<PAGE> 1
Form 10-Q/A
Amendment No. 1
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 28, 1996
As Amended October 30,1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
-------------- --------------
-----------------------------
COMMISSION FILE NUMBER 1-7534
-----------------------------
STORAGE TECHNOLOGY CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 84-0593263
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
2270 South 88th Street, Louisville, Colorado 80028-4309
(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number, including area code: (303) 673-5151
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Form 10-Q/A
Page 2
EXPLANATORY NOTE
On August 13, 1996, Storage Technology Corporation (the Company), pursuant to
Rule 24b-2 promulgated under the Securities Exchange Act of 1934, filed a
request for confidential treatment of specified portions of a document filed as
an Exhibit to the Company's Quarterly Report on Form 10-Q for the Quarterly
Period Ended June 28, 1996. In particular, the Company sought confidential
treatment for certain specified portions of Exhibit 10.5. In response to the
comments received from the Commission, the Company revised its request for
confidential treatment. An amended redacted form of Exhibit 10.5 is filed with
this Form 10-Q/A.
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
10.1** Tenth Amendment and Restatement of Storage Technology
Corporation 1987 Employee Stock Purchase Plan.
10.2** Storage Technology Corporation Amended and Restated
Stock Option Plan for Non-Employee Directors.
10.3** Employment Agreement between the Company and David E.
Weiss, dated June 24, 1996.
10.4** Employment Agreement between the Company and David E.
Lacey, dated June 24, 1996.
10.5* OEM Agreement between the Company and International
Business Machines Corporation ("IBM"), dated June 7,
1996. The OEM Agreement contains certain
confidential information which has been omitted
pursuant to an order of the Securities and Exchange
Commission granted to the Company under Rule 24b-2 of
the Securities Exchange Act of 1934.
11.0 Computation of Earnings (Loss) Per Common Share.
27.0 Financial Data Schedule.
(b) Reports on Form 8-K
On May 23, 1996, the Company filed a current report on Form
8-K dated May 23, 1996, pursuant to Item 5, disclosing the
appointment of David E. Weiss as Chairman of the Board,
President and Chief Executive Officer to succeed Ryal Poppa
who retired from his positions as an officer and director
effective on such date, and the appointment of David E. Lacey
as Executive Vice President and Chief Financial Officer of the
Company.
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* Indicates Exhibits filed with this Quarterly Report on Form
10-Q/A.
** Contracts or compensation plan or arrangement in which
directors and/or officers participate.
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Form 10-Q/A
Page 3
On June 12, 1996, the Company filed a current report on Form 8-K dated
June 10, 1996, pursuant to Item 5, disclosing that the Company had
entered into an OEM agreement with IBM, concerning the Company's
mainframe online storage products. The Agreement provides that the
Company will manufacture for IBM storage subsystems sold by the
Company under the brand names Iceberg, Kodiak, and Arctic Fox, and,
beginning July 1, 1996, intends to use IBM as its main worldwide
distribution channel for these products.
On June 13, 1996, the Company filed a current report on Form 8-K dated
June 12, 1996, pursuant to Item 5, disclosing that the Company had
called for redemption on July 12, 1996 all of its outstanding 7%
Convertible Subordinated Debentures due March 15, 2008.
<PAGE> 4
Form 10-Q/A
Page 4
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
STORAGE TECHNOLOGY CORPORATION
(Registrant)
October 30, 1996 /s/ DAVID E. WEISS
- ---------------------------- ---------------------------------------
(Date) David E. Weiss
Chairman of the Board, President
and Chief Executive Officer
(Principal Executive Officer)
October 30, 1996 /s/ DAVID E. LACEY
- ---------------------------- ---------------------------------------
(Date) David E. Lacey
Chief Financial Officer
(Principal Financial Officer and
Principal Accounting Officer)
<PAGE> 5
EXHIBITS INDEX
10.5 OEM Agreement between the Company and International Business
Machines Corporation ("IBM"), dated June 7, 1996. The OEM
Agreement contains certain confidential information which has
been omitted pursuant to an order of the Securities and
Exchange Commission granted to the Company under Rule 24b-2 of
the Securities Exchange Act of 1934.
<PAGE> 1
CONFIDENTIAL TREATMENT
THE FOLLOWING IS A REDACTED VERSION OF THE
OEM AGREEMENT DATED AS OF JUNE 7, 1996
BY AND BETWEEN STORAGE TECHNOLOGY CORPORATION
AND INTERNATIONAL BUSINESS MACHINES CORPORATION
THIS MATERIAL IS BEING SUBMITTED IN CONNECTION
WITH A REQUEST FOR CONFIDENTIAL TREATMENT
PURSUANT TO RULE 24b-2 UNDER
THE SECURITIES AND EXCHANGE ACT OF 1934
<PAGE> 2
OEM AGREEMENT
BETWEEN
INTERNATIONAL BUSINESS MACHINES
CORPORATION
AND
STORAGE TECHNOLOGY CORPORATION
JUNE 7, 1996
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<S> <C>
BACKGROUND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. SCOPE OF AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3. TERM OF AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4. COMPONENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5. AGREEMENT ADMINISTRATOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
6. PURCHASE COMMITMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
6.1 1996-1998 ** Volumes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
6.2 1999 ** Volumes/Pricing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
6.3 Qualified Upgrades . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
6.4 Credits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
6.5 Liquidated Damages/ ** Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
6.6 Other StorageTek Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.7 Exceptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.8 Additional StorageTek Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
7. PRICING & PAYMENT TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
7.5 ** Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
7.6 Recovery Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
7.7 FRU Prices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
7.8 Lowest Cost Sourcing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
7.9 Taxes/Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
7.10 Payment Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
7.11 Snapshot Feature . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
8. IBM SALES TO STORAGETEK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
9. QUALITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
9.1 Manufacturing Testing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
9.2 Engineering Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
9.3 Quality Levels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
9.4 Quality Assurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
9.5 ISO 9000 Certification and Use of Subcontractors . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
</TABLE>
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** Confidential portions omitted and filed separately with the Securities and
Exchange Commission under an application for confidential treatment.
i
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<TABLE>
<S> <C> <C>
10. PRODUCT LEAD TIMES AND FORECAST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
10.4 Current Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
10.5 StorageTek's Capacity/Allocation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
11. PURCHASE ORDERS, ALTERATIONS & RESCHEDULING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
12. CONSIGNMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
13. DELIVERY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
13.1 On-time Delivery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
13.2 Carrier . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
13.3 Title/Risk of Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
13.4 Packaging . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
14. EQUIPMENT WARRANTY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
14.10 Licensed Programs, Microcode and Maintenance Code Warranty . . . . . . . . . . . . . . . . . . . . . . 43
15. FRUs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
15.4 FRU Rework Procedures and Prices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
16. FIELD SERVICE & SUPPORT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
16.1 Installation Support . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
16.2 Training . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
16.3 Service of Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
16.4 Emergency and Expert Maintenance Coverage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
16.5 Labor Rate Table . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
16.6 New Product Development Center Support . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
16.7 Maintenance and Installation Tools . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
16.8 Maintenance and Technical Support . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
16.9 Access . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
17. MARKETING RIGHTS & SUPPORT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
17.2 Marketing Support Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
17.3 Training . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
17.4 Additional Initial Training . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
17.5 Ongoing Training . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
17.6 Marketing Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
17.7 Marketing Tools . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
17.8 Systems Engineering Support . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
18. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
</TABLE>
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<TABLE>
<S> <C> <C>
19. TRADEMARK & ADVERTISING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
19.1 Trademark and Design Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
19.2 Advertising/Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
20. CONFIDENTIALITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
21. ASSIGNMENT & CHANGE OF CONTROL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
22. DISPUTE RESOLUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
22.1 Escalation Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
22.2 Mediation Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
23. TERMINATION/REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
23.1 Termination by Mutual Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
23.2 Termination by Bankruptcy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
23.3 Termination for Cause . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
23.4 Material Breach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
23.5 ** License . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
23.6 Manufacturing Make or Have Made Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
23.7 Termination for Convenience . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
23.8 Termination for Burdensome Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
23.9 Wind Down . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
23.10 ** After Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
24. INDEMNIFICATION RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
24.1 Intellectual Property Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
24.2 General Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
24.3 Obligations of IBM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
25. GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
25.1 New York Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
25.2 Limitation of Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
25.3 Limitation of Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
26. GENERAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
26.1 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
26.2 Relationship of the Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
26.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
26.4 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
26.5 Headings and Attachments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
26.6 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
26.7 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
</TABLE>
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** Confidential portions omitted and filed separately with the Securities and
Exchange Commission under an application for confidential treatment.
iii
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<TABLE>
<S> <C> <C>
26.8 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
26.9 Weekends and Holidays . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
26.10 Force Majeure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
26.11 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
26.12 Order of Precedence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
</TABLE>
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EXHIBITS, ATTACHMENTS, APPENDICES
<TABLE>
<S> <C>
Exhibit 1 - Prices
Attachment 1 - Product Prices
Attachment 2 - Volume Recovery Tables
Appendix A - 1996 ** Payment Table
Appendix B - 1997 ** Payment Table
Appendix C - 1998 ** Payment Table
Appendix D - 1999 ** Payment Table
Attachment 3 - Upgrade Pricing
Exhibit 2 - Specifications
Attachment 1 - Manufacturing Test Specifications
Attachment 2 - Product Specifications
Exhibit 3 - IBM Developer Agreement Between IBM and StorageTek: Base Agreement
Attachment 1 - Statement of Work
Appendix A - Functional, Technical and Quality Specifications
Schedule 1 - Iceberg Items
Schedule 2 - Kodiak Items
Schedule 3 - IXFP and IXOF Items
Schedule 4 - Iceberg Performance Commitments for 7/96
Schedule 5 - Iceberg Performance Commitments for 6/97
Schedule 6 - Kodiak Performance Commitments for 10/96
Schedule 7 - Kodiak Performance Commitments for 10/1/97
Schedule 8 - Capacity Ratio Specification
Appendix B - Completion and Acceptance Criteria
Schedule 1 - Monterey System Test
Schedule 2 - Current Volume Assumptions
Appendix C - [Intentionally Left Blank]
Appendix D - Certificate of Originality
Appendix E - IBM Source Code Custody Agreement
Appendix F - Performance Assessment Workload (PAWS)
Appendix G - Product Development Plan
Attachment 2 - Description of Licensed Works
Appendix A - IBM LIC Terms
Appendix B - StorageTek LIC Terms
Exhibit 4 - Consignment Agreement
Exhibit 5 - FRU Prices/Lead Times
Exhibit 6 - Data Items
Exhibit 7 - List of Countries for IP Indemnity
Exhibit 8 - Examples of Calculations of IBM Volume Credit Due to RAS Criteria
</TABLE>
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** Confidential portions omitted and filed separately with the Securities and
Exchange Commission under an application for confidential treatment.
v
<PAGE> 8
OEM AGREEMENT
This agreement is made and entered into as of June 7, 1996, by and between
International Business Machines Corporation, having an office for the
transaction of business at 5600 Cottle Road, San Jose, California 95193
(hereinafter called "IBM" or "Monterey"), and Storage Technology Corporation,
having an office for the transaction of business at 2270 South 88th Street,
Louisville, Colorado 80028 (hereinafter called "StorageTek," "STK" or "Oahu").
StorageTek and IBM may be individually referred to herein as a "Party" and
collectively as the "Parties."
BACKGROUND
StorageTek manufactures and sells, among others, certain Equipment as more
fully described below. IBM wishes to purchase such Equipment from StorageTek
on an Original Equipment Manufacturer (OEM) basis at large volume prices in
order to resell or lease such Equipment to its customers throughout the world,
both directly and indirectly through its distributors, Subsidiaries, and other
channels. In order to secure access to IBM's distribution channels, to provide
StorageTek with the opportunity to reach more customers, to provide more
product choices for customers and also due to IBM's willingness to invest a
substantial amount in product research and development and in product
engineering, StorageTek is willing to sell such Equipment to IBM at such prices
if IBM will purchase a substantial amount of the Products and Upgrades,
advertise and market the Products and Upgrades, provide maintenance and repair
service for the Equipment sold or leased by it, maintain an inventory of spare
parts and take certain other related actions.
The provisions of this section are intended to generally explain the reasons
that StorageTek and IBM have entered into this Agreement, but do not constitute
a portion of the contractual obligations, terms or conditions agreed to by the
Parties, which are set forth in the following sections of this Agreement.
WITNESSETH THAT:
In consideration of the mutual premises and covenants herein contained, the
Parties hereto agree as follows:
1. DEFINITIONS
1.1 "Agreement" shall mean this OEM Agreement, its
Exhibits, their Attachments, their Appendices and
their Schedules.
1.2 "Agreement Administrator" shall have the meaning set
forth in Section 5.
1.3 "Annual Volumes" shall have the meaning set forth in
Section 6.1.
<PAGE> 9
1.4 "APAR" shall mean a completed form entitled
"Authorized Program Analysis Report," that is used by
IBM to report suspected Code or documentation errors
in a Licensed Program (including updates or
enhancements thereto) and to request their
investigation and correction.
1.5 "Audit Rights" (Section 7.5c) shall mean a Party's
right to have Price Waterhouse, Arthur Andersen or
Ernst & Young, or their lawful successors, audit the
other Party's books and records on reasonable prior
notice for the purpose of making a factual
determination of whether a specified event has
occurred. The Parties shall request the firms in the
order set forth above, and shall only request the
second or third listed firm if the earlier listed
firms decline to serve. In carrying out such audit
responsibilities, said accounting firm shall use
generally accepted accounting principles (hereafter
"GAAP"), as consistently applied by the audited
party. The auditor's working papers shall not be
made available to the Party requesting the audit.
1.6 "Base Iceberg Package" shall have the meaning set
forth in the IDA.
1.7 "Burdensome Condition" (Section 23.8) shall mean: **
.
1.8 "CHANGE OF CONTROL" (SECTION 21) SHALL MEAN THE
ACQUISITION BY AN ENTITY OF MORE THAN (I) ** in the
case of a Change of Control for the purpose of
Section ** hereunder, or (ii) ** in the case of a
Change of Control for the purpose of Section **
hereunder, of the ** , or any consolidation, merger
or other reorganization ** is not the continuing or
surviving corporation or pursuant to which shares **
would be converted into cash, securities or other
property.
1.9 "Commit Date" shall have the meaning set forth in
Section 13.1i.
1.10 "Contract Coordinators" (Section 5) shall mean those
individuals described in Section 11.1 of the
Statement of Work (Attachment 1 to Exhibit 3).
1.11 "Cost Exclusions" (Section 9.3f) shall mean those
parts costs that are incurred by IBM for (i) FRUs
returned for warranty credit, (ii) FRU removals
which are not in accordance with FRU removal
procedure to the extent that such removals exceed
StorageTek's actual experience during the first six
(6) months of 1996, (iii) defective IBM Drives, and
(iv) FRUs replaced due to a confirmed IBM Drive or
any other IBM-supplied component failure (without a
defect in the associated StorageTek FRU package).
1.12 "Count Key Data Systems" (Section 6.6a) shall mean
storage subsystems or solutions which present a count
key data or extended count key data image to the
host.
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1.13 "Day(s)," "month(s)," "quarter(s)" and "year(s)"
shall mean calendar days, months, quarters or years,
unless otherwise specified.
1.14 "Delivery," "Delivered," "Deliver" (Section 2.1) or
other forms of the term shall mean the physical
transfer of Equipment by StorageTek to an
IBM-specified common carrier, freight forwarder, or
IBM's agent at StorageTek's plant of manufacture.
1.15 "Devices" (Section 6.2) shall mean products which
would be ** .
1.16 "Disclosing Party" shall have the meaning set forth
in Section 20.
1.17 "Drives" shall have the meaning set forth in Section
12.1.
1.18 "Effective Date" shall have the meaning set forth in
Section 3.
1.19 "Emergency Engineering Change" shall have the meaning
set forth in Section 9.2b.
1.20 "Equipment" (Section 2) shall mean Products, Upgrades
and FRUs.
1.21 "Error Free Installation" (Section 9.3b) shall mean
installations of Products and Upgrades Delivered that
both (i) Plug and Play; and (ii) meet the following
criteria: (a) arrives configured according to IBM's
written instructions; (b) has all of the correct
documentation, cables and accessories included; and
(c) is Delivered in the correct packaging and with
the shipping documents. Such criteria shall
specifically not include any failures caused by IBM
or the customer, or for which IBM or the customer is
responsible, including without limitation, I/O
control program generations, shipping damage, failure
(for any reason) of Drives or other IBM-supplied
components.
1.22 "Estimated Volumes" shall have the meaning set forth
in Section 7.6a.
1.23 "FAST" shall mean Iceberg, as described in the
Specifications.
1.24 "FASTER" shall mean Kodiak, as described in the
Specifications.
1.25 "FRU" (Section 6.2) shall mean any part, assembly or
subassembly of Products, Devices or Upgrades supplied
by StorageTek that are designed to be replaceable in
the field.
1.26 "Gigabyte" or "GB" shall mean one billion bytes of
storage.
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1.27 "IBM Customer Engineering" shall have the meaning set
forth in Section 16.2.
1.28 "IBM Total" shall have the meaning set forth in
Section 7.6c.
1.29 "IDA" (Section 2.2) shall refer to the IBM Developer
Agreement, which is attached hereto as Exhibit 3.
1.30 "IDC Methodology" shall have the meaning set forth in
Section 7.6b.
1.31 "Impact Error" (Section 9.3a) shall mean an incident,
as reasonably determined by IBM, that either results
in: (1) the loss of data, or (2) the loss of access
to data resulting in an application interrupt (e.g.,
an abnormal program ending or "abend" or inability to
bring up an application) or system interrupt (e.g., a
system outage or requirement to initiate an initial
program load command in order to resolve or clear an
error condition). Any Impact Error due to improper
use of the Equipment by the customer, or an IBM agent
or employee will be excluded.
1.32 "Invention" shall mean any idea, design, concept,
process, technique, invention, discovery or
improvement, whether or not patentable, either
conceived or reduced to practice solely by one or
more employees of one of the Parties or its
Subsidiaries (Inventing Party) or jointly by one or
more employees of IBM or its Subsidiaries and one or
more employees of StorageTek or its Subsidiaries
(Joint Invention) in the performance, and during the
term, of this Agreement.
1.33 "Level 1" support are those activities that assist
the user in resolving "how to" and operational-type
questions, as well as technical questions on
installation procedures.
1.34 "Level 2" support are those activities that require
additional research and analysis of a user problem.
The Problem Management System database is checked to
locate a duplicate of the problem being reported and
the previous solution applied to that problem.
1.35 "Level 3" support are those activities that require
duplication of the user problem, analysis of APAR or
PMR records and distribution of a fix to resolve the
user problem.
1.36 "Licensed Programs" shall mean IXFP, IXOF and the
Snapshot Feature (as defined in Section 1.13 of the
DLW).
1.37 "Liquidated Damages" shall mean those damages
described in Section 6.5.
1.38 "Machine Month" or "MM" (Section 9.3a) shall mean a
measurement, established at the end of such calendar
month, of the number of units of Product installed
and operational during a month at an end user's
location, prorated on a daily basis (e.g., the sum of
the total number of machine days [i.e., number of
machines installed and
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<PAGE> 12
operational at an end user's location on a particular
day] in a calendar month, divided by the number of
days in that month).
1.39 "Maintenance Code" shall be as defined in the DLW.
1.40 "Major Enhancements" shall be as defined in the IDA.
1.41 "Mandatory Engineering Changes" shall have the
meaning set forth in Section 9.2.
1.42 "Maximum Percentage" shall have the meaning set forth
in Section 10.2.
1.43 "Megabyte" or "MB" shall mean one million bytes of
storage.
1.44 "Microcode" shall have the meaning set forth in the
Description of Licensed Works.
1.45 "Minimum Percentage" shall have the meaning set forth
in Section 10.2.
1.46 "Minimum Volumes" shall have the meaning set forth in
Section 6.5.
1.47 " ** Price" shall have the meaning set forth in
Section 7.5.
1.48 "New FRU Cost" (Section 7.7a) shall mean StorageTek's
price for FRUs, as specified in Section 7.7a.
StorageTek will provide IBM a schedule setting forth
this cost for each FRU (the current version set forth
in Exhibit 5 to this Agreement, FRU Prices and Lead
Times) which list will be adjusted semiannually (in
January and July).
1.49 "New Product Development Center Support" shall have
the meaning set forth in Section 16.6.
1.50 "Non-RMM Device" shall have the meaning set forth in
Section 1.11 of the DLW.
1.51 "Notification Date" shall have the meaning set forth
in Section 6.2a.
1.52 "Object Code" shall have the meaning set forth in the
SOW.
1.53 "Plug and Play" means that a unit of Product or
Upgrade, when installed following StorageTek's
recommended installation procedures, operates without
experiencing any functional failures during
installation and passes all installation verification
tests, that internal diagnostic routines execute
successfully and generally that each such unit of
Product or Upgrade is observed to operate properly
and in accordance with
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the Specifications (as the same may be changed in any
applicable Product Development Plan) through the
installation of such unit. A functional failure is
defined as any repair/replacement/adjustment
corrective action that is required to install or make
the subsystem functional that is not specified as
part of the installation instructions.
1.54 "PMR" shall mean a problem management report that is
used by IBM to report machine failures.
1.55 "Product(s)" (Section 6.1) shall mean the products
purchased from StorageTek by IBM and consist of the
StorageTek-manufactured Iceberg, Kodiak and Arctic
Fox high performance storage subsystems, including
any Deliverables, Enhancements and Maintenance
Modifications hereafter made pursuant to the IDA, and
controllers, A-boxes, B-boxes, Microcode and Licensed
Works, and which are further described in Exhibit 2,
Specifications, and Appendices A and B to Attachment
1 of Exhibit 3. Products also include related
documentation and other supporting materials.
1.56 "Product Engineering Services" shall mean the support
and services as described in Section 3.7 of the SOW.
1.57 "Qualified Upgrades" shall have the meaning set forth
in Section 6.3.
1.58 "Quarterly Cost" (Section 6.2b(1) shall mean the sum
of ** plus ** , and for ** for the ** quarter,
plus the ** ; provided, however, that ** plus **
and the ** plus ** .
1.59 "Quarterly Volumes" shall have the meaning set forth
in Section 6.2.
1.60 "QUICK" shall mean Arctic Fox.
1.61 "RAS criteria" shall have the meaning set forth in
Section 9.3a.
1.62 "Receiving Party" shall have the meaning set forth in
Section 20.
1.63 "Recovery Payments" shall have the meaning set forth
in Section 7.6.
1.64 "Remainder Percentage" shall have the meaning set
forth in Section 10.2.
1.65 "Service Call" (Section 9.3a) shall mean any service
call due to a failure condition resulting from either
a subsystem hardware or Microcode error (including
the Microcode portion of Snapshot Feature) (e.g., 01,
02 and 04 service codes).
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1.66 "Service Call Rate" (Section 9.3a) shall mean a rate
which is calculated as follows:
number of service 180 GB for Iceberg or
calls during month 360 GB for Kodiak
x
--------------------------- -----------------------
number of average capacity
Machine Months in GB per machine
1.67 "Severity Level" shall mean a designation (i.e.,
Severity 1, Severity 2, Severity 3 and Severity 4)
assigned to errors that is intended to indicate the
seriousness of the error based upon the impact that the
error has on the user's operation.
1.68 "Severity 1" is a "critical problem"; the product is
unusable or an error severely impacts a customer's
operation. Severity 1 requires maximum effort to
resolve a critical problem until an emergency fix is
developed, implemented and made generally available to
IBM's customers who experience such problem.
1.69 "Severity 2" is a "major problem"; important function is
not available resulting in operations being severely
restricted.
1.70 "Severity 3" is a "minor problem"; inability to use a
function occurs, but it does not seriously affect the
user.
1.71 "Severity 4" is a "minor problem" that is not
significant to the user's operation; the user may be
able to circumvent the problem.
1.72 "Source Code" shall have the meaning as set forth in the
SOW.
1.73 "Specifications" (Section 2.1) shall mean the
descriptions contained in Appendices A and B to
Attachment 1 of Exhibit 3 and Exhibit 2, Specifications.
1.74 "Standard Parts Cost" (Section 9.3f) shall mean the
following with respect to the following specific periods
of this Agreement:
a. First twelve months of the Agreement: ** of the
New FRU Cost plus ** of the Used FRU Cost for
each FRU, plus actual freight; and
b. Thereafter: ** of the New FRU Cost plus **
of the Used FRU Cost for each FRU, plus actual
freight.
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1.75 "StorageTek Installed Base" shall mean ** prior to the
Effective Date and ** distributed by StorageTek
pursuant to the terms of Section 6.7 and 6.8, below.
1.76 "Subsidiary" (Section 6.6) shall mean a corporation,
company, limited liability company or other entity:
a. more than fifty percent (50%) of whose
outstanding shares or securities (representing
the right to vote for the election of directors
or other managing authority) are, now or
hereafter, owned or controlled, directly or
indirectly, by a party hereto; or
b. which does not have outstanding shares or
securities, as may be the case in a partnership,
joint venture, or unincorporated association, but
more than fifty percent (50%) of whose ownership
interest representing the right to make the
decisions for such corporation, company or other
entity is, now or hereafter, owned or controlled,
directly or indirectly, by a party hereto;
but such corporation, company or other entity shall be
deemed to be a Subsidiary only so long as such ownership
or control exists.
1.77 **
1.78 "Terabyte" or "TB" (Section 6.1) shall mean one trillion
bytes of storage which is accessible to the customer.
For calculating storage capacities of purchases of **.
1.79 "Upgrade(s)" (Section 6.2b) shall mean additional
features or functions, including but not limited to
Major Enhancements, which improve performance or
increase capacity of previously sold or leased Products
or Devices.
1.80 "Used FRU Cost" (Section 7.7a) shall mean the price of
rework for FRUs as determined by Section 15.4. This
cost as of the execution of this Agreement is set forth
in Exhibit 5 to this Agreement, FRU Prices and Lead
Times, which will be adjusted semiannually (in January
and July).
1.81 Capitalized terms not otherwise defined in the OEM
Agreement shall have the definitions set forth elsewhere
in the Agreement.
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2. SCOPE OF AGREEMENT
2.1 StorageTek agrees to develop IBM requested enhancements to the
Equipment, to provide continuing engineering and marketing and
service support for the Equipment, and to manufacture, test,
sell and Deliver Equipment to IBM and desires that IBM supply
Drives for use in such Equipment all in accordance with the
Specifications, procedures and conditions contained in this
Agreement.
2.2 IBM (i) agrees to fund the continuing engineering on, and the
future development of, specific enhancements to the Equipment
as set forth in the IDA, (ii) intends to add value to such
Equipment by consigning IBM Drives to StorageTek for inclusion
in the Equipment, and (iii) has the right to market and sell
Equipment purchased from StorageTek, all in accordance with
the terms of this Agreement.
2.3 Changes to Specifications, procedures and conditions contained
in the Agreement, its Exhibits, their Attachments and their
Schedules may be made from time to time upon mutual written
agreement, specifically identifying this Agreement and stating
an intent to make such changes.
3. TERM OF AGREEMENT
Unless earlier terminated, the term of this Agreement shall be for a
period from the date first set forth above (hereinafter "Effective
Date"), through December 31, 1999.
4. COMPONENTS
Because the Equipment purchased by IBM from StorageTek is likely to be
associated with the IBM brand, IBM wishes to be assured that such
Equipment, when sold to its customers, will have the quality that its
customers expect from items so branded. Accordingly, IBM believes
that, to the extent that StorageTek can utilize components in such
Equipment that are manufactured by or for IBM under its high quality
standards, it would be desirable for StorageTek to obtain such
components from IBM for use in manufacturing the Equipment. On
receipt of IBM's written request, StorageTek agrees that if such **
, it will ** . StorageTek agrees to ** if IBM ** , and if such
** , and such ** .
5. AGREEMENT ADMINISTRATOR
Each Party will identify an Agreement Administrator no later than June
15, 1996, who shall have overall responsibility for managing this
Agreement for such Party. Until such time, the
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Agreement Administrators are set forth below. The Agreement
Administrators may not amend the terms of this Agreement. In addition
to other responsibilities as may be agreed, such Administrators or any
successor named by the Party designating such Administrator, will
complete as soon as possible after the Effective Date, and will update
throughout the term of this Agreement their respective entries in
Exhibit 6, "Data Items." The Administrators shall also be responsible
for the exchange of data, as provided in this Agreement.
The Agreement Administrators are:
For StorageTek: **
For IBM: **
6. PURCHASE COMMITMENTS
6.1 1996-1998 ** VOLUMES
IBM intends to purchase a specified volume of Products and
Qualified Upgrades during 1996, 1997 and 1998 from StorageTek
** (hereafter " ** Volumes"). The ** Volumes, based upon
the capacity, in Terabytes, of Products and Qualified Upgrades
purchased by IBM and credited to IBM pursuant to other
provisions of this Agreement, are ** Terabytes in 1996, **
Terabytes in 1997, and ** Terabytes in 1998. If IBM's
purchases and credits do not equal or exceed the ** Volume,
then IBM will make Recovery Payments as set forth in Section
7.6, and, in certain circumstances, IBM will be obligated to
pay Liquidated Damages as set forth in Section 6.5b or 6.5c.
6.2 1999 ** VOLUMES/PRICING
IBM may continue to purchase Products and Upgrades from
StorageTek during 1999 according to the process detailed
below:
a. On or before ** , the Parties will ** , then IBM
must notify StorageTek according to the following
schedule ** :
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Notification Date For Shipment in
---------------------------------------
[S] [C]
** **
** **
** **
** **
b. Prices which StorageTek shall charge to IBM for Products
in 1999 will be based on price quotes. Thirty (30) days
prior to each Notification Date described in paragraph
6.2a, above, StorageTek shall provide a price quote to
IBM for Products to be shipped to IBM in the
corresponding ** as indicated above. Such price shall
be the greater of:
(1) **
(2) **
IBM's purchase volumes for ** (hereafter " **
Volumes") shall depend on the price determined as set
forth above.
