OEM Agreement - Dell Products LP and Quantum Snap Division Corp.
QUANTUM CONFIDENTIAL DELL CONFIDENTIAL
OEM AGREEMENT
BETWEEN
QUANTUM AND DELL
1.0 INTRODUCTION. This is a Master OEM Provider Agreement and attachments
(this "Agreement") by and between Dell Products L.P., a Texas limited
partnership ("Dell"), and Quantum Snap Division Corporation, a Delaware
corporation ("Quantum"). As of June 8, 2000 (the "Effective Date"), Dell and
Quantum (each a "Party" and collectively, the "Parties") establish binding
terms under which Dell may purchase and Quantum may sell Products, Licensed
Products and Parts (defined below), that Dell may resell directly, and
indirectly through resellers and distributors, to end-user customers. Dell may
resell Products, Licensed Products and Parts to Dell's OEM customers for resale
by such OEM customers under their own brand names. Any costs and expenses
associated with modifications required to support Dell's OEM customers will be
borne by Dell or Dell's OEM customers.
Therefore, Dell and Quantum agree as follows:
2.0 DEFINITIONS
As used in this Agreement, the following terms shall have the following
meanings:
"Affiliates" shall mean the affiliated entities of Dell listed on Attachment A.
Affiliates may purchase Products under this Agreement, but Quantum agrees that
all liabilities and obligations under this Agreement will remain the sole
responsibility of Dell.
"APCC" shall mean Dell's manufacturing facilities for Asian countries, other
than China, located in Penang, Malaysia or other locations as Dell may
designate under this Agreement (see Section 4 of this Agreement).
"Day(s)" shall mean a calendar day(s) unless otherwise specified in a
particular Section of this Agreement.
"Dell Demand Forecast" shall mean the projected volume of Product needed by
Dell as provided in writing by Dell to Quantum on or around the first business
day of each month (see Section 6 of this Agreement).
"Dell Offering" shall mean Products and Licensed Products, including any
additional hardware or Software installed by or for Dell, that Dell may sell to
Dell's customers.
"DAO" shall mean Dell's manufacturing facilities for the Americas located in
and around Austin, Texas or other locations as Dell may designate under this
Agreement (see Section 4 of this Agreement).
"EMEA" means Dell's manufacturing facilities for Europe, the Middle East and
Africa located in Limerick, Ireland or other locations as Dell may designate
under this Agreement (see Section 4 of this Agreement).
"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.
"Licensed Product" shall mean products manufactured by Dell pursuant to the
conditional manufacturing license granted in Section 12.7.
"NRE" shall mean non-recurring engineering.
"Order" shall mean any purchase order for Products placed by Dell or Dell's
Affiliates.
"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.
"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 Dell separately and not as a component of the Products listed in
Attachment A.
"Software" shall mean all device drivers, firmware and other software necessary
to operate and support the
*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.
1 of 19
<PAGE> 2
QUANTUM CONFIDENTIAL DELL CONFIDENTIAL
Products, except for Quantum's Hard Disk Drive ("HDD") firmware.
3. QUANTUM'S ROLE IN THE DELL DIRECT MODEL
3.1 Dell-Focused Team. Quantum will maintain a Dell-focused team consisting
of at least: (a) a dedicated Dell account manager; and (b) a Dell
quality/engineering resource person who will serve as a primary contact for
Dell's engineers. Quantum will provide Dell employees with reasonable points of
contact for other key areas, including at a minimum testing, process and
quality.
3.2 Quarterly Business Review. Dell will be entitled to participate in the
formulation and direction of Quantum's future Product and technology roadmaps.
Quantum and Dell 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.
3.3 Cost Reductions and Price Reductions. Quantum understands that Dell's
selection of Quantum as a provider of the Products to Dell is based in part on
Dell's belief that Quantum 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 Quantum.
Quantum shall review with Dell, on an ongoing basis (for each Product) the
noncosted bill of materials ("BOM"). Modifications of the supply chain by
Quantum after commencement of shipments of Products to Dell are subject to Dell
approval.
3.4 Quality Goals. Quality is a material term of this Agreement. Quantum 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, Quantum will develop a comprehensive quality plan for all Products as
specified in Attachment A. Quantum will maintain accurate and legible records
of all Product manufacturing methods and specifications. If Quantum fails to
achieve the Quality Goals, Quantum will promptly put into place a corrective
action plan, as agreed to in writing by Dell, designed to bring Quantum's
quality performance back into conformity with the Quality Goals.
Notwithstanding any other provision in this Agreement, if Quantum fails to
meet the Quality Goals, within forty-five (45) Days after written notice to
Quantum, Dell may cancel any outstanding Orders without any liability
whatsoever. If Quantum fails to meet the Quality Goals, then Quantum 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, Quantum will grant Dell reasonable access to and Dell may audit any
information reasonably requested by Dell with respect to Quantum's quality
performance under this Agreement (see Section 23.1 of this Agreement).
3.5 Electronic Communication. Quantum will maintain electronic communications
with Dell via e-mail or the Internet, and will establish and maintain such
other commercial communication methods as Dell 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 Dell to submit Orders to Quantum. 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.
3.6 Quantum's Service Obligations. Quantum's general service obligations
beyond those in particular Sections of this Agreement are set forth in
Attachment A.
3.7 Dell Service Tags and Test Plans. Quantum will place Dell Service Tags on
Products per Dell Specifications. Quantum will integrate Dell's test plan into
its manufacturing process for Products upon mutual agreement. Dell will be
permitted to audit Quantum's manufacturing process upon reasonable notice.
4.0 MANUFACTURING LOCATIONS
4.1 Approved Quantum Manufacturing Locations. Quantum's Dell-approved
manufacturing facilities for Products as of the Effective Date are listed in
Attachment A. All Products that Quantum delivers to Dell will be manufactured
at the locations listed in Attachment A. Quantum will provide Dell 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
Dell's approval and right to audit (see Section 23.1), but Dell will not
unreasonably withhold approval of a new manufacturing location. Dell's failure
to object to or approve the new manufacturing location in writing within the
ninety (90)-Day period specified above will constitute Dell's approval of the
new manufacturing location. Quantum will give due consideration to Dell's input
on matters including, without limitation, inventory velocity (hubs and revolver
2 OF 19
<PAGE> 3
QUANTUM CONFIDENTIAL DELL CONFIDENTIAL
requirements), quality, timeliness of delivery and manufacturability.
