COUNTERPARTS<\/p>\n
This Agreement may be executed simultaneously in two (2)
\n counterparts, each of which shall be deemed an original, but
\n both of which together shall constitute one and the same.<\/p>\n
26.5 HEADINGS AND ATTACHMENTS<\/p>\n
The headings in this Agreement are for reference only and will
\n not affect its meaning or interpretation. The Exhibits,
\n their Attachments, their Appendices and their Schedules, are
\n attached to and referenced in this Agreement and are
\n incorporated herein by reference.<\/p>\n
26.6 AMENDMENT<\/p>\n
For any change to this Agreement to be valid, it must be
\n signed by both Parties.<\/p>\n
26.7 WAIVER<\/p>\n
The failure by either Party at any time to enforce the
\n provisions of this Agreement, to exercise any option or
\n election, or to require at ant time the performance by the
\n other Party of any provisions herein will not be construed as
\n a waiver of such provision.<\/p>\n
26.8 SEVERABILITY<\/p>\n
If any provision or provisions of this Agreement shall be held
\n to be invalid, illegal or unenforceable, the validity,
\n legality and enforceability of the remaining provisions shall
\n not in any way be affected or impaired provided the original
\n intentions of both Parties are maintained.<\/p>\n
26.9 WEEKENDS AND HOLIDAYS<\/p>\n
If any obligation of a party hereunder falls due on a weekend
\n day or a Federal holiday, then that obligation shall be due on
\n the next business day following such weekend day or Federal
\n holiday.<\/p>\n
62
\n 70
\n 26.10 FORCE MAJEURE<\/p>\n
Neither StorageTek nor IBM shall be liable for any delay or
\n failure of performance hereunder due to any contingency beyond
\n its control which renders performance commercially
\n unreasonable including, but not limited to, an act of God,
\n war, mobilization, riot, strike, embargo, fire, flood,
\n hurricane, earthquake or power failure (“force majeure
\n incident”).<\/p>\n
When only part of StorageTek’s or IBM’s ability to perform is
\n excused under this section, StorageTek or IBM must allocate
\n production and deliveries or receipt of deliveries among
\n various customers or suppliers then under contract for similar
\n goods during the period when StorageTek or IBM is unable to
\n perform. The allocation must be effected in accordance with
\n Section 10.5 of the Agreement.<\/p>\n
If either StorageTek or IBM claims excuse for nonperformance
\n under this section, it must give notice in writing to the
\n other party.<\/p>\n
If StorageTek is unable to Deliver or IBM is unable to sell
\n Equipment, or if IBM is unable to deliver Drives, due to a
\n force majeure incident, any units of Equipment that were
\n properly ordered by IBM and not Delivered will be counted
\n toward IBM’s attainment of its ** Volumes, Annual Volumes
\n and Minimum Volumes.<\/p>\n
If a Party’s inability continues for more than one hundred
\n twenty (120) days, the other Party may terminate this
\n Agreement and IBM shall have no liability hereunder for
\n Recovery Payments and Liquidated Damages.<\/p>\n
26.11 SURVIVAL<\/p>\n
The rights and obligations of Sections 1, 7.6, 7.7a, 7.8,
\n 7.10, 9, 14, 15, 16.8, 18, 19.1, 19.2, 19.5, 20, 22, 23, 24,
\n 25 and 26, and 11, 13.1a, 13.2, 13.3 and 13.4 (with respect
\n to FRUs), shall survive and continue after any expiration or
\n termination of this agreement and shall bind the parties and
\n their legal representatives, successors and assigns.<\/p>\n
26.12 ORDER OF PRECEDENCE<\/p>\n
In the event that there is an inconsistency or conflict
\n between the terms in the Specifications and other terms of
\n this Agreement, then such other terms in this Agreement shall
\n take precedence over the terms in the Specifications.<\/p>\n
THIS AGREEMENT SUPERSEDES ALL PROPOSALS, ORAL OR WRITTEN, AND ALL NEGOTIATIONS,
\nCONVERSATIONS OR DISCUSSIONS HERETOFORE HAD BETWEEN THE PARTIES RELATED TO THE
\nSUBJECT MATTER OF THIS AGREEMENT. THE PARTIES BOTH ACKNOWLEDGE THAT THEY HAVE
\nNOT BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY ANY REPRESENTATIONS OR
\nSTATEMENTS, ORAL OR<\/p>\n
63
\n 71
\nWRITTEN, NOT EXPRESSLY CONTAINED HERE. THE TERMS AND CONDITIONS OF THIS
\nAGREEMENT SHALL PREVAIL, NOTWITHSTANDING ANY VARIANCE WITH THE TERMS AND
\nCONDITIONS OF ANY ORDER OR OTHER INSTRUMENT SUBMITTED BY THE PARTIES.<\/p>\n
\n
\nINTERNATIONAL BUSINESS MACHINES STORAGE TECHNOLOGY CORPORATION
\n CORPORATION <\/p>\nBy: By:
\n ———————— ————————-<\/p>\n
Name: Name:
\n ———————— ————————-<\/p>\n
Title: Title:
\n ———————— ————————-<\/p>\n
Date: Date:
\n ———————— ————————-
\n<\/c><\/s><\/table>\n
64<\/p>\n
72
\nPlease note: The Exhibits, Attachments and Appendices are not filed herewith
\nas such documents contain confidential pricing information and other
\nproprietary materials and are otherwise immaterial to an understanding of the
\nOEM Agreement between Storage Technology Corporation and International Business
\nMachines Corporation.<\/p>\n","protected":false},"template":"","meta":{"_acf_changed":false,"_stopmodifiedupdate":true,"_modified_date":"","_cloudinary_featured_overwrite":false},"corporate_contracts_companies":[7886,8959],"corporate_contracts_industries":[9508],"corporate_contracts_types":[9613,9619],"class_list":["post-42610","corporate_contracts","type-corporate_contracts","status-publish","hentry","corporate_contracts_companies-international-business-machines-corp","corporate_contracts_companies-storage-technology-corp","corporate_contracts_industries-technology__hardware","corporate_contracts_types-operations","corporate_contracts_types-operations__sales"],"acf":[],"_links":{"self":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts\/42610","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts"}],"about":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/types\/corporate_contracts"}],"wp:attachment":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/media?parent=42610"}],"wp:term":[{"taxonomy":"corporate_contracts_companies","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_companies?post=42610"},{"taxonomy":"corporate_contracts_industries","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_industries?post=42610"},{"taxonomy":"corporate_contracts_types","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_types?post=42610"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}