If StorageTek provides the cost described in paragraph
6.2b(1), above, as its price, IBM's ** Volumes shall be
** Terabytes of Products and Upgrades. If StorageTek
provides the price described in paragraph 6.2b(2),
above, as its price, IBM's ** Volumes shall be **
Terabytes of Products and Upgrades .
c. Prices provided to IBM by StorageTek pursuant to
paragraph 6.2b, above, shall be based on StorageTek's
** .
d. Notwithstanding the above, if IBM fails to notify
StorageTek prior to ** of its desire to purchase
Products for ** 1999, and if, on or before ** IBM
decides that it wishes to continue to purchase Products
** 1999, then, ** 1999 only, IBM may elect to
purchase such Products at the price quoted pursuant to
paragraph 6.2b, above ** , by providing a
noncancelable purchase order for such units of Products
as IBM may require.
e. If IBM does not attain its ** Volumes for any quarter,
then IBM shall pay a ** Volume Recovery Payment
computed in accordance with Exhibit 1, Attachment 2,
Appendix D. IBM's payment of these Recovery Payments
shall be the sole and exclusive remedy to StorageTek for
IBM's failure to purchase the Quarterly Volumes pursuant
to this Agreement.
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f. If IBM does not attain its ** Volumes for ** , then
StorageTek may use IBM Materials ** to sell or
distribute Devices and Major Enhancements therefor,
subject, however, to the applicable provisions of the
Description of Licensed Works Transaction Document.
6.3 QUALIFIED UPGRADES
** , if the total of IBM's purchases and credits is more than
** , then the capacity of any and all Upgrades purchased
during such year as measured in Terabytes shall be credited
toward IBM's attainment of its ** Volumes in such year. If
the total of IBM's purchases and credits is ** Terabytes or
less ** then IBM may credit a maximum of ** Terabytes of
Upgrade purchases ** in determining attainment of its **
Volumes. Such Upgrades shall be hereafter referred to
as "Qualified Upgrades." Upgrades ** will count toward
achievement of the ** Volumes to the extent that the
capacity of Upgrades purchased and credited does not exceed
** of the total capacity purchased and credited.
6.4 CREDITS
IBM's ** Volumes are subject to credits based upon
StorageTek's failure to meet agreed-to specifications relating
to quality, availability, supply, delivery, technical
milestones and other such items to the extent that such
credits are provided for elsewhere in this Agreement. As
applied herein, credits shall be additive to any actual
purchase of Equipment by IBM.
6.5 LIQUIDATED DAMAGES/ ** PAYMENTS
IBM intends, through a combination of purchases of Equipment
from StorageTek and credits to volumes as provided elsewhere
in this Agreement, to achieve a minimum of ** Terabytes
("Minimum Volumes") of its ** Volumes in ** .
a. If, ** , IBM has not purchased its Minimum Volumes,
then, except as otherwise provided in Sections 6.6a,
6.6b and 21, StorageTek may elect to terminate this
Agreement and receive from IBM ** pursuant to Sections
6.5b or 6.5c, below. StorageTek will provide IBM with
notice of such failure by ** in which a shortfall
occurs. IBM shall have the option to avoid such
termination ** by ** , respectively; provided that
IBM has received at least twenty (20) days' prior
written notice of such shortfall. Such ** . If IBM
** , subject to Section 23.9, StorageTek may terminate
this Agreement effective upon notice, which must be
provided no later than ** of such year.
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b. If IBM's total volume of purchases ** is less than its
Minimum Volumes, and StorageTek elects to terminate this
Agreement ** , but no later than ** pursuant to
Section 6.5a above, then IBM will pay to StorageTek:
(1) ** in the amount of ** ; plus
(2) The net sum of any ** as determined in
accordance with Section 7.6d, provided, however,
that such ** shall not exceed the sum of ** ;
plus
(3) Any unpaid ** , provided, however, that no
additional ** shall be due ** , and, provided
further, that ** shall not exceed the sum of
** .
c. If IBM's total volume of purchases for ** is less than
its Minimum Volumes, and StorageTek elects to terminate
this Agreement ** , but no later than ** pursuant to
Section 6.5a above, then IBM will pay to StorageTek:
(1) ** in the amount of ** ; plus
(2) The net sum of any ** as determined in
accordance with Section 7.6d; provided, however,
that such ** shall not exceed the sum of ** .
d. If IBM terminates this Agreement for convenience ** ,
then, except as otherwise provided in Sections 6.6a,
6.6b and 21, IBM will pay ** as described in Section
7.6, below, to the extent not already paid, that would
be due ** , plus the sum of ** .
e. If IBM terminates this Agreement for convenience between
** and ** , then, except as otherwise provided in
Sections 6.6a, 6.6b and 21, IBM will pay to StorageTek:
(1) ** in the amount of ** for each ** that has
elapsed before the ** ; plus
(2) The net sum of any unpaid ** through the end of
the ** ; provided, however, that no additional
** shall be due for any **.
f. The provisions of Sections ** to StorageTek for IBM's
** in connection with this Agreement or arising from
** termination of this Agreement pursuant to Section
** in the event of IBM's termination of this Agreement
** .
g. The Parties acknowledge and agree that the foregoing **
amount is not a penalty but represents a good faith
estimate by the Parties of the amount of
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damages incurred by StorageTek upon the occurrence of
the events set forth in Sections 6.5b through 6.5e. The
Parties have entered into this provision after each
Party has had the opportunity to consult counsel, and
pursuant to a mutual intent to avoid the expenses of any
dispute resolution process.
6.6 OTHER STORAGETEK DISTRIBUTION
a. StorageTek and its Subsidiaries may, at their sole
discretion, sell, lease or otherwise distribute Devices
and products competitive with Equipment to third
parties, provided, however, that neither StorageTek nor
its Subsidiaries are ** , and, provided further, that,
except for situations as described in Section 6.7,
below, if StorageTek chooses to use, sell, lease or
otherwise distribute, either directly or indirectly:
(1) any ** , or
(2) any product that ** and the ** form of all or
such portion includes ** of the ** of any **
that either constitutes (a) ** , or (b) ** ;
then, unless the sale is excepted pursuant to Section
6.8, below, IBM shall be ** its obligations and
liabilities related to ** , as well as any obligation
to pay any ** in the year in which the sale occurred
and thereafter. StorageTek shall also have no right to
terminate this Agreement for failure of IBM to meet its
** and shall immediately notify IBM in writing that
such use, sale, lease or other distribution has
occurred, and shall indicate that IBM ** the foregoing
obligations. IBM shall also have the right to ** ,
and to ** to either (a) ** (b) ** and contract for **
from StorageTek on a ** basis at a ** rate
(provided, in either case, that **. If IBM ** , then:
(i) IBM shall ** that it would have received which was
based on the ** being delivered by ** IBM, if **
, will be deemed ** and not ** . Each Party may
also terminate its obligation to ** specified in
Section ** .
b. If StorageTek licenses, transfers, sells or assigns to a
third party all or a portion of a Licensed Work and **
form of all or such portion includes ** that either
constitutes (a) ** , or (b) ** ; then IBM shall be **
its obligations and liabilities related to ** , as
well as any obligation to ** in the year in which the
sale occurred and thereafter. StorageTek shall also
have no right to terminate this Agreement for failure of
IBM to meet its ** and shall immediately notify IBM in
writing that such license, transfer, sale or assignment
has occurred, and shall indicate that IBM ** the
foregoing
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obligations. IBM shall also have the right to ** and
to ** to either (a) ** (b) ** and contract for **
from StorageTek on a ** basis at a ** rate
(provided, in either case, that ** . If IBM ** ,
then: (i) IBM shall ** that it would have received
which was based on the ** being delivered by StorageTek
to IBM by its ** ; and (ii) such ** to the extent
not delivered to IBM, if ** , will be deemed ** and
not ** . Each Party may also terminate its obligation
to ** specified in Section ** .
c. If IBM learns of facts that indicate that StorageTek is
selling, leasing or otherwise distributing the products
described in Section 6.6a, above, directly or
indirectly, to customers other than IBM, or has
licensed, transferred, sold or assigned the Licensed
Works described in Section 6.6b, above, then upon
written notice by IBM to StorageTek:
(1) StorageTek shall investigate the facts and
circumstances relating to the incident
thoroughly, and share the results, but not the
customer-specific details, with IBM. If both
Parties agree that no such sale, lease or other
distribution occurred or no such license was
granted, then the rights and obligations of the
Parties shall not change. If the Parties are
unable to agree on the facts relating to such
incident, then the matter will be handled
pursuant to the dispute resolution process
described in Section 22.
(2) if StorageTek or its Subsidiaries has made a
sale, lease or other distribution to third
parties, as described in Section 6.6a, above, or
has licensed, transferred, sold or assigned the
Licensed Works to a third party, as described in
Section 6.6b, above, other than IBM, then IBM's
obligations shall be modified as set forth in
such sections.
6.7 EXCEPTIONS
a. Sales, leases, or other distribution or use of Devices
by StorageTek or its Subsidiaries in the following
situations are excepted from the provisions of Section
6.6, and will be credited toward calculation of IBM's
purchase volume for the purpose of determining whether
IBM has achieved its ** Volumes:
(1) Sales, leases or other distribution of ** .
For the purpose of determining the ** which
shall be credited to IBM's ** Volumes, only the
** will be used.
- --------------------
** Confidential portions omitted and filed separately with the Securities
and Exchange Commission under an application for confidential
treatment.
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<PAGE> 23
(2) Sales of Devices by StorageTek or its
Subsidiaries to ** with whom StorageTek:
(a) prior to the Effective Date, had a **
such Devices, and such Devices are **
prior to ** ; or
(b) between the Effective Date and ** , had a
** such Devices and such Devices are **
on or before ** and ** on or before
** , provided, however, that the ** of
** after ** , does ** ;
and further provided that, in the case of (a) or
(b), shipments made prior to ** will not be
credited to IBM's ** Volumes; and
(3) Sales of Devices to ** existing as of the **
pursuant to orders received within ** days after
** , provided such Devices are ** to such
distributor(s) on or before ** ; and further
provided that ** made prior to ** will not
be credited to IBM's ** Volumes.
b. Uses, sales, leases or other distribution of Equipment
or Devices by StorageTek or its Subsidiaries in the
following situations are excepted from the provisions of
Section 6.6a, and will not be credited as IBM's volumes
for the purpose of determining IBM's attainment of its
** Volumes:
(1) Sales or leases by StorageTek or it Subsidiaries
of Equipment that is ** StorageTek or its
Subsidiaries ** ; however, all ** from
StorageTek which are ** to StorageTek will **
IBM's attainment of its ** Volumes;
(2) Use of Equipment or Devices internally by
StorageTek or its Subsidiaries for development,
manufacture, test and demonstration at
StorageTek's manufacturing facility or field
service offices;
(3) Use of Equipment or Devices internally by
StorageTek for StorageTek's or its Subsidiaries'
** , provided that such Equipment or Devices are
used by StorageTek or its Subsidiaries solely to
** StorageTek's or its Subsidiaries' ** ; and
sales or distributions of Equipment and Devices
by StorageTek or its Subsidiaries to ** ,
provided further that such Equipment or Devices
are used solely by ** and are used solely to
** ; and further provided that the ** so used
by StorageTek and sold to ** by StorageTek does
not exceed ** over the term of this Agreement;
- --------------------
** Confidential portions omitted and filed separately with the Securities
and Exchange Commission under an application for confidential
treatment.
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<PAGE> 24
(4) Sales or leases of used Equipment, Devices or
Count Key Data Systems that StorageTek or its
Subsidiaries purchase from IBM or a third party
provided that StorageTek or its Subsidiaries **
such ** Equipment, Devices or Count Key Data
Systems in substantially the same ** ; or **
any such Product ** that StorageTek has
purchased from ** .
(5) Sales or use of FRUs for maintenance purposes
only. However, nothing in this clause 6.7b(5)
shall be interpreted as granting StorageTek an
implied license to distribute FRUs that are or
contain IBM Materials or other IBM Code not
licensed under this Agreement.
(6) Sales or leases of Arctic Fox and Arctic Fox
Upgrades, provided that the ** will ** to
agree by ** for IBM's purchase of Arctic Fox
from StorageTek, at the prices set forth in **
.
(7) Sales of Non-RMM Devices, as defined in Section
** , after ** ; and
(8) Use of Count Key Data Systems that are not
Equipment or Devices by StorageTek or its
Subsidiaries.
6.8 ADDITIONAL STORAGETEK SALES
In the event that StorageTek or its Subsidiaries makes sales
which are not within the scope of the sales enumerated in
Section 6.7, above, IBM shall nevertheless continue its
obligations for future ** and ** if the total units of
Product, Upgrades, Count Key Data Systems and Devices sold by
StorageTek and its Subsidiaries, and not included under
Section 6.7, above, in any consecutive ** period, does not
exceed ** units; provided that under no circumstances shall
any units of Product, Upgrades, Count Key Data Systems and
Devices sold by StorageTek and its Subsidiaries pursuant to
this Section 6.8, include **. IBM will receive credit against
the attainment of its ** Volumes in an amount equal to two
times the amount of Terabytes sold pursuant to this Section
6.8. For the purposes of determining the capacity that shall
be so credited, ** will be used.
7. PRICING & PAYMENT TERMS
7.1 Prices charged to IBM by StorageTek for Products sold
hereunder in 1996, 1997 and 1998 shall be as set forth in
Attachment 1 to Exhibit 1 to this Agreement. These prices
include necessary cables, software, packaging, packing and
shipping materials and such other items (excluding manuals) as
StorageTek currently includes in its
- --------------------
** Confidential portions omitted and filed separately with the Securities
and Exchange Commission under an application for confidential
treatment.
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<PAGE> 25
Product shipments. Manuals normally included with Product
shall also be included through September 31, 1996. Prior to
such date the Parties will meet to discuss methods by which
StorageTek could assist in preparing or having such manuals
prepared at IBM's expense.
7.2 Prices charged to IBM for Upgrades shall be as set forth in
Attachment 3 to Exhibit 1 to this Agreement.
7.3 In the case of Products or Upgrades manufactured by StorageTek
in Europe, an additional charge equivalent to ** will be
added by mutual agreement to the prices set forth in
Attachments 1 and 3 to Exhibit 1, which charge initially shall
be ** .
7.4 Prices charged for Products in 1999 shall be as set forth in
Section 6.2.
7.5 ** PRICE
Notwithstanding any other provisions in this Agreement, in no
event will any price charged by StorageTek to IBM exceed **
Prices, as defined below:
a. The prices, ** offered by StorageTek to IBM for **
under this Agreement shall be ** after ** to ** .
b. If, during the term of this Agreement, StorageTek **
for ** to IBM hereunder, StorageTek agrees to ** ,
and StorageTek agrees to ** .
c. In addition to the above, StorageTek ** IBM ** for
purposes of ** . If the ** determines that IBM **
, then ** , StorageTek will ** . Unless otherwise
agreed, ** will not exceed ** .
7.6 RECOVERY PAYMENTS
a. If IBM fails to purchase volumes from StorageTek equal
to its ** Volumes for each ** , IBM will pay to
StorageTek a sum referred to herein as a Recovery
Payment. This amount shall be calculated, ** , on a
** basis by using ** as represented in the **
Tables attached hereto as ** , respectively, of ** .
The amount of such Recovery Payments shall be calculated
at least ** and shall be based on ** made by
StorageTek to IBM, plus ** pursuant to other
provisions of this Agreement, which ** shall be **
to IBM by StorageTek (hereinafter " ** Volumes"). If
the parties cannot agree on such ** Volumes, then they
shall resolve the dispute pursuant to Section 22. No
later than the last day of such quarter, IBM will pay to
StorageTek or StorageTek
- --------------------
** Confidential portions omitted and filed separately with the Securities
and Exchange Commission under an application for confidential
treatment.
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<PAGE> 26
will pay to IBM the estimated net sum of any Recovery
Payment due to the other Party. For ** such **
Recovery Payment shall not be reconciled to actual
volumes of shipments and credits. For the ** such **
Recovery Payment shall be ** and credits for such **
by ** of the following year. Such Recovery Payment
shall not exceed the sum of ** in any year.
b. Definition of IBM Total. As used in Appendices B and C
of Attachment 2 to Exhibit 1 hereto, "IBM Total" shall
mean (1) for the ** , the ** IBM volumes of
all ** sold by IBM ** , expressed in Terabytes, which
are ** for each ** by ** using the methodology
that is consistent with ** then current outlook report
for ** or, if such data is not available, as otherwise
mutually agreed; and (2) for the ** , subject to
StorageTek's Audit Rights, the total of ** during such
year.
c. 1996. The Recovery Payment for 1996 shall be calculated
by reference to ** . After making such calculation
and after ** the amount, if any, ** in the ** ,
any positive number resulting shall be ** StorageTek
by IBM as ** Recovery Payment. If a negative number
results, then StorageTek shall ** IBM for the ** of
such negative number.
d. 1997-1998. The Recovery Payment for 1997 and 1998
shall be calculated by reference to ** . After **
such Recovery Payment the ** amount, if any, ** with
respect to the ** , any positive number resulting from
this calculation shall be ** StorageTek by IBM. If a
negative number results, then StorageTek shall ** IBM
for the ** of such negative number. All such **
shall be ** after receipt of ** reflecting the **
of shipments or ** amounts, but no sooner than the
** .
e. 1999. The Recovery Payments, if any, for 1999 shall be
calculated by reference to ** , as provided for in
Section ** , above.
f. Notwithstanding anything to the contrary in this Section
7.6, in the event that StorageTek terminates this
Agreement based on IBM's failure to purchase its **
Volumes or if IBM terminates this Agreement for
convenience, then IBM's liability for ** shall be **
amounts calculated pursuant to Section **.
7.7 FRU PRICES
Prices charged by StorageTek to IBM for new FRUs will be **
of such FRUs and the multiples set forth in Section 7.7a,
below. For the purpose of this section and Section 15.4, cost
shall be determined by using ** . The standard cost will be
- --------------------
** Confidential portions omitted and filed separately with the Securities
and Exchange Commission under an application for confidential
treatment.
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<PAGE> 27
reviewed ** , and any differences in cost will be adjusted in
the following period. Compliance with this section shall be
subject to IBM's Audit Rights.
a. Multiples for New FRUs.
(1) During 1996 the multiple is ** .
(2) During the remaining term of this Agreement the
multiple is ** .
(3) After the termination of this Agreement the
multiple is ** .
b. FRU Rework. Prices for FRUs returned by IBM will be
determined in accordance with Section 15.4.
7.8 LOWEST COST SOURCING.
The Parties agree that it is in their mutual interest for
StorageTek to obtain parts for new production and maintenance
purposes at the lowest practicable cost. If IBM identifies a
potential alternative source for any part, StorageTek will
make a good faith reasonable effort to qualify the
alternative. If such bid is comparable with the quality,
terms and conditions and offers a better price compared to the
then current source of such parts, and awarding such
alternative source a supply contract pursuant to such bid does
not adversely impact the terms of StorageTek's purchases of
other parts from the then current source, then the lower cost
will be used in determining prices to IBM for Equipment
whether or not StorageTek actually obtains the part or parts
from such alternative source.
7.9 TAXES/DUTIES
The prices for Equipment supplied under this Agreement are
exclusive of any customs charges and duties and sales, use,
privilege, excise and similar taxes levied by the USA, foreign
territories, or any other governmental entity on the Products,
their export, import, shipment, purchase or sale. IBM shall
pay and be responsible for the payment of any such taxes
(excluding taxes based upon StorageTek's net income) or
duties; and, to the extent legally required, StorageTek shall
collect any applicable taxes unless IBM establishes its
exemption therefrom. If StorageTek is required to pay any
such taxes or duties, IBM will reimburse StorageTek pursuant
to StorageTek's invoice.
IBM hereby represents to StorageTek that it is purchasing the
Products hereunder for the purpose of resale, rent, lease or
in-house use, and, if required by applicable law,
- --------------------
** Confidential portions omitted and filed separately with the Securities
and Exchange Commission under an application for confidential
treatment.
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<PAGE> 28
IBM will furnish StorageTek with pertinent and valid sales and
use tax exemption certificates.
7.10 PAYMENT TERMS
a. StorageTek will invoice IBM for Equipment on or after
the date on which such Equipment is Delivered. If any
unit of Equipment is Delivered and is not suitable to be
installed, then the Equipment shall not be considered as
Delivered until such time that such Equipment is
rendered suitable for installation. IBM or its
designee will exercise reasonable efforts to install
Equipment that it receives. IBM will promptly notify
StorageTek when such Equipment is not suitable for
installation.
Subject to Section 13.1k, payment terms will be the
number of days from date of receipt of a correct invoice
by IBM as shown in the following table:
Invoice Date Payment Term
[S] [C]
--------------------------------------------
1996 ** days
1997 or later ** days
b. StorageTek's invoices must state the IBM purchase order
number, description of the item(s) being invoiced,
quantity shipped, ship date, unit price, total amount
due and the remit-to address. StorageTek will mail or
deliver invoices to the address indicated on the
purchase order.
c. Payment of an invoice by IBM under IBM purchase order(s)
will not be construed as and will not constitute an
acceptance of Product failing to conform to
specifications or agreed upon quality levels, nor will
any payment to StorageTek be construed as or constitute
a waiver of any of IBM's legal rights or remedies.
d. StorageTek will invoice, and IBM will pay, in US Dollars
to the address listed on StorageTek's invoice. All
payments will be made by wire transfer of immediately
available funds.
7.11 SNAPSHOT FEATURE
IBM will license the Snapshot Feature as set forth in the
Description of Licensed Works for the license fees set forth
in Attachment 3 to Exhibit 1 hereto.
- --------------------
** Confidential portions omitted and filed separately with the Securities
and Exchange Commission under an application for confidential
treatment.
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<PAGE> 29
8. IBM SALES TO STORAGETEK
8.1 StorageTek, in its sole discretion, may acquire Equipment from
IBM for orders that StorageTek ** and which are ** . The
prices for the first ** units of Products will be ** for
such Products. The prices for all other units of Products
will not exceed ** for such Products. The prices for
Upgrades will not exceed ** for such Upgrades. Such
Equipment may be sold by StorageTek ** . Sales by IBM to
StorageTek will be pursuant to ** , as ** (as defined in
such ** with a one (1) day transit period, except that all
Equipment supplied pursuant to this section by IBM to
StorageTek shall be provided on ** basis ** . Moreover,
StorageTek shall not be subject to ** requirements that are
contained in ** for such units.
8.2 IBM agrees to sell StorageTek the Upgrades it reasonably
requires to meet the ongoing remarketing obligations
StorageTek has as of the ** with respect to ** . The
prices for Upgrades for ** which IBM will charge Storagetek
shall be commercially reasonable and not exceed ** of IBM's
average selling price per ** for the ** as determined by
** , but under no circumstance shall such prices be any less
than ** of the price charged to IBM by StorageTek per MB of
Product as set forth in Section 7. Any such Upgrades, when
purchased by IBM from StorageTek, will be counted as IBM's
volumes in calculating IBM's attainment of its ** , and will
not be subject to the limitations of Section 6.3, and will be
counted in addition to the Qualified Upgrades.
9. QUALITY
9.1 MANUFACTURING TESTING
Prior to Delivery, StorageTek shall conduct a mutually
agreed-upon preshipment manufacturing test at its plant on
each unit of Equipment. Notwithstanding such preshipment
manufacturing testing, all Equipment must conform to the
Specifications.
StorageTek will provide IBM on a quarterly basis with a
complete, summarized record of inspection and tests performed
on each unit of Equipment during the term of the Agreement.
Detailed records of inspection and tests (in manual and
electronic form) performed for each unit of Equipment shall
also be kept by StorageTek for three (3) years. Upon IBM's
request, StorageTek will provide IBM with access to an
electronic copy of the specific test results for each unit of
Equipment within two (2) business days after receipt of such
request.
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** Confidential portions omitted and filed separately with the Securities
and Exchange Commission under an application for confidential
treatment.
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<PAGE> 30
IBM's representative may, if it so requests and at its sole
expense, witness the preshipment tests carried out by
StorageTek, provided such request is made at least three (3)
days prior to the scheduled Delivery of the items being
tested. Any such observation by IBM shall be subject to
StorageTek's reasonable safety and security rules and shall be
conducted to the extent feasible on a noninterference basis.
IBM may also conduct its own testing to the extent feasible on
a non-interference basis either at StorageTek's plant, its
own facilities or IBM's customers' facilities, at IBM's own
expense, to confirm that the Equipment meets the
Specifications. Any testing performed at StorageTek's plant
shall be subject to StorageTek's reasonable safety and
security rules.
9.2 ENGINEERING CHANGES
a. Mandatory Engineering Changes. If changes that may
affect the form, fit, function, interface, reliability
or serviceability of the Equipment (including
interchangeability with previously purchased FRUs) are
required in order to make the Equipment sold hereunder
conform to the Specifications ("Mandatory Engineering
Changes"), StorageTek shall first obtain IBM's approval.
If it is mutually agreed that the change is to be made,
StorageTek shall make the changes at no charge to IBM in
all units of Equipment which are not yet delivered to
IBM. If such changes are required to make delivered
units of Equipment conform to those Specifications, they
shall be supplied in the form of mandatory field change
kits at no charge to IBM in accordance with the
procedure set forth below.
IBM shall supply labor to install, subject to Section
9.3h, all Mandatory Engineering Changes in delivered
units of Equipment.
Field change kits resulting from Mandatory Engineering
Changes described above will be administered as follows:
(1) StorageTek will promptly send an engineering
change notice (ECN) to IBM prior to Delivery of
the first shipment of Equipment that contains a
Mandatory Engineering Change. IBM shall issue a
no-charge purchase order for all mandatory field
change kits that IBM desires. Such kits and any
Equipment returned which are covered by the
Mandatory ECNs shall be shipped freight prepaid
by StorageTek, at no charge to IBM.
(2) StorageTek will ship the mandatory field change
kits according to the schedule that is set forth
in clause (4), below, and issue a no-charge
invoice to IBM for all parts ordered and shipped
as a part of the mandatory field change kits.
(3) Subject to the terms of Section 15.3, IBM will
use reasonable efforts to see that repairable
parts (displaced by field change kits) from
Equipment
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<PAGE> 31
are packaged separately from other parts
returned. IBM will send Products to StorageTek,
freight prepaid, and Upgrades and FRUs, freight
collect.
(4) For each Mandatory Engineering Change the parties
will agree upon an appropriate round-robin
process for distributing field change kits to the
field and securing the return of displaced FRUs
for rework by StorageTek.
b. Emergency Engineering Changes. Notwithstanding Section
9.2a, above, StorageTek may issue any engineering change
necessary to remedy an Equipment-down situation at a
customer of IBM or to make any unit of the Equipment
safe (an "Emergency Engineering Change") upon notice to
IBM but without any prior evaluation or approval by IBM;
provided, however, that StorageTek agrees to follow the
procedures as set forth in Section 9.2a in order to
implement a permanent solution to resolve the safety or
down situation that arose precipitating the need for the
engineering change.
As to any affected Equipment from time to time in IBM's
inventory or control, or already accepted by IBM, IBM
shall use reasonable efforts to promptly accomplish the
installation of such Emergency Engineering Change. In
the event of installation of Emergency Engineering
Changes by IBM hereunder, StorageTek shall implement a
corrective action plan, including the provision of
information, materials, tools and parts necessary to
effect the installation of such Emergency Engineering
Changes on the affected Equipment (all without cost to
IBM), subject to Section 9.3h.
c. Optional Engineering Changes. In addition to Mandatory
Engineering Changes, it is recognized by the Parties
that there may be optional changes requested by either
IBM or StorageTek, which are not required to make the
units of Equipment conform to the Specifications. The
cost of implementing such changes (including kits and
labor) on delivered Equipment shall be divided between
the parties as they mutually agree. StorageTek will
deliver field change kits for such changes to IBM, as
specified in IBM's purchase order, which purchase order
shall be given by IBM to StorageTek within such time
period as the Parties shall mutually agree.
d. Procedures Regarding Proposed Engineering Changes. In
connection with any engineering changes proposed
pursuant to Section 9.2a, above, StorageTek will forward
to IBM, at IBM's request, a minimum of two (2) samples
of each such proposed engineering change, as well as the
details of any proposed change, to enable IBM to
determine whether to approve such change, including:
(1) the effect of the change on the form, fit,
function, interface, reliability or
serviceability of the Equipment;
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<PAGE> 32
(2) StorageTek's reference number for the proposed
change;
(3) StorageTek's identification of the item to be
changed and whether any items should be returned;
(4) description of and reason for the change with
sufficient engineering detail and applicable
validation data, as endorsed by StorageTek's
quality control process, to enable the proposal
to be assessed;
(5) the date and, if available at the time,
StorageTek's serial number from which StorageTek
proposes to implement the change;
(6) whether retroactive action is proposed and, if
so, the details of any necessary field action and
the initial availability of FRUs (on Engineering
Changes, StorageTek will advise IBM about the
effect on (a) outstanding orders for Equipment;
(b) units of Equipment which are at the time of
such proposed change in for repair or
replacement; and (c) the next batch of units of
Equipment to be delivered from StorageTek's plant
on which the Engineering Change should be
implemented);
(7) intended alterations to FRUs, documentation,
tools and other relevant material supplied or to
be supplied to IBM; and
(8) whether any parts will become obsolete as a
result of the change.
Except for any Emergency Engineering Changes, StorageTek
is required to obtain IBM's prior written approval for
each Engineering Change before StorageTek's
implementation of the same.
e. Revalidation. Upon implementation of each engineering
change, StorageTek agrees to perform revalidation
testing at no charge to IBM to ensure that the Equipment
so changed meets the Specifications.
f. Obsolete Upgrades and FRUs. If StorageTek makes any
Mandatory, Emergency or StorageTek-initiated Engineering
Change which renders any Upgrades and FRUs obsolete
(i.e., unusable), StorageTek shall replace the obsolete
Upgrades and FRUs at no charge to IBM in accordance with
the procedures set forth in Section 9.2a, above. No
returns are authorized for field change kits that are
requested as a result of an optional IBM-initiated
engineering change which renders any Upgrade or FRU
obsolete.
