EXHIBIT 10.6
CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS. OMITTED INFORMATION HAS BEEN REPLACED BY [*].
PRODUCTION PROCUREMENT AGREEMENT (PPA) -- [*]
This is an agreement (Agreement), dated as of July 11, 1997, by and between
International Business Machines Corporation (IBM), a New York corporation and
Symbios Logic Inc. (Symbios), a Delaware corporation.
STATEMENT OF INTENT
It is IBM's intention to do business with Suppliers who remain competitive
in providing IBM with leading-edge technology at favorable prices on acceptable
terms and conditions. Accordingly, from time to time, IBM intends to assess
Suppliers' competitiveness in terms of pricing, continuity of supply, quality
improvement, and cost reduction, and to notify Supplier if IBM determines that
the Supplier is not competitive with its fully qualified competitors so that the
Supplier can remedy the situation.
1.0 Product
In return for the prices paid by IBM under this Agreement, Symbios shall
provide IBM with materials, products, components, object code, documentation,
spare parts and/or related services (Products) according to the terms and
conditions of this Agreement, the Product Specification and Price List (PSPL)
which is an Attachment to this Agreement, and Work Authorizations issued under
Section 3.0 below.
2.0 Term and Termination
This Agreement shall commence on the date of execution by the parties and
shall continue in full force and effect for a period of [*] unless earlier
terminated as provided in this Agreement. Either party may terminate this
Agreement for material breach of the other party upon [*] written notice,
provided that such breach has not been cured within such [*] period.
3.0 Work Authorization
Only a Work Authorization issued by IBM or its subsidiaries (i.e. a
Purchase Order or other document or transaction defined in the PSPL as a Work
Authorization), in either electronic or hard copy form, provides authorization
to Symbios to perform any work or produce any products under this Agreement.
Only procurement personnel of IBM or its subsidiaries have the authority to
issue Work Authorizations or direct work activity under the terms and conditions
of this Agreement.
4.0 Most Favored Customer
The prices provided by Symbios to IBM under this Agreement and attached
PSPL's will not [*]. If Symbios offers prices to another customer which are [*].
5.0 Symbios Actions
5.1 Product Modifications: Symbios will advise IBM promptly in
writing of any changes that will affect the form, fit or function of the
Product, and will ensure that such changes do not compromise the quality,
reliability, compatibility or performance of Products ordered by IBM
hereunder.
5.2 Withdrawal of Products: Symbios shall notify IBM at least [*] to
Symbios' withdrawal of any Product(s). IBM will then have [*] after
original notification to place orders and Supplier shall use reasonable
efforts to deliver such Products(s) before the withdrawal date or upon
mutually agreed upon deliver terms.
1
6.0 Symbios Representations/Warranties
6.1 Representations and Warranties: Symbios represents and warrants:
(i) it has the right to enter into this Agreement; (ii) Symbios'
performance of this Agreement will not violate the terms of any license,
contract agreement, note or other obligation to which Symbios is a party or
any statute, law, regulation or ordinance to which Symbios is subject,
including, without limitation, all health, safety and environmental
statutes, laws, regulations and ordinances (iii) at the time of execution,
no claim, lien, or action is pending or threatened against Symbios or its
subsidiaries or parent company (and to the best of Symbios' knowledge after
reasonable inquiry, Symbios' suppliers or affiliates) which would have a
materially adverse impact on IBM's or its subsidiaries', or their
respective distributors' or customers' use of the Products. Symbios will
provide prompt written knowledge if subsequent action occurs; (iv) that, as
of the date of this Agreement, the Product does not infringe any patent,
trademark, copyright or other intellectual property right of a third party;
(v) that (a) neither the Products contain nor are any of the Products
manufactured using ozone depleting substances including, without
limitation, chloroflurocarbons, halons, methyl chloroform and carbon
tetrachloride; and (b) the Products do not contain any hazardous or
carcinogenic materials or chemicals; (vi) each of the Products will not
cause personal injury when used for its intended use; and (vii) all
Products provided to IBM under this Agreement are new and do not contain
anything used or reconditioned.
6.2 Product Warranty: Symbios warrants that from the date of shipment
of the Product and for the period of time specified in the applicable PSPL,
all Products provided to IBM are free from defects in material and
workmanship, and will conform to all of the agreed upon specifications.
This warranty does not apply to any Product which has been misused
(including static discharge, improper installation, repair, or accident),
neglected, or modified, or which Symbios is not capable of testing under those
test conditions that were used with the manufacturing and testing processes
during the original manufacturing of the Product. Supplier's sole obligation to
IBM for a Product failing to meet this Product warranty, and as mutually agreed
to by the parties, is to replace or repair the Product or to issue IBM a credit
for the purchase price of the Product, but only if (i) the failure has occurred
within the warranty period, (ii) Symbios has received written notice of the
warranty claim, (iii) IBM has returned the Product to Symbios under Symbios'
Return Material Authorization (RMA) procedure, and (iv) Symbios has reasonably
verified that the Product is defective. Symbios warrants a replacement or
repaired Product for the unexpired term of the warranty for the defective
Product, or for an extended warranty period as mutually agreed to by the
parties.
THE WARRANTIES IN THIS AGREEMENT ARE IN LIEU OF ALL OTHER WARRANTS, EXPRESS
OR IMPLIED, INCLUDING THOSE WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR USE.
7.0 Intellectual Property Indemnification
Symbios grants IBM all rights and licenses necessary for IBM and its
subsidiaries to use and sell the parts and commodities sold hereunder and to
exercise their rights under this Agreement. Symbios agrees to defend, at its
expense, and pay all damages, costs and attorney's fees finally awarded in any
claim that Symbios' Product infringes any intellectual property rights of a
third party or any claim that Symbios failed to comply with its representations
or warranties under Subsection 6.1 of this Agreement. If such a claim of
infringement is made, Symbios shall, use reasonable efforts to obtain for IBM
the right to continue to use and sell Symbios' Product or Symbios shall replace
it with non-infringing product which meets the Product specifications. If such a
claim of infringement is made before Symbios completes delivery of the affected
Product under this Agreement, Symbios may decline to make further shipments of
that Product without breaching this Agreement
Supplier will not be obligated to defend or be liable for costs or damages
if the infringement solely and necessarily arises out of (a) IBM's technology or
compliance with IBM's written specifications, or (b) IBM's combining with,
adding to, or modifying the Product after shipment by Symbios, unless Symbios is
a contributory infringer, or (c) use of the Product, or any part of the Product,
in the practice of a manufacturing
2
process, or (d) IBM's failure to use material or written instructions provided
by Symbios which would have rendered the Product non-infringing.
8.0 Trademark and Trade Names
Neither party may use any of the other party's or its subsidiaries'
trademarks, trade names or brand names without the other party's written
consent.
9.0 General
9.1 Confidentiality: IBM and Symbios agree that the pricing terms of
this Agreement are confidential. All other exchanges of information between
the parties pursuant to this Agreement shall be deemed nonconfidential,
unless the parties have entered into a separate written confidentiality
agreement.
9.2 No Agent: Each party is an independent contractor and is not an
agent of the other for any purpose whatsoever. Each party is solely
responsible for the acts of its employees and agents, including any
negligent acts.
9.3 Choice of Law: Waiver of Jury Trial: This Agreement shall be
governed by the substantive laws of the state of New York applicable to
contracts executed in and performed entirely within that state. The parties
expressly waive any right to a jury trial for a dispute related to this
Agreement.
9.4 Force Majeure: Neither IBM nor Symbios shall be in default or
liable for any delay or failure to comply with this Agreement due to an act
of nature, public enemy, government action, or freight embargo beyond the
control of the defaulting party, and the defaulting party shall provide the
nondefaulting party immediate notice of any such anticipated delay or
failure of compliance, provided, however, that the nondefaulting party
shall be relieved of its obligations, except obligations to make payments
for Products already provided, during the existence of such condition and
that any such act shall relieve the defaulting party's obligations
hereunder for such time as the conditions causing such delay or failure are
in effect, and such party hereby agrees to perform its obligations, unless
excused by the nondefaulting party, as soon as practicable after the
conditions causing such delay or failure have subsided.
9.5 Assignment: IBM and Symbios shall not assign their rights or
delegate or subcontract their duties under this Agreement without the prior
written consent of the other parry, except that either party shall have the
right to assign this Agreement and its obligations hereunder in connection
with the sale of all or part of its business that makes use of or sells the
parts, commodities, etc. purchased hereunder.
9.6 Rights of Subsidiaries: IBM and its subsidiaries may exercise any
of the rights under the Agreement; however, both parties agree that
Symbios' obligation to sell Products to any IBM subsidiary is subject to
Symbios' prior approval, which will not be unreasonably withheld, of the
individual IBM subsidiary. Notwithstanding the foregoing, distribution of
Products directly between IBM and its subsidiaries without Symbios' prior
approval, whether by sale or otherwise, is exempted from the provisions of
this paragraph.
9.7 Survival: The provisions set forth in Sections and Subsections
6.0, 7.0, 8.0, 9.1. 9.3, 9.5, 9.6, 9.7 and 9.8 shall survive and continue
after any expiration, termination or cancellation of this Agreement and
shall remain in effect until fulfilled, and apply to respective successors
and assigns.
9.8 Limitations of Liability
NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR ANY INDIRECT,
INCIDENTAL, CONSEQUENTIAL, OR PUNITIVE DAMAGES, OR FOR LOSS OF PROFIT,
REVENUE, OR DATA, WHETHER IN AN ACTION IN CONTRACT, TORT, STRICT LIABILITY,
OR OTHERWISE, EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. EACH
PARTY WILL, HOWEVER, BE LIABLE FOR PERSONAL INJURY CAUSED BY ITS
NEGLIGENCE.