4.2 Dell Manufacturing Locations. [*] Quantum agrees that so long as
Quantum receives ninety (90) Days written notice of changes or additions to
Dell's manufacturing locations, Quantum will deliver Products to all Dell
manufacturing locations under the terms and conditions of this Agreement and
provided that such new manufacturing location is in a country where Quantum
ships product.
5.0 PRICE AND PAYMENTS
5.1 Product Pricing. The prices, payment terms, lead times and buffer
inventory requirements for Products are set forth in Attachment A.
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. Dell 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. Dell has the right to withhold any applicable taxes from
any payments due under this Agreement if required by any government authority.
Dell 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 Austin SLC to zero (0) at the end of any calendar year, so as
to minimize exposure to property tax assessment by the State of Texas.
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 Quantum
offers Products to any other purchaser on prices and terms more favorable than
those offered to Dell for similar quantities of the Products, Quantum shall
offer those same prices and terms to Dell. To refresh Products and prices,
Quantum will issue a Price Release Letter to Dell. The Price Release Letter will
contain revised prices and their effective dates and will be transmitted via
facsimile or electronic mail to Dell within twenty-four (24) hours of verbal
confirmation. In the event Dell receives multiple, conflicting prices from
Quantum, Dell 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. Dell shall pay pursuant
to the currently effective Price when Products are shipped to Dell. Dell's
agent, may audit Quantum's compliance with this Section 5 as provided for
financial audits in Section 23.1 of this Agreement.
On a quarterly basis, or more frequently as requested by Dell and as
necessitated by market conditions, Quantum's pricing for the Products shall be
adjusted based on Quantum's cost reductions and competitive market conditions.
5.4 Form of Invoices. Invoices shall be in sufficient detail for Dell to
determine the quantity and quality of Products.
5.5 Payment.
5.5.1 Payment for Orders issued by EMEA will be made net thirty (30) Days
end of month from the later of the date of Quantum's invoice.
5.5.2 Payment for Orders issued by all other Dell manufacturing locations
will be made net thirty (30) Days from the date of Quantum's invoice, with
payment within forty-five (45) Days of such date deemed timely.
6.0 SUPPLIER LOGISTICS CENTER, FORECASTS AND ORDERS
6.1 Revolver. Quantum agrees to use the Supplier Logistics Center ("SLC")
approved by Dell, at Dell's expense, for each Dell manufacturing location for
all Products as follows:
6.1.1 Forecast. On a monthly basis, Dell will provide rolling six (6) month
forecasts of projected purchases of Products to Quantum for each Dell
manufacturing location, but any such forecasts provided by Dell to Quantum are
for planning purposes only, and do not constitute a commitment of any type by
Dell or Quantum.
6.1.2 Forecast Confirmation. No later that five (5) days from receipt of
the Dell forecast, Quantum will confirm supply for a rolling three (3) month
period (current month plus two).
6.1.3 Frame Order. Dell will issue to Quantum a non-binding individual frame
Order in writing (via fax or email) to cover Dell's demand for the next month
based on Dell's most recent forecast. With each new monthly forecast, Dell will
extend this frame Order accordingly, so that the frame Order will continue to
cover at least the next month of Dell's forecasted demand. The quantity of
Product for each delivery period will be determined by
*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.
3 of 19
<PAGE> 4
QUANTUM CONFIDENTIAL DELL CONFIDENTIAL
Dell 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 Dell on the first (1st) workday of May.
6.1.4 Order Confirmation. No later than five (5) Days from receipt of the Dell
frame Order, Quantum shall issue an Order acceptance confirming the quantity
and Ship Date if Quantum accepts the Order. Quantum may only reject Orders that
are not in compliance with the Agreement. Quantum shall notify Dell of the
reasons for rejection of an Order within two business days of receipt of such
Order.
6.1.5 Inventory. Quantum will establish a capability to deliver additional
Product to Dell at the SLC for each Dell manufacturing location in quantities
equal to Dell'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 Dell's Pull Orders
for the preceding four (4) weeks and the second week based on the most recent
Dell forecast). If Dell requests delivery of any or all of the Revolver
Inventory, Quantum shall provide to Dell a schedule by which it shall replenish
Revolver Inventory within two (2) business days.
6.1.6 Pull Order. Dell will transmit a Pull Order by fax or other agreed upon
means to communicate to Quantum, at the applicable SLC, the part number and
quantity of each Product required ("Pull Order"). Dell's transmission of a Pull
Order is authorization for Quantum to ship and invoice Dell against the frame
Order for the part numbers and quantities set forth in the transmission. Quantum
will deliver Product from the SLC upon receipt of the Pull Order.
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.
6.2 Form of Orders. Dell 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:
(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.
6.3 Acceleration, Rescheduling and Cancellation of Orders. Dell may accelerate,
reschedule or cancel Orders on the terms and conditions stated in Attachment A.
7.0 DELIVERY AND ACCEPTANCE
7.1 Delivery. The terms and conditions of sale and delivery of Products are as
stated in Attachment A.
7.2 Packaging. Quantum will handle, pack, mark and ship Products in accordance
with Dell's packaging specifications as stated in the then-current Dell
Packaging and Labeling Manual (the "Manual"). Dell agrees to timely notify
Quantum of changes to the Manual and will provide Quantum with updated copies of
the revised Manual as new versions become available. A revised Manual takes
effect upon mutual agreement.
7.3 Delivery Documentation. Each delivery of Products must be accompanied by
Quantum'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) Dell's Order number; (b) Quantum's
Product number; and (c) the quantity shipped. Quantum agrees to develop and use
a joint Quantum/Dell part number identification method. Dell's name shall not
appear on any labels.