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<PAGE> 33
9.3 QUALITY LEVELS
a. RAS Criteria. StorageTek shall maintain (i)
throughout the term of this Agreement, and (ii)
for a period of ** after the date of last
Delivery of each type of Product (provided IBM
pays for the Product Engineering Services unless
it is not required to do so and StorageTek is
still providing Product Engineering Services for
its own distribution of Equipment or Devices);
the following reliability, availability and
service ("RAS") levels for the Products:
SERVICE CALL CALCULATION
<TABLE>
<CAPTION>
Effective
RAS Criteria Date Iceberg Kodiak
------------ ----------- ------- ------
<S> <C> <C> <C>
Service Call Rate ** ** **
Guardband ** **
</TABLE>
For measuring Service Calls, the calculation of a
Machine Month is based on the use of a 180 GB and 360 GB
machine configuration for Iceberg and Kodiak,
respectively.
IMPACT ERROR CALCULATION
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
IMPACT ERRORS
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
** ** ** ** ** ** **
- -------------------------------------------------------------------------------------------------------------
ICEBERG ** ** ** ** ** ** **
- -------------------------------------------------------------------------------------------------------------
KODIAK ** ** ** ** ** ** **
- -------------------------------------------------------------------------------------------------------------
GUARDBAND ** ** ** ** ** ** **
- -------------------------------------------------------------------------------------------------------------
</TABLE>
Such rates will be calculated based on the total number
of Impact Errors that occur during a calendar quarter
divided by the total number of Machine Months during
said quarter for Iceberg and Kodiak, respectively.
- --------------------
** Confidential portions omitted and filed separately with the Securities
and Exchange Commission under an application for confidential
treatment.
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<PAGE> 34
EXAMPLE:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
OCTOBER NOVEMBER DECEMBER TOTAL
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
End of Month ** ** ** **
- ----------------------------------------------------------------------------------------------------
Install Base ** ** ** **
- ----------------------------------------------------------------------------------------------------
Impact Errors ** ** ** **
- ----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
Failure Rate **
- ----------------------------------------------------------------------------------------------------
</TABLE>
Impact Error measurements for Kodiak will not count
toward any criteria until the earlier of: (i) the first
quarter in which ** units of Kodiak have been
installed by IBM, or (ii) the second quarter of 1997,
provided that at least ** units have been installed by
IBM as of the last day of such quarter.
Impact Error measurements for Iceberg will not count
toward any criteria until ** units of Iceberg have
been installed by IBM.
The RAS measurements shall exclude impacts or failures
of Products where a microcode or engineering change is
available which, if installed, would have prevented the
impact or failure from occurring; provided, however,
that such microcode or engineering change was made
available by StorageTek for installation pursuant to a
nonemergency (i.e., generally distributed) engineering
change at least three (3) months prior to the date of
an Impact Error or Service Call. The RAS measurements
will exclude any Impact Errors and Service Calls that
arise from ** concurrent Drive failures in the same
array, and any Service Calls and Impact Errors for units
of Iceberg and Kodiak installed as part of the ESP, as
defined in the SOW.
For the first ninety (90) days following the
availability of a Major Enhancement, IBM will exercise
reasonable efforts to install within 30 days engineering
changes that StorageTek designates as "critical."
Calculations of the actual Service Call Rate and Impact
Error Rate will be made based on U.S. installations
only.
b. Error Free Installation Criteria. StorageTek shall
maintain a ** Error Free Installation rate for
Products and Upgrades (separately calculated) until the
date
- --------------------
** Confidential portions omitted and filed separately with the Securities
and Exchange Commission under an application for confidential
treatment.
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<PAGE> 35
on which IBM no longer markets Products and Upgrades.
These measurements will be calculated separately for
Products and Upgrades. This rate assumes that an
average IBM-customer subsystem installation is comprised
of an Iceberg subsystem, or a Kodiak control unit and
one connecting storage cabinet. If the average
IBM-customer installation for the Kodiak Product
involves more than one connecting storage cabinet, then
the ** rate for Kodiak will be reduced by ** for
each connecting storage cabinet in calculating such
average.
c. Levels for Future Functions. Features or functions
added after the initial shipment in volume of Iceberg
and Kodiak will be measured against specific
reliability, availability and service criteria that is
to be documented and addressed in each applicable
product development plan and related specification for
the future feature or function, but in any event they
must meet the Iceberg and Kodiak criterion as specified
herein.
d. Guardband. StorageTek shall not be considered to be
failing to meet the criterion unless the percentage by
which IBM's actual measurements exceeds the criterion is
at least higher than the Guardband percentage set forth
above in Section 9.3a for Service Calls or Impact
Errors.
e. Action Plan. If StorageTek fails to meet the Service
Call Rate, Impact Error Rate, or Error Free Installation
Rate, then StorageTek shall promptly investigate the
cause of the failures, and generate and provide to IBM
within ten (10) days a root cause failure analysis that
describes the cause of the failures. StorageTek will
promptly develop and implement an action plan acceptable
to IBM to resolve such failures, which plan shall
include remedies for failure to meet the Service Call
Rate, Impact Error Rate, or Error Free Installation Rate
in such action plan.
StorageTek shall provide all support necessary to meet
an agreed upon repair turnaround time that is
established in the action plan to maintain IBM's
customers' satisfaction. StorageTek's plan may include,
but is not limited to increased repair capacity (i.e.,
labor, equipment, facilities); expedited freight; and
providing new, repaired and/or upgraded buffer stock to
IBM's stocking locations, distributors and customer
sites.
f. Price Reduction for FRU Costs. StorageTek shall provide
a price reduction to IBM ** after the date of last
Delivery of each type of Products in an amount that is
equal to ** ("Excess FRU Cost"). The calculation of
this price reduction shall specifically exclude ** .
The price reduction provided hereunder may **
StorageTek. Any claim to such price reduction will be
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and Exchange Commission under an application for confidential
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deemed waived if not made by IBM no later than ** days
after the ** in which such Excess FRU Cost occurred.
g. Reporting of FRU Consumption. IBM will provide a
quarterly report to StorageTek that summarizes
IBM-reported fault symptom information for the
consumption of FRUs in repair actions that are
undertaken by IBM in the United States. The summarized
information in this report will be adjusted by IBM to
exclude those items which qualify as Cost Exclusions.
This information is considered to be IBM confidential,
and StorageTek agrees to keep such information
confidential under the terms of the Agreement for
Exchange of Confidential Information between the
Parties.
h. Credit for Labor Costs. The target for labor required
for repair actions (including ** and those repair
actions related to ** , but excluding labor required
for ** is ** for each ** during a Machine Month.
StorageTek shall provide a credit to IBM on a ** basis
up through ** after the date of last Delivery of
Product, upon StorageTek's receipt of appropriate
supporting documentation, for average labor costs per
Machine Month incurred by IBM in connection with repair
actions that are in excess of ** of that ** target
("Excess Labor Cost"). The amount of this credit will
be calculated by multiplying the number of hours in
excess of ** of that ** target by a rate of ** per
hour. In the event that IBM incurs labor costs in
excess of ** of that ** target and the Parties
determine that the incurrence of ** , then a **
action will be developed and implemented. This plan
shall include ** . The calculation of Excess Labor
Cost will be based on ** and ** . The credit
provided hereunder may ** be used by ** , first, by
** against any ** during the ** ; second, against
** , or third, ** after ** . Any claim to such
credit will be deemed waived if not made by IBM no later
than ** days after the ** in which such Excess Labor
Cost occurred.
i. Attainment. The RAS criteria will be separately
calculated and applied to Iceberg and Kodiak. If
StorageTek fails to meet the established RAS criteria
for Service Calls or Impact Error rates set forth in
Section 9.3a for Iceberg and Kodiak in any calendar
quarter (after taking into consideration the applicable
Guardbands), then StorageTek shall be given until the
end of the next succeeding quarter to implement the
action plan described in Section 9.3e, above.
If the RAS criteria is missed again during such next
quarter, then IBM will receive credit towards attainment
of its ** Volumes in an amount equal to
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either: (i) such ** , or (ii) ** , times the **
was more than the ** set forth in Section ** , above.
The amount of credit that is counted for attainment
towards IBM's ** will be calculated ** ." Such **
amounts will be ** to determine the amount of credit
that IBM is entitled to receive toward the achievement
of its volume commitments. An example of the
calculation of the amount of credits to which IBM may
become entitled under this clause (i) is ** .
9.4 QUALITY ASSURANCE
StorageTek shall maintain at its sole cost and expense an
effective quality control system to maintain under continuous
control the entire process of design, manufacture and FRU
repairs, including the packaging and shipping of Equipment.
This system shall include checks to verify that all
requirements of the Specifications are satisfied.
StorageTek is responsible to insure that workmanship,
construction and other standards specified by this system
satisfy the requirements of the Specifications. StorageTek's
quality assurance shall be applied in a manner that will
maintain a consistent level of quality. StorageTek's quality
control procedures and instructions shall be made available to
StorageTek's employees, agents, contractors and
subcontractors, and to IBM, at the place of manufacture.
Upon request, IBM may conduct inspections on a
non-interference basis at StorageTek's manufacturing and
repair plants at any time during normal working hours provided
that, within 24 hours if an emergency situation exists or at
least three (3) days under non-emergency situations, prior
written notice is given by IBM. StorageTek will use
reasonable efforts to accommodate visits on shorter notice.
Such inspection may, at IBM's option, include the witnessing
of tests and inspection of Equipment, whether completed or
not. StorageTek will promptly take appropriate corrective
action with regard to any deficiencies found by IBM and
reasonably agreed to by StorageTek.
9.5 ISO 9000 CERTIFICATION AND USE OF SUBCONTRACTORS
StorageTek shall maintain ISO 9000 certification, and use
statistical process control systems to monitor quality, for
its manufacturing and development processes for Equipment
supplied to IBM during the term of the Agreement.
StorageTek shall ensure that its subcontractors that are
involved with the manufacturing and development of Equipment
shall maintain ISO 9000 certification,
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and use similar statistical process control systems to monitor
quality. StorageTek shall also ensure that its suppliers who
provide parts, assemblies or subassemblies that are used in
the manufacturing and development of Equipment shall maintain
ISO 9000 certification or use reasonable process control
systems to monitor quality.
It is the sole responsibility of StorageTek to select and
manage its suppliers. StorageTek will make available to IBM,
upon request, a list of all suppliers that are used to supply
parts or components in StorageTek's manufacturing process for
Equipment. StorageTek agrees to use its best efforts to
notify IBM of any additions or changes made in its suppliers.
If IBM reasonably determines that there is a supplier that may
be of concern to it, then StorageTek shall develop and
implement a mutually agreeable plan to address IBM's concerns.
StorageTek shall provide, upon written request by IBM, all
information pertaining to the measurements of quality that are
made for Equipment, and generated or derived from StorageTek's
statistical process control systems.
StorageTek is solely responsible for the quality of Equipment
supplied to IBM. Review and approval by IBM of StorageTek's
or any of its subcontractor's quality process systems does not
relieve StorageTek of this responsibility.
StorageTek agrees to notify IBM of any planned significant
changes that may adversely affect its manufacturing processes
or could adversely affect the form, fit, function, quality,
reliability, serviceability or safety of the Equipment to be
supplied to IBM no later than ninety (90) days before planned
implementation.
10. PRODUCT LEAD TIMES AND FORECAST
10.1 IBM will provide a monthly build forecast to StorageTek for a
** period (or a period equal to the remaining term of this
Agreement if less than ** ). The current quarter forecast
will be broken down by week and by Delivery location.
Volumes, specified in units of Product and Upgrades by
Delivery location, for the quarter following the then-current
quarter will be established and provided to StorageTek no
later than ** prior to the start of any given quarter. At
such time, the forecast for the upcoming quarter will be
binding, subject to the quarterly volume modifications
referred to in Sections 10.2 and 10.3. Except as otherwise
provided in the preceding sentence, volume forecasts are
provided as good faith estimates of IBM's anticipated
requirements for Products and Upgrades for the periods
indicated based on current market conditions and do not
constitute commitments to purchase any fixed quantity of
Products.
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10.2 StorageTek agrees to supply, and IBM agrees to take Delivery
of, during any current quarter, and to pay in accordance with
Section 7, above, for not less than the Minimum Percentage (as
shown in the table below) of the units forecasted as of the
date the volumes became binding as provided in Section 10.1.
StorageTek agrees to use the Remainder Percentage (as shown in
the table below) to satisfy the next quarter's orders.
StorageTek will hold additional units in excess of the
Remainder Percentage provided that IBM purchases and pays for
such additional units. Any units of inventory not required
under this section to be purchased and delivered in the
then-current quarter will be applied to and delivered to
fulfill the next-following quarter's volume requirements
before any new orders for such next-following quarter are
fulfilled.
<TABLE>
<CAPTION>
1996 1Q-3Q 1997 4Q 1997-end
---- ---------- -----------
<S> <C> <C> <C>
Minimum Percentage ** ** **
Remainder Percentage ** ** **
</TABLE>
With ** prior written notice, IBM may elect to adjust the
flexibility for ** to correspond to the other elements of
the above table, as well as the Maximum Percentage described
for the same quarters in Section 10.3, below, by changing the
payment terms set forth for those quarters in Section 7.10
from 45 to 30 days.
Initial purchases of Iceberg Product shall exclusively be **
until such time as IBM has purchased up to ** .
10.3 IBM may also require StorageTek to deliver during the current
quarter, for which IBM shall pay in accordance with Section 7,
above, up to the Maximum Percentage as shown in the table
below of the units forecasted as of date the volumes became
binding as provided in Section 10.1, except as adjusted as set
forth in the penultimate paragraph of Section 10.2, above.
<TABLE>
<CAPTION>
Q4 1996 1Q-3Q 1997 4Q 1997-end
------- ---------- -----------
<S> <C> <C> <C>
Maximum Percentage ** ** **
</TABLE>
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10.4 CURRENT QUARTER
Subject to Sections 10.2 and 10.3, in order to assist
StorageTek in planning its manufacturing operations, IBM will
provide modifications to the previously submitted weekly
schedules in the current forecast, as follows:
<TABLE>
<CAPTION>
FLEXIBILITY NOTICE REQUIRED
TARGET (in days from anticipated
Delivery date)
---------------------------------------------------------------------
<S> <C> <C>
+/- ** within **
+/- ** within **
+/- ** within **
+/- ** within **
+/- ** within **
+/- ** beyond **
</TABLE>
All volume increases will be allowable per the matrix above up
to StorageTek's maximum capacity. StorageTek's initial maximum
capacity is stated in the following table:
CAPACITY IN UNITS OF PRODUCT PER WEEK, FOR:
<TABLE>
<CAPTION>
Iceberg Kodiak
------- ------
<S> <C> <C>
1996 ** **
1997 ** **
1998 ** **
</TABLE>
Upon mutual agreement, StorageTek will add additional capacity
if IBM increases its forecasted volumes beyond the current
maximum capacity with at least six months' prior written
notice to StorageTek. StorageTek agrees to use reasonable
efforts to accommodate variations greater than those stated
above, including but not limited to accepting assistance from
IBM.
10.5 STORAGETEK'S CAPACITY/ALLOCATION
a. StorageTek expressly represents that StorageTek has, as
of the Effective Date of this Agreement, and will
maintain throughout the term of this Agreement, adequate
product and manufacturing capacity to fulfill in a
timely fashion all its existing contractual commitments
as well as the quantities committed to in
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this Agreement by IBM (when taking into account Section
10.4) and any commitments StorageTek subsequently enters
into, without allocation of production among its
customers. However, if StorageTek is unable to meet its
Delivery commitments and must allocate its capacity,
inventory, test equipment, resources, use of personnel,
parts, components, supplier resources and capabilities,
etc., that are used to produce Equipment, then
StorageTek agrees to:
(1) act in good faith; and
(2) allocate its capacity, supplier resources and
capabilities, inventory, test equipment,
resources, use of personnel, parts, components,
and available supply of Equipment to fill orders
for IBM in the following order of priorities:
(i) ** ; and
(ii) ** .
b. StorageTek will allocate parts, components and materials
in accordance with the following priorities:
(1) Code A FRUs order/requirements are filled first;
and
(2) then a fair allocation between manufacturing
orders and nonemergency maintenance parts
order/requirements.
11. PURCHASE ORDERS, ALTERATIONS & RESCHEDULING
11.1 IBM may submit purchase orders at any time; provided, however,
that subject to Section 11.6, any order shall be binding on
both Parties if such order is within the forecast range set
forth in Sections 10.2 and 10.3, and is submitted not less
than ten (10) business days before IBM's requested date of
Delivery. IBM may request that StorageTek deliver in fewer
than ten (10) business days and StorageTek may agree to do so.
11.2 This Agreement does not constitute a purchase order. IBM may
issue purchase orders from time to time during the term of
this Agreement in either electronic (EDI) or written form.
Authorization to StorageTek to perform any work or produce any
Equipment under this Agreement will be through IBM purchase
orders only. Alterations to the quantity, delivery date,
engineering level, or other items on
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purchase orders may be made by IBM from time to time, subject
to StorageTek's agreement. Purchase orders will be considered
noncancelable within ten (10) days of the scheduled Delivery
date.
11.3 IBM shall submit its purchase orders to StorageTek at the
address set forth in the Notices section of this Agreement.
IBM's purchase orders will include:
a. IBM's part, model or feature numbers, configuration and
description of Equipment;
b. quantity required;
c. unit or item price and total order price;
d. required delivery date(s);
e. delivery instructions (including a carrier who will
accept delivery at StorageTek's address); and
f. reference to this Agreement.
Unless otherwise specifically agreed to in writing, additional
terms and conditions on IBM's purchase orders or on
StorageTek's acknowledgment, whether in conflict with this
Agreement or not, are superseded hereby and are of no force
and effect.
11.4 StorageTek agrees to accept conforming IBM purchase orders and
to manufacture, supply and Deliver Equipment in accordance
with the terms and conditions of this Agreement. StorageTek
agrees to provide written acknowledgment of IBM's purchase
orders within two (2) days, for volumes within IBM's forecast,
or within five (5) days, for volumes in excess of IBM's
forecast, as measured from StorageTek's actual receipt of the
purchase order (without regard to the Notices section of this
agreement, except for EDI) which purchase order may be made
verbally and/or in advance of StorageTek's receipt of a hard
copy confirming such order. If StorageTek's acknowledgment is
not received by IBM within the two (2) or five (5) day period,
as described above, from the date of receipt of the purchase
order from IBM, then the purchase order, including the
requested delivery date(s) will be deemed to be accepted by
StorageTek. StorageTek may not reject any IBM purchase order
that conforms to the requirements of this Agreement and covers
quantities forecasted by IBM, as described in Section 10.
11.5 Orders for FRUs needed on a "Code A" basis (i.e.,
emergency-customer down) will be shipped by StorageTek within
twenty-four (24) hours at a price not to exceed the
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<PAGE> 43
lesser of ** of the price in Exhibit 5 or such price plus
** , with IBM designating the carrier and being responsible
for freight and insurance costs. However, IBM will not pay
any premium (i.e. pay only 100%) for Code A FRUs necessitated
because StorageTek has failed to deliver nonemergency FRU
orders within the lead times set forth in Exhibit 5.
11.6 IBM may cancel purchase order(s) or any portions thereof for
any reason by notifying StorageTek in writing at least ten
(10) days prior to the scheduled Delivery date. Cancellation
will be effective upon StorageTek's receipt of the written
cancellation notice from IBM. StorageTek will immediately
cease building such units for the affected purchase order(s)
in accordance with the cancellation notice. IBM will have no
liability for canceled purchase orders other than as set forth
in Section 10.2, and, if applicable, any Recovery Payment as
described in Section 7.6 hereof.
11.7 If for any reason StorageTek is unable to Deliver as required
by accepted IBM purchase order(s), and fails to correct such
inability within ** of such failure, IBM will have the right
to cancel such purchase order(s) or portions thereof by
notifying StorageTek in writing. If IBM cancels purchase
orders under this Section 11.7, IBM's only obligation will be
to pay for Products or Upgrades already delivered at the time
of IBM's cancellation notice ** .
11.8 Due to ongoing and unpredictable market conditions, StorageTek
agrees to permit IBM, upon written notice to StorageTek, to
require StorageTek to reconfigure units of Products and
Upgrades as follows:
a. Configuration changes that do not change a unit model
number may be made without additional cost until **
before scheduled Delivery; and
b. Any other configuration changes may be made at any time
(including Product and Upgrades that require
reconfiguration after Delivery) and such configuration
changes will be ** . StorageTek and IBM will agree in
advance on a schedule of lead times and costs that will
apply to such configurations.
11.9 Subject to Section 10, IBM may reschedule purchase order(s) or
any portions thereof for any reason by notifying StorageTek in
writing at least ** prior to the Delivery Date specified on
the purchase order(s).
11.10 For the last quarter of this Agreement, the purchase orders
submitted by IBM to StorageTek shall be noncancelable unless
StorageTek is manufacturing Devices.
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11.11 Products and Upgrades that are supplied to IBM hereunder will
consist of new parts and components. FRUs that IBM returns
will be reworked by StorageTek to an equivalent-to-new
reliability level. Such reworked FRUs will not be used in any
new Products or Upgrades Delivered to IBM hereunder, but may
instead be returned to IBM as reworked FRUs.
12. CONSIGNMENT
12.1 IBM will consign certain disk drives ("Drives") to StorageTek
for use in Equipment. Drives supplied by IBM to StorageTek
shall only be used by StorageTek to build Equipment for IBM
and shall remain the property of IBM.
12.2 StorageTek agrees to sign and adhere to the terms and
conditions of the IBM Consignment Agreement, attached hereto
as Exhibit 4, provided, however, that the terms of this
Section 12 prevail over those of Exhibit 4.
12.3 IBM agrees to consign Drives to StorageTek in accordance with
a mutually agreed Profile based on at least a five-day buffer
ahead of StorageTek's build cycle, and including a yield
factor based upon the previous quarter's experience and
calculated using a mutually agreed formula. Any Drives,
or other IBM-supplied parts and components, that are not
used by StorageTek due to integration fall-out will be
returned to IBM within ten (10) days after such fall-out.
12.4 If IBM fails to provide consigned Drives to StorageTek in
accordance with Section 12.3, and StorageTek's manufacturing
line is down such that StorageTek cannot meet its Delivery
dates to IBM, then StorageTek will agree, per Section 10.2, to
hold up to ** as the case may be, of such undelivered and
forecasted Products and Upgrades, without Drives, in inventory
for up to ** . If the amount of such Products and Upgrades
held in inventory exceeds ** of the forecasted volumes then
StorageTek will notify IBM, and IBM will ** .
12.5 If IBM Drives are not available for an extended period of
time, IBM may request assistance from StorageTek in securing
drives from other drive manufacturers in lieu of using IBM
Drives. StorageTek agrees, on a best effort basis, to assist
in securing the most cost effective, high quality alternative,
and with the agreement of IBM, to take the steps necessary to
integrate such drives into the Product. In such event, the
parties will agree in advance on an equitable division of
StorageTek's cost of securing, qualifying and integrating such
drives, including any cost relating to inventory or required
firm purchase commitments even if such substitution is only
temporary in nature.
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12.6 StorageTek agrees to return to IBM freight collect any IBM
consigned Drives in StorageTek's inventory, within five (5)
days of receipt of IBM's written (or EDI) request.
13. DELIVERY
13.1 ON-TIME DELIVERY
a. StorageTek shall use its best efforts to ensure that
every scheduled Delivery date is met. StorageTek must
notify IBM in advance if a scheduled Delivery date will
not be met. StorageTek will make every reasonable
effort at its expense to ensure the earliest possible
Delivery date and quantities for late Equipment,
including, but not limited to, overtime and expedite
charges. "On schedule" means ** . Unless delay is
caused by IBM's delay in its supply of Drives or IBM-
supplied parts and components, StorageTek will arrange
for premium transportation and pay, at StorageTek's sole
cost and expense, for the difference between normal
transportation and such premium transportation,
including, but not limited to, air transportation and
expedited freight charges. StorageTek also agrees to
provide, at IBM's request, an action plan to correct
late shipments and to resolve any Delivery problems.
b. If, during any ** period, StorageTek fails, on a
one-time basis only, to Deliver more than ** but not
more than ** , of the units of Equipment that are
scheduled for Delivery in a calendar month by their
scheduled Delivery dates, then StorageTek shall be
required to expedite shipment of such units in
accordance with Section 13.1. If more than ** of such
units of Equipment are Delivered late in ** , then
StorageTek will provide IBM with credit towards
attainment of its ** Volumes for ** in an amount
equal to ** the number of ** that were ** in
excess of ** .
c. If StorageTek fails to Deliver more than ** of the
units of Equipment that are scheduled for Delivery by
their scheduled Delivery dates in the next following
month, and except for Volumes subject to the one time
per ** provision defined in 13.1b, above, then
StorageTek shall provide IBM with ** credit towards
attainment of its ** Volumes for ** equal to **
the number of ** that ** by StorageTek.
d. If, in the month following any month in which a **
adjustment was credited to ** Volumes under this
Section 13.1, StorageTek fails to Deliver more than **
of the units of Equipment that are scheduled for
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Delivery by their scheduled Delivery dates, then
StorageTek shall provide IBM with ** credit towards
attainment of its ** Volumes for ** in an amount
equal to ** the number of ** that were ** by
StorageTek.
e. If, in the next following month, StorageTek fails to
Deliver more than ** of the units of Equipment that
are scheduled for Delivery by their scheduled Delivery
dates, then StorageTek shall provide IBM with **
credit towards attainment of its ** Volumes for **
in an amount equal to ** the number of ** that were
** by StorageTek.
f. If, in the next following month, and for each additional
consecutive month, StorageTek fails to Deliver more than
** of the units of Equipment that are scheduled for
Delivery by their scheduled Delivery dates, then
StorageTek shall provide IBM with ** credit towards
attainment of its ** Volumes for ** in an amount
equal to ** the number of ** that were ** by
StorageTek.
g. Notwithstanding anything to the contrary in this
Section, and in lieu of credits provided in other
paragraphs of this Section, if, in any calendar month,
and subject to Section 13.1b. above, StorageTek fails to
Deliver more than ** of the units of Equipment that
are scheduled for Delivery by their scheduled Delivery
dates, then StorageTek shall provide IBM with **
credit towards attainment of its ** Volumes for that
** in an amount equal to ** the number of ** that
were ** by StorageTek.
h. Any credit towards achievement of IBM's ** Volumes for
** by StorageTek to IBM ** such Equipment ** by
StorageTek ** credited towards IBM's attainment of its
volumes.
i. Notwithstanding anything to the contrary in this
Section, units of Equipment which StorageTek fails to
Deliver by the Delivery date will not be counted as
failures to Deliver if StorageTek causes such units to
be delivered to IBM customers by the delivery date IBM
has committed to such customers (the "Commit Date").
IBM will notify StorageTek in writing of each unit of
Equipment which fails to arrive by the Commit Date
within ten (10) business days after StorageTek notifies
IBM that such shipment was expedited.
j. If IBM fails to deliver Drives to StorageTek in
accordance with the ** in Section ** of this
Agreement and this delay results in ** in accordance
with ** then IBM agrees to ** , and StorageTek
agrees to ** , and such units ** .
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k. If StorageTek fails to deliver to IBM more than ** of
the units of Equipment scheduled for Delivery by the
scheduled Delivery dates in a month, for **
consecutive calendar months then the payment terms in
Section 7.10a will be immediately extended to ** days
until ** after the first month in which StorageTek
Delivers 98% or more of Equipment on its scheduled
Delivery date.
l. IBM expressly reserves the right to assert that any
failure to ship Equipment on a timely basis, including,
but not limited to, failures for which volume
adjustments are provided for in this section, could
constitute a material breach of StorageTek's obligations
under this Agreement.
13.2 CARRIER
It is understood and agreed that IBM shall make all
arrangements for shipments of the Equipment. It shall be the
responsibility of IBM, at its own expense, to supply
StorageTek with detailed documentation and instructions and
all necessary export licenses, customs declarations and
certificates in properly executed form required for successful
shipment of Equipment from the Manufacturing Site and entry
into foreign territories. StorageTek shall notify IBM when
Equipment is ready for shipment from StorageTek's plant. IBM
will pay all shipping and transportation charges directly to
the carrier or freight forwarder as long as shipped in
accordance with IBM's routing instructions. If IBM requests
that StorageTek arrange shipping, IBM shall reimburse
StorageTek for the shipping charges pursuant to StorageTek's
invoice. In no event will IBM reimburse StorageTek for, or pay
any C.O.D. charges, should StorageTek ship by another carrier
without prior IBM approval. If StorageTek ships using other
than an IBM-approved carrier, StorageTek is responsible for
any incremental increase in freight charges.
13.3 TITLE/RISK OF LOSS
Title to Equipment and risk of loss shall pass to IBM at
StorageTek's plant of manufacture loading dock. [F.O.B. by
UCC/ExWorks by INCOTERMS]; provided, however, that
notwithstanding anything to the contrary in this Agreement
title to all Licensed Works will remain with StorageTek,
except as provided in the IDA and its related Attachments. All
claims for shipping damage shall be resolved between IBM,
carriers or freight forwarders handling the Equipment and the
insurance companies and agents responsible for adjusting such
claims, and StorageTek shall have no responsibility with
respect thereto. However, at IBM's request, StorageTek agrees
to cooperate reasonably with IBM in filing and settling such
claims.
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13.4 PACKAGING
StorageTek will package each unit of Equipment according to an
agreed-upon Specification for packaging. The prices for
Equipment include all packaging costs.
14. EQUIPMENT WARRANTY
14.1 StorageTek warrants that units of Equipment (excluding Drives
and nonserialized FRUs) that are to be provided to IBM
hereunder conform to the Specifications and are and shall
remain free from defects in materials and workmanship, for the
time periods specified in this Section 14.1.
a. The warranty period for each unit of Products and
Upgrades shall be ** after the earlier of:
(1) ** ; or
(2) ** .
b. StorageTek will serialize the FRUs identified as
serialized on Exhibit 5, and as to those FRUs the
warranty period shall be ** after the earlier of:
(1) ** ; or
(2) ** .
14.2 All warranties provided by StorageTek to IBM hereunder shall
survive any inspection, delivery, acceptance and payment and
shall not be affected by the fact that IBM has resold, rented
or leased units of Equipment to others.