3
Except for personal injury or damage to real and tangible property
caused by Symbios' negligence, or liability arising from Section 7.0, and
except as otherwise set forth in an applicable PSPI, Symbios' cumulative
liability under a Work Authorization shall not exceed the aggregate amount
paid to Symbios under that Work Authorization, even if a term of this
Agreement or any Attachment fails of its essential purpose.
HIGH RISK ACTIVITIES: THE PARTIES AGREE THAT TO THE EXTENT THAT ANY
SPECIFIC INDUSTRY, SUCH AS THOSE WHICH ENGAGE IN HIGH RISK ACTIVITIES, HAS
SPECIAL REQUIREMENTS FOR INFORMATION TECHNOLOGY EQUIPMENT WHICH ARE NOT
INCLUDED TO THE AGREED UPON PRODUCT SPECIFICATIONS, FUNCTIONAL
SPECIFICATIONS OR DATA SHEETS, SYMBIOS DOES NOT WARRANT OR REPRESENT THAT
ITS PRODUCTS MEET ANY SPECIAL REQUIREMENTS AND WILL NOT ACCEPT ANY
LIABILITY RESULTING FROM THE FAILURE TO MEET SUCH SPECIAL REQUIREMENTS.
The remedies of IBM specifically set forth in this Agreement or the
applicable PSPL constitute laws exclusive remedies for the breaches by
Symbios to which they relate.
9.9 Waiver: In order for a waiver to be effective under this
Agreement, it must be in writing signed by the party so waiving its rights.
The waiver by either party of any instance of the other party's
noncompliance with any obligation or responsibility herein shall not be
deemed a waiver of subsequent instances.
9.10 EDI: All Electronic Data Interchange (EDI) transactions and/or
electronic funds transfers for Product ordered under the terms of this
Agreement shall be in accordance with the terms of the Electronic Data
Interchange/Electronic Funds Transfer Trading Partner Agreement No. [*].
9.11 Entire Agreement and Order or Precedence: This Agreement and its
PSPL, together with Work Authorizations issued hereunder, constitute the
entire Agreement between the parties with respect to the subject matter
hereof. In the event of any conflict in these various documents, the order
of precedence will be: (i) the tams specified in the quantity, price,
payment and delivery sections of a Work Authorization; (ii) the PSPI, (iii)
this Agreement excluding its PSPLs and Work Authorizations; and the terms
of any other applicable agreement executed by the parties.
9.12 Amendments: This Agreement may only be amended in writing signed
by authorized representatives of each of the parties. To be effective, such
amendment must specifically reference this Agreement.
ACCEPTED AND AGREED TO: ACCEPTED AND AGREED TO:
INTERNATIONAL BUSINESS SYMBIOS LOGIC INC.
MACHINES CORPORATION
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ 9/12/97 /s/ ▇▇▇ ▇▇▇▇▇▇▇▇ 9/11/97
-------------------------------------------- --------------------------------------------
Authorized Signature Date Authorized Signature Date
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------------------------- --------------------------------------------
Printed Name Printed Name
Director, OEM Procurement Vice President Storage Systems Division
-------------------------------------------- --------------------------------------------
Title Title
4
FIRST AMENDMENT TO
PRODUCTION PROCUREMENT AGREEMENT [*]
This First Amendment (the "Amendment") to the
Production Procurement
Agreement [*] (the "Agreement") made between International Business Machine
Corporation ("IBM") and Symbios Logic Inc. ("Symbios") dated July 11, 1997, is
effective as of January 2, 2002 (the "Effective Date"),. All terms used in this
Amendment have the meanings defined for them in the Agreement unless otherwise
defined herein.
BACKGROUND
A. Whereas, Symbios and LSI Logic Corporation ("LSI Logic") each separately
entered into
Production Procurement Agreements with IBM;
B. Whereas, LSI Logic subsequently acquired Symbios and assumed all of the
rights and obligations under the Agreement; and
C. Whereas, IBM and LSI Logic intend to have one (1)
Production Procurement
Agreement in effect to cover all of the products of LS1 Logic by terminating the
Production Procurement Agreement number [*] executed by LS1 Logic and IBM dated
February 1, 1998 (the "Former PPA").
Now, therefore, for good and valuable consideration, the sufficiency of
which is hereby acknowledged by both parties, the parties agree as follows:
AGREEMENT
1. The Former PPA is hereby terminated without liability to either party.
2. All references to "Symbios" and "Symbios Logic, Inc." shall mean "LSI
Logic" and "LSI Logic Corporation," respectively.
3. A new section for legal notices is hereby added to the Agreement as
Section 9.13 and reads as follows:
"9.13 LEGAL NOTICES: All legal notices will be sent to the following
addresses and will be deemed received (a) two (2) days after mailing if
sent by certified mail, return receipt requested, or (b) on the date
confirmation is received if sent by facsimile or courier to the party
set forth below:
IBM: Contract Administration Supplier: General Counsel
IBM Corporation LSI Logic Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇.
Z/93A, D/2F3, B/321-2 M/S D-106
Hopewell Jct., NY 12533 ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
FAX: (▇▇▇) ▇▇▇-▇▇▇▇ FAX: (▇▇▇) ▇▇▇-▇▇▇▇"
4. The Production Specification & Price List Attachment [*] is hereby
amended to have a termination date of [*].
5. The Production Specification & Price List Attachment [*] is hereby
amended to include certain ASIC products by inserting a new Addendum 2 to
Exhibit A of the Agreement.
6. With respect to the ASIC products only as set forth in Addendum 2 to
Exhibit A of the Production Specification & Price List Attachment [*],
notwithstanding anything to the contrary contained in the Agreement, IBM may, at
any time, reschedule Was in total or in part by giving Supplier not less than
[*] notice of such reschedule prior to the delivery/ship date as specified in
the WA. Was may not be rescheduled for requested delivery more than [*] beyond
the original request date.
7. All other terms and conditions of the Agreement will remain in full
force and effect.
In witness whereof, this Amendment is hereby executed by the authorized
representatives of both parties as of the Effective Date.
5
INTERNATIONAL BUSINESS
MACHINES CORPORATION LSI LOGIC CORPORATION
/s/ ▇.▇. ▇▇▇▇▇▇▇▇▇ /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------------------- --------------------------------------------
SIGNATURE SIGNATURE
/s/ ▇.▇. ▇▇▇▇▇▇▇▇▇ 12/21/2001 /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------------------- --------------------------------------------
PRINTED NAME PRINTED NAME
EVP, WW SALES
-------------------------------------------- --------------------------------------------
TITLE TITLE
6
PRODUCT SPECIFICATION & PRICE LIST ATTACHMENT [*]
TO
PRODUCTION PROCUREMENT AGREEMENT [*]
This Product Specification & Price List Attachment [*], including its
Exhibits and Product Unique Attachments ("Attachment"), is incorporated under
the
Production Procurement Agreement [*], also referred to as [*] ("Agreement")
and is entered into by and between LSI Logic Storage Systems, Inc. ("LSI" or
"Supplier") and International Business Machines Corporation ("IBM", or "Buyer").
The original Agreement was entered into by Symbios Logic Inc. ("Symbios"), but
LSI has purchased Symbios in its entirety, and LSI hereby assumes all
obligations of Symbios and all terms and conditions of the Agreement as they
apply to this Attachment. This Attachment is conditional and does not become
binding unless and until the Closing Date, as defined in the Asset Purchase
Agreement, signed June 28, 2002, between IBM and LSI The term of this Attachment
shall expire on [*] unless terminated earlier as set forth herein or in the
Agreement.
1.0 Scope of Work
1.1 General Statement of Work. LSI agrees to develop, manufacture,
assemble, test, inspect, package, inventory, deliver, service and support
the Product, and perform all other responsibilities described in the
Agreement, including this Attachment. LSI shall deliver to IBM or
distribute on behalf of IBM only that quantity of Products that are ordered
by IBM pursuant to a Work Authorization.
2.0 Product Description
The Products to be purchased under this Attachment are more fully described
in the Product Unique Attachments attached hereto.
The Products are further described by the requirements set forth in the
following specifications, which are incorporated herein by reference:
- Supplier Packaging & Materials Handling specification [*].
- Any additional specification and/or a more current EC Level to an
existing specification agreed to in writing.
3.0 Product Requirements
3.1 Tamper Evident Protection. Each Product (except for spare parts
as defined in Section 4.4) shall be required to have tamper evident
protection to ensure that the Products are new when received by end user
customers. Tamper evident protection will be in the form of IBM logo tape,
labels or seals applied to the finished Product packaging in such a manner
that if removed or tampered with, it would be evident that the finished
Product packaging has been opened. Such tamper evident method must not be
resealable, without evidence of tampering.
LSI agrees to treat such IBM logo tape, labels, seals or other specified
materials with appropriate controls to prevent unauthorized use or dissemination
(including tracking the purchase, internal use, application, and destruction [to
avoid use by others]), and to limit access to such materials to only those with
a need to know to carry out the tamper evident sealing on new Products. LSI
agrees to only use the IBM logo tape, labels, seals or other specified materials
in connection with new Product, and not with any other product or with any Spare
Part.
3.2 Labels. LSI shall ensure that no markings, labels of any kind,
are placed on the Products, other than as expressly specified by IBM in
writing.
3.3 Product Warranties: Notwithstanding anything to the contrary, LSI
represents and warrants that at all times: (i) for a period of [*] from
Product delivery to IBM, the Product shall operate (a) in accordance with
all specifications and requirements in this Attachment, and be free from
defects in design, material, and workmanship, (b) in accordance with the
uses as contemplated by the Agreement (including this Attachment),
including those validated by completion of IBM's [*], and (c) in or with
IBM product offerings. Those Products that do not conform to this or any
other Product warranties shall,
1
be repaired or replaced by LSI within [*] of IBM's notification to LSI.