7.4 Delivery Schedules. If Quantum believes any shipment may not be delivered on
schedule (and without waiver of any rights by either Party), Quantum must
provide advance notification to Dell, along with proposed solutions and recovery
plans. Except for late shipments due to Force Majeure (see Section 23.11),
Quantum 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 Dell having
been the primary cause of the delay, Dell may cancel or reschedule such Order
without any liability whatsoever. Failure or delay by Dell's carrier to pick up
Products is not deemed to be a late delivery.
7.5 Open Order Logs. On a weekly basis, Quantum will provide to each Dell
manufacturing location a report that details the status of all open Orders.
7.6 Inspection and Acceptance of Products. Before shipment, Quantum will
inspect, test and qualify Products for Dell. Dell 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
Dell's shipment to Dell's customer, may be returned for credit, replacement or
repair at Quantum's expense. All other in-warranty returns will be handled in
accordance with the terms and conditions of Section 9.2. Quantum will repair or
replace non-
4 OF 19
<PAGE> 5
QUANTUM CONFIDENTIAL DELL CONFIDENTIAL
conforming Products as stated in the warranty provisions of this Agreement, and
no payment shall be due to Quantum until non-conforming Products are repaired or
replaced. Dell will make returns of non-conforming Products within a reasonable
time.
8.0 WARRANTIES
8.1 General Warranty. Quantum warrants that all Products (hardware content)
will meet all specifications set forth in Attachment A. Quantum warrants that
all Products (software content) will substantially meet all specifications set
forth in Attachment A [*] Quantum warrants that all Products delivered hereunder
to Dell will be new (except for repaired or returned Products), free and clear
of all liens, claims and encumbrances. Quantum warrants that Dell will acquire
good and marketable title to all Products upon delivery to Dell. Quantum
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 Quantum. This [*]
month warranty may be extended as follows: if Dell or Dell's customer returns
Products to quantum and Quantum delivers repaired Products to Dell or Dell'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.
8.2 Date Data Warranty. Quantum warrants that all Products, at no additional
cost to Dell 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.
8.3 Good and Workmanlike Fashion Warranty. Quantum warrants that Quantum
possesses the skills to and will perform services and obligations hereunder in a
good and workmanlike fashion.
8.4 Prompt Satisfaction of Warranties. Dell's remedy for breach of the
warranties in this Agreement is repair or replacement of Products. Quantum will
promptly repair or replace all Products that do not meet the terms of all
warranties in this Agreement. If quantum does not remedy a breach of warranty
under this Agreement within ten (10) Days of notice, Dell may seek money damages
from Quantum and Dell may immediately terminate this Agreement.
8.5 Warranties Non-transferable. Quantum extends the warranties in this
Agreement only to Dell and Dell may not transfer these warranties.
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. QUANTUM DISCLAIMS
ALL IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND
NONINFRINGEMENT.
9.0 REPAIRS AND RETURNS
9.1 General Repair Obligation of Quantum. 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 Quantum's
warranties; (b) after a warranty has expired; or (c) for a problem not caused by
any failure of Quantum's warranties. In any of these cases, Products may fail in
the field or Dell may discover the need for Product repair or replacement at
Dell's manufacturing locations. Products in need of repair or replacement may be
returned to Quantum from the field or directly from Dell's manufacturing
locations or Dell may receive credit as detailed below. During the term of this
Agreement, Quantum will repair or replace all Products according to the terms
and conditions in this Section 9.
9.2 Warranty Repairs and Replacement. Dell may return defective Products
under warranty to Quantum immediate repair or replacement as specified in this
Section 9.2. Dell will ship defective Products under warranty to Quantum at
Quantum's expense. Quantum must return repaired or replacement Products to any
Dell manufacturing location that Dell specifies at no charge to Dell. Quantum
agrees to ship a repaired or replacement Product to Dell within two (2) business
days after Quantum's receipt of the defective Product, or for Products that
cannot be repaired within two (2) business days of Dell's request to Quantum.
Quantum must clearly mark repaired Products and will segregate repaired Products
from other Product shipments to Dell.
9.3 Out of Warranty Repairs. Quantum will make out-of-warranty repair
service and Products available to Dell for at least two (2) years after the
expiration of the warranty period following the last delivery of each model of
Product to Dell 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 Dell's request, Quantum agrees to discuss with
Dell the possible certification of a third party repair center
*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.
5 of 19
<PAGE> 6
QUANTUM CONFIDENTIAL DELL CONFIDENTIAL
to perform repair of Products. Such discussion would be triggered by concerns
over insufficient repair capacity, poor response time, or repair quality. Dell
shall consult with Quantum prior to certifying such third party repair center.
9.4 End of Life. At the end of a Product's life cycle, Dell and Quantum 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 Dell, Quantum will notify Dell of opportunities to procure Parts
for those Products on behalf of Dell and inventory such Parts at Dell's expense.
9.5 Price Protection. All replacement Product prices shall be listed in a
standard Quantum Products price list, which may be changed by Quantum once
annually. Quantum will provide Dell with at least sixty (60) Days prior notice
of price changes.
9.6 Field Returns.
9.6.1 Dell may make field returns directly to Quantum. At Quantum's request, or
Dell's option, Dell will consolidate field returns into five (5) regions and
send them back to Quantum'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. Quantum will perform tests
within [*] after receipt of failed Products and ship replacement Products as
provided in Section 9.2.
9.6.2 As a goal, the Parties agree to collaborate on a process where Quantum
would give Dell access to a web-based return material authorization ("RMA")
delivery procedure that will provide Dell with immediate access to RMA Numbers
on an as-needed basis. At a minimum, Dell will have access to and use of blocks
of at least 500 RMA numbers at any time.
9.6.3 Quantum will perform all testing required by this Agreement. The Parties
will work together to segregate and separately report line and field returns by
Dell's manufacturing locations. At Dell's request, Quantum will provide a
preliminary failure analysis report within [*] after receipt of Products.
Quantum 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. Dell will provide Quantum with relevant failure date and
error logs, as necessary. Quantum will provide a monthly failure analysis
report, including (at a minimum) the following information as available: (a)
serial number; (b) Dell-provided symptom; (c) Quantum subsystem; (d) defect
found, if any; (e) root cause; (f) short term fix; and (g) long term corrective
action.