14.3 IBM will maintain failure records for Products and Upgrades to
the same extent as IBM maintains such records for similar
high-end direct access storage device products marketed by it.
If IBM believes failures for a given serial number unit of
Equipment warrants replacement, IBM may request and StorageTek
may agree to replace the same at no cost to IBM. StorageTek's
agreement will not unreasonably be withheld. In order to
improve Equipment quality and minimize costs, StorageTek may
request relevant information from the data which IBM retains
regarding failure by machine serial number. IBM may agree to
provide such information to StorageTek. Such agreement will
not be unreasonably withheld.
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14.4 StorageTek's liability under warranty pursuant to Section 14.1
is limited to: Delivery to the IBM regional stocking
locations specified by IBM of retrofit kits (containing FRUs)
with installation instructions (at no charge to IBM) as
necessary to make Equipment conform to the Specifications, or
otherwise be free from defects in materials and workmanship;
or repair or replacement, at StorageTek's option, without cost
to IBM, of the defective Equipment. IBM will use reasonable
efforts to resolve customer issues through use of FRUs or
retrofit kits before requesting repair or replacement of the
defective Product or Upgrade. Labor to remove defective FRUs
and install replacement FRUs under this warranty shall be
supplied by IBM at no charge to StorageTek, subject to Section
9.3h. Where warranty can be provided by replacing a FRU,
StorageTek will provide and IBM will install the replacement
FRU.
14.5 All warranty claims shall be made by IBM, regardless of any
transfer of title or possession of the Equipment by IBM to
other parties, and StorageTek agrees that IBM may make
warranty claims against StorageTek on the behalf of any
rightful user or possessor of the Equipment.
14.6 StorageTek's liability to perform warranty under this Section
14 shall not apply to failures of any unit of Equipment
caused by:
a. Physical abuse or use that is not consistent with
operating instructions for the Equipment; or
b. Modification (by other than StorageTek's personnel or
agents) in any way other than approved by StorageTek;
provided, however, that the warranty shall not be voided
by repair or replacement of FRUs or the attachment of
items in the manner described in maintenance or
installation instructions provided by StorageTek.
14.7 Claims under the terms of this warranty shall be submitted to
StorageTek in writing (including EDI) and shall clearly state
the Product or Upgrade serial number. Where available, IBM
shall send StorageTek its field defect report. Defective FRUs
replaced under this warranty become the property of
StorageTek.
14.8 Both Parties will ensure that FRUs returned to the other Party
are properly and adequately packaged, and IBM agrees to use
the same or equivalent packaging as StorageTek uses to package
such FRUs.
14.9 StorageTek shall use reasonable commercial efforts to complete
repairs of FRUs for in-warranty units within thirty (30)
business days after the date StorageTek receives the defective
FRUs, but in any case, it will complete repairs of the FRUs at
no charge to IBM within sixty (60) days after receipt. If,
upon receipt, StorageTek determines that such defective FRUs
are not repairable or if StorageTek has not completed its
failure analysis on any FRU within ten (10) business days
after StorageTek's receipt, then replacement FRUs will be
provided at no charge by StorageTek to IBM within ten (10)
business days. If StorageTek cannot find a defect or
assignable cause in a
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FRU that is returned by IBM as defective, StorageTek will
replace the received FRU and will ensure that the FRU is not
included in Equipment and cannot be returned in the future to
IBM.
14.10 LICENSED PROGRAMS, MICROCODE AND MAINTENANCE CODE WARRANTY
a. StorageTek warrants that the Licensed Programs and
Microcode will conform to the Specifications, as such
Specifications may be modified by any Product
Development Plan, and are and shall remain free from
defects in workmanship. The Maintenance Code shall
remain free from defects in workmanship. The warranties
set forth in this Section 14.10 shall not apply to:
(1) use of the Licensed Programs or Microcode which
is not in accordance with the end user
documentation delivered by ** , pertaining to
the Licensed Programs or Microcode;
(2) use of the Licensed Programs or Microcode with
other than the hardware described in the
Specifications;
(3) use of the Licensed Programs, Microcode and
Maintenance Code in other than the software
configuration described in the Specifications;
(4) any modifications of the Licensed Programs,
Microcode and Maintenance Code not made or
authorized by ** ;
(5) use of other than the then current, or
immediately preceding, version of the Licensed
Programs; or
(6) ** that ** by ** of the Microcode.
StorageTek does not warrant that the functions contained
in the Licensed Program and Maintenance Code will
satisfy IBM's or its end user's requirements to the
extent such requirements are different than those set
forth in the Specifications, as such Specifications may
be modified by any Product Development Plan, or that the
Licensed Programs will ** or its ** , or that the **
of the Licensed Programs and Maintenance Code will be
** .
b. In the event of a breach of the warranties contained in
this Section 14.10, StorageTek will exercise reasonable
commercial efforts to implement appropriate procedures
to correct such breach in accordance with Section 16.8,
for Licensed Programs and Microcode and Section 16.7 for
Maintenance Code.
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and Exchange Commission under an application for confidential
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14.11 StorageTek warrants that it will competently perform all work
relating to the Deliverables in a manner consistent with
ordinary Microcode programmers skilled in the art, and,
further, all Deliverables will conform to the mutually
agreed-upon Specifications.
14.12 THE WARRANTIES IN SECTIONS 14 AND 18 OF THIS OEM AGREEMENT,
AND IN PART 6 OF THE SOURCE CODE CUSTODY AGREEMENT, ARE IN
LIEU OF ALL OTHER WARRANTIES EITHER WRITTEN, ORAL OR IMPLIED
WITH RESPECT TO THE EQUIPMENT, DELIVERABLES, LICENSED PROGRAMS
AND MAINTENANCE CODE.
STORAGETEK DISCLAIMS THE IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. EXCEPT
AS OTHERWISE PROVIDED IN SECTION 18.2, STORAGETEK ALSO
DISCLAIMS THE IMPLIED WARRANTY OF NONINFRINGEMENT.
STORAGETEK'S WARRANTY OBLIGATIONS SHALL EXTEND ONLY TO IBM,
AND STORAGETEK SHALL HAVE NO LIABILITY ARISING OUT OF ANY
WARRANTIES PROVIDED BY IBM WHICH ARE BEYOND STORAGETEK'S
WARRANTY OBLIGATIONS IN THIS AGREEMENT.
IBM'S EXCLUSIVE REMEDY FOR A BREACH OF THE WARRANTY SET FORTH
IN THIS SECTION 14 IS SET FORTH IN SECTION 14.4 FOR EQUIPMENT,
AND SECTION 14.10(b); FOR LICENSED PROGRAMS, MICROCODE AND
MAINTENANCE CODE, PROVIDED, HOWEVER, THAT STORAGETEK PROMPTLY
PERFORMS ITS WARRANTY OBLIGATIONS PURSUANT TO SECTION 14.
15. FRUs
15.1 During the term of this Agreement and for ** after the last
Delivery of Product or Upgrades, or for so long as StorageTek
makes FRUs available to any other entity, whichever is later,
StorageTek agrees to provide FRUs to IBM. The list of FRUs
and their respective prices and lead times are described in
Exhibit 5, which Exhibit will be updated semiannually (in
January and July).
15.2 Notwithstanding anything herein to the contrary, if StorageTek
intends to discontinue producing or making available any FRU
after the ** obligation set forth above, StorageTek agrees
to provide IBM with twelve (12) months' prior written notice
of such intent and permit IBM to purchase as many FRUs as IBM
reasonably believes it will need for the Products. In the
alternative, and at IBM's option, StorageTek
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agrees to grant IBM the right to manufacture such FRUs in
accordance with Section 23.6.
15.3 FRUs shall be packaged in the same or equivalent packaging as
StorageTek used to package such FRUs. Return of FRUs for
repair or replacement is subject to a reasonable material
return procedure to be mutually agreed between the Parties.
15.4 FRU REWORK PROCEDURES AND PRICES
a. StorageTek will attempt to rework/repair all FRUs
returned from IBM and return them to IBM within 30 days
of receipt. At IBM's request, StorageTek will also ship
to IBM any unrepairable FRUs.
b. Except as otherwise provided in Section 9, Quality, and
Section 14, Equipment Warranty, StorageTek will invoice
IBM, and IBM agrees to pay, ** for FRUs as described
in Section 7.7, plus normal transportation charges
unless IBM requests special handling. Such costs will be
subject to IBM's Audit Rights.
16. FIELD SERVICE & SUPPORT
16.1 INSTALLATION SUPPORT
a. Upon IBM's written request, StorageTek will, at no
charge to IBM, assist IBM in installing units purchased
under this Agreement, including on-site installation if
necessary, in accordance with the table below provided
StorageTek is not prevented from doing so by either
IBM's customer or the scheduling of installations by IBM
in a particular geographical area which exceed
StorageTek's resources of personnel when taking into
account StorageTek's other service commitments. IBM's
written requests will specify the installation site,
date of installation, whether the site is classified and
any special installation instructions. StorageTek may
provide at IBM's request additional installation
services beyond those required in this section at the
rates described in Section 16.5.
PERCENTAGE OF INSTALLATIONS STORAGETEK WILL SUPPORT (BY PRODUCT)
<TABLE>
<CAPTION>
TIME PERIOD ICEBERG KODIAK
----------- ------------------------
<S> <C> <C>
3Q96 ** **
4Q96 ** **
1Q97 ** **
</TABLE>
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b. The services and charges referred to in this section do
not include additional ** arising from: (i) ** , or
(ii) ** equipment, such as ** . IBM agrees to **
.
16.2 TRAINING
a. StorageTek will provide ** "train the Trainer" **
for IBM ** personnel (not to exceed a total of **
for each ** ). One of each such session will be held
in ** ; however, IBM may choose ** to the U.S. This
training will cover ** at the ** that StorageTek
covers when ** and will ** :
(1) the maintenance, diagnosis, and repair of
Products and Upgrades;
(2) the replacement of FRUs ;
(3) how the Products and Upgrades function;
(4) how the Products and Upgrades react to and report
problems;
(5) how to install the Products and Upgrades.
In addition, StorageTek will conduct ** training
sessions for IBM's ** personnel at StorageTek's
expense ** . The goal of this training will be to **
by IBM's ** team.
b. At IBM's request, StorageTek will provide up to **
additional initial training sessions beyond the
sessions described above at a fee of ** per class,
plus reasonable travel and living expenses for
StorageTek trainers if such sessions are held at a
location other than StorageTek's training facility.
StorageTek also agrees to make its training facilities
available to IBM at StorageTek's cost for IBM to provide
education to its personnel through the end of 1996.
c. StorageTek will also provide "on-the-job" training for
IBM customer engineering personnel by assisting them, at
IBM's option, in any Product and Upgrade installations
as described in Section 16.1.
d. For all new Products and Upgrades StorageTek makes
available to IBM during the term of this Agreement,
StorageTek agrees to provide IBM personnel with
assistance at no charge to develop training for IBM's
customer engineering personnel at the same level as the
training StorageTek provides to its own personnel on its
other products.
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16.3 SERVICE OF EQUIPMENT
To assist IBM in product transition, in every
country/territory where StorageTek has a service organization
and IBM ** , at IBM's request, StorageTek agrees to ** :
a. ** ; and
b. ** .
At the beginning of each quarter, IBM agrees to commit to, and
to pay for as set forth in Section 16.5, and StorageTek
thereafter agrees to provide, the number of hours of such
customer engineering support IBM will require at the beginning
of each quarter. The maximum fee StorageTek will charge IBM
for each hour of such customer engineering support actually
provided (except for the no charge installation support) is
set forth in the table found in Section 16.5. To the extent
StorageTek is unable to provide service hereunder, StorageTek
will promptly refund unearned payments.
16.4 EMERGENCY AND EXPERT MAINTENANCE COVERAGE
In every country/territory where IBM installs Products and
Upgrades, StorageTek agrees to make available upon IBM's
request and on the shortest possible notice customer service
engineers to support critical customer situations. The maximum
fee StorageTek will charge IBM for each hour of such support
actually provided is set forth in the table in Section 16.5.
In addition, IBM will reimburse StorageTek for actual and
reasonable travel expenses incurred by StorageTek's personnel
in providing this support in countries where StorageTek does
not have a service organization.
16.5 LABOR RATE TABLE
<TABLE>
<CAPTION>
Calendar Quarter Maximum Hourly Rate
-------------------------------------------------------
<S> <C>
** **
** **
** **
** **
** **
** and beyond **
</TABLE>
16.6 NEW PRODUCT DEVELOPMENT CENTER SUPPORT
a. StorageTek will provide its New Product Development
Center Support ("NPDC") **. In addition, ** ,
StorageTek will ** . StorageTek agrees to
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provide IBM ** that StorageTek uses to provide NPDC
support for ** . StorageTek grants IBM a license to
** in accordance with the Description of Licensed
Works.
b. To assist IBM in transitioning to its own service
center, StorageTek agrees that until ** , IBM's **
shall be able to ** from StorageTek's NPDC for problem
resolution ** if, ** , it would be ** to contact
the NPDC than to contact StorageTek's development
organization directly.
c. StorageTek shall provide comparable levels of response
times for NPDC support to IBM as those that StorageTek
provides to its own customer service base (including
StorageTek's tape and service products).
16.7 MAINTENANCE AND INSTALLATION TOOLS
To assist IBM in providing optimum hardware and software
maintenance service to customers, StorageTek agrees to:
a. Assist IBM, ** , in ** needed to ** , for
example (without limitation) ** , etc., to include
Iceberg, Kodiak and Arctic Fox; and
b. Promptly provide to IBM all problem determination and
service information, tools, Maintenance Code and related
documentation (except for the ** tools and software,
as to which StorageTek agrees to ** ) and all
replacements, enhancements, revisions, and modifications
** , to the extent not prevented by ** . StorageTek
grants IBM a license to the ** in accordance with the
Description of Licensed Works.
StorageTek also agrees to provide technical support, ** , to
correct and fix bugs and defects that arise from IBM's use of
Maintenance Code.
16.8 MAINTENANCE AND TECHNICAL SUPPORT
a. Maintenance. IBM will be responsible to provide Level
1, Level 2 and Level 3 support to its customers. IBM
agrees to use its commercially reasonable efforts to
perform the following:
(1) maintain ** to provide maintenance to customers
who are capable of performing installations of
Equipment and taking ** and to ** ;
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(2) maintain ** to provide support to the field and
who are capable of diagnosing and resolving
complex "system issues" related to, among other
things, system configuration and operating
systems;
(3) maintain ** of planning and implementing
complex system configurations, performing virtual
DASD capacity planning, planning for acceptable
subsystem performance, undertaking performance
measurement and tuning, and resolving or
assisting in the resolution of system-related
problems when required;
(4) provide necessary and relevant ** information,
and ** information to StorageTek in order for
StorageTek to perform its technical and
engineering support responsibilities as set forth
below; and
(5) order a ** for the Products ** to address
customer requirements.
b. Technical Support. StorageTek agrees, upon IBM's
request, ** , to provide technical support to IBM for
the Equipment, Licensed Programs and Microcode,
including without limitation, assistance in problem
determination, problem source identification and problem
diagnosis, in the following manner:
(1) Equipment. StorageTek will provide IBM with
reasonable assistance for the Equipment ** .
In addition, if a malfunction or failure in
Equipment ** , then StorageTek shall, if
requested, provide ** . Prior to honoring a
request for ** , the Equipment for which the
request is to be made shall be at ** . IBM's
technical support personnel must have ** to
assist StorageTek's personnel ** and to supply
needed ** for repairs). Upon receipt of
appropriate supporting documentation, IBM will
** StorageTek for ** in providing this
support.
StorageTek agrees to use its commercially
reasonable efforts to assist IBM in resolving
problems within the time frames set forth below:
(a) Any Severity 1 level problem: Within **
after notification by IBM of any such
problem;
(b) Any Severity 2 level problem: Within **
after notification by IBM of any such
problem;
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(c) Any Severity 3 level problem: Within **
after notification by IBM of any such
problem; and
(d) Any Severity 4 level problem: Within **
after notification by IBM of any such
problem.
For purposes of this Section 16.8b(1),
"resolving" by StorageTek means to assist IBM in
restoring the customer's machine to ** of
operation or functionality (which may be
accomplished by a ** that such machine is
operating and functioning as designed).
(2) Licensed Programs and Microcode. The following
is a description of the support that StorageTek
shall provide to IBM:
(a) receive the APAR or PMR, and any supporting
documentation and materials, as
appropriate;
(b) analyze the problem symptoms and diagnose
the suspected error in the Licensed
Programs or Microcode;
(c) attempt to recreate the problem on
StorageTek's test system, if recreation is
required;
(d) reasonably develop a bypass or
circumvention for high impact (e.g.,
typically, Severity 1) problems with
assistance of IBM's personnel;
(e) reasonably determine if Maintenance
Modifications are required to be made to
the Deliverables and, if so, provide the
Code or other corrections to IBM in the
format specified by IBM;
(f) provide resolution assistance to APARs or
PMRs in accordance with the IBM-assigned
Severity Level as set forth in Section
16.8b(1)(a)-(d) above;
(g) receive technical questions and supporting
documentation and materials, and analyze
such technical questions and provide
answers to the same; and
(h) generate and promptly provide to IBM the
most current releases of the Licensed
Programs or Microcode with all of the past
fixes incorporated as required, including
any accumulated maintenance items.
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16.9 ** ACCESS
During the term of the Agreement, IBM agrees to allow
StorageTek to have access to IBM's ** , and ** access for
** and other such implementations solely to support IBM's
provision of technical support for Equipment and Licensed
Programs. This information may be viewed and updated
electronically by StorageTek where feasible and appropriate.
StorageTek's use of and access to ** is subject to continual
review, and may be terminated if such use or access is beyond
the permitted purposes as set forth herein.
17. MARKETING RIGHTS & SUPPORT
17.1 On the Effective Date, the Parties will announce that they
have entered into an agreement under which IBM will market
Products worldwide that it purchases on an OEM basis from
StorageTek.
17.2 MARKETING SUPPORT ORGANIZATION
StorageTek agrees to establish a marketing support
organization to provide timely sales and marketing support to
IBM on a worldwide basis. This organization will provide **
the following support:
a. ** , StorageTek will maintain a project office staffed
with persons trained in StorageTek's administrative and
support systems to assist and interface with IBM
administrative personnel in processing IBM's customer
orders. Until ** , IBM's customer orders for
Products and Upgrades will be processed ** .
StorageTek will provide this processing and support **
to IBM through ** .
b. Through ** , StorageTek will provide worldwide ** to
IBM through a ** located in ** , StorageTek will **
. StorageTek agrees to ** to staff these positions
with individuals acting as Disk Product managers as of
** .
17.3 TRAINING
StorageTek agrees to provide marketing training and support to
IBM to facilitate IBM's sales of Products and Upgrades.
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a. Initial Training.
(1) Sales. During ** , StorageTek will provide,
** "train the Trainer" training sessions for IBM
** personnel to ** to IBM's marketing
personnel ** information about the Products and
Upgrades and their technologies to ** the
products, including ** of the Products and
Upgrades and the customer environments ** to
the Products and ** each Product ** .
(2) Systems Engineering. During ** , StorageTek
will provide, ** "train the Trainer" training
sessions for IBM ** personnel on ** . The
training will ** to describe in detail **
operating environments and optimum
configurations, and to ** to IBM's **
regarding changes or improvements as required.
17.4 ADDITIONAL INITIAL TRAINING
StorageTek will provide up to ** training sessions to each
of the above groups beyond those sessions described above at a
fee of ** per class, plus ** for StorageTek's trainers
when such training is provided at ** facility. StorageTek
also agrees to make its training facilities available to IBM
** for IBM ** to its personnel through ** .
17.5 ONGOING TRAINING
StorageTek agrees to provide IBM with material, documentation,
and support from StorageTek's Engineering and Technical
Support Staff similar to that provided as of the Effective
Date on StorageTek's new products, for IBM to provide its
personnel with training for all new Products and Upgrades.
17.6 MARKETING MATERIALS
StorageTek will promptly provide IBM with electronic and paper
copies, to the extent available, of all marketing materials
used by StorageTek within one year prior to the Effective Date
of this Agreement, to market StorageTek products similar to
Products and Upgrades, including without limitation all "white
papers," materials describing the advantages and benefits of
such StorageTek products, and materials related to
comparisons of such StorageTek products with competitive
products.
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In, addition StorageTek will provide samples, artwork, and
camera ready copy (to the extent available) of all collateral
materials (e.g., brochures and product guides) and advertising
related to StorageTek products similar to Products and
Upgrades.
IBM may ** from StorageTek for ** of StorageTek's ** for
such materials.
To the extent that StorageTek has the right to do so,
StorageTek hereby grants IBM a ** , nonexclusive worldwide
right and license to all of the marketing and collateral
materials relating to the Products and Upgrades it receives
from StorageTek, during the term of this Agreement, to use,
reproduce, display, distribute, create and have created
Derivative Works of any or all such materials without
attribution and grant sublicenses of equivalent scope to its
Subsidiaries but not otherwise; provided IBM does not use
StorageTek's trademarks or trade names except as specifically
permitted. StorageTek will identify portions of the materials
which are subject to third-party rights.
17.7 MARKETING TOOLS
StorageTek will provide all of its marketing tools, software
and related documentation related to the Products and
Upgrades, excluding third-party confidential materials, ** .
In addition, StorageTek will reasonably assist IBM in updating
its own tools to support Products and Upgrades. StorageTek
agrees to provide IBM such tools and software (in Source Code
form, to the extent not prevented by supplier license
transferability restrictions and if StorageTek discontinues
its support of such tools and software, and in Object Code
form). StorageTek hereby grants IBM a ** , nonexclusive
worldwide right and license to the tools, software and related
documentation it receives from StorageTek during the terms of
this Agreement, to use, reproduce, display, distribute, and
create, and have created Derivative Works of any or all such
tools and software without attribution, and grant sublicenses
of equivalent scope to its Subsidiaries but not otherwise.
17.8 SYSTEMS ENGINEERING SUPPORT
StorageTek agrees to provide IBM with fully trained persons
with substantial systems engineering and technical support
experience in the Equipment to ** and to interface with **
. StorageTek will provide IBM with such support ** during
** , and with ** of such support during ** . IBM may **
support for ** , for the duration of the Agreement, at a **
, provided IBM ** IBM may ** at the beginning of ** .
All such support is ** of personnel. To the extent
StorageTek is unable to provide hours hereunder, StorageTek
will promptly refund unearned payments.
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18. REPRESENTATIONS AND WARRANTIES
18.1 Each Party represents and warrants that it has the authority
and right to enter into this Agreement, and has no existing
obligations, and shall not assume any obligations, that
conflict with its obligations or the rights granted to it in
this Agreement. Each Party also represents and warrants that
it has the authority to convey the rights granted or assigned
by it in this Agreement. Each Party will provide, upon
request, copies of agreements or other documentation necessary
to establish such rights. If a Party is unable to supply a
copy of such agreements or other documentation, then such
Party shall use its best efforts to obtain such agreements or
other documentation to sufficiently establish that it has been
granted these rights.
18.2 StorageTek represents and warrants that ** the Equipment (or
Devices if ** pursuant to Section ** ) (including the
Deliverables), Maintenance Code and Licensed Programs licensed
to IBM hereunder ** , provided, however, that this
representation and warranty shall ** Equipment (or Devices
if ** pursuant to Section ** ) that ** , and only
Maintenance Code and Licensed Programs that ** , Equipment
(or Devices if ** pursuant to Section ** ). The right to
** based on the foregoing representation and warranty **
upon ** as set forth in Section ** . StorageTek further
represents and warrants that the Equipment (including the
Deliverables), Maintenance Code and Licensed Programs, **.
StorageTek ** , provide IBM with ** that StorageTek **
to the Equipment, including the Deliverables, Maintenance Code
or Licensed Programs.
18.3 StorageTek represents and warrants that, with respect to the
Deliverables, Licensed Programs and Maintenance Code created
outside the United States, all authors have waived their moral
rights in all Deliverables, Licensed Programs and Maintenance
Code to the extent permitted by law.
18.4 StorageTek represents and warrants that the Equipment (or
Devices if manufactured by IBM pursuant to Section 23.6), when
used in accordance with the Specifications, will not present a
health or safety risk to persons or property; and the
Equipment shall comply with all applicable regulatory health
and safety standards, including UL, CSA, VDE, IEC, FCC,
European Economic Community CE-mark standards, any other
standards that are described in the Specifications or as
required by law. StorageTek agrees to provide IBM with copies
of all reports, certifications, and other relevant documents
related to such standards at StorageTek's expense.
18.5 StorageTek represents that ** are, as of ** equal to or
better than ** for every ** available on ** . If IBM
** process described in Section ** .
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19. TRADEMARK & ADVERTISING
19.1 TRADEMARK AND DESIGN RIGHTS
Except as provided in Section 8, but notwithstanding any other
provisions of this Agreement, neither party hereto is granted
the right to use the trademarks, trade names, or service marks
of the other party (including those of Subsidiaries), directly
or indirectly, in connection with any product, promotion or
publication without the prior written approval of the other
party, except that IBM may use StorageTek's trademarks and
trade names for the aforementioned purposes on any Equipment
shipped by StorageTek which bears such trademarks or trade
names. Any approved use of one Party's trademark or trade
name shall enure to the benefit of the Party owning such
trademark or trade name.
19.2 ADVERTISING/DISCLOSURE
Neither party shall, without first obtaining the written
consent of the other party, in any manner disclose any details
of the work to be performed herein, the terms, conditions and
subject matter of this Agreement, or documents issued
hereunder, except as may be required by law or government rule
or regulation. To the extent that a party is compelled to
make a disclosure due to government rule or regulation, such
disclosure shall be limited to the extent required, and the
other party shall have an opportunity to review the
information prior to its release. Each party may independently
and without the consent of the other party inform customers of
the fact that an OEM distribution arrangement exists between
the Parties; however, to the extent that such communication
includes any additional information about the other party,
such party shall have an opportunity to review such
information prior to disclosure.
19.3 Upon request by IBM, StorageTek shall apply IBM's, its
Subsidiaries', its distributors' and/or its OEMs' trademarks,
logos and other information designated by IBM for the Product
and Upgrades as may be provided to StorageTek by IBM.
19.4 By no later than ** , StorageTek shall remove all of its
trademarks and any other markings which would identify
StorageTek from ** the Product or other items which, ** ,
would be visible to the IBM's customers or service technicians
and, ** from Upgrades and FRUs.
19.5 Use of a Party's trademarks by the other Party shall not
diminish the owner's right, title or interest to such
trademarks.
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20. CONFIDENTIALITY
20.1 It is anticipated that confidential information will be
exchanged between the Parties. Where confidential information
must be exchanged, it will be exchanged under an IBM Agreement
for the Exchange of Confidential Information (hereafter
"AECI").
20.2 With respect to all nonconfidential information disclosed by
one party (hereafter the "Disclosing Party") to the other
party (hereafter the "Receiving Party"), except to the extent
such information is protected by the Disclosing Party's patent
or copyright rights, the Disclosing Party grants to the
Receiving Party, to the extent, if any, of its interest
therein, a nonexclusive, royalty-free, irrevocable,
unrestricted, worldwide license to use, have used, disclose to
others, make copies in the case of documents, and dispose of,
all without limitation, such nonconfidential information in
any manner as it determines, including the use of such
nonconfidential information in the development, manufacture,
marketing and maintenance of products and services
incorporating such nonconfidential information.
21. ASSIGNMENT & CHANGE OF CONTROL
Neither Party shall assign or subcontract this Agreement, or any right
or obligation hereunder, without the prior written consent of the
other Party, except that subcontracts pursuant to StorageTek's normal
manufacturing procedures may be assigned, provided, however, that
StorageTek may not subcontract final assembly and test without IBM's
prior written consent. Any attempted assignment or subcontract not in
compliance with this paragraph shall be void.
StorageTek shall promptly notify IBM in writing of any Change of
Control involving StorageTek. Upon such Change of Control, ** as
provided below.
21.1 In the event that a Change in Control occurs whereby control
of StorageTek is acquired by (i) ** ; or (ii) ** ; then
IBM may (i) ** such Change of Control ** a Change of
Control ** ; or (ii) ** of the later of: (i) written
notice by StorageTek to IBM of such Change of Control; or (ii)
the effective date of such Change of Control. In the event of
** , IBM shall be ** on the date of ** and thereafter. If
IBM ** pursuant to this Section, StorageTek shall ** for
** , subject to the ** ; and provided further, that **
shall not **. In addition, IBM ** hereof, for **
following the date that IBM ** . In addition, IBM agrees to
** to StorageTek ** , to StorageTek for a period of **
after the date ** pursuant to this Section at a price that
is **, and based on ** existing as of the date ** .
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21.2 In the event that a Change of Control occurs in which control
of StorageTek is acquired by: (i) ** ; or (ii) ** ; then
** and ** will apply in the event ** ; provided, however,
that **.
** the Changes of Control described above, a Change of Control of **
shall ** this Agreement.
22. DISPUTE RESOLUTION
22.1 ESCALATION PROCESS
The Parties will attempt in good faith to promptly resolve any
controversy or claim arising out of or relating to this
Agreement by negotiations between executives of the Parties.
If a controversy or claim should arise, the Agreement
Administrators, or their respective successors, or their
superiors, will meet in person or phone, as they decide, at
least once and will attempt to resolve the matter. Either
Agreement Administrator may require the other to meet within
seven days at a mutually agreed upon time and location.
If the matter has not been resolved within ten days of their
first meeting, or a request for such meeting if no meeting
occurs, the Agreement Administrators shall refer the matter to
senior executives, who shall have authority to settle the
dispute (hereafter "Senior Executives"). The Senior Executive
for IBM shall be the General Manager of IBM's Storage System
business or his/her designee and the Senior Executive of
StorageTek shall be its Chief Executive Officer, or his/her
designee. Thereupon, the Agreement Administrators shall
promptly prepare and exchange memoranda stating the issues in
dispute, and their positions, summarizing the negotiations
which have taken place, and attaching relevant documents. The
Senior Executives will meet in person or by telephone within
seven (7) days of the end of the ten-(10) day period referred
to above, at a mutually agreed time.
The first meeting shall be held at the offices of the
Agreement Administrator receiving the request to meet. If more
than one meeting is held, the meetings shall be held in
rotation at the offices of IBM and StorageTek.