However, for situations involving non-conformance prior to IBM's delivery
of its Product to IBM's customers and resellers, LSI shall replace the
non-conforming Product with a new conforming Product within [*]. If repair
or replacement is not reasonably feasible, then the purchase price paid
shall be credited or refunded; (ii) for Products that either have: (a) Dead
on Arrival (DOA performance is determined by dividing the number of defects
by the number of systems installed by dealers and or customers) [*] of
total Products purchased; (b) an epidemic defect rate of [*] of Products
purchased with the same date code; (c) [*] of total Products purchased that
contain defects related to the same root cause which has been determined
and mutually agreed by both Parties; or (d) for Products that IBM has
recalled or otherwise returned for safety reasons, LSI shall, at IBM's
option within [*] of IBM's notification to LSI, repair and/or replace all
Products within affected manufacturing lots. If the parties agree that
repair or replacement is not reasonably feasible, then the purchase price
paid shall be credited or refunded; (iii) LSI will maintain and submit to
IBM, written evidence of the certifications and approvals addressed in this
Attachment for all Products, and that LSI will affix all required labels
regarding such certifications and approvals on the appropriate area of each
Product and packaging; (iv) when used in accordance with its associated
documentation, the Products purchased under this Attachment are Year 2000
ready such that they are capable of correctly processing, providing,
receiving and displaying date data, as well as exchanging accurate date
data within and between the twentieth and twenty-first century, provided
all other products (software, hardware and firmware) used with the Products
properly exchange accurate date data with it.
The warranties in this Subsection 3.3 shall be considered to be part of the
warranties in Subsection 6.1 of the Agreement and supplement any other
warranties in Section 6.0 of the Agreement.
3.4 Product Support Training and Documentation. LSI shall provide
with reasonable frequency "T3" training (i.e., teaching individuals in a
manner to allow them to teach others) which shall be conducted at Research
Triangle Park, NC. IBM shall provide reasonable travel and living expenses
for this training. Education materials for "T3" training will be provided
by LSI in reasonable quantities. Education updates would also be required
for significant changes in the product or in the repair or support of the
Product for which IBM will provide reasonable training, travel and living
expenses.
3.5 Product Field Support. IBM customer support may include providing
end-user customer support by telephone or electronic methods ("Level 1
Support") and determining whether any defects, quality issues or other
problems exist with the Product and provide a solution within [*] from
end-user customer's inquiry ("Level 2 Support"). LSI shall be responsible
to provide appropriate training and diagnostic tools so that IBM may
provide such ▇▇▇▇▇ ▇ ▇▇▇ ▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇. ▇▇▇ shall provide Level 3 Support
(support inquiries from IBM that exceed the capabilities of Level 2
Support) and will provide a solution to such problems within [*] from IBM's
inquiry. LSI shall provide IBM an LSI engineering contact name and phone
number for Level 3 Support purposes. For problems that the parties mutually
agree are more complex, the parties shall use best efforts to finalize a
plan and provide a solution within [*] from IBM's inquiry.
In the event repairs or corrections to the Products are required, LSI shall
make and test the necessary repairs or corrections, and LSI shall include such
repairs or corrections in subsequently delivered Product. LSI shall maintain a
comprehensive log of all Level 3 defects, repairs, and corrections, and shall
ensure that IBM has the most current version of such log to properly assist
customers. Within [*] of preparing repairs or corrections. LSI shall deliver to
IBM updated technical specifications and Product documentation reflecting such
corrections or repairs. The Product support described in this Attachment shall
not relieve LSI from any warranty obligations.
IBM has the right to withhold payments in any amount equivalent to the
price of all Products affected by the Severity Level 1 defect (e.g., the
customer is unable to use the product and/or customer operations are critically
impacted) due to LSI upon notice to LSI of a Severity Level 1 (SL1) Defect,
until such Defect is corrected to IBM's reasonable satisfaction. An SL1 Defect
is a defect that results in an emergency condition that causes critical impact
to IBM's schedule or that critically hinders performance or continued
performance of the Product.
2
3.6 Product Certifications.
PROVIDER OF
AGENCY DESCRIPTION PRODUCT CERTIFICATION
------ ----------- ---------------------
[*].. [*] [*]
[*].. [*] [*]
[*].. [*] [*]
[*].. [*] [*]
[*].. [*] [*]
[*].. [*] [*]
[*].. [*] [*]
[*].. [*] [*]
[*].. [*] [*]
[*].. [*] [*]
[*].. [*] [*]
[*].. [*] [*]
[*].. [*] [*]
[*].. [*] [*]
[*].. [*] [*]
3.7 FAA Certification. LSI certifies that the Products and their
packages do not contain explosives, hazardous materials, incendiaries
and/or destructive devices.
3.8 COO Product Certification. LSI hereby certifies that the Products
purchased hereunder have the following countries of origin. If there are
any changes to this information, LSI will notify IBM by providing a new
country of origin certification signed by an authorized LSI representative
before shipping any Products other than those with the country of origin
listed below for such Product. LSI acknowledges that IBM will rely upon
this certification, and timely updates to it, in making representations to
IBM customers and to comply with various laws and regulations. If any part
number listed has more than one country of origin, LSI certifies that each
country of origin is listed below.
IS PRODUCT MARKED
COUNTRY OF ORIGIN AND WITH AN INDUSTRY
IBM P/N PRODUCT DESCRIPTION COMPLETE STREET ADDRESS STANDARD BARCODE (/N)
------- ------------------- ----------------------- ---------------------
All Products All Products Yes
3.9 Service and Manufacturing. LSI shall provide IBM with materials
and assistance which shall include but not be limited to the relevant ▇▇▇▇
of Materials (e.g., list of parts and the sources approved by IBM to supply
those parts, a.k.a. "BOMB"), Product specifications, manufacturing
processes, test routines, vendor contacts, authorizations, rights, and/or
licenses that may be needed to purchase Parts, assemble, market, and
service Product, as well as information, training, and consulting necessary
to help IBM manufacture or have manufactured, service or have serviced the
Product (Hereinafter, these materials and assistance shall be referred to
as the "Manufacturing Package"), upon the occurrence of any of the
following from which LSI and IBM reasonably believes LSI cannot recover:
(a) commencement of any involuntary proceeding in bankruptcy or insolvency
against LSI; or (b) appointment, without LSI's consent, of a receiver or an
assignee for the benefit of creditors; or (c) LSI ceases to carry on
business as an on-going entity; or (d) LSI, for any other reason, does not
meet the on time delivery criteria defined in Section 8.3 of this PSPL and
does not expect to again provide or is unable to again provide on time
delivery; or (e) LSI materially breaches the Agreement (including this
Attachment). LSI shall provide the Manufacturing Package as soon as
possible after IBM requests it, but in no event more than [*] following
IBM's request.
Subject to the terms above and to the terms and conditions of Confidential
Disclosure Agreement [*], as of the effective date of this Attachment LSI hereby
grants to IBM, under LSI's patent, copyrights, trade
3
secrets, and other intellectual property in the Product and Manufacturing
Package, an irrevocable, non-exclusive, worldwide [*] license to make, use,
sell, offer to sell, import, reproduce, prepare derivative works of, distribute,
perform, and display the Product and any derivative works of Product, and to
authorize others to do any of the foregoing on IBM's behalf. This does not
include a license to manufacture the LSI Logic Semiconductor devices found in
the Product: however, LSI will use best efforts to provide a continued supply of
such semiconductors to IBM. [*]. The cost of establishing production shall be
documented by IBM and approved by LSI; LSI's approval shall not unreasonably be
withheld. The [*] to IBM for this license shall be negotiated upon execution of
these rights and be based upon a [*] LSI has made in the development and
intellectual property in the Product. The license to make and reproduce the
Product shall continue until IBM discontinues manufacture of the Product or in
the event that IBM fails to comply with the terms of this license. IBM may
subcontract the manufacturing to a third party, or assume the management of
LSI's third-party manufacturer, provided such third party complies with the
terms of this license and any associated obligations of confidentiality. In the
event IBM elects to exercise this right: (a) LSI shall release to IBM all
materials and processes necessary for the manufacture of the Product Except as
provided above, IBM shall not communicate to third parties (other than the third
party manufacturer) any such materials or information furnished by LSI, without
the prior written consent of LSI, which consent will not be unreasonably
withheld; (b) LSI shall furnish to IBM within [*] after IBM's written request,
the names and addresses of LSI's sources for parts not manufactured by LSI,
including the appropriate part numbers for commercially available equivalents of
electronic parts. LSI shall use all reasonable efforts to ensure that IBM shall
have the right to purchase any custom parts directly from LSI's vendors; (c) LSI
shall furnish to IBM [*] all parts catalogues, schematics, material lists,
engineering change orders, and other servicing documentation deemed necessary by
IBM to service and support the Product.
LSI shall, in support of the manufacturing rights conveyed to IBM under
this Section, provide: (a) Up to [*] of consulting services, as required by IBM,
provided that [*]; and (b) additional consulting services at a rate to be
mutually agreed to by LSI and IBM.
3.10 Tooling & Equipment. Except as expressly set forth below in this
Subsection, and except in cases where tooling or modifications to tooling
are requested by IBM, LSI shall, [*], supply and do all things necessary,
including, without limitation, supply all tooling and equipment required
for the manufacture and testing of the Product. In the event that IBM has
paid for, or otherwise snakes available to LSI, tooling or equipment
pertaining to any aspect of the Product, LSI agrees to sign a separate
tooling loan agreement that addresses additional loan requirements.
3.11 Product Cost Reduction Enhancements. If LSI decides to market a
product that is positioned as a cost reduced or enhanced version of the
Products, LSI agrees to offer and sell said product as "Product" to IBM
under the terms and conditions of this Attachment, except for price that
will be negotiated between the parties. If IBM buys said replacement
product, the quantity purchased in combination with the quantity of the
original Products purchased hereunder, shall collectively apply to IBM's
purchase quantities for purposes of calculating price, to the extent that
Product pricing is determined by quantities purchased. Notwithstanding the
above, unless the parties agree in a written amendment that a particular
enhanced product shall replace the "Product," LSI agrees to continue to
make the original Product available to IBM through the end of Product's
life.