9.6.4 If Quantum has reasonable cause to believe that Dell's quality control
process has allowed [*] or more of No Fault Found ("NFF") Products to be
returned to Quantum, Quantum will notify Dell. Dell and Quantum will cooperate
to examine Dell's process and work to improve service delivery to reduce NFF
Products. The Parties will confer to address appropriate steps to correct Dell's
quality control process. The Parties will establish an acceptable verification
process for NFF Products.
9.6.5 For Products failing in the field, Dell will pay transportation charges
for shipping Products to Quantum's manufacturing locations and Quantum will pay
transportation charges for shipping repaired or replacement Products to Dell's
designated location.
10.0 EPIDEMIC FAILURE, PRODUCT HAZARDS AND ENGINEERING CHANGES
10.1 Epidemic Defect. Quantum 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
Dell, Dell's designated service provider, Quantum's test procedures or may
appear as customer-reported failures. Quantum and Dell will cooperate to
promptly determine the root cause of the failures. If the root cause is
determined, then Quantum and Dell will cooperate in good faith on a corrective
action plan. If an Epidemic Defect occurs, Dell may stop delivery of Products
without penalty or liability until the root cause is determined. In addition to
any applicable warranty, Quantum will be responsible for all costs associated
with resolving an Epidemic Defect, where the root cause is Quantum's negligence,
fault or error, including without limitation all Product recall costs.
In addition, in the event Epidemic Defects are identified in the hard disk
drives, Dell may elect to procure HDDs from other vendors and consign them to
Quantum for use in manufacturing Products. The Product price will be adjusted
by subtracting Quantum's cost for HDDs. Quantum shall be responsible for all
incremental costs necessary to enable the consignment of HDDs by Dell. In the
event of any use of non-Quantum HDDs, Quantum 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 Quantum
HDDs. Quantum shall have no responsibility to test, alter, rework, or otherwise
technically interact with non-Quantum HDDs or to share
*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.
6 of 19
<PAGE> 7
QUANTUM CONFIDENTIAL DELL CONFIDENTIAL
any Quantum HDD information with any Quantum HDD competitor. Dell will not be
released from any obligation of confidentiality as to information related to
Quantum HDDs. The Parties shall discuss the feasibility of the above described
consignment provision for each new Product.
10.2 Product Hazards. If either Quantum or Dell 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. Quantum and Dell 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. Quantum 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.
10.3 Engineering Change Orders. Quantum 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
Dell's written consent in the form of an agreed-to Engineering Change Order
("ECO"). If Dell wishes to reject a proposed ECO, Dell must provide written
notice of rejection within thirty (30) Days after receipt of the proposed ECO.
If Dell rejects an ECO, Quantum 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. Quantum will reasonably
notify Dell of ECOs that do not affect the industrial design, form, fit,
function or maintainability of Products. Quantum agrees to supply Dell 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 Dell resell any samples of the Product.
10.4 Dell-Originated ECO. Dell may request ECOs to correct deficiencies or
improve the Product. Such Dell-originated ECOs shall be handled in accordance
with Section 10.3 above. If, however, Dell requires Quantum to implement a
Dell-originated ECO solely for Dell's convenience (a "Convenience ECO"), Dell
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 Quantum has provided Dell
with reasonable written estimates of the scrap or excess. In addition, Dell will
pay reasonable expediting charges to implement the Convenience ECO if Dell
requires implementation faster than the normal lead times for the affected
Products.
10.5 Changes to Parts/Suppliers. Quantum will provide Dell with sixty (60) Days
notice of proposed changes in Parts or suppliers, to provide Dell an opportunity
to approve the new Parts or suppliers. Dell will provide a response within
fifteen (15) Days after receipt of notice of the proposed change in Parts or
suppliers. If Dell does not respond within fifteen (15) Days, such changes shall
be deemed to be accepted by Dell.
11.0 LICENSE NEGOTIATIONS
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.
12.0 LICENSES TO DELL
12.1 Software. Dell 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 Dell's sales
and support of the Products and Licensed Products. Quantum agrees to provide any
commercially released updates and modifications to the Software for the Products
purchased by Dell hereunder and the Licensed Product during the Term of the
Agreement. Dell 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 Quantum with the Software.
12.2 Customer Documentation. Quantum agrees to provide Dell with Product
documentation ("Documentation"). The structure and content of the Documentation
will be as specified by Dell. The
7 OF 19
<PAGE> 8
QUANTUM CONFIDENTIAL DELL CONFIDENTIAL
Documentation shall be provided in PDF or HTML formats, unless otherwise
requested by Dell. Any references to Quantum in the Documentation will be
replaced by references to Dell. Dell may reproduce and distribute the
Documentation in hard copy or softcopy form as well as in electronic form on
bulletin boards. Quantum agrees to provide Documentation to Dell in the
following national languages: English, German, French, and Spanish. With
respect to translations, Quantum's obligation to modify the graphical user
interface ("GUI") and Help text is excluded.
12.3 Marketing Materials. Quantum hereby grants to Dell the nonexclusive,
non-assignable, royalty-free right to use, possess, derive, copy, modify,
display, publish, and distribute Quantum marketing materials; provided that all
applicable Quantum copyright notices, licenses, and proprietary notices are
fully reproduced on each copy. Quantum marketing materials shall be re-branded
"Dell". In addition, Dell may not use the marketing materials licensed under
this Section to position Quantum's branded version of Products as competitive
to Dell's branded version of Products.
12.4 Field Service Documentation. Quantum hereby grants to Dell the
nonexclusive, non-assignable, royalty-free right to use, possess, derive, copy,
modify, display, publish and distribute the Quantum 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 Dell'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 Dell.
12.5 Trademarks. During the term of this Agreement, Quantum hereby grants Dell
a nonexclusive, non-assignable, royalty-free, worldwide right to use Quantum
Trademarks in connection with advertising, promotion and sale of Products and
Licensed Products. "Quantum 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 Quantum on the Products anywhere in the world and which Quantum has a
right to license, upon which the Parties shall mutually agree in writing.