If the matter has not been resolved within fifteen (15) days
of the first meeting of the Senior Executives (which period
may be extended by mutual agreement), the Parties will attempt
in good faith to resolve the controversy or claim in
accordance with the following mediation process. During the
course of negotiations between the
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representatives, all reasonable requests made by one party to
the other for nonprivileged information will be honored in
order that each of the parties may be fully informed of the
circumstances relevant to the dispute.
22.2 MEDIATION PROCESS
If the escalation process fails to resolve a dispute in
connection with this Agreement, any such dispute shall be
submitted to expedited mediation prior to the commencement of
any litigation with respect to such dispute. In the event
either party intends to seek recourse against the other by an
action at law or in equity, such party shall first give notice
to the other party. Within ten (10) business days of such
notice, the Parties shall attempt to agree on one mediator
who shall be a person mutually agreeable to both Parties and
who shall be experienced in the DASD industry. In the event
the Parties cannot agree on one mediator, each shall have the
right to appoint one mediator, and the two mediators shall
appoint a third. Mediation shall commence within twenty (20)
business days of the notice of request for mediation. Each
party agrees to cooperate fully with the mediator(s) in an
attempt to resolve any disputes. The mediator(s) shall use the
rules of the American Arbitration Association in conducting
the mediation. Any decision reached through mediation shall be
in writing but shall not be legally binding upon the Parties
nor admissible as evidence in any legal proceedings. If the
Parties cannot resolve their differences to their mutual
satisfaction within thirty (30) business days of the request
for mediation, either Party shall be free to pursue any and
all other remedies available to such Party, including, but not
limited to, litigation. Costs of the Mediator shall be born
equally by the Parties.
23. TERMINATION/REMEDIES
23.1 TERMINATION BY MUTUAL CONSENT
This Agreement shall be subject to termination prior to the
expiration of the term at any time by mutual consent of the
parties, evidenced by a written agreement providing for
termination. Such agreement will include provisions to allow
StorageTek access to IBM disk drives of the same type as are
then being consigned to StorageTek and to provide IBM ongoing
maintenance, FRUs and Product Engineering Services if
StorageTek offers such items to any other entity.
23.2 TERMINATION BY BANKRUPTCY
This Agreement may be immediately terminated by either Party
if any of the following events ("Triggering Events") occur:
(1) the other Party files a voluntary petition under any
provision of the U.S. Bankruptcy Code or under any similar
insolvency law, makes an assignment for the benefit of its
creditors, (2) any involuntary petition in bankruptcy under
any provision of the U.S. Bankruptcy Code or under any similar
insolvency law is filed against such other Party, or (3) a
receiver
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is appointed for, or a levy or attachment is made against all
or substantially all of its assets, and such involuntary
petition is not dismissed or such receiver or levy or
attachment is not discharged within sixty (60) days after the
filing, appointment or making thereof.
To the extent that applicable bankruptcy law does not permit
the exercise of rights under the immediately preceding
paragraph, the bankrupt party agrees that adequate assurance
of performance by the bankrupt party of the balance of this
Agreement as a "Debtor-in-possession" or any similar entity
under successor bankruptcy laws will include assurances both
of such entity's ability to adequately produce products for
the specifically permitted Agreement and such entity's
willingness and ability to protect the other party's
proprietary rights. As a personal contract, exercise of
rights by a trustee or assignment of rights hereunder
would not be appropriate and such understanding is an
essential part of each Party's willingness to enter into this
Agreement.
23.3 TERMINATION FOR CAUSE
a. If either Party is in material breach of this Agreement,
the other Party may give written notice to the
defaulting Party specifying the respects in which the
defaulting Party has failed to perform or comply with
the terms and conditions of this Agreement. In the
event that any defaults so indicated shall not be
remedied by the defaulting Party within sixty (60) days
(ten (10) days as to a failure to pay any amounts
indisputably due) unless a different period is provided
for elsewhere in this Agreement after such notice, the
party not in default may, by written notice to the
defaulting Party, terminate this Agreement.
b. Either Party may submit disputes related to the notice
of termination to the Escalation Process or Mediation
Process described in Section 22 but such termination
notice shall not be stayed by submission to escalation
or mediation and termination shall take effect as set
forth above. Failure of either Party to terminate this
Agreement due to a breach on the part of the other Party
shall not prejudice its rights to terminate for a
subsequent breach on the part of the defaulting Party.
c. The right of a Party to terminate this Agreement, and
the exercise of such right by such Party, shall be in
addition to any other remedies or rights granted in this
Agreement or which a Party would have in law or equity.
d. If IBM terminates this Agreement for cause:
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(1) IBM will be relieved of its obligations to **
due in the year of termination (including any
previously ** to StorageTek in that calendar
year, which shall be ** by StorageTek), and
thereafter, and to pay any ** , that would
otherwise be due in the year of termination, or
thereafter;
(2) IBM will receive the ** license and ** rights
set forth in, and pursuant to, Sections ** of
the Agreement, and the ** for ** shall become
** ;
(3) So long as StorageTek continues to provide
Product Engineering Services as described in
Section ** of the ** for any ** product,
which product includes any, all or some of the
Deliverables, StorageTek will provide IBM with
such Product Engineering Services with respect to
those same portions of such Deliverables a ** ,
and will, in addition grant to IBM a ** license
to the ** (with respect to those same portions
of such Deliverables) of the ** as the licenses
granted to IBM, under the ** , for Licensed
Works;
(4) All licenses granted to StorageTek to use **
under Section ** of the Description of Licensed
Works will survive such termination, and be **
as provided in such Description of Licensed
Works, provided, however, that, if StorageTek
elects to maintain or effectuate, whichever the
case may be, the StorageTek ** Licenses set
forth in Section **, and in Section ** of the
Description of Licensed Works ** , then
StorageTek must ** and also ** as set forth in
the Description of Licensed Works for such
license, except that ** shall be ** for each
** StorageTek following the date of StorageTek's
receipt of IBM's written notice of termination,
and except that, once StorageTek has ** pursuant
to this section ** then such license shall
become ** , and provided further, that any **
by StorageTek to IBM under this section shall be
** for products other than as covered in
Sections ** of the ** , and shall have no
effect on the ** to be ** pursuant to Section
** ; and
(5) Despite such termination, IBM shall have the **
for any and all Specified Functions in process
under the IDA, and if IBM ** , StorageTek will
continue to develop Specified Functions ** as
specified in the IDA. Further, if IBM ** , the
rights and obligations of the Parties to the
intellectual property related to such ** . If
IBM does not ** any such Specified Function,
StorageTek will have ** above, provided,
however, that if IBM ** for any Specified
Function of the Deliverables ** , and
StorageTek ** completes development of such
Specified
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Function, then such ** Specified Function to
the extent ** will be deemed a ** and not
**.
e. If StorageTek terminates this Agreement for cause:
(1) IBM will pay to StorageTek all Recovery Payments
that are unpaid as of the date of termination;
(2) IBM will pay to StorageTek any amounts that
become due under the IDA during the ninety (90)
day period following the date on which StorageTek
provides notice of termination to IBM;
(3) IBM will supply disk drives of the same type as
the Drives which are being consigned, or similar
replacements therefor, to StorageTek for a period
of two (2) years after the date of termination at
a price that is no higher than the average
selling price for five (5) major IBM OEM
customers who acquire such disk drives at
comparable volumes, and based upon IBM's standard
OEM terms and conditions existing at the time of
termination;
(4) The StorageTek Material Use Licenses set forth in
Sections 3.2d and 3.2e of the DLW will become
fully paid-up and irrevocable; and
(5) So long as StorageTek continues to provide
Product Engineering Services as described in
Section ** for any StorageTek product which
includes any, all or some of the Deliverables,
StorageTek will provide IBM with such Product
Engineering Services (with respect to the same
portions of the Deliverables) at ** .
23.4 MATERIAL BREACH
A material breach shall include, but not be limited to, a
material failure to:
a. pay any amounts that are undisputably due;
b. deliver Equipment or to supply software, tools and
licenses in accordance with this Agreement;
c. comply with the reliability, availability, and service
levels specified in the Agreement;
d. manufacture Equipment in accordance with the Agreement;
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e. supply Deliverables in accordance with Attachment 1 to
Exhibit 3; or
f. comply with Section 18, Representations and Warranties.
A Party may not be declared to be in material breach of any
provision of this Agreement if, and to the extent that its
failure to perform has been caused by the other Party's breach
of this Agreement.
23.5 ** LICENSE
StorageTek hereby grants to IBM a fully paid-up license to **,
effective if: (1) IBM has ** , (2) StorageTek has ** ,
or (3) one of the Triggering Events set forth in Section 23.2
occurs; provided, however, that IBM may not exercise its
rights under such license if, on the day IBM notifies
StorageTek that IBM will exercise such rights: (i) IBM is in
material breach of this Agreement; (ii) StorageTek has given
IBM notice in writing of such material breach prior to the
applicable event set forth in Section 23.5, above; and (iii)
IBM has failed to cure such material breach; and IBM
thereafter fails to cure such material breach within sixty
(60) days of IBM's notice to StorageTek.
23.6 MANUFACTURING MAKE OR HAVE MADE RIGHTS
If an event under Section 23.5, above, occurs, or if IBM
elects to receive ** pursuant to Section ** , then
StorageTek agrees to provide the following assistance to IBM
or IBM's designee ** to enable IBM or its designee to assume
Equipment, Devices or just FRUs, as the case may be,
manufacturing responsibilities:
a. Grant access by ** to ** ;
b. Provide a complete copy of all bills of material for
Equipment including the costs and sources of materials
listed therein and identification of suppliers. In
addition, if IBM requests, StorageTek agrees to assist
IBM in acquiring parts, or materials from StorageTek's
vendors at prices, terms and conditions ** , and
including ** .
c. Provide copies of all materials related to and required
for the manufacture and test of any and all Equipment,
Devices or just FRUs, as the case may be, including, but
not limited to, assembly drawings, component drawings,
mechanical drawings, schematics, process descriptions,
tools and fixtures.
d. In addition StorageTek will provide training on the use
of such tools.
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e. Provide a copy of each document, Maintenance Code,
Microcode, Licensed Works, and any related software that
relates to the manufacture, maintenance or repair of
Equipment, Devices or just FRUs, as the case may be.
f. Provide, to the extent that it has the right to do so:
(i) a ** , nonexclusive, ** and license to use the
information, tooling, equipment, and know-how described
in this Section 23.6 and (ii) a ** ; solely to
manufacture, have manufactured, test, have tested, sell,
lease and otherwise distribute, the Equipment, Devices
or just FRUs, as the case may be. In addition,
StorageTek agrees to transfer title to IBM or IBM's
designee with respect to all tooling specific to and
necessary for manufacture and test of Equipment, Devices
or just FRUs, as the case may be.
g. Provide IBM with permission to disclose confidential
StorageTek information related to Equipment, Devices or
just FRUs, as the case may be, which has been received
by IBM under this Agreement, or information received
pursuant to any confidential disclosure agreement
between the Parties, to the same extent as IBM would
disclose its own confidential information to third
Parties in order to have Equipment, Devices or just
FRUs, as the case may be, manufactured by such third
Parties.
h. Grant to IBM a ** , nonexclusive, ** license to **
to the extent such license is required for IBM to
exercise the rights granted under this Section. Such
license shall include the right to ** the Equipment,
Devices or just FRUs, as the case may be. Such license
shall ** , including ** to its ** .
23.7 TERMINATION FOR CONVENIENCE
IBM shall also have the right to terminate this Agreement for
convenience ** by providing StorageTek with a ** prior
written notice of its election to do so. In the event IBM
elects to terminate this Agreement for convenience, IBM's
liability for such termination is ** to StorageTek of any
** , if any, owed pursuant to Section ** . StorageTek
agrees that, in consideration for such ** , IBM shall have
the option to ** prior to the date such termination becomes
effective, and StorageTek will at IBM's request ** , finish
any partially completed Equipment in StorageTek's possession
on such date and Deliver any such Equipment promptly to IBM.
Also, the ** granted pursuant to the ** will become
effective and ** . Moreover, IBM agrees to supply disk
drives of the same type as the Drives that are being
consigned, or similar replacements therefor, to StorageTek for
a period of ** after the date of termination at a price that
is ** , and based upon IBM's standard OEM terms and
conditions at the time of termination.
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23.8 TERMINATION FOR BURDENSOME CONDITION
a. Upon the occurrence of a Burdensome Condition involving
only a circumstance described in Section ** , IBM shall
** prior written notice to StorageTek, to terminate
this Agreement in its entirety (including, but not
limited to, the IDA) ** , including, but not limited
to, ** ; except that
(1) IBM shall not be entitled to the ** ;
(2) IBM shall remain liable for any ** with respect
to the ** in which IBM sends notice of such
termination to StorageTek, the ** thereafter
and any ** for which such ** remain unpaid.
For purposes of this Section 23.8, ** shall be
computed as set forth ** , and IBM may continue
to purchase Equipment, at its option, in all **
in which it remains liable for ** ;
(3) IBM shall be ** during the ** notice period
and also the ** that were scheduled to have **
for the ** period after such notice period, and
StorageTek shall not be ** under the ** after
the ** notice period;
(4) The licenses granted to StorageTek pursuant to
the ** shall be ** ;
(5) StorageTek shall be ** for all ** for
materials that StorageTek made prior to
notification of termination in order to comply
with its obligations under the Agreement;
provided that such materials are Delivered to IBM
** (to the extent that ** of such materials
has been reimbursed); and further provided that
in no event will such reimbursement by IBM exceed
the sum of ** ;
(6) IBM shall supply disk drives as the same type as
the Drives that are being consigned, or similar
replacements therefor, to StorageTek for a period
of ** after the date of termination at a price
that is ** , and based on ** ; and
(7) The licenses granted to IBM pursuant to the **
shall be the same as if termination under this
Section 23.8a had been a ** or a ** .
b. Upon the occurrence of a Burdensome Condition involving
a circumstance described in Section ** , IBM shall **
prior written notice to StorageTek, to terminate this
Agreement in its entirety (including, but not limited
to, the IDA).
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IBM's liability will be limited as set forth in Sections
23.8a(1) through 23.8(7), above, except that:
(1) The period in which IBM shall remain liable for
** as set forth in Section 23.8a(2) above shall
** IBM notifies StorageTek of termination
pursuant to Section 26.3; and
(2) The period in which IBM shall be ** pursuant to
Section 23.8a(3) above shall be the ** period
following the date that IBM notifies StorageTek
of termination pursuant to Section 26.3.
c. Upon the occurrence of a Burdensome Condition,
StorageTek shall ** prior written notice to IBM, to
terminate this Agreement in its entirety ** ; except
that
(1) StorageTek shall ** ;
(2) IBM shall ** all obligations to make any
further ** , including ** in which StorageTek
notifies IBM of termination pursuant to Section
26.3, and to ** ;
(3) IBM shall have no further obligation to ** to
StorageTek under the ** , and StorageTek shall
** that IBM has made to StorageTek under the **
;
(4) The ** granted pursuant to the Description of
Licensed Works will become effective, subject to
the ** as set forth in the Description of
Licensed Works; and provided that the licenses
granted pursuant to the DLW shall not ** ;
(5) IBM shall supply disk drives as the same type as
the Drives that are being consigned, or similar
replacements therefor, to StorageTek for a period
of ** after the date of termination at a price
that is ** , and based on ** ;
(6) The licenses granted to IBM pursuant to the
Description of Licensed Works shall become ** ;
and
(7) IBM will receive the manufacturing make or have
made rights set forth in, and pursuant to,
Section 23.6 of this Agreement.
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d. For purposes of this Section 23.8, ** shall be
computed as the ** that would be due under Sections **
using the Volume Recovery table only for the ** in
which IBM provides notice to StorageTek (or for the
period set forth in Section 23.8a(2) above for a
termination for Burdensome Condition relating only to a
circumstance described in Section ** as if such
payments were calculated on a ** basis alone with **
obligation. After making such payment, IBM shall **
for any subsequent ** (or with respect to a
termination under Section 23.8a, for the period set
forth in clause (2) thereunder), or for the ** or
thereafter.
e. In no event will either Party's liability to the other
for termination pursuant to this Section 23.8 exceed (i)
the sum of ** in the event of a termination of this
Agreement only as a result of a circumstance described
in Section 1.7(ii); or (ii) the sum of ** in the event
of a termination of this Agreement as a result of a
circumstance described in Section 1.7(i). These
limitations of liability will not apply to ** hereof;
nor shall such limitations apply to any ** as modified
above.
23.9 WIND DOWN
Upon termination of this Agreement by either Party for any
reason prior to the expiration of the term set forth in
Section 3:
a. IBM may continue, for ** following the date of notice
of such termination, to place noncancelable purchase
orders at prices for the quarter in which such notice is
effective for Equipment, and StorageTek agrees to accept
such orders and to manufacture supply and Deliver such
Equipment to IBM if ordered for Delivery within 90 days
of such purchase orders and within appropriate lead
times; and
b. StorageTek may continue for ** following the date of
notice of termination (unless a longer period is
otherwise provided for in this Agreement), to place
noncancelable purchase orders for disk drives of the
same type as the Drives that are being consigned, or
similar replacements therefor, at a price that is ** ,
and based on IBM's standard terms and conditions; and
IBM agrees to accept such purchase orders and to
manufacture, supply and deliver such disk drives, if
ordered for delivery by StorageTek within appropriate
lead times.
Except for a termination of this Agreement by StorageTek
pursuant to Sections 6.5b or 6.5c, Equipment ordered by IBM
hereunder, if Delivered after termination, will
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be credited toward IBM's attainment of its ** Volumes, as
the case may be, for the quarter in which the Agreement was
terminated.
23.10 ** AFTER TERMINATION
Subject to Sections 23.3 and 23.8, and so long as StorageTek
continues to provide Product Engineering Services as described
in Section ** for any StorageTek product, if either Party
terminates this Agreement, then IBM may elect to: (i) **
Product Engineering Services under the SOW; (ii) ** Product
Engineering Services at the ** under the SOW, but at a
funding level of ** of the funding levels for Product
Engineering Services required under the SOW; or (iii) receive
such Product Engineering Services as it may request, up to the
levels as then required under the SOW, on a time and materials
basis at ** .
24. INDEMNIFICATION RIGHTS
24.1 INTELLECTUAL PROPERTY INDEMNITY
a. StorageTek shall indemnify, defend and hold harmless IBM
** in respect to any costs, expenses, liability or
damages, including reasonable attorney's fees, arising
out of or related to any action ** to the extent that
it is based on a ** . StorageTek agrees to provide
IBM with ** to defend a claim brought in ** .
b. StorageTek shall also indemnify IBM in accordance with
the preceding paragraph for ** , provided that such
** , provided, however, that StorageTek's liability
under this paragraph is ** .
c. StorageTek shall have no obligation regarding any **
to the extent based on: (i) ** ; (ii) ** , (iii)
** ; or (iv) ** .
d. If the use of the ** shall become, ** to become, **
based on ** , StorageTek may, ** , either:
(1) procure for IBM the right to continue to market
and use the ** on a continued, uninterrupted
basis; or
(2) replace or modify the ** with a functionally
equivalent substitute so that the ** will
become noninfringing.
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24.2 GENERAL INDEMNITY
a. StorageTek shall indemnify, defend and hold harmless IBM
in respect to any cost, expenses, liability or damages,
including reasonable attorney's fees, for any
third-party claims arising out of or related to:
(1) injury or damage to persons or property resulting
** from any ** , or the ** used in, or in
connection with, ** ;
(2) StorageTek's failure to make available any **
and related documentation to ** under
reasonable terms and conditions;
(3) StorageTek's failure to ** ;
(4) Any ** , provided that such claims do not
specifically pertain to ** in the ordinary
course of business by ** end user customers; or
(5) StorageTek's failure to comply with or a ** .
b. StorageTek shall, however, have no liability to
indemnify IBM if and only to the extent that:
(1) the injury or damage is due to use of ** ,
Maintenance Code or Licensed Programs in a manner
for which it was not designed;
(2) the injury or damage is caused by the negligence
of IBM or another third party (but excluding
those servants, agents, contractors or
subcontractors of StorageTek); or
(3) the ** has been modified by: (i) anyone other
than StorageTek, or (ii) IBM if not authorized by
StorageTek.
24.3 OBLIGATIONS OF IBM
The obligation of StorageTek to defend and make payments under
Sections 24.1 and 24.2 is conditioned on the following:
a. StorageTek shall be notified promptly in writing by IBM
of any claim;
b. StorageTek shall ** for its settlement or compromise;
and
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c. IBM shall ** in defending such an action.
IBM may participate, at its sole cost and expense, in the
defense of any action on such claim and any negotiations for
its settlement or compromise.
25. GOVERNING LAW
25.1 NEW YORK LAW
The relationship between the Parties and this Agreement are
governed by the substantive laws of the state of New York. Any
action between the Parties must be brought before a court of
competent jurisdiction located in the United States Southern
District of New York. Each Party hereby waives any right to a
jury trial in any dispute between them. The Parties agree that
the United Nations convention on the international sale of
goods shall not apply to this Agreement.
It shall be a condition precedent to the filing of any such
actions that the dispute resolution procedure set forth in
Section 22 will have been followed prior to the filing of such
action, excepting only that a Party may institute an action
seeking a preliminary injunction, temporary restraining order,
or other equitable relief, if necessary in the opinion of that
Party to avoid material harm to its property, rights or other
interest, before commencing or at any time during the course
of the dispute procedure in Section 22.
25.2 LIMITATION OF ACTIONS
Neither Party will bring a legal action in connection with
this Agreement against the other more than ** after the cause
of action arose. This limitation does not apply to actions
brought to enforce (i) indemnification rights (Section 24) or
(ii) violation of intellectual property rights.
25.3 LIMITATION OF LIABILITY
Except as may be required pursuant to Section 6.5, in no event
shall either Party hereto be liable to the other for more than
** for any and all causes of action and claims of any nature
(including, but not limited to, claims that obligations,
representations or warranties hereunder have failed of their
essential purpose) in connection with this Agreement;
provided, however, that:
(a) ** ; and
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(b) ** .
26. GENERAL
26.1 COMPLIANCE WITH LAWS
Each Party agrees to comply at its own expense with all
applicable laws and regulations of the United States, the
European Union, and all other countries or country groups.
26.2 RELATIONSHIP OF THE PARTIES
Each Party acknowledges and agrees that it is it is
independent of the other. Neither Party is, or will claim to
be, a partner, employee, joint venturer, agent, or legal
representative of the other Party except as specifically
stated in this Agreement. Neither Party will assume or create
any obligation or responsibility, expressly or by implication,
on behalf of or in the name of the other Party. Each Party
is responsible for the direction and compensation of its
employees.
Each Party may have similar agreements with others. Each
Party may design, develop, manufacture, acquire or market its
own or competitive products and services.
26.3 NOTICES
All notices by one party to the other in connection with this
Agreement shall be in writing and will be sent to the
following addresses:
Notices related to forecasts, orders, and shipment will be
sent to:
For IBM: For StorageTek:
** Agreement Administrator
Procurement Manager for IBM Agreement
IBM Corporation Storage Technology Corporation
5600 Cottle Road 2270 South 88th Street
San Jose, CA 95193 Louisville, CO 80028
All other notices, including without limitation notices of breach, default,
will be sent to the following addresses:
- --------------------
** Confidential portions omitted and filed separately with the Securities
and Exchange Commission under an application for confidential
treatment.
70
<PAGE> 78
For IBM: For StorageTek:
** Agreement Administrator
Vice President, Worldwide Materials for IBM Agreement
IBM Corporation Storage Technology Corporation
5600 Cottle Road 2270 South 88th Street
San Jose, CA 95193 Louisville, CO 80028
with a copy to:
For IBM: For StorageTek:
Legal Department General Counsel
IBM Corporation Storage Technology Corporation
5600 Cottle Road 2270 South 88th Street
San Jose, CA 95193 Louisville, CO 80028
Either Party may change any address at which it will receive
notices by notifying the other Party in writing.
Notices and other communications between the Parties in
connection with this Agreement shall be deemed given:
a. three days after being sent by U.S. mail, postage
prepaid, certified or registered, to the address listed
above; or
b. on the date it is sent via facsimile transmission with
confirmation from the receiving party that the
transmission was completed successfully, with the
original document sent as described above in item a.
Notices related to order, forecast, shipment, and delivery may
also be sent via confirmed electronic mail (EDI) to the
address listed above and shall be deemed given on the date of
confirmation of delivery.
26.4 COUNTERPARTS
This Agreement may be executed simultaneously in two (2)
counterparts, each of which shall be deemed an original, but
both of which together shall constitute one and the same.
- --------------------
** Confidential portions omitted and filed separately with the Securities
and Exchange Commission under an application for confidential
treatment.
71
<PAGE> 79
26.5 HEADINGS AND ATTACHMENTS
The headings in this Agreement are for reference only and will
not affect its meaning or interpretation. The Exhibits, their
Attachments, their Appendices and their Schedules, are
attached to and referenced in this Agreement and are
incorporated herein by reference.
26.6 AMENDMENT
For any change to this Agreement to be valid, it must be
signed by both Parties.
26.7 WAIVER
The failure by either Party at any time to enforce the
provisions of this Agreement, to exercise any option or
election, or to require at ant time the performance by the
other Party of any provisions herein will not be construed as
a waiver of such provision.
26.8 SEVERABILITY
If any provision or provisions of this Agreement shall be held
to be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall
not in any way be affected or impaired provided the original
intentions of both Parties are maintained.
26.9 WEEKENDS AND HOLIDAYS
If any obligation of a party hereunder falls due on a weekend
day or a Federal holiday, then that obligation shall be due on
the next business day following such weekend day or Federal
holiday.
26.10 FORCE MAJEURE
Neither StorageTek nor IBM shall be liable for any delay or
failure of performance hereunder due to any contingency beyond
its control which renders performance commercially
unreasonable including, but not limited to, an act of God,
war, mobilization, riot, strike, embargo, fire, flood,
hurricane, earthquake or power failure ("force majeure
incident").
When only part of StorageTek's or IBM's ability to perform is
excused under this section, StorageTek or IBM must allocate
production and deliveries or receipt of deliveries among
various customers or suppliers then under contract for similar
goods during the period when StorageTek or IBM is unable to
perform. The allocation must be effected in accordance with
Section 10.5 of the Agreement.
72
<PAGE> 80
If either StorageTek or IBM claims excuse for nonperformance
under this section, it must give notice in writing to the
other party.
If StorageTek is unable to Deliver or IBM is unable to sell
Equipment, or if IBM is unable to deliver Drives, due to a
force majeure incident, any units of Equipment that were
properly ordered by IBM and not Delivered will be counted
toward IBM's attainment of its Quarterly Volumes, Annual
Volumes and Minimum Volumes.
If a Party's inability continues for more than one hundred
twenty (120) days, the other Party may terminate this
Agreement and IBM shall have no liability hereunder for
Recovery Payments and Liquidated Damages.
26.11 SURVIVAL
The rights and obligations of Sections 1, 7.6, 7.7a, 7.8,
7.10, 9, 14, 15, 16.8, 18, 19.1, 19.2, 19.5, 20, 22, 23, 24,
25 and 26, and 11, 13.1a, 13.2, 13.3 and 13.4 (with respect
to FRUs), shall survive and continue after any expiration or
termination of this agreement and shall bind the parties and
their legal representatives, successors and assigns.
26.12 ORDER OF PRECEDENCE
In the event that there is an inconsistency or conflict
between the terms in the Specifications and other terms of
this Agreement, then such other terms in this Agreement shall
take precedence over the terms in the Specifications.
THIS AGREEMENT SUPERSEDES ALL PROPOSALS, ORAL OR WRITTEN, AND ALL NEGOTIATIONS,
CONVERSATIONS OR DISCUSSIONS HERETOFORE HAD BETWEEN THE PARTIES RELATED TO THE
SUBJECT MATTER OF THIS AGREEMENT. THE PARTIES BOTH ACKNOWLEDGE THAT THEY HAVE
NOT BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY ANY REPRESENTATIONS OR
STATEMENTS, ORAL OR
73
<PAGE> 81
WRITTEN, NOT EXPRESSLY CONTAINED HERE. THE TERMS AND CONDITIONS OF THIS
AGREEMENT SHALL PREVAIL, NOTWITHSTANDING ANY VARIANCE WITH THE TERMS AND
CONDITIONS OF ANY ORDER OR OTHER INSTRUMENT SUBMITTED BY THE PARTIES.
INTERNATIONAL BUSINESS MACHINES STORAGE TECHNOLOGY CORPORATION
CORPORATION
By: By:
------------------------------- -------------------------------
Name: Name:
------------------------------- -------------------------------
Title: Title:
------------------------------- -------------------------------
Date: Date:
------------------------------- -------------------------------
74
<PAGE> 82
CONFIDENTIAL TREATMENT -- EXHIBIT PORTION
THE FOLLOWING IS A REDACTED VERSION OF THE
"EXHIBITS, ATTACHMENTS, APPENDICES" PORTION
OF THE
OEM AGREEMENT DATED AS OF JUNE 7, 1996
BY AND BETWEEN STORAGE TECHNOLOGY CORPORATION
AND INTERNATIONAL BUSINESS MACHINES CORPORATION
THIS MATERIAL IS BEING SUBMITTED IN CONNECTION
WITH A REQUEST FOR CONFIDENTIAL TREATMENT
PURSUANT TO RULE 24b-2 UNDER
THE SECURITIES EXCHANGE ACT OF 1934
<PAGE> 83
ATTACHMENT 1 TO EXHIBIT 1
UNIT PRICES
UNIT CONTROLLER OEM PRICE (INCLUDING IXFP SOFTWARE)
PRICES EXCLUDING DRIVES IN THOUSANDS OF US DOLLARS
($K) OR MILLIONS OF US DOLLARS ($M)
ICEBERG see notes (1) (2) (3) (4) # Escon
Cache MB Channel **
**
System Average **
KODIAK see notes (2) (3) (4)
**
System Average **
- -------------
Notes: (1) For ** Iceberg, pricing will be ** for first ** units
shipped during a quarter; any additional units shipped during that
quarter will be priced at ** . Note: ** figure above
reflects average cost assuming current volume estimate of **
units.