3.12 Compatibility Requirements. The Product shall meet its
functional specifications. LSI will work with IBM to make the Product
compatible with IBM's system units, peripherals and operating systems as
verified in IBM's [*] or compatibility testing.
3.13 Product Availability. LSI will notify IBM prior to LSI's
withdrawal of the Product. Such withdrawal notice will not occur during the
term of this Attachment, unless LSI obtains IBM's prior written approval.
LSI shall ensure that any such Product withdrawals will not affect FRU
availability.
4.0 Pricing
4.1 Product Pricing. LSI shall make the Product available to IBM at
the pricing specified in the relevant Product Unique Attachment. The
pricing in the relevant Product Unique Attachment as
4
expressed in Work Authorizations ("WAs," i.e., written or electronic IBM
purchase orders or other electronic transactions that are expressly
identified by IBM as an authorization to perform work under the Agreement,
including this Attachment) shall be the only charges due to LSI from IBM,
unless otherwise authorized in writing by IBM. LSI warrants that the
pricing in the Product Unique Attachments does not include sales taxes and
that LSI will not include, or otherwise charge IBM for, any sales tax on
any Products purchased by IBM. IBM will provide LSI with an applicable sale
tax exemption certificate, as appropriate.
4.2 Cost Reductions. LSI agrees to provide IBM cost reductions
consistent with industry pricing and technology trends.
4.3 Payments. LSI will invoice IBM upon shipment of Product to IBM.
Terms for payment on all invoices will be net [*] from date of acceptable
invoice to IBM. Payment of invoices shall not be deemed acceptance of the
Products. All prices are expressed in US dollars.
4.4 Spare Parts and Field Replacement Units (FRUs). The list of FRUs
(also referred to as spare parts, which may consist of the entire Product
or portions thereof) and agreed to pricing for FRUs (for cases where IBM
elects to purchase FRUs) shall be listed in the relevant Product Unique
Attachment, provided, however, that the parties may elect to establish
updated pricing for such FRUs via other documents that are signed by both
parties. IBM reserves the right to review LSI's FRUs supply plan. Should
IBM purchase FRUs for the Product from LSI, LSI shall not be relieved from
any of its warranty and support obligations. LSI shall reimburse IBM for
any FRUs IBM has to replace due to LSI's failure to comply with any of its
warranties and representations.
FRUs will be made available for [*], or longer if legally required by law
after: (a) the expiration of this Attachment; (b) the last shipment of Product
from LSI; or (c) IBM's withdrawal of the Product from the market, whichever
occurs last, unless otherwise expressly agreed upon in writing for longer
periods by both parties for the applicable Product.
For the Products under this Attachment, LSI will not substitute FRUs, even
if such FRUs are equal or better to those originally approved by IBM, unless
expressly agreed to by IBM in writing.
LSI shall ship FRUs for returned parts within [*] of receipt. All FRUs
shall be upgraded to the latest EC level, single-packed and single-labeled.
For the purposes of evaluating LSI's performance, as it relates to FRU
orders, LSI will be measured against the following criteria. LSI scores are
calculated on a monthly basis and are used to compare LSI to other similarly
situated suppliers and the awarding of business. Nothing in this section shall
relieve Supplier of any obligations in the Agreement (including this
Attachment).
CRITERION TARGET
--------------------------------------------- ---------------------------------------------
On Time Performance [*] at IBM's Facility On time
Orders [*] Past Due [*]
Emergency Orders Received by Customer within [*] by Customer; [*] receipt by Customer
[*] of PO Issuance within [*]
Inbound Packaging Quality [*] of FRUs error free
Early Shipments [*] FRUs received at IBM earlier than [*] to
scheduled due date
In any calendar month in which LSI fails to meet the above performance
criteria specified in this section, LSI will respond to IBM with an agreed upon
action plan within [*] of notification by IBM demonstrating its ability to
achieve the required measurements. LSI's failure to successfully execute an
action plan within an agreed upon time frame, may, in addition to other remedies
in the Agreement (including this Attachment) and at law, result in substantial
or complete reduction of new business awards from IBM.
IBM will obtain RMA (Returned Material Authorization) from LSI prior to
shipment of returned FRUs, subject to LSI promptly providing such RMA to IBM
upon request. LSI will acknowledge receipt of
5
FRUs within [*] of receipt, and such acknowledgment shall include a report
regarding any shortages, overages or damages alleged to have occurred in
transit. LSI will reimburse IBM at the current FRU price for FRUs that are
stripped, stolen, lost, damaged or unaccounted for, except for those reported to
IBM upon initial receipt of the returned FRUs.
LSI will provide a packing slip with all return shipments of unrepairable
FRUs to IBM which specify LSI's name, IBM part numbers being shipped, quantity
of each part number being shipped, and the relevant Purchase Order number. In
addition to the above, the packing slip for FRU returns which are unrepairable
will also reference a return authorization number (such numbers are obtained by
contacting IBM), provide a reason for return, and will be shipped within [*]
after receiving IBM's authorization.
5.0 Work Authorization Logistics
5.1 Placement of Work Authorizations (WA's), Reschedules and
Cancellations. WAs, duly issued by IBM procurement personnel, shall be the
only authorization for LSI to deliver any Product under this Attachment.
IBM shall have no obligation to issue any Work Authorizations. IBM shall
not be liable for any costs incurred by LSI in its anticipation of
receiving Work Authorizations or in performing work in excess of any
authorized limits of Work Authorizations issued hereunder. Except as
expressly stated in this Subsection 5.1 and as authorized under Work
Authorizations, all other expenses in support of this Attachment shall be
borne by LSI, without liability to IBM, unless authorized by IBM in
writing.
IBM's Product order lead time from WA issuance to delivery is [*]. LSI
agrees to cooperate and use all reasonable efforts for cases where IBM requests
an earlier delivery. Any increase in the agreed to lead-time must have IBM's
prior written approval.
IBM MAY USE "BLANKET" PURCHASE ORDERS (e.g., electronically these may
identified as "Scheduling Agreements") WHICH MAY HAVE THE APPEARANCE OF A NORMAL
PURCHASE ORDER, BUT SUCH BLANKET PURCHASE ORDERS CAN BE DISTINGUISHED BY NOT
HAVING A DELIVERY DATE AND ARE ISSUED ONLY AS A LOGISTICAL PROCESSING DOCUMENT
TO ENABLE THE USE OF ELECTRONIC PURCHASE ORDER COMMUNICATIONS AND ARE NOT
BINDING IN ANY MANNER AND SHALL NOT BE INTERPRETED AS AN AUTHORIZATION TO
PERFORM ANY WORK, REGARDLESS OF ANY QUANTITIES OR PRICES THAT MAY BE INCLUDED IN
SUCH BLANKET PURCHASE ORDERS.
5.1.1 Accommodation of Increases in Order Volume. LSI agrees to
use all reasonable efforts to accommodate the following increases to
Product order quantities which may be made by IBM without any additional
cost to IBM, unless authorized by IBM in writing.
INCREASE IN PRODUCT QUANTITY TO A
NUMBER OF CALENDAR DAYS SCHEDULED DELIVERY DATE
PRIOR TO DELIVERY DATE (% OF ORDER QUANTITY)
--------------------------------- ---------------------------------
[*] [*]
[*] [*]
[*] [*]
[*] [*]
5.1.2 Accommodation of Decreases in Order Volume
5.1.2.1 Finished Goods. For Finished Goods (meaning the Product
in its completed form) manufactured in accordance with duly issued
Work Authorizations, IBM shall incur the following maximum liability,
subject to LSI using reasonable efforts to mitigate IBM's liability
by, among other actions, returning parts and materials to its
suppliers, selling parts and materials to others, or otherwise use
such parts or materials in other products or for other WAs hereunder
for Products or FRUs.
6
NUMBER OF CALENDAR DAYS IBM LIABILITY FOR DECREASES IN ORDER VOLUME
PRIOR TO AUTHORIZED DELIVERY DATE (AS % OF WORK AUTHORIZED)
--------------------------------- ---------------------------------------------
[*] [*]
[*] [*]
5.1.2.2 Industry Standard Components. All components are
considered industry standard components unless specified otherwise in
a Product Unique Attachment For industry standard components procured
by LSI in accordance with duly issued Work Authorizations, IBM shall
incur the following maximum liability, subject to LSI using
reasonable efforts to mitigate IBM's liability by, among other
actions, returning parts and materials to its suppliers, selling
parts and materials to others, or otherwise use such parts or
materials in other products or for other WAs hereunder for Products
or FRUs.
NUMBER OF CALENDAR DAYS IBM LIABILITY FOR DECREASES IN ORDER VOLUME
PRIOR TO AUTHORIZED DELIVERY DATE (AS % OF WORK AUTHORIZED)
--------------------------------- -------------------------------------------
[*] [*]
[*] [*]
5.1.2.3 IBM Unique Components. Only those components specified
in a Product Unique Attachment are considered IBM Unique Components.
For IBM Unique Components procured by LSI in accordance with duly
issued Work Authorizations, IBM's maximum liability is limited to the
costs that LSI can reasonably demonstrate were necessary and
appropriate to support WAs , subject to LSI using reasonable efforts
to mitigate IBM's liability. IBM shall not be liable for any forward
buys of IBM Unique Components in excess of [*], based upon IBM's
forecast without IBM's written consent. In addition to other
mitigation efforts such as returning IBM Unique Components to
.suppliers, or using such components for other WAs hereunder, LSI
will (i) cancel all non-liability bearing outstanding orders with its
suppliers, (ii) present IBM with the option to pay cancellation
charges, if applicable, (iii) use on-hand components to satisfy IBM's
forecasted FRU requirements. Furthermore, LSI will provide a current
inventory, on a quarterly basis, of the quantity and value of all
items in Product Unique Attachments currently in LSI inventory and/or
currently on order.