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 Dell 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.
12.7 Conditional Manufacturing License.
12.7.1 Conditional License Grant. Subject to Section 12.7.2 of this Agreement,
Quantum hereby grants to Dell 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 Dell's customers the
Licensed Products (the "Conditional Manufacturing License"). In addition, the
grant of manufacturing rights includes the right of Dell to procure directly
from Quantum, or any Quantum contract manufacturer, any or all of the parts or
assemblies related to the Products. Upon Dell's exercise, as described in
Section 12.7.2 below, of the Conditional Manufacturing License, Quantum shall
immediately provide notice to such contract manufacturers permitting them to
sell such parts or assemblies directly to Dell.
12.7.2 Conditional Exercise by Dell. Dell may exercise the Conditional
Manufacturing License granted in Section 12.7.1 above only: i) in the event
that Quantum's Revolver Inventory is materially out of stock for twenty-one
(21) consecutive Days, for any reason not caused by Dell or a Force Majeure
event; ii) in the event that a majority interest of the equity or assets of
Quantum is transferred to an unrelated third party, except through IPO; or iii)
in the event that Quantum attempts to assign the Agreement without Dell's prior
written consent, except to Quantum Corporation. In the event Dell exercises the
Conditional Manufacturing License because Quantum's Revolver is materially out
of stock, the License shall be limited in scope only to the Products that were
out of stock. Dell shall notify Quantum 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 Dell.
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 Dell's expense. Quantum shall provide to such escrow agent all
specifications, designs, discoveries, inventions,
8 of 19
<PAGE> 9
QUANTUM CONFIDENTIAL DELL CONFIDENTIAL
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 Quantum then
currently uses to manufacture Products purchased hereunder by Dell, excluding
any HDD information (the "Manufacturing Packages"); provided, however, that
Quantum shall not be obligated to provide any information related to the design,
development, or manufacture of HDDs. Quantum 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 Dell's then existing systems, to the extent Quantum is
reasonably able to do so. The Escrow Agreement shall provide that the escrow
agent shall deliver to Dell the Manufacturing Packages immediately upon Dell's
bonafide election to exercise, as described in Section 12.7.2 above, the
Conditional Manufacturing License. Quantum shall reasonably assist Dell with the
installation and implementation of such Manufacturing Packages in the event Dell
exercises the Conditional Manufacturing License. The Parties shall equally share
the costs of such implementation. Dell shall not use any Software source code
for any purpose other making bug fixes to the Software that are necessary to
enable Dell to ship the Licensed Product during the eighteen (18) month term of
the Conditional Manufacturing License. Quantum shall own all right, title and
interest in and to such bug fixes.
12.7.4 Sublicensing. The license in Section 12.7.1 and Manufacturing Packages
may, at Dell's sole discretion, be sublicensed to a contract manufacturer, that
is not a competitor of Quantum, selected by Dell to assist Dell in the
manufacture or preparation of the Licensed Products; provided, however, that
Dell 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 Dell
pursuant to this Section 12.7.4 shall be in writing and contain terms that
otherwise protect Quantum's right, title and interest in and to the Product and
Software at least to the extent of this Agreement. Dell hereby agrees to ensure
the performance of any contractor manufacturer receiving a sublicense from Dell.
12.7.5 Per Unit Royalty for Licensed Products. Subject to the royalty accounting
and payment provisions of Section 14, DELL shall pay Quantum a per unit royalty
for each Licensed Product sold by Dell in an amount that is equal to [*]
12.8 License Exclusions. Nothing contained in this Agreement shall be construed
as:
(a) conferring by implication, estoppel or otherwise any license or right except
the licenses or rights expressly granted to a Party hereunder;
(b) an obligation to modify the design or operation of any part of the
Intellectual Property licensed under this Agreement;
(c) an obligation to bring or prosecute actions or suits against third parties
for infringement;
(d) an obligation to grant by implication, estoppel or otherwise a manufacturing
license to Dell for any Quantum Product other than as expressly stated herein;
(e) impairing any right of Quantum or Dell to market, directly or indirectly,
other products or services competitive with those offered by Quantum or Dell
Quantum and Dell shall be free to market, directly or indirectly, to other
customers; or
(f) implicitly limiting Dell'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
(g) transferring ownership of any intellectual property in the Software from
Quantum.
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.
*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.
9 of 19
<PAGE> 10
QUANTUM CONFIDENTIAL DELL CONFIDENTIAL
13.0 Indemnification.
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, Quantum will defend,
indemnify and hold Dell harmless against that claim at Quantum's expense and pay
all costs, damages, and attorney's fees that a court finally awards, provided
that Dell: (a) provides reasonable notice to Quantum of the claim; and (b)
allows Quantum to have sole control (dell, however, may be represented at its
expense by counsel of its own choice), and reasonably cooperates with Quantum 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 Dell's inventory, Dell
agrees to permit Quantum to either enable Dell to continue to market the
Indemnified Item, or to modify or replace it. If Quantum determines that none of
these alternatives is reasonably available, Dell will return the Indemnified
Item freight collect at Quantum's request for a credit at the purchase price.
Quantum has no obligation to the extent any claim is based on: (i) any
modification of an Indemnified Item by or on behalf of Dell 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 Quantum 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 Quantum did not
provide under this Agreement); or (iii) infringement by a non-Quantum product
alone as opposed to its combination with the Indemnified Item.