(2) The following amounts will be added to the price of certain Iceberg
and Kodiak units shipped during these quarters:
During the following quarters **
----
For the first following number of units ** shipped **
Add the following amount ("Price Adder") to applicable unit
prices: **
Total additional cost during the quarter ("Minimum
Adder"): **
If fewer units than indicated above are shipped to IBM during a
quarter, then IBM shall pay to STK ** the ** amount of **
applicable to units shipped during that quarter and the ** for
that quarter no later than ** days following the end of that
quarter.
(3) STK will purchase the ** from third-party suppliers; IBM will
then pay to STK the cost of these ** (including actual material
burden, not to exceed ** to STK on terms consistent with those
provided to by the supplier to STK. IBM will manufacture and
provide to STK on a consignment basis ** .
(4) System Averages assume product mix incorporated in current volume
estimates. The cache sizes listed above refer to physical size.
(5) The stated prices shall include any ** (excluding the ** )
that are available at the time of Delivery and are incorporated
into ** .
- -----------------
** Confidential portions omitted and filed separately with the Securities and
Exchange Commission under an application for confidential treatment.
<PAGE> 84
ATTACHMENT 1 TO EXHIBIT 1
(Page 2)
Current Volume Assumptions
Number of Controllers
ICEBERG # Escon
Cache ** Channel **
**
TOTAL **
KODIAK
**
TOTAL KODIAK
TOTAL ICEBERG & KODIAK **
- -----------------
** Confidential portions omitted and filed separately with the Securities and
Exchange Commission under an application for confidential treatment.
<PAGE> 85
ATTACHMENT 1 TO EXHIBIT 1
(Page 3)
Current Volume Assumptions
TB's
ICEBERG # Escon
Cache ** Channel **
**
SYSTEM TOTAL **
KODIAK
**
TOTAL KODIAK
TOTAL ICEBERG & KODIAK **
- -----------------
** Confidential portions omitted and filed separately with the Securities and
Exchange Commission under an application for confidential treatment.
<PAGE> 86
ATTACHMENT 2 TO EXHIBIT 1
Appendix A 1996 ** Payment Table
Appendix B 1997 ** Payment Table
Appendix C 1998 ** Payment Table
Appendix D 1999 ** Payment Table
- -----------------
** Confidential portions omitted and filed separately with the Securities and
Exchange Commission under an application for confidential treatment.
<PAGE> 87
Appendix A
1996 ** Payment Table
Estimated Volumes in TB's
Payments in **
<TABLE>
<CAPTION>
3Q96 FY1996
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Estimated Estimated
Volumes ** Payments Volumes ** Payments
Under & over Under & over
- --------------------------------------------------------------------------------
**
- --------------------------------------------------------------------------------
</TABLE>
Note: Full Year commitment: **
** Volumes equal ** plus any ** .
- -----------------
** Confidential portions omitted and filed separately with the Securities and
Exchange Commission under an application for confidential treatment.
<PAGE> 88
Appendix B
(Page 1)
1997 ** Payment Table -- 1Q YTD
<TABLE>
<CAPTION>
Payments in **
Volumes in TB's
** Total
---------------
Estimated
Volumes from ** to from ** to Standard
(in TB's) ** TB ** TB ** TB
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
from ** to ** ** Total x ** **
** x Estimated Volume ** x Estimate Volume
from ** to ** ** Total x ** **
** x Estimated Volume ** x Estimated Volume
from ** to ** ** Total ** **
** x Estimated Volume ** x Estimated Volume
from ** to ** ** Total ** **
** x Estimated Volume ** x Estimated Volume
( ** Total ** x **
from ** to ** ** ** **
** x Estimated Volume ** x Estimated Volume ** x Estimated Volume
( ** Total ** x **
from ** to ** ** ** **
** x Estimated Volume ** x Estimated Volume ** x Estimated Volume
</TABLE>
1997 ** Payment Table -- 2Q YTD
<TABLE>
<CAPTION>
Payments in **
Volumes in TB's
** Total
---------------
Estimated
Volumes from ** to from ** to Standard
(in TB's) ** TB ** TB ** TB
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
from ** to ** ** Total x ** **
** x Estimated Volume ** x Estimate Volume
from ** to ** ** Total x ** **
** x Estimated Volume ** x Estimated Volume
from ** to ** ** Total ** **
** x Estimated Volume ** x Estimated Volume
from ** to ** ** Total ** **
** x Estimated Volume ** x Estimated Volume
( ** Total ** x **
from ** to ** ** ** **
** x Estimated Volume ** x Estimated Volume ** x Estimated Volume
( ** Total ** x **
from ** to ** ** ** **
** x Estimated Volume ** x Estimated Volume ** x Estimated Volume
</TABLE>
- -----------------
** Confidential portions omitted and filed separately with the Securities and
Exchange Commission under an application for confidential treatment.
<PAGE> 89
Appendix B
(Page 2)
1997 ** Payment Table -- 3Q YTD
<TABLE>
<CAPTION>
Payments in **
Volumes in TB's
** Total
---------------
Estimated
Volumes from ** to from ** to Standard
(in TB's) ** TB ** TB ** TB
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
from ** to ** ** Total x ** **
** x Estimated Volume ** x Estimate Volume
from ** to ** ** Total x ** **
** x Estimated Volume ** x Estimated Volume
from ** to ** ** Total ** **
** x Estimated Volume ** x Estimated Volume
from ** to ** ** Total ** **
** x Estimated Volume ** x Estimated Volume
( ** Total ** x **
from ** to ** ** ** **
** x Estimated Volume ** x Estimated Volume ** x Estimated Volume
( ** Total ** x **
from ** to ** ** ** **
** x Estimated Volume ** x Estimated Volume ** x Estimated Volume
</TABLE>
1997 ** Payment Table -- 4Q YTD
<TABLE>
<CAPTION>
Payments in **
Volumes in TB's
** Total
---------------
Estimated
Volumes from ** to from ** to Standard
(in TB's) ** TB ** TB ** TB
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
from ** to ** ** Total x ** **
** x Estimated Volume ** x Estimate Volume
from ** to ** ** Total x ** **
** x Estimated Volume ** x Estimated Volume
from ** to ** ** Total ** **
** x Estimated Volume ** x Estimated Volume
from ** to ** ** Total ** **
** x Estimated Volume ** x Estimated Volume
( ** Total ** x **
from ** to ** ** ** **
** x Estimated Volume ** x Estimated Volume ** x Estimated Volume
( ** Total ** x **
from ** to ** ** ** **
** x Estimated Volume ** x Estimated Volume ** x Estimated Volume
NOTE: 1997 ** payments are **.
</TABLE>
- -----------------
** Confidential portions omitted and filed separately with the Securities and
Exchange Commission under an application for confidential treatment.
<PAGE> 90
Appendix C
(Page 1)
1998 ** Payment Table -- 1Q YTD
<TABLE>
<CAPTION>
Payments in **
Volumes in TB's
** Total
---------------
Estimated
Volumes from ** to from ** to Standard
(in TB's) ** TB ** TB ** TB
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
from ** to ** ** Total x ** **
** x Estimated Volume ** x Estimate Volume
from ** to ** ** Total x ** **
** x Estimated Volume ** x Estimated Volume
from ** to ** ** Total ** **
** x Estimated Volume ** x Estimated Volume
from ** to ** ** Total ** **
** x Estimated Volume ** x Estimated Volume
( ** Total ** x **
from ** ** ** ** **
** x Estimated Volume ** x Estimated Volume ** x Estimated Volume
( ** Total ** x **
from ** to ** ** ** **
** x Estimated Volume ** x Estimated Volume ** x Estimated Volume
</TABLE>
1998 ** Payment Table -- 2Q YTD
<TABLE>
<CAPTION>
Payments in **
Volumes in TB's
** Total
---------------
Estimated
Volumes from ** to from ** to Standard
(in TB's) ** TB ** TB ** TB
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
from ** to ** ** Total x ** **
** x Estimated Volume ** x Estimate Volume
from ** to ** ** Total x ** **
** x Estimated Volume ** x Estimated Volume
from ** to ** ** Total ** **
** x Estimated Volume ** x Estimated Volume
from ** to ** ** Total ** **
** x Estimated Volume ** x Estimated Volume
( ** Total ** x **
from ** to ** ** ** **
** x Estimated Volume ** x Estimated Volume ** x Estimated Volume
( ** Total ** x **
from ** to ** ** ** **
** x Estimated Volume ** x Estimated Volume ** x Estimated Volume
</TABLE>
- -----------------
** Confidential portions omitted and filed separately with the Securities and
Exchange Commission under an application for confidential treatment.
<PAGE> 91
Appendix C
(Page 2)
1998 ** Payment Table -- 3Q YTD
<TABLE>
<CAPTION>
Payments in **
Volumes in TB's
** Total
---------------
Estimated
Volumes from ** to from ** to Standard
(in TB's) ** TB ** TB ** TB
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
from ** to ** ** Total x ** **
** x Estimated Volume ** x Estimate Volume
from ** to ** ** Total x ** **
** x Estimated Volume ** x Estimated Volume
from ** to ** ** Total ** **
** x Estimated Volume ** x Estimated Volume
from ** to ** ** Total ** **
** x Estimated Volume ** x Estimated Volume
( ** Total ** x **
from ** ** ** ** **
** x Estimated Volume ** x Estimated Volume ** x Estimated Volume
( ** Total ** x **
from ** to ** ** ** **
** x Estimated Volume ** x Estimated Volume ** x Estimated Volume
</TABLE>
1998 ** Payment Table -- 4Q YTD
<TABLE>
<CAPTION>
Payments in **
Volumes in TB's
** Total
---------------
Estimated
Volumes from ** to from ** to Standard
(in TB's) ** TB ** TB ** TB
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
from ** to ** ** Total x ** **
** x Estimated Volume ** x Estimate Volume
from ** to ** ** Total x ** **
** x Estimated Volume ** x Estimated Volume
from ** to ** ** Total ** **
** x Estimated Volume ** x Estimated Volume
from ** to ** ** Total ** **
** x Estimated Volume ** x Estimated Volume
( ** Total ** x **
from ** to ** ** ** **
** x Estimated Volume ** x Estimated Volume ** x Estimated Volume
( ** Total ** x **
from ** to ** ** ** **
** x Estimated Volume ** x Estimated Volume ** x Estimated Volume
</TABLE>
Note: 1998 ** payments are **.
- -----------------
** Confidential portions omitted and filed separately with the Securities and
Exchange Commission under an application for confidential treatment.
<PAGE> 92
Appendix D
1999 ** Payment Table
Estimated Volumes in TB's
Payments in **
<TABLE>
<CAPTION>
When Quarterly Volume Commitment = ** TB's When Quarterly Volume Commitment = ** TB's
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Estimated Estimated
Volumes ** Payments Volumes ** Payments
Under & over Under & over
- --------------------------------------------------------------------------------------------
**
- --------------------------------------------------------------------------------------------
</TABLE>
* Volumes equal ** plus any ** .
- -----------------
** Confidential portions omitted and filed separately with the Securities and
Exchange Commission under an application for confidential treatment.
<PAGE> 93
ATTACHMENT 3 TO EXHIBIT 1
UPGRADE PRICING
ICEBERG
1. INTEGRATED ICEBERG CAPACITY UPGRADES (excluding drives)
a) Base Kit, including ** assembly, and ** : Price = **
b) Base Kit with additional ** , including ** : Price = ** .
c) During 1997, the first ** TB of Capacity Upgrades shipped to
IBM by StorageTek will be priced at ** (excluding ** )
2. FREEZER CAPACITY UPGRADES (including drives)
a) Base Kit, including ** assembly, ** and ** : Price = ** .
b) Base Kit with additional ** , including ** : Price = **
3. SNAPSHOT FEATURE LICENSE FEES
a) First ** units: Fee = ** .
Additional units: Fee = ** .
b) Minimum cumulative quantity to be taken by IBM on or prior
to ** = ** units. Minimum cumulative quantity to be
taken by IBM on or prior to ** = ** units.
c) If StorageTek makes available the ** on or later than ** ,
then StorageTek will provide without cost to IBM ** Snapshot
Feature licenses. If StorageTek makes available the ** on or
between ** , then StorageTek will provide without cost to IBM
** Snapshot Feature licenses. If ** is available on or
before ** , then ** Snapshot Copy Licenses. These
licenses shall not count towards the minimum quantities in (b)
above.
d) StorageTek will make Snapshot Copy available by ** . For each
** slip beyond ** , the ** and ** dates for minimum
Snapshot Copy volumes moves by ** each.
- -----------------
** Confidential portions omitted and filed separately with the Securities and
Exchange Commission under an application for confidential treatment.
<PAGE> 94
4. MEMORY KIT
a) Memory Kit with minimum **: Price = StorageTek's ** .
b) Turbo Shared Memory Upgrade Kit (Escon to Escon): Price = ** .
c) If StorageTek makes the ** available on or later than ** ,
then StorageTek will provide without cost to IBM ** Turbo
Shared Memory Upgrade Kits. If StorageTek makes the **
available on or between ** , then StorageTek will provide
without cost to IBM ** Turbo Shared Memory Upgrade Kits. If
Turbo is available on or before ** , then ** Turbo
upgrades.
d) 8 Path Upgrade Kit (Escon to Escon): Price = ** .
5. OTHER UPGRADE KITS
Upgrade kits not listed above will be priced at ** .
KODIAK
1. ** Upgrade Kit (with non-mirrored cache, excluding drives): Price =
** .
2. Other upgrade kits will be priced at ** .
ARCTIC FOX
Prices are as follows:
** ** **
Non-mirrored - **
** MB Memory ** MB ** MB
** MB
** MB Memory ** MB ** MB
** MB
Mirrored - **
** MB Memory ** MB ** MB
** MB
** MB Memory ** MB ** MB
** MB
- --------------------
** Confidential portions omitted and filed separately with the Securities and
Exchange Commission under an application for confidential treatment.
<PAGE> 95
EXHIBIT 2
The documents described in the attached pages and in the form as delivered to
IBM in Connection with this Agreement prior to the Effective Date, and as
further modified in accordance with the provisions of the Agreement, are hereby
incorporated into the Agreement by this Reference.
<PAGE> 96
Attachment 1 to Exhibit 2
<PAGE> 97
FILE: OAHUMFG1 LIST3270 A1 National VM/ESQ Conversational Monitor System
MANUFACTURING TEST PROCESSES AND QUALIFICATIONS
o The test process is described in the **test instruction attachment
for Equipment. This process describes test durations, criteria, and
feedback, and includes Oahu monitoring and identification of **
and ** are ** by Monterey at an appropriate timeframe, and
results are acceptable as measured by ** .
o Oahu agrees that the test process for ** shall be ** than that
process described for ** and will be subject to MONTEREY **
before implementation of same in ** Equipment that is to be **
under the Agreement.
- --------------------
** Confidential portions omitted and filed separately with the Securities and
Exchange Commission under an application for confidential treatment.
<PAGE> 98
ICEBERG(TM) TEST ENGINEERING, TEST INSTRUCTION, EMUSYS
DOCUMENT ID: ITE_EST.TI REVISION: 4.3 DATE: 14-FEB-96
================================================================================
STORAGETEK
ICEBERG(TM) TEST ENGINEERING
TEST INSTRUCTION, EMUSYS
CONTROLLED COPY NUMBER: _____________
NOTE: A controlled copy is indicated
if RED ink is used for the
Control Copy Number. If the
number is not red, this indicates
an Uncontrolled Copy.
================================================================================
STORAGETEK PROTECTED PAGE: 1 OF 85 ICEBERG(TM) Test Engineering
<PAGE> 99
ICEBERG(TM) TEST ENGINEERING, TEST INSTRUCTION, EMUSYS
DOCUMENT ID: ITE_EST.TI REVISION: 4.3 DATE: 14-FEB-96
================================================================================
DOCUMENT APPROVALS
==================
ICEBERG TEST ENGINEERING 2/19/96
DOCUMENT OWNER / DEPT MGR: -----------------------------------------------------
** Date
ICEBERG TEST ENGINEERING 2/20/96
DOCUMENT CONTROLLER: -----------------------------------------------------
** Date
ICEBERG TEST ENGINEERING 2/19/96
DOCUMENT CO-AUTHOR: -----------------------------------------------------
** Date
ICEBERG TEST ENGINEERING 2/20/96
DOCUMENT CO-AUTHOR: -----------------------------------------------------
** Date
ICEBERG MANUFACTURING 2/19/96
DEPARTMENT MANAGER: -----------------------------------------------------
** Date
================================================================================
STORAGETEK PROTECTED PAGE: 2 OF 85 ICEBERG(TM) Test Engineering
- ------------------------
** Confidential portions omitted and filed separately with the Securities and
Exchange Commission under an application for confidential treatment.
<PAGE> 100
PLEASE NOTE: Pages 3 through 85 of Exhibit 2, Attachment 1, pertaining to
Iceberg Test Engineering, Test Instructions, EMUSYS, following Pages 1-8
pertaining to Iceberg Test Engineering, Checkoff List, EMUSYS, and the
following single pages Iceberg Test Engineering, Penguin Hardware
Validation, Checkoff List and Iceberg Test Engineering, Freezer Hardware
Validation, Checkoff List, have been omitted in their entirety (rather than
redacting all of the information on each and every page) as the Company
believes that these pages are comprised completely of proprietary product
specifications and testing processes, the disclosure of which would be a
significant competitive disadvantage to the Company by revealing such
information not reciprocally available to the Company with respect to the
product specifications and testing processes of the Company s competitors.
Moreover, such disclosure could possibly disrupt the Company s relationship
with IBM as it would invite the Company's competitors to challenge the
quality of the Company's specifications and testing processes.
<PAGE> 101
To: **
Fru Shipment Criteria
o Process per attached process flow
o Testing per attached matrix
o Fru must successfully pass defined testing criteria
Definitions
PRSESS - Pre-ESS test as defined in Iceberg test process
IBCESS - Iceberg card cage ESS test as defined in Iceberg test process
IBSPAR - Iceberg spares FRE qualification process
**
5/21/96
- ------------------------
** Confidential portions omitted and filed separately with the Securities and
Exchange Commission under an application for confidential treatment.
<PAGE> 102
APPENDIX C
FRUQ PROCESS FLOW
<TABLE>
<S> <C> <C> <C>
--------- --------- ---------
** ** **
--------- --------- ---------
--------- ------------- -------------
** ** ** **
** **
--------- ------------- -------------
--------- ---------------
* ** **
-----------
--------- ---------------
---------
** **
---------
--------- -------------
* **
----------------------------------- -------------------------------------
--------- -------------
---------
**
---------
</TABLE>
- ------------------------
** Confidential portions omitted and filed separately with the Securities and
Exchange Commission under an application for confidential treatment.
<PAGE> 103
ICEBERG GENERAL FRU QUALIFICATION REQUIREMENTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
**
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- ------------------------
** Confidential portions omitted and filed separately with the Securities and
Exchange Commission under an application for confidential treatment.
<PAGE> 104
COPY
Fax: (303) 673-7669
Office: (303) 673-6538
FACSIMILE MESSAGE COVER SHEET
Date: 5-21-96
----------------------------
To: **
----------------------------
Via: Garth Pickett
----------------------------
Fax: 408-998-4790
----------------------------
From: **
----------------------------
Following are 1 pages including this cover sheet. If you did not receive all
pages, please call (303) 673-6538.
Message:
Today is the only day Randy will be here for questions. He is on x35373
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CONFIDENTIALITY NOTICE
NOTICE: If the reader of this message is not the intended recipient,
please be advised that any dissemination, distribution or copying of this
communication is prohibited. If you received this communication in
error, please notify the sender immediately. Thank you for your
cooperation.
- ------------------------
** Confidential portions omitted and filed separately with the Securities and
Exchange Commission under an application for confidential treatment.
<PAGE> 105
**
The ** is the process used on all items that have been repaired. Basically
the ** difference is the ** test on repaired cards. The process is **
for all items returned whether less than or greater than the ** from this
point in the process ** . The area we identified at the meeting last week
as being different for less than ** days is the repair process that
occurs prior to this.
**
5/22/96
- --------------------
** Confidential portions omitted and filed separately with the Securities and
Exchange Commission under an application for confidential treatment.
<PAGE> 106
To: **
Fru Shipment Criteria
o Process per attached process flow
o Testing per attached matrix
o Fru must successfully pass defined testing criteria
Definitions
PRSESS - Pre-ESS test as defined in Iceberg test process
IBCESS - Iceberg card cage ESS test as defined in Iceberg test process
IBSPAR - Iceberg spares FRE qualification process
**
5/21/96
- ------------------------
** Confidential portions omitted and filed separately with the Securities and
Exchange Commission under an application for confidential treatment.
<PAGE> 107
APPENDIX C
FRUQ PROCESS FLOW
<TABLE>
<S> <C> <C> <C>
--------- --------- ---------
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ICEBERG GENERAL FRU QUALIFICATION REQUIREMENTS
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ATTACHMENT 2
PRODUCT SPECIFICATIONS
EXHIBIT 2
<TABLE>
<CAPTION>
Document Revision Title
Number Date
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<S> <C> <C> <C>
1. ** JULY 95 **
2. ** OCT 95 **
3. ** JULY 95 **
4. ** JULY 95 **
5. ** JULY 95 **
6. ** OCT 95 **
7. ** OCT 94 **
8. ** DEC 95 **
9. ** DEC 95 **
10. ** DEC 95 **
11. ** MAY 96 **
12. ** DEC 95 **
13. ** 03/04/96 **
14. ** JUL 95 **
15. ** JUL 95 **
</TABLE>
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<PAGE> 110
<TABLE>
<CAPTION>
Document Revision Title
Number Date
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<S> <C> <C> <C>
16. ** JUL 95 **
17. ** JUL 94 **
18. ** MAR 96 **
19. ** DEC 95 **
20. ** FEB 94 **
21. ** NOV 94 **
22. ** JUN 94 **
23. ** AUG 95 **
24. ** AUG 95 **
25. ** JUNE 96 **
26. ** APR 96 **
27. ** FEB 95 **
28. ** DEC 95 **
29. ** APR 96 **
30. ** AUG 95 **
31. ** DRAFT **
32. ** 04/11/96 **
33. ** DEC 95 **
34. ** DEC 95 **
</TABLE>
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<PAGE> 111
<TABLE>
<CAPTION>
Document Revision Title
Number Date
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<S> <C> <C> <C>
35. ** SEPT 95 **
36. 05/01/96 **
37. 04/18/96 **
38. ** 08/03/95 **
39. ** 08/03/95 **
40. ** 08/03/95 **
41. ** 08/03/95 **
42. ** 08/03/95 **
43. 10/31/95 **
</TABLE>
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<PAGE> 112
EXHIBIT 3
IBM DEVELOPER AGREEMENT BETWEEN IBM AND STORAGETEK
BASE AGREEMENT
The IBM Developer Agreement ("IDA") consists of this Base Agreement and its
Transaction Documents. This IBM Developer Agreement is entered into between
International Business Machines Corporation , with an office at 5600 Cottle
Road, San Jose, California 95193 ("IBM") and Storage Technology Corporation,
with an office at 2270 South 88th Street, Louisville, Colorado 80028
("StorageTek"), which IDA is Exhibit 3 to the OEM Agreement between the
parties.
This Base Agreement establishes the basic terms and conditions under which
StorageTek will develop features, enhancements to storage products, microcode
therefor, related software, documentation and other supporting materials and
ongoing support thereof, for the Iceberg, Kodiak and Arctic Fox storage
products that IBM will purchase from StorageTek under the OEM Agreement. The
Transaction Document(s) attached hereto specify the work to be performed by
StorageTek and supplementary provisions and rights of the parties with respect
thereto.
The IDA, together with the documents listed in the Statement of Work ("SOW"),
is the complete agreement with respect to the development activities described
above and replaces all prior oral or written communications between StorageTek
and IBM regarding the transactions described in the Transaction Documents.
1.0 DEFINITIONS
Capitalized terms have the following meanings.
1.1 "Appearance Design" is the appearance presented by an object, formed
in hardware or by software, that creates a visual impression on an
observer. Appearance Design refers to the ornamental and not the
functional aspects of the object.
1.2 "Deliverable" is any item that StorageTek prepares or provides under a
Transaction Document, including IBM Materials and Licensed Works.
Where Deliverables include code, StorageTek shall deliver object and
fully commented source code, which source code shall correspond to the
current release or version of the Deliverable and be in the form
specified in the Transaction Document.
1.3 "Derivative Work" is a work that is based on an underlying work and
that would be a copyright infringement if prepared without the
authorization of the copyright owners of the underlying work.
Derivative Works are subject to the ownership rights and licenses of
others in the underlying work.
1.4 "Development Environment" includes devices, compilers, hardware,
software, user and programming documentation, media or other items
required for the development, testing, maintenance or implementation
of a Deliverable.
<PAGE> 113
1.5 "Enhancements" are changes or additions, other than Maintenance
Modifications, to the Deliverables.
"Basic Enhancements" are incidental updates or Enhancements that
support new releases of operating systems and devices. They do not
include Major Enhancements.
"Major Enhancements" provide substantial additional value that could
be offered to customers for an additional charge.
1.6 "IBM Licensees" include IBM, its Subsidiaries, and those authorized by
them to Distribute IBM's products.
1.7 "IBM Materials" are Deliverables that are funded in accordance with
the terms of this Agreement by IBM and as result from product
engineering funding specified in the SOW, that IBM owns, such as
programs, program listings, programming tools, documentation, reports
and drawings. IBM Materials also include Basic Enhancements and
Maintenance Modifications that StorageTek creates or authorizes others
to create during the term of this IDA. The term "IBM Materials" does
not include Licensed Works, Maintenance Code, software tools licensed
to IBM by StorageTek, equipment or items specifically excluded in a
Transaction Document.
1.8 "Invention" is as defined in the OEM Agreement.
1.9 "Licensed Works" are as identified in the Description of Licensed
Works.
1.10 "Maintenance Modifications" are revisions that correct errors and
deficiencies in the Deliverables.
1.11 "Moral Rights" are personal rights associated with authorship of a
work under applicable law. They include the rights to approve
modifications and to require authorship identification.
1.12 "Personnel" are either party's employees or subcontractors working
under the IDA.
1.13 "Products" are as defined in the OEM Agreement.
1.14 "Services" are efforts expended by StorageTek or StorageTek's
Personnel to perform the work described in a Transaction Document.
Deliverables may result from such work.
2.0 AGREEMENT STRUCTURE
2.1 Structure. The structure of the IDA is as follows:
The "Base Agreement" defines certain basic terms and conditions of the
development and funding of the Deliverables in the SOW.
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"Transaction Documents" specify the details of a transaction related
to the Deliverables and the rights and obligations of the parties
thereto and may include additional terms and conditions. Transaction
Documents include, among others, the Statement of Work and the
Description of Licensed Work, and their amendments, appendices,
schedules and exhibits.
2.2 Conflicting Terms. Terms in IBM's purchase orders for development and
support issued under the IDA and terms in StorageTek's invoices
related thereto are all void unless identified otherwise in the IDA.
3.0 RELATIONSHIP OF THE PARTIES
3.1 Independent Contractor. Each party is an independent contractor.
Neither party is, nor will claim to be, a legal representative,
partner, franchisee, agent or employee of the other except as
specifically stated in the IDA. Neither party will assume or create
obligations for the other. Neither party nor such party's Personnel
are employees of the other party. Each party is responsible for the
direction and compensation of its own Personnel.
3.2 Confidentiality. Where confidential information must be exchanged, it
will be done under the Agreement for Exchange of Confidential
Information ("AECI") No. OEM-9447.
All Deliverables that are identified in the Agreement as IBM Materials
shall be marked by StorageTek as IBM Confidential and treated and
protected as the confidential information of IBM in accordance with
StorageTek's obligations under the AECI and mutatis mutandis with
respect to Deliverables and other StorageTek confidential materials
that are marked StorageTek Confidential.
3.3 Loaned Items: If any party lends the other party items ("Loaned
Items"), the lending party will do so under a mutually agreeable
equipment loan agreement ("ELA"). The party borrowing the Loaned
Items (and such party's Personnel) will use the Loaned Items only in
support of the IDA or as otherwise mutually agreed in writing in the
ELA. The party borrowing the Loaned Items will return the Loaned
Items as specified in the ELA or the Transaction Document, whichever
is earlier.
3.4 Furnished Items: Either party may provide the other party items for
use in connection with this IDA. These items will be identified as
either "IBM Furnished Items" or "StorageTek Furnished Items", as the
case may be, in the applicable Transaction Document(s). The party to
whom any Furnished Items (and such party's Personnel) will use such
Furnished Items **and ** without the approval of the owner of
such Furnished Items. At the end of the term of the Agreement the
party receiving such Furnished Items will destroy such Items,
including any copies of them, unless the party owning such Furnished
Items requests that the party receiving such Furnished Items delivers
them to such furnishing party.
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3.5 Records: Both parties will maintain auditable records to support
invoices issued and payments made to the other. The records will be
retained and made available for ** from the date of the related
payment or invoice. Each party shall have ** , as that term is
defined in the OEM Agreement. The auditor will only disclose to the
requesting party any payments due and payable, or specific failure of
records to support invoices, for the period examined.
3.6 The parties shall each:
a. use their own then-current processes designed to prevent
and/or identify contamination by harmful code. Each party
shall promptly notify the other party if suspected
contamination occurs in spite of such processes.
b. participate in progress meetings to review StorageTek's
performance of its obligations as specified in a Transaction
Document or as otherwise agreed in writing by the parties; and
c. ** obtain the ** and such party's Personnel to convey
the rights granted or assigned in the IDA.
3.7 Neither party will, without the other party's prior written approval:
a. ** other than as may be permitted under the OEM Agreement,
and any attempt to do so is void; provided, however, that
either party shall be permitted to use individual
subcontractors or temporary agencies, so long as the other
party's rights (as set forth in the OEM Agreement and the
documents comprising the IDA) are enforced against such
subcontractors; and provided, further, that each party
acknowledges that Subsidiaries of the other party have been
and will continue to be involved in the development activities
described in the IDA.
b. assume or create obligations on the other party's behalf, or
make any representations for such other party; or
c. disclose the terms of the IDA except under a nondisclosure
agreement to the disclosing party's financial advisors,
attorneys and accountants, or to assert the disclosing party's
rights under it. If required by law to disclose the terms of
the IDA, StorageTek will promptly notify IBM. Upon request,
StorageTek will seek confidential treatment for the IDA.