5.1.2.4 LSI Product Line Unique Components. Only those
components specified in a Product Unique Attachment are considered
LSI Product Line Unique Components. For LSI Product Line Unique
Components procured by LSI in accordance with duly issued Work
Authorizations, IBM's maximum liability is as follows, subject to LSI
using reasonable efforts to mitigate IBM's liability. In addition to
other mitigation efforts such as returning IBM Unique Components to
suppliers, or using such components for other WAs hereunder, LSI will
(i) cancel all non-liability bearing outstanding orders with its
suppliers, (ii) use on-hand components in other products if possible,
(iii) return excess, non-liability bearing product to its suppliers,
(iv) use on-hand components to satisfy IBM's forecasted FRU
requirements. Furthermore, LSI and IBM will [*] reasonable supplier
cancellation and/or restocking charges for components LSI can
demonstrate were reasonably purchased to satisfy IBM's requirements.
NUMBER OF CALENDAR DAYS IBM LIABILITY FOR DECREASES IN ORDER VOLUME
PRIOR TO AUTHORIZED DELIVERY DATE (AS % OF WORK AUTHORIZED)
--------------------------------- -------------------------------------------
[*] [*]
[*] [*]
[*] [*]
5.2 Work Authorization Acceptance. LSI shall accept Work
Authorizations issued by IBM provided such Work Authorizations comply with
the terms and conditions of this Attachment. LSI shall confirm receipt of
each Work Authorization and, if LSI does not object to such Work
Authorization within [*] of receipt and identify the reasons of
non-compliance with this Attachment, then such Work Authorization will be
deemed to have been accepted by LSI.
7
IBM may provide [*] estimated forecast for any quantities of Product that
may be required. LSI will use reasonable efforts to respond to such forecast
within [*].
ANY PRODUCT QUANTITIES CITED IN OR IN SUPPORT OF THIS AGREEMENT (INCLUDING
THIS ATTACHMENT) ARE PRELIMINARY ONLY AND SHALL NOT IN ANY WAY BE CONSTRUED AS A
COMMITMENT AND ARE NON-BINDING. IBM MAKES NO REPRESENTATION OR WARRANTY AS TO
THE QUANTITY OF PRODUCTS THAT IT WILL PURCHASE, IF ANY.
5.3 Product Allocation. LSI will ensure proper management and
operational controls are present to provide for an equitable and
proportional allocation of capacity, resources, commodities, tooling and
any other items required to execute this Attachment. In the event of a
non-LSI controlled shortage of any items necessary to satisfy the
requirements of LSI internal (i.e., LSI branded products) and external
customers, the order of precedence for said allocation will be; (i) the
acknowledged purchase orders, (ii) pending purchase orders, and (iii)
system forecasts from all affected parties submitted and on record for the
month in which the shortage became known to LSI. [*]. Non-LSI-controlled
shortages are those events that occur in the industry at-large. Shortages
caused by LSI actions (e.g. commodity purchase orders not placed, internal
or external LSI customer demand increase which LSI accepts) will not
relieve LSI of its obligation to meet IBM's accepted Work Authorizations
and will use reasonable efforts to meet forecasted demands, including the
associated flexibility terms set forth in this Attachment.
LSI will promptly notify IBM in writing that such a shortage has occurred,
the expected duration of said shortage, and the impact upon the monthly forecast
in use at that time. LSI will include in this notification that IBM is receiving
its proportional share of all LSI resources and that no LSI internal or external
customer has received preferential treatment in the allocation of resources.
Notwithstanding the above, (a) IBM shall have first priority to all
components, subassemblies or services supplied by suppliers that IBM has
directed to or otherwise presented to LSI provided they are deemed acceptable by
LSI and such suppliers are not current suppliers to LSI; or such suppliers may
be current suppliers to LSI provided the supplies provided by suppliers are
those that have been previously allocated to IBM over and above those supplies
previously allocated to LSI; (b) any IBM or IBM subsidiary supplied components,
subassemblies or services shall only be used on Products hereunder, unless
otherwise agreed to in writing by the parties, and (c) LSI will use reasonable
efforts to mitigate the impact to IBM of all shortages, regardless of their
nature or cause.
6.0 Product Replacements
IBM and LSI will jointly establish a process to replace Products for
situations identified by IBM that are essential for IBM to maintain a positive
relationship with its customer and are not related to any Product defects or
warranty claims. IBM will identify the Products to LSI in writing, and LSI will
use reasonable efforts to provide such replacement Products within [*] if
Product is in LSI's inventory or otherwise within [*] to customers, at IBM's
cost, subject to the parties prior written agreement of such cost.
7.0 Quality, Inspection and Acceptance
7.1 Quality Plan. LSI shall implement and maintain a comprehensive
quality plan (including inspection and quality assurance procedures) that
demonstrates a high quality Product rate and continuous quality improvement
of the Product production. LSI will provide monthly Product reports to IBM.
Such quality plan shall be submitted to IBM for review and approval. Once
approved, such document shall be incorporated herein by reference.
7.2 On-Site Product Inspections. LSI's responsibilities hereunder
shall include comprehensive quality controls, testing and inspection of the
Products and all components and subassemblies thereof IBM may also inspect
the Products at LSI facilities with reasonable advance notice and perform
additional inspection and testing of all Products delivered to customers,
and may refuse to accept Products that do not conform to all
specifications, warranties, and/or other requirements.
8
7.3 Use of NDF Products. "No-Defects-Found Product" ("NDF-Product")
shall mean any Product that has been returned to LSI as defective, but
after comprehensive analysis and testing, the Product was found by the
parties not to be defective in any manner. LSI agrees that NDF Products
shall not be used in any Products, except in spare parts. LSI further
agrees that any NDF Product that has been used in a Spare Part, and then
subsequently returned and found to be an NDF Product again, will never be
used hereunder, even as a Spare Part.
However, LSI may use such returned Spare Part for LSI's own independent
purposes outside of this Attachment, subject to: (a) LSI removing all references
to IBM (including, but not limited to logos, labels, model numbers, etc.,
regardless of whether such references are in the hardware or code) and all IBM
unique features (e.g. bezels, documentation, or other ship ▇▇▇▇▇ ▇▇▇▇▇▇▇▇). LSI
hereby agrees to protect, defend, hold harmless and indemnify IBM and customers
from and against any and all claims, suits, actions, demands or liabilities
arising out of LSI's use of such returned spare parts outside of this Agreement.
8.0 Delivery
8.1 Product Delivery. All Products and spare parts may be shipped FOB
receipt by carriers from the replenishment centers as designated by IBM.
Payment of transportation, import/export fees, duties, taxes and tariffs
will be specified in the relevant Product Unique Attachment or in another
document signed by IBM and LSI. LSI shall utilize the "pull process"
through EDI allowing IBM to systematically request Product from LSI on an
as needed basis. At the request of IBM, LSI shall work with IBM to jointly
establish a written process for handling missing items from the original
ship groups.
8.3 On-Time Delivery. If LSI cannot meet a scheduled delivery date,
LSI shall promptly notify IBM of LSI's revised delivery date and IBM may,
at its option, (i) reschedule Products, (ii) [*] associated with shipping
and handling incurred as a result of the late delivery, (iii) cancel
Products not delivered without charge; and (iv) exercise all other remedies
provided at law, in equity and in the Agreement, including this Attachment.
Notwithstanding anything to the contrary contained in the Agreement or this
Attachment, if LSI fails to deliver products on time and to the extent that such
failure is caused solely by: (a) LSI's inability to utilize (for reasons beyond
LSI's reasonable control) any of the Assigned Information, Assigned Copyrights,
Assigned Software, and/or licensed materials (as such capitalized terms are
defined in that certain Intellectual Property Agreement between IBM and LSI
dated June 28, 2002) or (b) IBM's default under any agreement between IBM and
LSI executed in connection with LSI's acquisition of the assets set forth in the
Asset Purchase Agreement between IBM and LSI dated June 28, 2002, then the
failure to deliver products on time shall not be considered a breech of this
Attachment and LSI will not be responsible for the [*] set forth above as long
as LSI uses commercially reasonable efforts to mitigate the effects of the delay
and otherwise complies with IBM instructions regarding the Product.
8.4 Date of Manufacture. LSI agrees that the date of manufacture for
all Products purchased by IBM shall be less than [*] from the date of
Product delivery to the IBM designated replenishment warehouse.
8.5 Distribution of [*] Software. Pursuant to Section 3.1.13.3 of the
IBM/[*] agreement [*], LSI will be provided with the [*] software Version
2.0 and updates thereto ("[*] Software") on shrink wrap CDs and shall have
the right to include the [*] Software within the Product carton and
distribute the same with the Product. LSI will have no right to modify the
[*] Software or distribute it in a manner other than as described herein
and shall not remove or tamper with the tamper evident protection provided
with the [*] Software. IBM represents that LSI's performance pursuant to
the terms of this Section 8.5 will not violate the terms of SOW [*]. IBM
may terminate this Section 8.5 at any time by providing LSI a written
termination notice.
9
9.0 Replenishment
9.1 Replenishment Logistics
This section 9.0 shall only apply when Pull Profiles are addressed as
described below.
9.2 Pull Definitions
"Pull Buffer" means a quantity of Pull Products within the Liability
Horizon Quantity which is held in inventory by Supplier.
"Pull Products" means Products specified in a Pull Product Profile.
"Pull Product Profile," "Pull Profile," "MIRS Profile," or "Profile" means
the relevant document signed by both parties or otherwise included in a PSPL
describing the Pull Products and supporting information, including, but not
limited to, IBM Part Number, Liability Horizon, Replenishment Time and packaging
requirements.
"Pull Purchase Order," "Pro forma Purchase Order," "PPO," or "Purchase
Order" means a purchase order used by Buyer as a logistical tool only to enable
system and related activities for the pull process, and does not represent a
firm offer by Buyer nor bind Buyer to any quantity or delivery date.
"Liability Horizon" means the period of time as specified in the relevant
Pull Profile used to calculate the maximum liability for a given Pull Product,
by applying the Liability Horizon period against the Planning Schedule.