14.0 ROYALTY PAYMENTS AND AUDITS
14.1 Royalty Payments. Royalties due to Quantum under this Agreement shall
accrue at the time Dell invoices a customer for a Licensed Product. Dell shall
furnish a royalty report to Quantum within thirty (30) Days after the end of
each of Dell'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 Quantum with respect to all Licensed Products sold, leased, licensed
or otherwise disposed of (excluding Licensed Products which are used by Dell for
evaluation, testing, and demonstration purposes) by or on behalf of Dell during
such Dell fiscal quarter. Payments shall be provided at the same time royalty
reports are provided to Quantum. 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 Dell to Quantum for
Licenced Products shall be calculated in accordance with Section 12.7.5. Royalty
reports and payment shall be made to Quantum as follows:
Quantum Corporation
500 McCarthy Blvd.
Milpitas, CA 95035
Attn: Accounts Receivable
cc: Account Executive, Dell
14.2 Royalty Records and Audits. Dell shall keep adequate records of Dell's
sales and licensing of Licensed Products from which it shall be possible to
audit the accuracy of the royalties remitted to Quantum pursuant to this
Agreement. Quantum shall have the right, at mutually agreeable times during
normal working hours of Dell, 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. Quantum shall provide Dell with at least thirty
(30) Days advance notice of Quantum's intent to conduct an audit. Such audit
shall be performed at Quantum's expense by independent, nationally recognized
auditors selected by Quantum and approved by Dell. Dell shall not unreasonably
withhold such approval. Audits will be conducted in such a manner as not to
interfere with Dell's normal business activities. Audits hall be conducted
pursuant to the confidentiality provisions of Section 17 of this Agreement and
NDA #3688. Dell shall keep files and books of account containing the data
reasonably required for the full computation and verification of Dell's sale
sand royalties paid hereunder for two (2) years after the date of submission of
each royalty report.
15.0 BRANDING, MARKETING, FULFILLMENT, NRE AND SUPPORT
15.1 Branding. Quantum will place the Dell brand or the brand of a Dell OEM
customer, on the product per Dell's ID specification. Any costs and expenses
associated with modifications required to support Dell's OEM customers will be
borne by Dell or Dell's OEM customers. Dell will provide scalable artwork to
Quantum to enable the above requirement.
15.2 Marketing. Quantum shall provide Dell personnel access to a Quantum
pre-sales support desk. Quantum and Dell shall participate in cooperative
demand generation activities, to be funded by a jointly funded market
development fund ("MDF"). Dell shall be required to provide a detailed marketing
plan showing how the MDF is to be utilized prior to disbursement of any funds by
Quantum. Dell Product Marketing shall recommend that Dell's sales segments use
Quantum's minimum advertised pricing guidelines with respect to the Products.
Notwithstanding the above, Dell's sales segments shall be solely and
independently responsible for establishing end-user pricing to Dell's customers.
10 OF 19
<PAGE> 11
QUANTUM CONFIDENTIAL DELL CONFIDENTIAL
15.3 Fulfillment. The Parties agree to work together to develop an acceptable
alternative order entry and fulfillment process, at Dell's expense.
The Parties agree that the preferred fulfillment method would be a system where
Dell would accept the customer order and pass the order specifics to Quantum,
including the customer name and ship-to address. Quantum would then fulfill the
order within 48 hours of receipt from Dell and ship the Product directly to the
Dell customer. Customer returns will be handled by Quantum issuing a RMA and
drawing from a Dell-specific swap pool. Quantum will ship an advance replacement
unit after taking credit card or order information to ensure return of a broken
unit. When Quantum ships a replacement unit, Quantum will provide an order
update to correct Service Tag information.
Alternatively, Dell will place Orders with Quantum as described in this
Agreement.
15.4 NRE. Unless otherwise agreed by the Parties, Quantum will fully fund all
NRE for all Products sold to Dell.
15.5 Support. Dell will handle Level 1 service calls. Quantum will handle level
2, level 3 and level 4 service calls, all of which shall be more fully described
in a separate support agreement. Quantum will fix in a timely manner all
Software bugs reported by Dell.
Quantum will provide support for Software to Dell at no additional charge.
Quantum will provide a blind FTP site for Dell specific software downloads.
Dell will provide a support page on the Dell site with links to Quantum's blind
FTP site as needed. Quantum agrees that Dell may access and use the Quantum
technical support database for the Product for support level analysis of the
Product.
Quantum will develop a written Support Agreement to be approved by Dell (the
"Support Agreement"). The Support Agreement will detail Quantum's support
functions in each of five (5) phases of service:
(a) before Product launch;
(b) in warranty and production by Quantum;
(c) in warranty but out of production by Quantum;
(d) out of warranty and production by Quantum but within the period of time
described in Section 9.3 for each model of Product; and
(e) out of warranty and production by Quantum and outside the period of time
described in Section 9.3 for each model of Product.
The Support Agreement will be updated by Quantum, subject to Dell's approval,
once a year on the anniversary of Dell's approval of the original Support Plan.
Quantum will provide at no cost to Dell all training reasonably necessary to
enable Dell 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 Quantum's manufacturing locations. Dell will
bear the expenses for Dell's service technicians to travel to and attend
training classes.
15.6 Development Support. The Parties shall cooperate on device driver, file
system and microcode interfaces.
16.0 PRODUCT WITHDRAWAL AND NEW PRODUCTS
16.1 Product Withdrawal. Quantum will provide Dell with at least ninety (90)
Days' prior written notice of the planned last date of manufacture of a Product
family. Quantum will ship Product for all Orders that Quantum has accepted
before the last date of manufacture. Subject to Product inventory after the last
date of manufacture, Quantum will accept Orders from Dell for Products for an
additional three (3) months after the last date of manufacture. Additionally,
Quantum 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 Dell (or such
longer period as may be required by Dell). At the end of such period of time,
Quantum will cooperate with Dell to allow Dell to make a final large volume
Order for Parts. If Parts supplied by third parties to this Agreement are not
available Quantum will use Quantum'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 Dell. Dell shall comply with all provisions set forth in
each EOL letter issued by Quantum to Dell with respect to the Products and
Parts.
16.2 New Products Must Be Offered to Dell. The Parties will share relevant
product roadmap information at least every three (3) months. During the term of
this Agreement, Quantum will offer to sell to Dell all Quantum Snap Division
Corporation products developed, manufactured, distributed or sold directly to
end-users by Quantum, or by Quantum to Quantum's resellers. Dell will have
access to such products early enough in the
11 of 19
<PAGE> 12
QUANTUM CONFIDENTIAL DELL CONFIDENTIAL
product development cycle to introduce Products simultaneously with Quantum's
introduction of such products to end-users to Quantum's resellers. If Dell
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.