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3.8 StorageTek will: unless otherwise specified in the SOW or any document
comprising the IDA, maintain records to verify authorship of all
Licensed Works and IBM Materials for **after the expiration of the
term of the OEM Agreement. Upon request by IBM, StorageTek shall
deliver or otherwise make available such information in a form
reasonably specified by IBM;
4.0 OWNERSHIP AND RIGHTS
4.1 IBM Materials: IBM ** , and StorageTek agrees to execute any
documents and undertake any actions reasonably necessary to effect and
perfect the assignment of the ownership of ** to IBM.
Each party's Personnel may use copies, intermediate versions, drafts
and partial copies of the other parties' owned property (i.e., IBM
Materials for IBM, Licensed Works for StorageTek) only as set forth in
the Agreement. At the expiration of the term of the OEM Agreement and
unless otherwise necessary to exercise the licenses granted to the
receiving party for such other party's owned property, the receiving
party will destroy (and, upon request certify destruction thereof)
these items unless the owning party requests that the receiving party
deliver them to the owning party.
4.2 Development Environment
a. For each Deliverable, StorageTek will list all items contained
in its Development Environment that are not provided by IBM.
StorageTek will deliver the listed items that are not
commercially available; StorageTek will revise the list for
any changes and deliver these updated items that are not
commercially available.
b. StorageTek grants IBM a ** license to use, execute,
reproduce, display, perform, and prepare Derivative Works of,
all delivered Development Environment items and their
Derivative Works. StorageTek grants IBM the right to
authorize others to do any of the above in support of this
Agreement. This license applies to associated audio and
visual works.
4.3 Patents
StorageTek grants IBM an ** license under any patents and patent
applications that are (a) owned or licensable by StorageTek now or in
the future, and (b) required to make, have made, use, have used, sell,
offer for sale, license or otherwise transfer: (i) combinations of
Equipment with equipment or software; (ii) Deliverables or its
Derivative Works for inclusion in Equipment; and (iii) combinations of
a Deliverable or its Derivative Works with equipment and other
software in such equipment.
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4.4 Inventions.
a. Disclosure. StorageTek will promptly disclose in writing to
IBM each Invention. Such disclosure will specify the
features or concepts that StorageTek believes to be new or
different.
b. Ownership. IBM shall own all ** and ** including **
relating to an Appearance Design which arise out of
development that is fully or partially funded by IBM under
this IDA. StorageTek will, at IBM's expense, assist in the
filing of patent applications on these ** and have
required documents signed. StorageTek hereby ** , any
such ** together with the right to seek protection by
obtaining patent rights therefor and to claim all rights of
priority thereunder, and the same shall become and remain
IBM's property whether or not such protection is sought.
c. License. IBM grants to StorageTek a ** license under **
and shall include the right to make, have made, use, have
used, lease, sell offer for sale and/or otherwise transfer any
apparatus, and to practice and have practiced any process,
provided, however, that such license is not applicable to any
** , patent applications or patents relating to Appearance
Designs.
d. No Other Patent Rights. Except as specifically granted, the
IDA does not grant either party any rights in any patents or
patent applications.
5.0 DELIVERY AND ACCEPTANCE
5.1 Delivery: StorageTek will provide all Deliverables according to the
schedule in a Transaction Document with remedies for failure to do so
as specified in the Agreement.
5.2 Evaluation: IBM has the right to evaluate each Deliverable as
specified in the applicable Transaction Document before accepting it
to verify that it meets the requirements of such Transaction Document.
IBM will notify StorageTek if it accepts (in whole or in part) or
rejects each Deliverable according to the processes described in the
particular Transaction Document.
6.0 PERSONNEL
6.1 Parties' IDA Representatives: A Technical and a Contract Coordinator
for each of StorageTek and IBM will be appointed pursuant to the SOW
to represent them in matters specific to the SOW and all other
documents comprising the IDA. Each party will address all notices,
payments and deliveries to the appropriate coordinator. A party will
notify the other in writing when coordinators change.
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6.2 StorageTek will:
a. provide appropriate ** the Personnel who will perform
StorageTek's obligations under the IDA;
b. assure that the skill levels being applied by StorageTek's
Personnel to the part of its business being used to perform
the IDA are consistent with the skills being applied in
comparable parts of StorageTek's business that are not
involved in performing this IDA;
c. not ** technical deelopment personnel who will support
development of the Products to areas of StorageTek's business
that are not involved in performing under this IDA if so doing
would ** the Products or the ** ; and
d. supply its ** to IBM as to how it will ** with the
specific development group performing the obligations under
this IDA.
6.3 Both Parties will:
a. assign employees with the requisite knowledge and skills to
perform their respective obligations under the IDA;
b. perform obligations under the IDA and grant rights to the
other party as set forth therein; and
c. be responsible for the direction, control, compensation and
actions of their own Personnel; and
d. if such employment would violate the terms of Section 2397 of
Title Ten of the U.S.C.A., not employ or compensate Personnel
to perform work under this IDA (without M's prior written
approval) who were, within the last two years: 1) members of
the U.S. Armed forces in a pay grade of O-4 or higher; or 2)
civilians employed by the U.S. Department of Defense with a
pay rate equal to or greater than the minimum rate for a grade
GS-13.
7.0 COMPLIANCE WITH LAWS
7.1 Compliance with Laws and Regulations: Each party will, at its own
expense, comply with all applicable governmental laws and regulations.
7.2 Exports: Each party will comply with all applicable government export
laws and regulations.
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7.3 EEO/OSHA: To the extent applicable, each party will comply with
Executive Order 11246 of the President of the United States on Equal
Employment Opportunity and the Occupational Safety and Health Act of
1970.
8.0 PRICES, PAYMENTS AND TAXES
8.1 Compensation: IBM will pay StorageTek for its Services in accordance
with the IDA. StorageTek's applicable taxes, expenses and payments to
third parties are included in the compensation, unless identified
otherwise in a Transaction Document.
8.2 Invoices: StorageTek and IBM will each submit invoices for Services,
as specified in each particular Transaction Document in accordance
with that document, with payment due as set forth in such Transaction
Document. The applicable expenses and payments to third parties are
included in the compensation, unless otherwise identified in a
Transaction Document.
9.0 AGREEMENT TERM AND TERMINATION AND SURVIVAL
9.1 Term. The term of this IDA is coextensive with that of the OEM
Agreement; the IDA's continuation is contingent upon the OEM Agreement
remaining in effect.
9.2 Termination. The provisions relating to termination of the IDA shall
be as set forth in the OEM Agreement.
9.3 Survival. Any terms of the IDA that by their nature extend beyond its
termination (e.g., Part 4.0 "Ownership and Rights" and Part 8.0
"Compliance with Laws") shall survive. These terms will apply to
either party's successors and assigns.
10.0 SUBSIDIARY RIGHTS
10.1 Each party may sublicense its intellectual property rights granted to
it by the other party under the Agreement to its Subsidiaries, who may
sublicense the same to their Subsidiaries.
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STATEMENT OF WORK
A Transaction Document Issued Under the
IBM Developer Agreement ("IDA" or "MDA")
By signing this Transaction Document, IBM and StorageTek agree that the
complete agreement between the parties regarding the Deliverables consists of
the following documents:
A. This Statement of Work ("SOW");
B. The IBM Developer Agreement Base Agreement ("Base Agreement");
C. Exhibit: Certificate of Originality ("COO");
D. Description of Licensed Work ("DLW");
E. IBM Source Code Custody Agreement ("Escrow Agreement");
F. The Agreement for Exchange of Confidential Information ("AECI")
No. OEM-9447; and
G. The OEM Agreement.
1. OVERVIEW
Pursuant to the terms of this SOW and in connection with the purchase and
distribution of Iceberg, Kodiak and Arctic Fox by IBM under the OEM
Agreement, StorageTek will design, develop, document, test and provide
certain features, functions and enhancements to the microcode, software,
hardware, and related materials for Iceberg, Kodiak, and Arctic Fox, as
well as ongoing maintenance and support thereof. IBM agrees **these
activities and provide such other items and/or assistance, as specified
herein.
2. DEFINITIONS
Unless otherwise defined herein, capitalized terms shall have the same
meanings as set forth in the Base Agreement or the OEM Agreement.
2.1 "Base Iceberg Package" shall mean the Iceberg product as it exists
as of June 30, 1996, including the Freezer III, IXFP base
support, IXOF and Predictive Service Analysis, as listed in
Section 6 of this SOW.
2.2 "Code" means computer programming code, including both Object Code
and Source Code, and including computer programming code being
used as microcode:
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a. Object Code is the computer programming code substantially in
binary form. It is directly executable by a computer after
processing, but without compilation or assembly.
b. Source Code is the computer programming code, other than Object
Code, and related source code level system documentation,
comments and procedural code, such as job control language.
It may be printed out or displayed in a form readable and
understandable by a programmer of ordinary skill.
2.3 "Completion and Acceptance Criteria" shall mean, for each
Deliverable, the criteria listed in the attached Appendix B, as
modified by the PDP, that each such Deliverable must meet.
2.4 "Design Change Request" or "DCR" shall mean a request by either of
StorageTek or IBM to make a change in any Specified Function,
which DCR must follow the process listed in Section 5.1(a).
2.5 "Dispute Resolution Process" shall mean the dispute resolution
process described in Section 22 of the OEM Agreement.
2.6 "ESP" or "Early Support Program" means the Early Support Program
process as IBM has previously implemented such programs for S/390
storage subsystems.
2.7 The "ESP Date" shall mean, with respect to Section 6.1 hereof, the
date that StorageTek meets the ESP Checkpoint criteria as
specified in Appendix B attached hereto.
2.8 "Arctic Fox" is a solid state storage device comprised of Kodiak
without the disk drives.
2.9 "Iceberg" shall be as described in Appendix A attached hereto.
2.10 "Kodiak" shall be as described in Appendix A attached hereto.
2.11 "Impact Error" is as defined in the OEM Agreement.
2.12 "PDP Date" is the date specified for StorageTek to provide to IBM
the PDP for each Specified Function or each group of Specified
Function(s).
<PAGE> 122
2.13 "Product Development Plan" or "PDP" shall mean a written plan
prepared by **describing the activities to be undertaken in
connection with each Specified Function or group of Specified
Functions listed in Section 6.1 hereof, in the same form as is
attached as Appendix G. PDPs in existence for Deliverables with
Volume dates prior to and including October 1, 1996, shall be
reasonably modified, as practicable to accommodate this format.
2.14 "Program Trouble Report" or "PTR" shall mean a report prepared by
either of StorageTek or IBM to reflect a problem discovered during
component testing or IBM's review of Deliverables.
2.15 "Specified Functions" or "SF" shall mean the specific functions
and/or features that, either individually or together with other
Specified Functions listed in Section 6.1 hereof, comprise
Deliverables.
2.16 "Volume" shall mean, with respect to the heading in Section 6.1
hereof, the date on which StorageTek shall meet the Volume
Shipment Checkpoint and Volume Shipment Compliance criteria as
specified in Exhibit B. With respect to all Specified Functions,
the Volume date means that StorageTek has the capability of
filling orders in reasonable quantities on such date.
3. STORAGETEK'S RESPONSIBILITIES
StorageTek agrees to perform the following obligations under this SOW:
3.1 PROJECT MANAGEMENT.
a. Write or provide a PDP for each Deliverable for which a PDP
Date is established in Section 6.1. StorageTek will include
in the PDP (or otherwise provide for in existing PDP's) a
project staffing plan, a specification and a development
plan, all as described in Appendix G and, as required,
submit updates that include reassignment of key personnel
and training plans. The PDP is subject to the written
approval of IBM's Contract Coordinator in writing, which
approval may not be arbitrarily withheld or delayed. If no
approval is received within a reasonable time after the PDP
Date or if IBM has rejected the PDP, either party may invoke
the Dispute Resolution Process. Notwithstanding any failure
to obtain IBM's approval of the PDP, StorageTek shall
proceed to perform the Services with respect
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to the Deliverable in accordance with the terms of this
Agreement, and the Volume date, volume commitments and
remedies shall apply with respect thereto.
b. Submit written monthly status reports ("Reports") that
indicate StorageTek's progress against the accepted plan.
The Reports will include:
(1) a summary of accomplishments during the current
reporting period, as compared with the schedule set
forth in the PDP;
(2) a summary of all concerns or issues (including,
without limitation, development delays, and changes
to the Deliverables' specifications pursuant to the
DCR and PTR process described herein) for the current
reporting period along with the plan and projected
date for resolution, if any;
(3) the status of outstanding concerns or issues that
were reported in previous reporting periods; and
(4) any other information that materially affects
StorageTek's ability to provide the Deliverables.
c. Notify IBM in writing of any development or delivery delays
as soon as StorageTek becomes aware of such delays.
d. Provide all Deliverables in accordance with Section 6 and as
further described in the PDP, including without limitation,
meeting the schedule set forth therein, which Deliverable
shall be in accordance with the requirements specified in
Section 6 and also in accordance with Appendix A,
"FUNCTIONAL, TECHNICAL AND QUALITY SPECIFICATIONS", as the
same may be modified by the applicable PDP.
3.2 DESIGN, CODE AND DEVELOPMENT.
a. Provide and implement the Deliverables in accordance with
the specifications described in Appendix A and Section 6
hereof, as the same may be amended by StorageTek's PDP with
the written agreement of IBM's Contract Coordinator.
b. Use its established procedures to implement the following
development processes for activities being under taken
subsequent to the Effective Date hereof:
(1) design change requests (DCRs);
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(2) program trouble reports (PTRs);
(3) design reviews of hardware, microcode and software
design; and
(4) code and test case inspections, as appropriate.
c. Ensure that user documentation Deliverables are created by
individuals best qualified to describe the technical details
unique for its subsystems. StorageTek will further ensure
these individuals are available for interviews, at no
additional cost to IBM **, to augment the information as
required; provided, however, that IBM agrees not to
unreasonably interfere with such individuals' ability to
perform the Services hereunder. IBM will provide prior
reasonable written notice to StorageTek prior to any
requested interviews and shall be subject to StorageTek's
facility security requirements.
3.3 INSPECTIONS.
StorageTek will inspect the Deliverables that StorageTek develops
under this SOW as such inspection is required pursuant to the
applicable PDP. StorageTek's inspection shall be done in
accordance with the processes it applies generally to inspection
in its overall business. StorageTek will inform IBM of the dates
for all inspections and provide draft copies of the Deliverable
subject to inspection at least one (1) week before the inspection
meeting, or at such other time as the parties may mutually agree
if such draft copies cannot reasonably be provided at least one
(1) week before the inspection meeting. IBM has the right to
participate in these inspections and to review the results of the
inspections.
3.4 TRAINING. StorageTek agrees to provide training to IBM in
accordance with Sections 16 and 17 of the OEM Agreement.
3.5 QUALITY. StorageTek's Deliverables shall be subject to the
quality requirements set forth in Section 9 of the OEM Agreement
and Section 2D to Appendix A attached hereto.
3.6 StorageTek will document and provide to IBM each Deliverable
according to the criteria in Appendix B, "COMPLETION AND
ACCEPTANCE CRITERIA."
3.7 StorageTek shall provide product engineering services ("Product
Engineering Services") to support Equipment that IBM is acquiring
or has acquired from StorageTek. These Services shall include,
without being limited thereto, the following:
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a. StorageTek shall correct errors and deficiencies in the
Licensed Works and IBM Materials to ensure conformance to
the Specifications therefor (as these have been modified by
any applicable PDP);
b. StorageTek shall supply to IBM all corrections to the
Licensed Works that it has made outside of the scope of this
Agreement that affect the Equipment;
c. StorageTek shall provide minor updates and changes that
support new releases of operating systems and devices (e.g.,
HDAs, channel path, escon directors); and
d. StorageTek shall provide Basic Enhancements and Maintenance
Modifications to the Licensed Works and IBM Materials, as
well as enhance and support existing StorageTek software and
microcode that are normally shipped in or with Iceberg,
Kodiak, or Arctic Fox for the purpose of configuration,
service, maintenance and support; provided, however, that
IBM shall not acquire any ownership rights with respect to
StorageTek's Maintenance Code, proprietary tools and
maintenance documentation and enhancements thereto that are
owned by StorageTek and generally used by StorageTek for its
other products, all of which are excluded from the term
"Licensed Works."
4. IBM'S RESPONSIBILITIES
IBM agrees to perform the following obligations under this SOW:
4.1 IBM's Contract Coordinator will, on a timely basis, review and
accept or reject in writing all Deliverables according to the
acceptance criteria specified in Appendix B, "COMPLETION AND
ACCEPTANCE CRITERIA," as modified by the PDP. Acceptance of all
Deliverables shall not be unreasonably withheld or delayed, and
any disagreement between the parties shall be subject to the
Dispute Resolution Process described in Section 22 of the OEM
Agreement. StorageTek's warranty in Section 14 of the OEM
Agreement relative to the conformance of the Deliverables with the
Specifications applies regardless of any acceptance of a
Deliverable by IBM under the acceptance criteria specified in
Appendix B, as modified by the PDP.
4.2 IBM shall track and record all Impact Errors. Such tracking and
recording shall be performed by IBM's product engineering group in
accordance with its standard practice presently utilized for IBM's
comparable DASD products.
6
<PAGE> 126
4.3 FUNDING.
The parties have agreed upon the following schedule of funding
relating to the Services to be performed by StorageTek hereunder:
<TABLE>
<CAPTION>
**
Total Funding ** Funding ** Funding Funding
------------- -------------- -------------- -----------
<S> <C> <C> <C> <C> <C>
1996: ** ** ** **
** **
1997: ** ** ** ** **
** **
1998: ** ** ** ** **
1999: ** ** _____ ____
------ -------
Totals: ** ** ** **
</TABLE>
(1) Subject to Section 4.3b
(2) StorageTek is ** of this amount to the ** .
a. Aggregate Funding Amounts. IBM agrees to provide StorageTek
with aggregate funding for ** Services in the following
amounts:
1996: ** ;
1997: ** ;
1998: ** ; and
1999: subject to Section ** .
On a quarterly basis the parties shall specify Deliverables
(other than "Committed In-Plan" Deliverables, as specified
in Section 6.1 hereof) eligible for consideration for
funding from (i) ** funds; (ii) ** funds; or (iii)
** funds.
StorageTek acknowledges that IBM shall have sole discretion
to ** funding through the ** process (except for **
highlighted in Section ** ).
- ---------------
** Confidential portions omitted and filed separately with the Securities
and Exchange Commission under an application for confidential treatment.
7
<PAGE> 127
b. Product Engineering Funding. IBM shall fund **
Services for the products that IBM is purchasing from
StorageTek under the OEM Agreement, as those products are
enhanced in accordance with this IDA, as follows:
1996-- **
1997-- **
1998-- **
1999-- **
Each year's total amount of ** funding shall be divided
by 4 and allocated to each quarter of the applicable year,
except for 1996, in which the total amount for 1996 shall be
divided by 2 and allocated to each of the third and fourth
quarters of 1996.
In any particular year, if StorageTek requires more funds to
meet its product engineering obligations under the OEM
Agreement than is funded above, StorageTek shall be
responsible for any such additional funds.
In any particular year, if StorageTek spends less than the
** funds, the amount ** for ** will be made
available for use by IBM for Deliverables that are other
than "Committed In-Plan Items". In addition, if StorageTek
is achieving its quality requirements for the Equipment as
set forth in Section 9 of the OEM Agreement ("Quality
Requirements"), IBM may, ** funds and apply the
remaining to Deliverables that are other than "Committed
In-Plan Items"; provided, however, that if the quality of
the Equipment falls below the Quality Requirements, then IBM
agrees to ** to be used ** funds.
With respect to ** , IBM may, at its option, **
allocated for ** by giving written notice at least one
year prior to the end of the first or any subsequent quarter
in ** ; any such notice(s) will be effective for the
applicable quarter and for any subsequent quarters in **.
StorageTek agrees to negotiate in good faith to provide
Product Engineering Services ** at a price equal to **
if IBM so requests and StorageTek is still providing product
engineering for such Devices or Equipment.
- ---------------
** Confidential portions omitted and filed separately with the Securities
and Exchange Commission under an application for confidential treatment.
8
<PAGE> 128
c. Funding of Deliverables. Except to the extent of **
which StorageTek will fund in ** , IBM shall fund **
of the development for the Deliverables specified in Section
6.1 as "Committed In- Plan Items" as follows:
(i) ICEBERG:
Product $ Year
** ** **
(ii) KODIAK:
Product $ Year
** ** **
If StorageTek requires more funds to complete any
such Deliverables than are specified above,
StorageTek shall ** funding. Notwithstanding
such StorageTek funding, the Deliverables shall
remain IBM Materials for purposes of the rights and
obligations set forth in the IDA documents.
If StorageTek requires ** funds to complete a
Deliverable, then the parties agree any ** funds
shall be made available for other Deliverables and
other development projects.
Each year's total amount of development funding shall
be divided by 4 and allocated to each quarter of the
applicable year, except for 1996, in which the total
amount for 1996 shall be divided by 2 and allocated
to each of the third and fourth quarters of 1996.
d. General. Funds are considered to be spent for
product engineering or a project based upon the
application of GAAP, as those principles have been
- ---------------
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and Exchange Commission under an application for confidential treatment.
9
<PAGE> 129
applied during the one calendar year period preceding
the calendar year of the execution of this SOW.
For each quarter, StorageTek shall invoice IBM for
Services to be performed during each such quarter on
or before the first business day of the quarter, and
IBM shall pay for such Services in ** payments due
and payable on the last business day of the end of
each month of each quarter.
e. ** Funding. During the term of the Agreement,
StorageTek may, from time to time, conceive idea(s)
for updates, improvements, or other development
projects which are not merely duplicative of
activities otherwise undertaken hereunder and which
add commercially significant functionality and/or
performance improvements to Equipment or Devices
(hereafter, "New Developments").
StorageTek may, but is not obligated to, offer any
New Development that it conceives during the term of
the Agreement to IBM--together with its reasonable
estimate of the cost and development schedule for
such New Development. IBM may ** such New
Developments as a project hereunder. If IBM **
such New Developments ** hereunder, or if
StorageTek ** , StorageTek shall own such New
Developments. Except as permitted under the DLW,
StorageTek is ** Derivative Works of IBM ** or
materials that are otherwise based upon IBM ** in
any New Development that would be ** by
StorageTek.
If StorageTek completes ** New Developments for
inclusion in or that would enhance the Iceberg,
Kodiak and Arctic Fox Products, then StorageTek shall
offer all devices, features, upgrades, or other
products for Iceberg, Kodiak and Arctic Fox using
such New Developments to IBM at its ** Price (as
defined in the OEM Agreement) and in the case of
microcode or software New Developments, offer to
license them to IBM under reasonable terms and
conditions, which includes the right to sublicense
customers, at ** , not to exceed such **
Price. StorageTek agrees to deliver the object
version of the Code to IBM which may be replicated
and distributed directly to customers for any such
New Development that IBM elects to license and to
deliver the source code version of the Code to IBM to
maintain and support such New Development and prepare
Derivative Works thereof.
- ---------------
** Confidential portions omitted and filed separately with the Securities
and Exchange Commission under an application for confidential treatment.
10
<PAGE> 130
If the New Developments include any ** ,
StorageTek is licensed to sell or license such **
devices, features, upgrades, or other products using
such New Developments to third parties as set forth
in the DLW Transaction Documents.
All such New Developments shall become IBM Materials
if funded by IBM and any intellectual property rights
arising out of the development of such New
Developments shall be owned by IBM in accordance with
the IDA.
4.4 IBM shall provide SSA design and implementation assistance (not to
exceed two person-years) in accordance with the PDP.
4.5 In order to assist StorageTek in providing Deliverables as
specified in the IDA, IBM's DASD subsystem product development
group shall make reasonable efforts to provide, by the dates set
forth in the related PDP, StorageTek with the following items; but
StorageTek shall have no remedy for IBM's failure to so provide
any of these items and shall remain responsible, despite any such
failure by IBM, for StorageTek's obligations under this Agreement:
a. Documentation and specifications as required in accordance
with the specific PDP: ** .
b. Products, programs, documentation, and training, as required
in accordance with the PDP:
(1) ** and ** such as ** test;
(2) ** , including the ** referred to in Section
** hereof; and
(3) ** .
c. Assistance as required in accordance with the PDP for:
(1) General Design Review -- not to exceed one person
month per year during this SOW; and
(2) ESP Selection, account management, test plan,
monitoring, VSAM consultation.
- ---------------
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and Exchange Commission under an application for confidential treatment.
11
<PAGE> 131
d. Product specifications, and support for ** with ** ,
as required by the applicable PDP.
To the extent that IBM has the right to do so, IBM grants
StorageTek a ** license (unless ** such items, and then such
license shall be ** ) to use, execute, reproduce, display and
perform the items provided under this subsection--only in support
of IDA.
4.6 If IBM fails to provide any of the above items, then StorageTek
will immediately notify IBM's Contract Coordinator in writing and,
if within fourteen (14) days thereafter, IBM has still not
provided such items, then the parties shall use the Dispute
Resolution Process to reach a resolution in order to avoid
unreasonable delays.
5. MUTUAL RESPONSIBILITIES
5.1 PROJECT CONTROLS. Both parties will use the following project
controls for work performed under this SOW.
a. Design Change Requests (DCR). All changes to the
specifications must go through the following DCR process:
(1) either party may propose a DCR;
(2) StorageTek will size the DCR and advise IBM in
writing of any impact to the schedule;
(3) IBM will decide whether to have the DCR implemented
or not; and
(4) StorageTek will keep a log of all DCRs to track the
status of such DCRs through the development and test
cycle.
The log will specify the status as:
"Proposed" - a DCR has been created and has been
distributed to both parties;
"Accepted/Rejected" - IBM has notified
StorageTek that the DCR has been accepted or
rejected;
- ---------------
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and Exchange Commission under an application for confidential treatment.
12
<PAGE> 132
"Design Specification Updated" - StorageTek has
updated the Product's Design Specification to
reflect the DCR if it has been accepted;
"In Process" - StorageTek is implementing the
DCR; or
"Complete" - The DCR has been implemented and
tested and the Documentation is updated to
reflect the DCR.
Any approval of a DCR by IBM or StorageTek must be
made by that party's Contract Coordinator in writing.
b. Program Trouble Reports (PTR). All problems discovered
during component testing or IBM's review of Deliverables
will follow the PTR process. The procedure used will be as
follows:
(1) either party may issue a PTR;
(2) StorageTek will track the status of each PTR; and
(3) the tracking system will specify the status as:
"Opened" - a problem has been discovered and
entered into the PTR tracking system;
"Received" - the programmer or engineer
responsible for the code is working on the PTR;
"Answered" - the programmer or engineer has
fixed and tested the problem; or
"Closed" - the test has been rerun, to verify
that the problem has been corrected and has not
caused any new problems.
5.2 PROJECT MANAGEMENT.
a. Project Management. IBM's and StorageTek's respective
management teams will meet monthly and review the field
support and status of the Deliverables. The field support
review will encompass the field performance of products,
open problems and status, resource allocation and use and
customer situations. The status of the Deliverables shall be
reviewed for progress in connection with the PDP, including
plans for corrective action (if any Deliverable is behind
the PDP schedule) and a summary of all concerns and issues.
13
<PAGE> 133
b. Plan Change Process. As business needs, business
opportunities or resource availabilities change, IBM may
supply StorageTek with a concise description of new product
requirements to StorageTek, which StorageTek will review and
provide a ** therefor. In addition, StorageTek may also
propose alternative descriptions of such new product
requirements (as well as other new product requirements),
together with ** .
If StorageTek can commit to such new product requirements
without adversely affecting, to a material extent, the
Deliverables already planned, StorageTek shall propose an
ESP/volume shipment plan to be reviewed and negotiated in
good faith by the parties. If StorageTek cannot include the
requested new product requirement within the then-current
commitments, IBM may provide a prioritization and the
parties will negotiate in good faith amended commitments for
all or any affected Deliverables.
5.3 ESCROW. By ** , StorageTek and IBM shall have available and
ready to deposit into escrow the following items (which
collectively shall be called "Escrowed Materials"):
a. As to StorageTek, a complete and accurate copy of the
Licensed Works existing on ** , for Iceberg (including
IXFP and IXOF), Kodiak and Arctic Fox and the applicable
Development Environment and the capacity ratio benchmark
specified in Schedule 8; and
b. As to IBM, a complete copy of the initial benchmarks IBM
used as of ** , measure performance requirements for
Iceberg and Kodiak.
The purpose for such escrow is to determine the level of the
Licensed Works in existence on June 30, 1996, together with the
benchmarks used to measure the Products' performance and other
requirements (as such Products are in existence as of ** ).
The parties have agreed that Data Securities International, Inc.
("DSI") shall be the escrow agent for such escrow. Upon execution
of a mutually agreeable escrow agreement by the parties, which
Escrow Agreement shall be attached to the IDA as Appendix E
thereto, and on ** , StorageTek and IBM shall deposit the
Escrowed Materials described in this paragraph into the escrow
account at DSI. The parties shall agree to reasonable changes to
the Escrow Agreement as they may be requested by the Custodian.
The parties agree to equally share the escrow agent fees for such
escrow.
- ---------------
** Confidential portions omitted and filed separately with the Securities
and Exchange Commission under an application for confidential treatment.
14
<PAGE> 134
5.4 PROVISION OF LICENSED WORKS.
On a timely basis, StorageTek shall provide to IBM the Licensed
Works.
5.5 HEADCOUNT AND EQUIPMENT INVESTMENTS. The parties recognize that
in order to achieve the Impact Error Rate objectives set forth in
Section 9.3 of the OEM Agreement, an investment in headcount and
equipment is required for ** commencing with the Effective Date
of the Agreement. IBM shall provide, at its own cost, ** field
support personnel, nine (9) test engineering and support personnel,
and a ** IBM Model ** processor system of a configuration
adequate for the testing that has been defined by both parties with
standard IBM software licenses and maintenance related thereto.