"Liability Horizon Quantity" means the quantity of Pull Products specified
in the Planning Schedule contained within the Liability Horizon. The Liability
Horizon Quantity is the WA for Pull Products ordered under this section 9.0.
"Upside Flexibility" means a percentage of Pull Products specified in the
Pull Profile in excess of the Liability Horizon Quantity.
"Liability Horizon Quantity Overage" or "Overage Limit" or "Overage" means
a Liability Horizon Quantity which exceeds the quantity of Pull Products
committed to in the Pull Notifications for the same period.
"Planning Schedule" means Buyer's [*] of requirements for Pull Products.
"Pull Notification" means Buyer's only authorization for Supplier to
deliver a specified quantity of Pull Products. "Replenishment Time" means the
total elapsed time from Supplier receipt of a Pull Notification to delivery of
the Pull Products to Buyer's location as specified in this PSPL or Pull Profile.
The Replenishment Time consist of response time, transit time and/or process
time as defined in the relevant Pull Profile.
9.3 Pull Profile Planning
After the parties agree to a Pull Profile, Buyer may issue a PPO to
Supplier for all Pull Products. Buyer may issue a Planning Schedule at intervals
as specified in the Pull Profile, the most recent Planning Schedule to supersede
all previous Planning Schedules. The Planning Schedule provides a forecast of
requirements for the Pull Products and establishes quantities applicable to the
Liability Horizon Quantity and Upside Flexibility, if any, with the Supplier.
Supplier will respond to the Planning Schedule as specified in this PSPL or Pull
Profile.
9.4 Pull Delivery
Supplier will deliver to Buyer on the delivery date the Pull Products
specified in the Pull Notifications issued by Buyer, provided such Pull
Notifications do not exceed the Liability Horizon Quantity. Supplier will comply
with Pull Notifications for quantities of Pull Products in excess of the
Liability Horizon Quantity but within the Upside Flexibility. Risk of loss and
title will pass to Buyer when Product is pulled from consignment.
10
9.5 Pull Limitation of Liability
Unless the Pull Products are specified in a Planning Schedule in
conjunction with the Liability Horizon in a Pull Profile, Buyer makes no
representation or warranty and assumes no liability regarding the quantity of
Pull Products that it will purchase. Buyer assumes no liability for materials
procured or products built beyond the Liability Horizon Quantity. Supplier will
apply Overages towards future Pull Notifications and the parties will agree to a
reconciliation amount and a disposition of Overage Products, if any. The
reconciliation amount will be reduced by any amount realized by Supplier for
Pull Products (including raw materials or works-in-progress) used, returned or
sold to any party, and any other reductions agreed to by the parties.
9.6 Order of Precedence
Notwithstanding section 9.11 of the Agreement (i.e. [*]), in the event of
any conflict in the documents contained in the Agreement involving Pull
Products, the order of precedence will be: (i) the Pull Profile in section 9.7
below (or separate Pull Profile if signed separate from but in support of this
Attachment); (ii) this section 9.0; (iii) the relevant Product Unique
Attachment, (iv) the balance of this Attachment; and (v) the Agreement (i.e.
[*]).
9.7 Pull Product Profile
PULL PRODUCT PROFILE
----------------------------------------------------------------------------------------------------------------------
[*]
----------
[*] [*] [*] [*] [*] [*] [*] [*] [*]
--- --------- -------- -------- --------- --------- ---------- ----------- ----------
[*] [*] [*] [*] [*]
PULL PRODUCT PROFILE PULL PRODUCT PROFILE
--------------------- --------------------------------------------------------------
[*]
--------------------------
[*] [*] [*] [*] [*] [*]
--- ------------- ---------- -------- --------- ----------
[*] [*] [*] [*] [*]
Note that:
"Day" means a work day.
"Week" means a work week starting on Monday and ending on Friday.
"Container quantity" is the number of pallets per 48 foot trailer.
9.8 Transaction Documents
REPLENISHMENT TRANSACTION DOCUMENTS
-------------------------------------------------------------------------------------------------
TRANSACTION DOCUMENT EDI, ANSI AND EDIFACT E-MAIL FAX FREQUENCY
-------------------- --------------------- ------ --- --------------
[*] Yes No No
[*] Yes No No
[*] Yes No No
[*] Yes No No
[*] Yes No No [*]
[*] Yes No No [*]
Yes No No [*]
[*] Yes No No [*]
[*] Yes No No [*]
[*] Yes No No [*]
[*] Yes No No [*]
[*] Yes No No [*]
11
9.9 Grace Period/Monthly Reconciliation/Inventory
(1) Based on First In First Out ("FIFO") accounting principles, IBM shall
have a [*] grace period, beginning at the date of Product receipt at the
warehouse.
(2) Parties shall use commercially reasonable efforts to reconcile
inventory and any associated liabilities monthly;
(3) The Parties agree to periodically review the status of inventory in the
warehouse. Based on the periodic review, the parties shall engage in
commercially reasonable actions to mitigate inventory exposure. When warehouse
inventory exceeds the required buffer stock in Section 9.7 (Pull Product
Profile), IBM agrees to pull Product that has been in the warehouse for [*]
provided it is a business day (otherwise on the next business day), unless the
parties agree to some other commercially reasonable period.
(4) Beginning [*] prior to the [*]and on a [*] basis thereafter, LSI and
IBM will work together and use commercially reasonable efforts to precisely
determine the inventory quantity in the warehouse at the end of the [*].
10.0 Engineering Record Changes
LSI will notify IBM before any LSI initiated changes, which shall not take
place without IBM approval. LSI will advise IBM promptly in writing of any LSI
initiated changes that will affect the form, fit or function of the Product, and
will ensure that such changes do not compromise the quality, reliability,
compatibility or performance of Products ordered by IBM hereunder. LSI will not
implement any form, fit or function changes to the Product without IBM's prior
written approval.
IBM may request changes to the Product in writing at any time. LSI will
promptly consider such changes and inform IBM in writing of the affect of
suggested changes on form, fit or function, price and schedule. The parties will
negotiate in good faith to resolve any adjustments in price, schedule and/or
specifications prior to implementation.
11.0 Communications
All communications between the parties shall be carried out through the
designated coordinators.
All procurement, business and administrative communications between the
parties shall be conducted through the following "Business Coordinators":
IBM: LSI:
---- ----
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
Technical communications between the parties shall be conducted through the
following "Technical Coordinators":
12
All legal notices shall be sent to the following addresses and shall be
deemed received (a) two (2) Days after mailing if sent by certified mail, return
receipt requested or (b) on the date confirmation is received if sent by
facsimile transmittal, to the party set forth below.
IBM: LSI:
---- ----
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
Each party may change its designated coordinators and/or addresses any time
during the Attachment-Term by a written notification to the Business Coordinator
(with a copy to the Technical Coordinator or legal notice coordinator, as
applicable).
12.0 Termination
12.1 Termination for Cause. Either party may terminate this
Attachment by sending a written notice for material breach by the other
party or in the event that the other party becomes insolvent, files, or has
filed against it, a petition in bankruptcy or undergoes a reorganization
pursuant to a petition in bankruptcy. Such termination shall become
effective [*] after receipt of such notice, unless the party receiving
notice remedies the cause cited in such notice within such [*] period. In
the event LSI terminates an Attachment as set forth in this Subsection
12.1, LSI shall have the right to cancel all outstanding WAs. In the event
IBM terminates an Attachment as set forth in this Subsection 12.1, LSI
shall immediately (a) cease all work and shall treat all applicable
outstanding WAs in accordance with Subsection 12.2, (b) prepare and submit
to IBM an itemization of all completed and partially completed Products
under such WAs, and at IBM's sole option and only upon IBM's written
direction, LSI shall deliver to IBM the (i) number of IBM requested
completed Products at the prices set forth in the applicable WA and (ii)
IBM requested partially completed Products at a price not to exceed the
actual and reasonable costs substantiated by LSI within any authorized
limits and cancellation schedules set forth in this Attachment and WAs,
provided however, in no event shall such price exceed the per unit price of
the Product, (c) allow IBM access to LSI's premises to take possession of
all IBM owned property or to file a security interest in such property, and
(d) return to IBM all IBM confidential information or property, if any. IBM
shall also have all other remedies available at law, in equity and in the
Agreement (including this Attachment).
12.2 Work Authorization Cancellation for Cause. IBM may at any time
cancel WAs in total or in part, for reasonable cause by notifying LSI, in
writing. Cancellation will be effective immediately upon LSI's receipt of
the notice. LSI will immediately cease all work under such WA in accordance
with the cancellation notice. IBM shall have no liability if it cancels WAs
for reasonable cause.
Any existing credits in IBM's favor at the time of cancellation shall be
deducted from any amount due to LSI and if such credits exceed the amount due to
LSI under the applicable WA, LSI agrees to refund the difference to IBM within
[*] of the effective date of cancellation. The results of all work paid for by
IBM under the applicable WA are the sole property of IBM, and upon cancellation,
the disposition of all such IBM property shall be in accordance with IBM's
written instructions.
12.3 Attachment Termination for Convenience. IBM may terminate this
Attachment for convenience at any time by providing LSI written termination
notice, and such notice shall be effective immediately upon LSI's receipt
of such notice, unless the notice provides for a longer period. In the
event of such notice, LSI shall immediately cease all work and shall treat
all applicable outstanding WAs in accordance with Subsection 5.1.2, from
the time of receipt of the written termination notice. IBM's total and
maximum liability is set forth in Subsection 5.1.2.