Quantum will make available and sell Products to Dell prior to Quantum's FCS
date. Prior to the addition of a Product to Attachment A, the Parties will agree
on a schedule for Dell's introduction of the Product to Dell'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 Quantum is unable to comply with the terms of the agreed upon
schedule for Product introduction, including without limitation Quantum's
failure to meet the agreed upon Product launch date, the Parties will negotiate
in good faith, the amount, if any, that Quantum will reimburse Dell for all
direct costs, expenses and losses incurred by Dell as a result of such
non-compliance. Quantum will supply to Dell prerelease versions of Products that
are added to this Agreement pursuant to Quantum's standard beta program, but in
no event later than any of Quantum's other customers.
16.3 Training for New Products. Prior to the general availability of a Dell
Offering containing any new Product, the Parties will agree upon training that
Quantum will provide to Dell for sales, customer support and technical support.
Quantum 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 Dell.
16.4 Ramp Up Plans. Quantum will provide detailed ramp up plans for all new
Products. Quantum agrees to standardize all new Products for Dell systems. Dell
will be entitled to participate in all hardware and software design phases for
all new Products, and in the formulation and direction of Quantum's future
product and technical roadmaps.
16.5 New Product Diagnostics. Quantum will cooperate with Dell to develop
Product diagnostic specifications for all Products. Quantum will provide to Dell
manufacturing, customer and filed diagnostics complying with mutually agreed
upon diagnostic specifications at least ninety (90) Days prior to Dell's
shipment of a Product.
16.6 Samples. As reasonably requested by Dell, Quantum will provide to Dell
at no charge a mutually agreed number of samples (stated in Attachment A) of new
Products for Dell's validation, compatibility and test processes. Such Products
shall be delivered to Dell as directed by the Dell Strategic Commodity Manager.
17.0 CONFIDENTIAL INFORMATION
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 Dell, first receiving the prior written
approval of Dell's Corporate Communications department and, with respect to
Quantum, first receiving the prior written approval of an authorized
representative of Quantum. No other department within Dell is authorized to
consent to public releases of information. Dell's obligations of non-disclosure
with respect to the Manufacturing Packages shall be as set forth in the Escrow
Agreement.
18.9 TERM AND TERMINATION
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.
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.
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.
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 Quantum prior to the effective date of such termination. Upon
termination by either Party for cause, any monies
*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.
12 of 19
<PAGE> 13
QUANTUM CONFIDENTIAL DELL CONFIDENTIAL
due to the other Party hereunder shall become promptly due and payable and any
tooling, loaned equipment or test fixtures provided by Dell to Quantum must be
promptly returned unless otherwise requested in writing by Dell. 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.
19.0 LIMITATION OF LIABILITY
EXCEPT FOR THE SPECIFIC INDEMNITIES PROVIDED FOR IN THIS AGREEMENT, DELL'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.
20.0 [*]
21.0 COMPLIANCE
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.
21.2 Import/Export Requirements. Quantum 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, Quantum will, at Dell's request,
either (i) allow Dell to be the importer of record or (ii) provide Dell with any
documents required to prove importation and to transfer any duty drawback rights
to Dell. Quantum 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, Quantum agrees to indemnify, defend
and hold Dell harmless from any loss, expense, penalty or claim against Dell due
to Quantum's violation or alleged violation of any Export Laws with respect to
Products sold to Dell hereunder. Quantum'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). Dell may audit Quantum'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 Quantum represents and warrants
that all Products are freely exportable to all countries other than those which
are generally subject to U.S. embargo. Quantum agrees, (a) immediately upon
request by Dell, 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 Dell in
writing.
21.3 Quantum is responsible for obtaining and maintaining all necessary U.S. and
foreign regulatory approvals for the Product(s). Additionally, Quantum will
assist Dell in addressing problems with its Products that contribute to a Dell
system's failure to meet any regulatory requirement due to Quantum Products
being integrated into the Dell system.
22.0 NOTICES
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.
*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.
13 OF 19
<PAGE> 14
QUANTUM CONFIDENTIAL DELL CONFIDENTIAL
If to Dell: If to Quantum:
Dell Product L.P. Quantum Snap Division
One Dell Way Corporation
Round Rock, TX 78682 2001 Logic Drive
Attn: Vice President, San Jose, CA 95124
Worldwide Procurement Attn: Account Executive,
cc: General Counsel Dell
cc: Manager, Corporate
Contracts
with a copy to:
Quantum Corporation
500 McCarthy Boulevard
Milpitas, CA 95035
Deputy General Counsel,
General Legal
23.0 MISCELLANEOUS
23.1 Audits. Dell may audit the portions of Quantum'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, Dell may: (a) inspect Products at any stage of
production or testing; (b) review Quantum's facilities and quality control
procedures; and (c) accompany Dell customers on visits to Quantum's
manufacturing locations. Dell shall have the right, at mutually agreeable times
during normal working hours of Quantum, 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, Dell shall provide Quantum
with at least sixty (60) Days advance notice of Dell's intent to conduct an
audit. Other audits shall be conducted upon prior reasonable notice. Such audit
shall be performed at Dell's expense. For financial audits and the most favored
customer guarantee, such audits shall be performed by independent, nationally
recognized auditors selected by Dell and approved by Quantum. Quantum shall not
unreasonably withhold such approval. Audits will be conducted in such a manner
as not to interfere with Quantum's normal business activities. Audits shall be
conducted pursuant to the confidentiality provisions of Section 17 of this
Agreement and NDA #3688.
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 Dell Order or Quantum Order acknowledgment, except to the extent
that the Dell Order form includes terms specific to an Order such as delivery
schedules, lead times and Product specifications. In those cases, Quantum 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.
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 Dell, Vice President of World Wide
Procurement level or above; for Quantum, 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.
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.
23.5 No Requirements Contract. This Agreement is not a requirements contract. By
entering into this Agreement, Dell does not bind itself to purchase any minimum
or certain quantity of Products. Dell reserves the right to, and Quantum agrees
that Dell may, purchase similar or identical Products from other suppliers.
Furthermore, Quantum agrees to cooperate and work with Dell and any other
suppliers that Dell may engage in connection with the provision of Products.