13
13.0 Limitation of Liability
EXCEPT FOR SECTIONS 6.0 AND 7.0 OF THE AGREEMENT [*] AND SECTION 3.3 OF
THIS ATTACHMENT, NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR ANY INDIRECT,
INCIDENTAL, CONSEQUENTIAL, OR PUNITIVE DAMAGES, OR FOR LOSS OF PROFIT, OR
REVENUE, WHETHER IN AN ACTION IN CONTRACT, TORT, STRICT LIABILITY, OR OTHERWISE,
EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. EACH PARTY WILL, HOWEVER, BE
LIABLE FOR PERSONAL INJURY CAUSED BY ITS NEGLIGENCE. SECTION 9.8 OF THE
AGREEMENT [*] SHALL NOT APPLY TO THIS ATTACHMENT.
Notwithstanding anything to the contrary, IBM's maximum liability shall not
exceed the [*], less any amounts paid for such Products, and as further reduced
by the liability limitations stated below in this section 5.0.
14.0 Severability
If any Section or Subsection of the Agreement, including this Attachment,
is found by competent judicial authority to be invalid, illegal or unenforceable
in any respect, the validity, legality and enforceability of any such Section or
Subsection in every other respect and the remainder of the Agreement, including
this Attachment shall continue in effect.
15.0 No Publicity
15.1 Non-disclosure. Each party agrees not to disclose the terms or
the existence of the Agreement (including this Attachment), without the
other party's prior written approval, except as may be required by law or
government regulation.
15.2 Brand image. LSI shall use IBM specified packaging with IBM
logos at all times in accordance with the specifications in this
Attachment.
16.0 Freedom of Action
Nothing in this Attachment shall be construed as: (a) prohibiting or
restricting either party or their subsidiaries from independently developing,
having developed independently, acquiring, licensing, distributing or marketing
products, services and other materials which are competitive in any form with
the Products; or (b) affecting either party's pricing of products or services,
other than LSI's pricing of Products and services to IBM hereunder. Nothing in
this Attachment obligates IBM, IBM subsidiaries or distributors to announce,
offer for sale, lease, or market Products or other products that include
Products in any quantity or in any particular manner of resale. Resale or
marketing activities may be commenced or discontinued at the sole discretion of
IBM, without notice to LSI. Each party is free to enter into similar agreements
with other parties, provided they do not deny IBM or LSI the benefits associated
with this Attachment.
17.0 Intellectual Property
17.1 Confidential Information. All confidential information exchanged
between the parties shall be exchanged under and governed by the terms and
conditions of Confidential Disclosure Agreement [*]. LSI agrees not to
disclose any information concerning the Product hereunder, or any
supporting activity thereof, without IBM's prior written permission, except
as may be required by law or governmental rule or regulation, or to
establish LSI's rights under this Attachment; provided, however, that if
LSI seeks to disclose for reasons not requiring IBM's prior written
approval, LSI shall limit such disclosure to the extent required, shall
allow IBM to review the information disclosed prior to the disclosure, and
shall apply, where available, for confidentiality protective orders and the
like. Any such review by IBM shall not be construed to make IBM responsible
for the contents of the disclosure, and LSI remains solely liable for the
contents thereof. Except as stated above in this Subsection 17.1 and in any
separately signed agreement for the exchange of confidential information,
neither party shall have any obligation of confidentiality to the other.
17.2 Trademarks. Notwithstanding any other provisions of this
Attachment to the contrary, neither party shall have the right to use the
trademarks, service marks, trade names, or product names of
14
the other party or its subsidiaries directly or indirectly in connection
with any products, promotion or publication, without the prior written
approval of the other party.
18.0 Survival
The rights and obligations of Sections and Subsections 3.3, 3.5, 3.8, 3.9,
3.12, 4.4, 6.0, 7.3, 11.0, 12.0, 13.0, 14.0, 16.0, 17.0, 18.0, 23 and 24 of this
Attachment shall survive and continue after termination or expiration of this
Attachment and shall remain in full force and effect, and shall bind the parties
and their legal representatives, successors, heirs and assigns. The rights and
obligations of this entire Attachment as they apply to WAs that are not
terminated or canceled shall survive and continue after expiration of this
Attachment and shall bind the parties and their legal representatives,
successors, heirs and assigns until expiration or cancellation of such WAs. The
rights and obligations of this entire Attachment as they apply to FRUS that are
not terminated or canceled shall survive and continue after expiration of this
Attachment and shall bind the parties and their legal representatives,
successors, heirs and assigns until expiration or cancellation of such FRUs.
19.0 International Sale of Goods
The United Nations' Convention on International Sale of Goods does not
apply.
20.0 Counterparts
This Attachment may be signed in one or more counterparts, each of which
shall be deemed to be an original and all of which when taken together shall
constitute the same agreement. Any signed copy of this Attachment made by
reliable means (e.g., photocopy or facsimile) is considered an original.
21.0 Conditional Obligation to Purchase Products
21.1 Subject to the limitations and exclusions provided in this SOW,
LSI agrees to sell to IBM and IBM agrees to purchase from LSI the portions
of IBM's (a) [*]and (b) [*] for new [*] and [*] enclosures [*] as expressly
identified in Product-Unique Attachments #1 and #2 attached hereto, for the
following time periods:
(a) From the Effective Date of this Attachment through the [*] of
the Effective Date, IBM will purchase [*] of the [*] and [*] of SSG's
[*] during this time period; and
(b) From the [*] of the Effective Date plus [*] of the Effective
Date, IBM will purchase no less than [*] of the [*] brand's and no less
than [*] of SSG's [*] during this period.
21.2 "[*]" means the number of units the [*] or SSG, as applicable,
requires to fulfill customer orders received by IBM for the Products
worldwide during the time periods set forth immediately above, subject to
the limitations and exclusions provided in this Attachment. IBM makes no
representations or commitments regarding the amount of its [*] or the
number of Products it will order. IBM is under no obligation to purchase
Products in any quantity.
21.3 Notwithstanding the foregoing, IBM is relieved of its conditional
obligation to purchase its [*] for Products hereunder and shall have no
liability to LSI to the extent that:
(1) LSI does not produce Products that conform to specifications or
other requirements of the Agreement and does not remedy that situation
in accordance with the terms of any relevant Product Unique Attachment,
this Attachment, or the Agreement;
(2) IBM cancels WAs due to LSI's failure to deliver Products on
time as per Section 8.3 of this Attachment;(3) IBM cancels WAs for cause
as per Section 12.2 of this Attachment;
(4) LSI does not remain competitive as required under Section 22 of
this Attachment;
(5) LSI otherwise fails to comply with a material term of this
Attachment (including the Product Unique Attachments) or the Agreement
and fails to cure such noncompliance in accordance with this Attachment
or the Agreement;
15
(6) LSI has actual knowledge of situation(s) where IBM has not
complied with this Section 21.0 and LSI fails to notify IBM where such
notice could have enabled IBM to cure without subsequent liability to
LSI;
(7) LSI declines to bid in response to a IBM RFQ or fails to
fulfill a WA;
(8) either party terminates all or part of this Attachment or the
Agreement in accordance with the terms of Section 12 of this Attachment;
(9) a Competitor of IBM acquires a beneficial interest in at least
[*] of the outstanding shares, securities, or ownership interests
representing the right to vote for the election of managing authority or
the right to make decisions for LSI; or if a Competitor of IBM
purchases, leases, licenses or otherwise acquires a beneficial interest
in at least [*] of the assets of LSI; or if a Competitor of IBM becomes
entitled to appoint a [*]; or if work performed by LSI for a single
Competitor of IBM represents more than [*] of LSI's total operating
revenue and IBM reasonably believes that this situation is having a
significant, detrimental effect on IBM's relationship with LSI under
this Attachment; or (10) Products conform to specifications provided by
IBM but are nevertheless incompatible with IBM's overall system unit
design, to the extent that LSI had an opportunity to make the Product
compatible pursuant to Section 3.12 of the Attachment.
For the purposes of this Attachment, a "Competitor of IBM" shall
mean any company which is directly, or through an Affiliate is
indirectly: (i) involved in the development, manufacture or sales of
information handling hardware through which activity it generates annual
revenue in excess of [*], or (ii) involved in the development or sale of
software or computer-related services through which activity it
generates annual revenue in excess of [*].
For the purposes of this Attachment, "Affiliate" shall mean entities that
control, are controlled by or are under common control with, a party to
this Attachment.
21.4 IBM is not obligated to purchase and IBM shall have no liability
to LSI with respect to:
(1) products in IBM's possession or under IBM's control prior to or
on the Effective Date of this Attachment;
(2) products awarded by IBM to another supplier prior to the
Effective Date of this Attachment or products derived from an
Engineering Change to those products;
(3) products that a customer requires to be provided by a source
other than LSI; and
(4) initial production quantities (generally, [*] from the date
such Products are made generally available to the public) if IBM
believes, in its sole and reasonable discretion, that it is necessary to
produce these Products elsewhere due to concerns about engineering,
Parts availability, process and manufacturing readiness, or plant volume
capabilities, provided that IBM notifies LSI about the concerns and LSI
is unable to resolve them to IBM's satisfaction before the order for
initial production quantities must be placed.
21.5 The parties agree that damages are difficult to ascertain and as
a reasonable estimate of LSI's actual damages, and not as a penalty, IBM
will pay LSI liquidated damages as set forth in this Section 21.5 for each
Product that IBM purchased from another supplier in violation of this
Section 21. Notwithstanding the foregoing, IBM will have no liability and
shall not pay liquidated or other damages to the extent that the number of
such Products purchased by IBM from another supplier in violation of
Section 21 during each calendar year is no more than [*]: (a) all Products
ordered by IBM during that calendar year from LSI; plus, (b) all such
Products that IBM purchases from another supplier during that calendar year
in violation of Section 21.
IBM will pay [*] for each Product [*] by IBM from another supplier in
violation of Section 21 between the Effective Date of this Attachment and the
[*] of the Effective Date, for the number of such Products that is more than [*]
of all such Products ordered by IBM during the [*] from either LSI or another
supplier in violation of Section 21. This is the sole and exclusive remedy
available to LSI for IBM's failure to fulfill its
16
obligations under Section 21, and stands in lieu of all other remedies available
to LSI under this Agreement, at law, and in equity. LSI must bring any claim
under this Section 21.5 within [*] of the date LSI has actual knowledge of facts
giving rise to the claim, but in no event more than [*] after the date the claim
arises. If IBM purchases more than [*] of its [*] for a Product in any given
[*], then this Section 21.5 shall not apply and the parties shall follow the
dispute resolution mechanisms otherwise available to them.
22.0 LSI Competitiveness
22.1 IBM's commitment to purchase Products from LSI is contingent upon
LSI remaining competitive for each Product and in each geography with
regard to supplier performance criteria which include, without limitation:
Price, Product quality, Lead Times, on-time delivery, technology, Product
support and responsiveness. The determination of competitiveness will be
made by IBM in IBM's reasonable judgment and sole discretion, acting in
good faith. IBM may request LSI to provide such relevant data to
demonstrate competitiveness. IBM may at any time test LSI's competitiveness
relative to the industry on a periodic basis through a competitive RFQ
process with other external suppliers, internal IBM suppliers, and/or a
comparison of industry benchmark RFI data.
22.2 In the event that IBM determines in its sole and reasonable
discretion that LSI is noncompetitive pursuant to Section 22.1, then IBM
shall provide written notice to LSI specifying the Product(s),
geography(ies), and area(s) of performance in which LSI is noncompetitive.
If LSI receives such notice and:
(1) does not correct the identified noncompetitive performance to
IBM's satisfaction or negotiate a resolution action plan to the matter
which is satisfactory to IBM within [*] of said notice for price issues;
or
(2) does not correct the identified noncompetitive performance to
IBM's satisfaction Of negotiate a resolution action plan to the matter
which is satisfactory to IBM within [*] of said notice for all other
performance issues:
then IBM may, in addition to its other rights tinder this Attachment and the
Agreement, source the affected Products from other suppliers and/or cancel any
unfulfilled WA(s) for the affected product(s) at no charge and without
liability.
23.0 Indemnification
23.1 General Indemnification. LSI will defend, hold harmless and
indemnify, including legal fees, Customers and IBM personnel against third
▇▇▇▇▇ claims that arise or are alleged to have arisen as a result of
negligent or intentional acts or omissions of LSI or LSI personnel or
breach by LSI of any term of this Attachment (including the product Unique
Attachments) and the Agreement.
LSI's obligation to indemnify IBM under this section shall be contingent on
IBM (i) notifying LSI promptly in writing of such a claim, (ii) giving LSI sole
control and authority to proceed as contemplated herein provided, that LSI shall
have sole control of any such claim or settlement negotiations, and (iii) giving
LSI proper and fail information and assistance to settle and/or defend any such
claim. Failure by IBM to notify LSI promptly in writing of such a claim will
relieve LSI of its obligations under this section only to the extent that LSI's
ability to defend the claim is prejudiced by such lack of notice.
24.0 Assignment
IBM may assign some or all of its rights and obligations under this
Attachment and the Agreement to third parties or its Affiliates, at IBM's sole
discretion, including, but not limited to, assigning the right to procure FRUs
to third-party service providers. LSI may assign some or all of its rights and
obligations under this Attachment and the Agreement to third parties or its
subsidiaries with prior written consent from IBM's Business Coordinator except
that LSI shall have the right to assign some or all of its rights and
obligations under this Attachment and the Agreement in connection with the sale
of all or part of its business that makes use of or sells the Products purchased
hereunder. Any unauthorized assignment of this #Attachment or the Agreement is
void.
17
25.0 Order of Precedence
Notwithstanding section 9.11 of the Agreement [*] and section 9.6 of this
Attachment, in the event of any conflict in the documents contained in the
Agreement. the order of precedence will be: (i) the relevant Product Unique
Attachment: (ii) the balance of this Attachment; and (iii) the Agreement [*].
THIS ATTACHMENT AND ITS EXHIBITS, PRODUCT UNIQUE ATTACHMENTS, WAS, AND PULL
PROFILES ISSUED HEREUNDER, THE AGE THAT THIS ATTACHMENT IS ISSUED UNDER, AND THE
CONFIDENTIALITY AGREEMENT (IF ANY) CONSTITUTE THE ENTIRE AGREEMENT BETWEEN THE
PARTIES WITH RESPECT TO THE SUBJECT MATTER HEREOF AND SUPERSEDE ALL
COMMUNICATIONS AND UNDERSTANDINGS BETWEEN THESE PARTIES, WHETHER WRITTEN OR
ORAL., WITH RESPECT TO THE SUBJECT MATTER HEREOF.
The parties hereto have caused this Attachment to be signed by their
respective duly authorized representatives
ACCEPTED AND AGREED TO: ACCEPTED AND AGREED TO:
INTERNATIONAL BUSINESS MACHINES CORPORATION LSI LOGIC STORAGE SYSTEMS, INC.
/s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 6/28/02 /s/ ▇▇▇ ▇▇▇▇▇▇▇ 6/28/02
---------------------------------------------- ----------------------------------------------
Authorized Signature Date Authorized Signature Date
▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇
---------------------------------------------- ----------------------------------------------
Printed Name Printed Name
VP Systems Production Procurement Executive Vice President
---------------------------------------------- ----------------------------------------------
Title Title
18
EXHIBIT 1
TO ▇▇▇▇ ▇▇. ▇▇▇▇▇▇▇▇▇▇
DELIVERY LOGISTICS PLAN
[*]
FINAL EXECUTION VERSION
MARCH 12, 2003
IBM CORPORATION/LSI LOGIC STORAGE SYSTEMS, INC.
AMENDMENT #1 TO PSPL
This amendment and its attachments, which are incorporated by reference,
("Amendment #1") is entered into and made effective on March 12, 2003, by and
between LSI Logic Storage Systems, Inc. ("LSI" or "Supplier") and International
Business Machines Corporation, a
New York corporation ("IBM") having an office
for the transaction of business at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇ ▇▇▇▇▇ whereby LSI and IBM ("the Parties") mutually agree to the following
terms and conditions.
The Parties hereby agree to modify and amend Product Specification and
Price List Attachment (PSPL) [*] ("Attachment") as set forth herein in exchange
for good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged. All other terms and conditions of the Agreement shall apply
and remain in full force and effect.
(1.0) The parties acknowledge and agree that for the purpose of the
Agreement (as such term is defined in the Attachment, this Amendment #1 and any
and all of the Product Unique Attachments thereto, the following shall be
defined terms:
(1.1) The term, [*] describes [*] enclosures supplied by LSI.
(1.2) The term, [*] describes [*] enclosures supplied by LSI.
(1.3) The term, [*] describes [*] disk enclosures supplied hereunder
by LSI Logic.
(1.4) The term, [*] describes the [*] controller supplied by LSI which
product is currently referred to by IBM as [*].
(2.0) Section 21.1 is deleted and replaced in its entirety with the
following:
"Subject to the limitations and exclusions provided in this SOW, LSI agrees
to sell to IBM and IBM agrees to purchase from LSI the portions of IBM's (a) [*]
brand's actual worldwide requirements and (b) Storage System Group's ("SSG")
actual worldwide requirements for new [*] products, and (c) SSG's worldwide
requirements for [*] Products as expressly identified in Product-Unique
Attachments #1, 2, 3 and #4 attached hereto, for the following time periods:
(a) From the Effective Date of this Attachment through the [*] of the
Effective Date, IBM will purchase [*] of the [*] brand's and [*] of SSG's
[*]; and
(b) From the [*] of the Effective Date of this Attachment plus [*] of
the Effective Date of this Attachment IBM will purchase no less than [*] of
the [*] brand's and no less than [*] of SSG's [*] during this period."
(3.0) The second paragraph of section 21.5 is deleted and replaced in its
entirety with the following: "IBM will pay (a) [*], and (b) [*] from another
supplier in violation of Section 21 between the Effective Date of this
Attachment and the [*] of the Effective Date, for the number of such Products
that is more than [*] and no more than [*] of the total number of all such
Products ordered by IBM during the relevant [*] from either LSI or another
supplier in violation of Section 21. This is the sole and exclusive remedy
available to LSI for IBM's failure to fulfill its obligations under Section 21,
and stands in lieu of all other remedies available to LSI under this Agreement.
at law, and in equity. LSI must bring any claim under this Section 21.5 within
[*] of the date LSI has actual knowledge of facts giving rise to the claim, but
in no event more than [*] after the date the claim arises. If IBM purchases more
than [*] of its [*] for a Product in any
1
given [*], then this Section 21.5 shall not apply and the parties shall follow
the dispute resolution mechanisms otherwise available to them."
(4.0) The following exhibits are hereby added to the Attachment:
Exhibit 2 entitled:
"Packaging and Handling Specification -- Supplier Interplant Requirements
May 21, 2001
IBM Part Number [*]
IBM Packaging Requirements Manual
Document Number: [*]
Exhibit 3 entitled:
"Technical Support -- Revision 1.0
March 10, 2003"
This Amendment #1 may be signed by each Party's respective duly authorized
representative in one or more counterparts, each of which shall be deemed to be
an original and all of which when taken together shall constitute one single
agreement between the Parties. Any signed copy of this Amendment #1 made by
reliable means (e.g. photocopy or facsimile) shall be considered an original.
The Parties hereto have caused this Amendment #1 to be signed by their
respective duly authorized representatives.
ACCEPTED AND AGREED TO: ACCEPTED AND AGREED TO:
INTERNATIONAL BUSINESS MACHINES LSI LOGIC STORAGE SYSTEMS, INC.
CORPORATION
/s/ ▇. ▇▇▇▇▇▇ 4/4/03 /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 3/12/03
--------------------------------- -------- --------------------------------- ---------
Authorized Signature Date Authorized Signature Date
▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------- -------- --------------------------------- ---------
Printed Name Printed Name
OEM Procurement VP Sales & Marketing
--------------------------------- -------- --------------------------------- ---------
Title Title
2