23.6 Independence of the Parties. Dell and Quantum 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.
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.
23.8 Drafting. This Agreement was, and shall be deemed for all purposes to have
been, drafted by both Parties.
23.9 Governing Law and Venue. This Agreement shall be governed by the
substantive laws of the State of New
14 of 19
<PAGE> 15
QUANTUM CONFIDENTIAL DELL CONFIDENTIAL
York. The United Nations convention on the Sale of Goods shall not apply. If
Dell brings an action against Quantum related to this Agreement the venue shall
be the state or federal courts of Santa Clara County, California. If Quantum
brings an action against Dell related to this Agreement the venue shall be the
state or federal courts of Travis County, Texas.
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.
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.
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.
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 Dell) 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.
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.
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.
23.16 Quantum will maintain accurate and legible records for a period of two
(2) years and will grant to Dell reasonable access to and copies of any
information reasonably requested by Dell with respect to Quantum's performance
under this Agreement.
23.17 Dell 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). Dell does not guarantee that its marketing, if any, of the
Product(s) will be successful. Dell may distribute/sell the products on a
stand-alone basis or in conjunction with a system sale or lease.
23.18 Offset Credit Program. Orders issued by Dell pursuant to this Agreement
are placed with the expectation of potential acquisition of credit for current
and/or anticipated future offset obligations of Dell, Del Computer Corporation
or Dell Computer Corporation's subsidiaries or affiliates, or their designated
assignees to various governments around the world. Supplier agrees to reasonably
assist Dell, Dell Computer or Dell 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
15 OF 19
<PAGE> 16
QUANTUM CONFIDENTIAL DELL CONFIDENTIAL
the applicable in-country content of the orders placed under this Agreement.
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.
Quantum: DELL:
By: [/s/ SIGNATURE ILLEGIBLE] By: [/s/ SIGNATURE ILLEGIBLE]
------------------------------- ------------------------------------
(Authorized Signature) (Authorized Signature)
Title: VP/GM Snap Corp Title: SUP Enterprise Products Group
---------------------------- ---------------------------------
Date: 6/8/00 Date: 6/9/00
----------------------------- ----------------------------------
16 OF 19
<PAGE> 17
QUANTUM CONFIDENTIAL DELL CONFIDENTIAL
ATTACHMENT A
TO
MASTER OEM PROVIDER AGREEMENT
MATERIAL PRODUCT TERMS
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.
1. PRODUCTS
Under the terms of the Agreement and this Attachment, Dell may order, and when
Dell's Order is accepted, Quantum will sell Products to Dell as specified below
or as scheduled in an addendum to this Attachment:
All agreed to prices are not-to-exceed prices. The initial pricing, effective
July 1, 2000 shall be as follows:
<CAPTION>
Model Pricing (U.S. Dollars)
----- ----------------------
[*] [*]
[*] [*]
[*] [*]
[*] [*]
PRODUCT QUALITY GOODS
A separate detailed Quality Agreement will be developed by Quantum and Dell.
3. MANUFACTURING LOCATIONS AND SLCs
The Parties identify the following manufacturing locations in accordance with
Section 4 of the Agreement.
Quantum:
--------
[*]
[*]
[*]
[*]
[*]
Dell:
-----
[*]
[*]
[*]
Dell's manufacturing facilities in Brazil and China shall be supported for
Products sold under this Agreement in the same manner that Quantum supports HDD
and tape drive products sold to Dell under separate agreements.
In addition, Dell and Quantum agree to use the established SLCs as follows:
*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.
17 OF 19
<PAGE> 18
QUANTUM CONFIDENTIAL DELL CONFIDENTIAL
Austin, Texas
Nashville, Tennessee
Limerick, Ireland
Penang, Malaysia
4. FRAME ORDER FLEXIBILITY
Dell has the flexibility to increase or decrease frame Orders as follows:
Days from Planned Delivery to Dell Maximum Percentage of Order Quantity
---------------------------------- ------------------------------------
0 - 14 [*]
15 - 30 [*]
31 + [*]
Dell agrees to allow Quantum a sixty (60) Day compliance period, from the first
date of shipment to Dell. In order to ensure that Quantum can meet acceleration
requests, Quantum agrees to maintain a safety stock for certain Parts as set
forth below.
Part Weeks of Supply
---- ---------------
HDDs 2
5. PAYMENT AND DELIVERY TERMS
Products must be delivered to Dell in accordance with the following terms:
Delivery Terms. Terms of sale and delivery of Products to Dell are F.O.B. Dell
SLC. Title and risk of loss shall pass to Dell upon delivery by Quantum to
Dell's manufacturing location. Charges for carriage on Quantum's own vehicles
shall not exceed reasonable commercial rates.
6. GENERAL SERVICE OBLIGATIONS
In addition to Quantum's specific service and support obligations in the
Agreement, Quantum agrees to provide the following additional general services
for the Products during the term of the Agreement.
6.1 Shipping Reports. On a weekly basis, Quantum will provide shipping
reports for each Dell manufacturing location, including reference to the
relevant Order, quantity shipped and shipping documentation. Quantum and Dell
will reasonably agree on the information included in shipping reports. Dell
will designate Recipients of the shipping reports at each manufacturing
location.
6.2 Long Term Service Goal Recognition. Quantum acknowledges that Dell's
long term goals include: (a) shorting lead-times for the Products, (b)
increasing volume flexibility, (c) instituting direct shipment from Quantum to
Dell's customers, (d) achieving ongoing cost reductions, and (e) achieving
specific quality goals, and continuous quality improvement. Quantum agrees to
cooperate with Dell in working toward achieving these goals.
7. EXCLUSIVITY.
[*]
*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.
18 of 19
<PAGE> 19
QUANTUM CONFIDENTIAL DELL CONFIDENTIAL
8. DELL AFFILIATES.
The Dell affiliates listed below may purchase Products under the terms of the
Agreement:
None at this time.
9. SAMPLES.
Quantum shall provide up to twenty-five (25) samples of each Product family to
Dell, at no charge.
19 OF 19