StorageTek shall provide, at its own cost and incremental to
development and product engineering funding otherwise specified
herein, ** Iceberg engineers, ** Kodiak engineers, ** test
engineers, ** regression test technicians, ** program
administrators, for an aggregate of ** StorageTek personnel. The
personnel may be adjusted by mutual written agreement. All such
personnel and items shall be provided and/or installed and
operational as soon as practicable, with the objective of ** days
after the Effective Date, but in no event longer than ** days
after the Effective Date. If IBM is unable within ** days to
obtain the specified system processor because of supply constraints
or other reasons, the parties will meet to determine the
appropriate solution.
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and Exchange Commission under an application for confidential treatment.
15
<PAGE> 135
6. DELIVERABLES, SCHEDULES AND VOLUME COMMITMENT ADJUSTMENTS
6.1 CHART OF DELIVERABLES.
A. ICEBERG
1. COMMITTED IN PLAN ITEMS
FIRST ICEBERG DELIVERABLE:
PDP DATE: **
SPECIFIED FUNCTIONS COMPRISING FIRST ICEBERG DELIVERABLE
<TABLE>
<CAPTION>
VOLUME
COMMITMENT
DELIVERABLE TYPE ESP DATE VOLUME ADJUSTMENT
----------- ---- -------- ------ -----------
(see Appendix B)
<S> <C> <C> <C> <C>
** ** ** ** **
</TABLE>
SECOND ICEBERG DELIVERABLE
PDP DATE: **
SPECIFIED FUNCTIONS COMPRISING SECOND ICEBERG DELIVERABLE
<TABLE>
<CAPTION>
VOLUME
COMMITMENT
DELIVERABLE TYPE ESP DATE VOLUME ADJUSTMENT
----------- ---- -------- ------ -----------
<S> <C> <C> <C> <C>
** ** ** ** **
</TABLE>
(1) Must Review means that this package of items has IBM-requested content.
StorageTek needs to evaluate ** in order to commit volume production
dates and content. This will be done by the PDP Date. If the ** is
not available by 8/1/96 for any reason, then the parties shall put into
place a recovery plan pursuant to which they will ** for use with
Iceberg and the provisions of the OEM Agreement with respect to **
shall apply.
__________________________________
** Confidential portions omitted and filed separately
with the Securities and Exchange Commission under an
application for confidential treatment.
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<PAGE> 136
THIRD ICEBERG DELIVERABLE
PDP DATE: **
SPECIFIED FUNCTIONS COMPRISING THIRD ICEBERG DELIVERABLE
<TABLE>
<CAPTION>
VOLUME
COMMITMENT
DELIVERABLE TYPE ESP DATE VOLUME ADJUSTMENT
----------- ---- -------- ------ -----------
<S> <C> <C> <C> <C>
** ** ** ** **
</TABLE>
FOURTH ICEBERG DELIVERABLE
PDP DATE: **
SPECIFIED FUNCTIONS COMPRISING FOURTH ICEBERG DELIVERABLE
<TABLE>
<CAPTION>
VOLUME
COMMITMENT
DELIVERABLE TYPE ESP DATE VOLUME ADJUSTMENT
----------- ---- -------- ------ -----------
<S> <C> <C> <C> <C>
** ** ** ** **
</TABLE>
FIFTH ICEBERG DELIVERABLE
PDP DATE: **
SPECIFIED FUNCTIONS COMPRISING FIFTH ICEBERG DELIVERABLE
<TABLE>
<CAPTION>
VOLUME
COMMITMENT
DELIVERABLE TYPE ESP DATE VOLUME ADJUSTMENT
----------- ---- -------- ------ -----------
<S> <C> <C> <C> <C>
** ** ** ** **
</TABLE>
SIXTH ICEBERG DELIVERABLE
PDP DATE: **
SPECIFIED FUNCTIONS COMPRISING SIXTH ICEBERG DELIVERABLE
<TABLE>
<CAPTION>
VOLUME
COMMITMENT
DELIVERABLE TYPE ESP DATE VOLUME ADJUSTMENT
----------- ---- -------- ------ -----------
<S> <C> <C> <C> <C>
** ** ** ** **
</TABLE>
(1) On the PDP date they may mutually agree to rearrange the development
project priorities or cancel this Specified Function.
- ---------------
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and Exchange Commission under an application for confidential treatment.
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<PAGE> 137
2. WANTED, TO BE SIZED
<TABLE>
<CAPTION>
VOLUME
COMMITMENT
DELIVERABLE TYPE ESP DATE VOLUME ADJUSTMENT
----------- ---- -------- ------ -----------
<S> <C> <C>
** ** **
</TABLE>
3. TO BE DECIDED ITEMS
<TABLE>
<CAPTION>
VOLUME
COMMITMENT
DELIVERABLE TYPE ESP DATE VOLUME ADJUSTMENT
----------- ---- -------- ------ -----------
<S> <C>
** **
</TABLE>
4. OUT OF PLAN ITEMS
<TABLE>
<CAPTION>
VOLUME
COMMITMENT
DELIVERABLE TYPE ESP DATE VOLUME ADJUSTMENT
----------- ---- -------- ------ -----------
<S> <C>
** **
</TABLE>
- ---------------
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and Exchange Commission under an application for confidential treatment.
18
<PAGE> 138
B. KODIAK
1. COMMITTED IN-PLAN ITEMS
FIRST KODIAK DELIVERABLE
PDP DATE: **
SPECIFIED FUNCTIONS COMPRISING FIRST KODIAK DELIVERABLE
<TABLE>
<CAPTION>
VOLUME
COMMITMENT
DELIVERABLE TYPE ESP DATE VOLUME ADJUSTMENT
----------- ---- -------- ------ -----------
<S> <C> <C> <C> <C>
** ** ** ** **
</TABLE>
SECOND KODIAK DELIVERABLE
PDP DATE: **
SPECIFIED FUNCTIONS COMPRISING SECOND KODIAK DELIVERABLE (K-1 FRAME)
<TABLE>
<CAPTION>
VOLUME
COMMITMENT
DELIVERABLE TYPE ESP DATE VOLUME ADJUSTMENT
----------- ---- -------- ------ -----------
<S> <C> <C> <C> <C>
** ** ** ** **
</TABLE>
THIRD KODIAK DELIVERABLE
PDP DATE: **
SPECIFIED FUNCTIONS COMPRISING THIRD KODIAK DELIVERABLE
<TABLE>
<CAPTION>
VOLUME
COMMITMENT
DELIVERABLE TYPE ESP DATE VOLUME ADJUSTMENT
----------- ---- -------- ------ -----------
<S> <C> <C> <C> <C>
** ** ** ** **
</TABLE>
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and Exchange Commission under an application for confidential treatment.
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<PAGE> 139
FOURTH KODIAK DELIVERABLE
PDP DATE: **
SPECIFIED FUNCTIONS COMPRISING FOURTH KODIAK DELIVERABLE
<TABLE>
<CAPTION>
VOLUME
COMMITMENT
DELIVERABLE TYPE ESP DATE VOLUME ADJUSTMENT
----------- ---- -------- ------ -----------
<S> <C> <C> <C> <C>
** ** ** ** **
</TABLE>
- ---------------
(1) The parties intend to decide between ** proposal by ** ; if they
decide not to proceed and confirm such decision in writing, then no
** shall apply to this Specified Function.
FIFTH KODIAK DELIVERABLE
PDP DATE: **
SPECIFIED FUNCTIONS COMPRISING FIFTH KODIAK DELIVERABLE
<TABLE>
<CAPTION>
VOLUME
COMMITMENT
DELIVERABLE TYPE ESP DATE VOLUME ADJUSTMENT
----------- ---- -------- ------ -----------
<S> <C> <C> <C> <C>
** ** ** ** **
</TABLE>
SIXTH KODIAK DELIVERABLE
PDP DATE: **
SPECIFIED FUNCTIONS COMPRISING SIXTH KODIAK DELIVERABLE
<TABLE>
<CAPTION>
VOLUME
COMMITMENT
DELIVERABLE TYPE ESP DATE VOLUME ADJUSTMENT
----------- ---- -------- ------ -----------
<S> <C> <C> <C> <C>
** ** ** ** **
</TABLE>
- ---------------
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and Exchange Commission under an application for confidential treatment.
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<PAGE> 140
2. WANTED, TO BE SIZED
<TABLE>
<CAPTION>
VOLUME
COMMITMENT
DELIVERABLE TYPE ESP DATE VOLUME ADJUSTMENT
----------- ---- -------- ------ -----------
<S> <C> <C> <C> <C>
** ** ** ** **
</TABLE>
3. "IN DEVELOPMENT BUDGET" ITEMS
<TABLE>
<CAPTION>
VOLUME
COMMITMENT
DELIVERABLE TYPE ESP DATE VOLUME ADJUSTMENT
----------- ---- -------- ------ -----------
<S> <C> <C> <C> <C>
** ** ** ** **
</TABLE>
These items will be developed with part of the ** funds that are specified
in 4.3b and have no ** associated with them.
4. TO BE DECIDED ITEMS
<TABLE>
<CAPTION>
VOLUME
COMMITMENT
DELIVERABLE TYPE ESP DATE VOLUME ADJUSTMENT
----------- ---- -------- ------ -----------
<S> <C> <C> <C> <C>
** ** ** ** **
</TABLE>
5. OUT OF PLAN ITEMS
<TABLE>
<CAPTION>
VOLUME
COMMITMENT
DELIVERABLE TYPE ESP DATE VOLUME ADJUSTMENT
----------- ---- -------- ------ -----------
<S> <C> <C> <C> <C>
** ** ** ** **
</TABLE>
NOTE: With respect to all of the above Specified Functions, should StorageTek
fail to deliver any Specified Function by the Volume date listed for such
Specified Function in Section 6.1 above, then IBM shall be entitled to
purchase the existing subsystem product from StorageTek at the ** as if
StorageTek had delivered such Specified Function by such Volume date.
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and Exchange Commission under an application for confidential treatment.
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<PAGE> 141
6.2 CERTIFICATE OF ORIGINALITY (COO).
StorageTek agrees to provide a Certificate of Originality for
software and microcode items identified in 6.1. A blank
Certificate of Originality is attached hereto as Appendix D.
7. [RESERVED]
8. SPECIFICATIONS
All Deliverables will be prepared and provided according to the standards
in Appendix A, "FUNCTIONAL, TECHNICAL AND QUALITY SPECIFICATIONS" and
those set forth in the associated PDP. In the event of a conflict
between Appendix A and the applicable PDP as approved in writing by IBM's
Contract Coordinator, the PDP shall control.
9. QUALITY MEASUREMENTS
The quality measurements shall be as set forth in Section 9 of the OEM
Agreement, except for host software, which shall be as set forth in
Section 2D of Appendix A attached hereto.
10. LICENSE
10.1 Except as specifically stated in the Agreement, no license or
immunity is granted either directly or by implication, estoppel or
otherwise, under any intellectual property right of either party,
including, but not limited to, trade secrets, copyrights,
trademarks and patents.
11. COORDINATORS
11.1 CONTRACT COORDINATORS.
IBM and StorageTek agree that the following named contract
coordinators are responsible for amendments (including working
with each party's respective legal department to prepare and
execute such amendments), receipt of notices under this IDA and
all nontechnical administrative matters associated with this SOW.
The Contract Coordinators are:
22
<PAGE> 142
<TABLE>
<CAPTION>
FOR IBM: FOR STORAGETEK:
<S> <C> <C> <C>
Name: ** Name: **
Title/Dept: Director, Future Title/Dept: Vice President,
Storage Subsystems Online Development
Address: 9000 S. Rita Road Address: 2270 South 88th Street
Tuscon, Arizona 85744 Louisville, Colorado 80028
Phone: (520) ** Phone: (303) **
Facsimile: (520) 799-____ Facsimile: (303) **
</TABLE>
Notices shall be deemed given as specified in Section 26.3 of the OEM
Agreement.
11.2 TECHNICAL COORDINATORS.
IBM and StorageTek agree that the following named coordinators
will administer and coordinate the technical matters associated
with this SOW. Any changes in the party's coordinators shall be
provided to the other party in writing. They are responsible for
accepting all Deliverables and will supervise all exchanges of
confidential information under the CDA. The Technical Coordinators
are:
<TABLE>
<CAPTION>
FOR IBM: FOR STORAGETEK:
<S> <C> <C> <C>
Name: ** Name: **
Title/Dept: Director, Future Title/Dept: Vice President,
Storage Subsystems Online Development
Address: 9000 S. Rita Road Address: 2270 South 88th Street
Tuscon, Arizona 85744 Louisville, Colorado 80028
Phone: (520) ** Phone: (303) **
Facsimile: (520) 799-_____ Facsimile: (303) **
</TABLE>
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** Confidential portions omitted and filed separately with the Securities
and Exchange Commission under an application for confidential treatment.
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<PAGE> 143
ATTACHMENT 1
APPENDIX A
FUNCTIONAL, TECHNICAL AND QUALITY SPECIFICATIONS
TO THE STATEMENT OF WORK
1. TECHNICAL SPECIFICATIONS
The technical specifications for the existing Iceberg, Kodiak and
Arctic Fox products, as well as the IXFP and IXOF software are contained in the
following documents:
a. **
b. **
c. **
d. **
e. **
f. **
g. **
h. **
i. **
j. **
k. **
l. **
m. **
n. **
o. **
- -----------------------------
** Confidential portions omitted and filed separately with the Securities
and Exchange Commission under an application for confidential treatment.
<PAGE> 144
p. **
q. **
r. **
s. **
t. **
u. **
v. **
w. **
x. **
y. **
z. **
aa. **
bb. **
cc. **
dd. **
ee. **
ff. **
gg. **
hh. **
ii. **
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and Exchange Commission under an application for confidential treatment.
A-2
<PAGE> 145
jj. **
kk. **
ll. **
mm. **
nn. **
oo. **
The technical descriptions for the ** Iceberg Items (as specified
in Section 6.1 hereof) are in Schedule 1.
The technical descriptions for the ** Kodiak Items are in Schedule 2.
The technical descriptions for the ** IXFP and IXOF Items are in
Schedule 3:
2. PERFORMANCE SPECIFICATIONS
A. Performance Test Set
**
Each performance workload has a specification of the number of channels, cache
size, subsystem capacity, and the number of logical volumes to be used for each
evaluation.
B. Particular Performance Specifications
As specified in Schedules 4, 5, 6 and 7, Committed in Plan Items must maintain
performance specifications as currently existing or improve thereon as required
by the applicable PDP.
C. Capacity Ratio Specifications
For calculating storage capacities for purchases of Iceberg, a ratio of ** of
storage accessible to 1 ** is used to determine Terabytes. The benchmark
in Schedule 8 produces a capacity ratio of **
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A-3
<PAGE> 146
. Future enhancements to Iceberg, when this benchmark is applied, shall not
produce results less than **. Upon mutual written agreement, such benchmark
may be modified.
D. Host Software Quality Measurements
StorageTek's host software development (IXFP and IXOF) shall meet a quality
index of no more than ** errors per ** lines of actually executing code
(not including comments, dummy, nonoperational or nonfunctional lines of code)
("KLOC") for all of the code, including base, new and modified code that is to
be delivered to IBM under the IDA and its related attachments and appendices.
- -----------------------------
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and Exchange Commission under an application for confidential treatment.
A-4
<PAGE> 147
SCHEDULE 1 TO APPENDIX A TO
STATEMENT OF WORK
Integrated Iceberg Overview
The integrated Iceberg is **, packaged in an ** . This unit contains
** . The system will initially support both FIPS and ESCON interfaces.
There are ** differences between an Iceberg Controller with Freezer III and
the Integrated Iceberg system. Since the Freezer is ** . There is **
. The ** .
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<PAGE> 148
**
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and Exchange Commission under an application for confidential treatment.
<PAGE> 149
XSA/SnapShot
EXECUTIVE OVERVIEW
**& **
APRIL 1996
Storage Technology Corporation
2270 South 88th Street
Louisville, Colorado 80028-3256 USA
ABSTRACT
- --------------------------------------------------------------------------------
As customers strive to achieve the 7 x 24 operations that their users
demand, time remains the enemy. Storage management and data duplication, and
the time that they take, continues to prevent customers from achieving this
critical business objective. Iceberg, through Virtual DASD, greatly reduces
storage management requirements for users. Now a new product, XSA SnapShot,
compliments Iceberg by extending storage management benefits to data
duplication. By significantly reducing the resources and duration of data
duplication, XSA SnapShot saves the user significant Time without additional
risk. This paper provides an executive overview of SnapShot, and the benefits
it provides. It is intended for StorageTek management and sales personnel.
THE NEED
- ---------------------- [GRAPHIC]
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treatment.
<PAGE> 150
**
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and Exchange Commission under an application for confidential treatment.
4
<PAGE> 151
**Overview
The ** contains the following features. **
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and Exchange Commission under an application for confidential treatment.
5
<PAGE> 152
**Description
The ** array is **
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and Exchange Commission under an application for confidential treatment.
6
<PAGE> 153
**Load
** Load project is a method for **
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and Exchange Commission under an application for confidential treatment.
7
<PAGE> 154
**Analysis
** Analysis (PSA) is the method by which the **
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and Exchange Commission under an application for confidential treatment.
8
<PAGE> 155
ESCON 128 **
For ESCON on Iceberg, the subsystem will initially support a maximum of **
followed later with support for a ** . A ** is defined as the
communication ** between the ** and ** . In order to access **
, a ** will have four logical paths associated with it. This is due to the
** Control Unit images that are used to access ** . The support of **
Control Unit images will not consume ** resources available to the
subsystem. Each parallel channel card installed in the subsystem will reduce
the number of host paths supported by ** on the ** and by ** on the
** . ** installed parallel channel cards ( ** per cluster) will
reduce the total number of ** from ** to ** for ** total **
and from ** to ** for ** total ** . The ** project has
been ** and is currently ** .
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and Exchange Commission under an application for confidential treatment.
9
<PAGE> 156
Table 5-1. Parallel and ESCON Channel Configurations Options
<TABLE>
<CAPTION>
Cluster 0 Cluster 1
---------------------------------------------------------------
Total Cntrl Reg 0 Cntrl Reg 1 Cntrl Reg 2 Cntrl Reg 3
---------------------------------------------------------------
<S> <C> <C> <C> <C>
8P ** ** ** **
16P ** ** ** **
24P ** ** ** **
32P 4P ** ** ** **
8S - Single ** ** ** **
8S - Dual ** ** ** **
16S - Dual ** ** ** **
16P/8S - Single ** ** ** **
16P/8S - Dual ** ** ** **
</TABLE>
Note: Mixed channel configurations ** are supported ** will support
** configurations.
(1) Where P is one OEMI channel (one fourth of an ICQ card), 1S is one ESCON
link (one half of an ICE1 or ICE2 card). Where Single is the top link enabled
on each ICE card and Dual is both links enabled in each ICE card.
(2) Each link will support ** for Release 1 and ** for Release 2.
(3) Each link will support ** for Release 1 and ** for Release 2.
(4) Each link will support ** for Release 1 and ** for Release 2.
(5) Each link will support ** for Release 1. This configuration **
for Release 2.
(6) Each link will support ** for Release 1. This configuration **
for Release 2.
All channels to a device from the same system (host or LPAR) must be the same
type. Channel types S (=CNC), FX (=CVC), BL (Block - MUX) cannot be intermixed
to a device from the same system. Channel configurations are therefore
symmetrical between the clusters.
- ------------------------
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Securities and Exchange Commission under an application for confidential
treatment.
10
<PAGE> 157
SCHEDULE 2 TO APPENDIX A TO
STATEMENT OF WORK
KODIAK Descriptions
**
K-1
** VOLUMES:
This is a development to ** . This becomes desirable (and
necessary) due to increased capacity drives ** volume.
** SIZE:
This is a cost reduction element to allow the parity group (or RAID
group) size to increase from its current ** to ** . This means
that the effective real data space utilization grows from ** which
realizes a reduced cost for data protection. This group size must
** for practical reasons.
** SIZE:
The current ** size used in Kodiak is ** . This was chosen as
an optimal amount for the internal transfer elements and the disk
capacity. Subsequent to that implementation, most drive vendors have
dropped support for variable blocks sizes or sizes of this range. To
** must be adopted. The ** size will allow our internal element
size to be maintained and still utilize the ** drives.
** DRIVE CABINET:
With the support of ** drives, up to ** drives can be included
in a ** cabinet realizing both cost and floor space savings over
the ** drive ** cabinets.
** DRIVE SUPPORT:
Higher capacity ** drives are becoming available and will
represent a cost/performance advantage over the current drives being
used. Additionally, following the technology curves will be necessary
for both supply and cost issues. The support for ** will
encompass qualification, development of a dual port card, packaging,
code support (both configuration and functional, and testing.
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<PAGE> 158
**
The current ** unit vendor for us is developing under contract to
us ** that will allow a ** . This allows greater that **
distances for the ** drives. We will need to administer and test
this feature.
"BIND" OR MERGED ARCTIC FOX AND KODIAK
This feature allows ** to be held resident in cache and treated as
if they were on ** . This is set up through the ** and may be
changed by the customer support engineer. Data may still be **
through a requested action on the support controller for changes,
power downs, etc. This feature allows for ** to have specific
enhance performance characteristics over other ** for performance
critical data.
K-2
** POWER/PACKAGE
The K-2 development ** of the ** and allows for ** of **
in the ** while maintaining the ** . The ** in the **
allows for ** and ** . This provides a significant cost
reduction, assembly and test time decrease, and reduced parts count.
Additionally, ** required is ** as well as other **
requirements.
IMPROVED PERFORMANCE **
The ** will be improved in various areas to provide increased
performance that is targeted to be ** in the simulated TSO
workload. The areas include: better utilization of ** , faster
** , faster ** , increased ** , and ** .
NON-HOMOGENEOUS CACHE SUPPORT:
This development allows for ** . With the development of the
appropriate code, ** may be done where only data written is **
in a ** of the ** depending on configuration choices at
installation time. This is a cost reduction over ** system.
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<PAGE> 159
** SUPPORT:
This development allows for a ** mode where the total **
capacity, rather that be used in a ** (e.g. ** ) can be used as a
** space (stacked mode). This allows for larger ** in a **
with the appropriate code changes.
** SUPPORT:
This development changes the addressing mechanisms in the ** to
allow larger capacities that can be realized with ** .
LAPTOP PC SUPPORT:
This development replaces the current, ** with a ** for a cost
reduction. The development includes the encapsulating the
environmental report by the environmental multiplexor card onto the
** rather than ** into the ** .
Other Items
** SUPPORT:
This is the qualification and testing of the ** that will be
available ** . It will physically replace the ** with no
other changes other than configuration and mapping software.
**
** is using ** and the ability to ** and ** on the
** for ** .
** is the implementation of ** to ** on a ** .
** is a ** feature where the ** and the ** to **
actions. This requires documentation from IBM as to ** necessary
for implementation.
** WITH DUAL COPY COMMANDS
This feature maps the ** to the ** to allow ** of **
rather than ** implement at the ** .
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<PAGE> 160
PINNED DATA SUPPORT AT THE SC
This somewhat misnamed feature allows4 of ** at the ** as well
as the ability to ** and ** of the ** in ** . It is a
service enhancement for ** as well as ** .
ENHANCED PDS SEARCH ASSIST
Enhanced ** is ** for ** operation based on analysis of
particular program accesses.
** ESCON
This development is the ** and the ** to allow ** . This
includes evaluation as to feasibility (if it's possible at a
reasonable cost/effort).
** CACHE
This is the ** and the ** . Diagnostics, configuration, and
some functional code will have some changes.
** STATISTICS
This is the ** for ** performance. This depends on the
documentation for IBM as to the ** statistics required.
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<PAGE> 161
SCHEDULE 3 TO APPENDIX A TO
STATEMENT OF WORK
XSA/SNAPSHOT **
XSA/SnapShot is a virtual data duplication program product which **
XSA/SNAPSHOT FOR **
** of XSA/SnapShot will be implemented on ** as well (after release of
MVS SnapShot). ** SnapShot will allow ** and ** from the ** .
SnapShot for ** will run as a ** or from ** through ** . It
will also have a pre-requisite of ** and ** .
XSA/SNAPSHOT **
XSA/SnapShot ** will be the first major enhancement of XSA/SnapShot. It
will ** and ** . Final specifications are still being developed.
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<PAGE> 162
APPENDIX A: SCHEDULE 4
TO THE STATEMENT OF WORK
ICEBERG PERFORMANCE COMMITMENTS FOR **
VOLUME SHIP
<TABLE>
<CAPTION>
WORKLOAD SUBSYS DATA ** ** ** CACHE # OF
GB'S CHNLS ** ** ** SIZE DEVICES
-------- ----- ------ ------- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
**
NOTE: NA -) NOT APPLICABLE
</TABLE>
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<PAGE> 163
APPENDIX A: SCHEDULE 5
TO THE STATEMENT OF WORK
ICEBERG PERFORMANCE COMMITMENTS FOR **
VOLUME SHIP
<TABLE>
<CAPTION>
WORKLOAD SUBSYS DATA ** ** ** CACHE # OF
GB'S CHNLS ** ** ** SIZE DEVICES
-------- ----- ------- ------- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
**
NOTE: NA -) NOT APPLICABLE
</TABLE>
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<PAGE> 164
APPENDIX A: SCHEDULE 6
TO THE STATEMENT OF WORK
KODIAK PERFORMANCE COMMITMENTS FOR **
VOLUME SHIP
<TABLE>
<CAPTION>
WORKLOAD SUBSYS DATA ** ** ** CACHE # OF
GB'S CHNLS ** ** ** SIZE DEVICES
-------- ----- ------- ------- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
**
NOTE: NA -) NOT APPLICABLE
</TABLE>
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<PAGE> 165
APPENDIX A: SCHEDULE 7
TO THE STATEMENT OF WORK
KODIAK PERFORMANCE COMMITMENTS FOR **
VOLUME SHIP **
<TABLE>
<CAPTION>
WORKLOAD SUBSYS DATA ** ** ** CACHE # OF
GB'S CHNLS ** ** ** SIZE DEVICES
-------- ----- ------- ------- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
**
NOTE: NA -) NOT APPLICABLE
</TABLE>
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<PAGE> 166
SCHEDULE 8 TO APPENDIX A TO
STATEMENT OF WORK
CAPACITY RATIO SPECIFICATION
The test to determine capacity ratio consists of backing up a ** , and ** .
IXFP used to report test results. Specifications are as follows:
A. **
B. ** capacity:
**
C. ** (on FAST) = **
D. Compression ratio = **
E. Net Capacity Level = **
F. Volume Utilization = **
G. Capacity Ratio = **
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<PAGE> 167
ATTACHMENT 1
APPENDIX B
COMPLETION AND ACCEPTANCE CRITERIA
1. COMPLETION AND ACCEPTANCE CRITERIA.
All completion and acceptance criteria for ESP, volume shipment
checkpoint and volume shipment compliance are included in this
section.
In order to qualify for acceptance at the checkpoints identified
herein, each Deliverable must perform according to the specifications
identified and referenced in Appendix A, "FUNCTIONAL, TECHNICAL AND
QUALITY SPECIFICATIONS" as amended by the associated PDP for such
Deliverable. For the Iceberg and Kodiak Deliverables, the IBM System
Test is attached as Schedule 1 to this Appendix B.
2. STAGE CRITERIA.
Specified Function, ESP and Acceptance Criteria are as follows:
A. ESP Checkpoint. For each Specified Function, other than for
the Base Iceberg Package, StorageTek shall recommend to IBM
when each SF is ready for IBM to conduct an Early Support
Program ("ESP"), typically with a minimum of **StorageTek;
IBM shall have the right to have up to ** be IBM internal
customer sites or test installations. Machines supplied to IBM
installations shall be supplied at no charge to IBM during the
ESP test period.
Prior to the ESP start date, an ESP ready review shall be
conducted jointly by the parties; during this review
StorageTek will present the status of the testing that it has
completed for the Specified Function, with an accompanying
written report. StorageTek's report will include a summary of
all problems that have been encountered and resolved, details
on all unresolved problems and proposed action plans for their
resolution and status of meeting the agreed to exit criteria
for the function test of this Specified Function.
StorageTek will present its recommendation as to whether to
implement the plan for ESP shipments. If StorageTek has
recommended proceeding, IBM will have ** working days to
conclude whether the SF had met the criteria in the functional
test plan for ESP initiation. IBM will not unreasonably
withhold its agreement that the particular Specified Function
is ready for the ESP.
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<PAGE> 168
If StorageTek disagrees with IBM's conclusion, StorageTek may
appeal by means of the Dispute Resolution Process.
For each Specified Function, StorageTek's obligation to be
ready to initiate an ESP at the designated date shall be met
upon its delivery of such Specified Function that is in
accordance with the specification documents for it as listed
below:
o functional specification, as updated in accordance with
design change procedures
o customer documentation readiness
o Functional Test Plan Completion Criteria
o performance measurement results against requirements,
substantial compliance required
B. Volume Shipment Checkpoint. Prior to the volume shipment date, a
volume shipment readiness review shall be conducted jointly by the
parties; during this review StorageTek will present the status of
the testing that it has completed for the Specified Function, with
an accompanying written report. StorageTek's report will include a
summary of all problems that have been encountered and resolved,
details on all unresolved problems and proposed action plans for
their resolution and status of meeting the agreed exit criteria
for the ESP test of this Specified Function ("SF").
StorageTek will present its recommendation as to whether to
commence volume shipments. If StorageTek recommends proceedings
with volume shipments, IBM will have ** working days to conclude
whether the SF had met the criteria in the ESP test plan for
volume shipments.
If StorageTek disagrees with IBM's conclusion, StorageTek may
appeal by means of the Dispute Resolution Process (as that process
is defined in Section 21 of the OEM Agreement).
For each Specified Function, StorageTek's obligation to justify
volume shipments at the designated date shall be met upon its
delivery of such Specified Function that is in accordance with the
specification documents for such Specified Function as listed
below:
o functional specification, as updated in accordance with
design change procedures
o customer documentation readiness for volume shipments
o ESP Test Plan Exit Criteria
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<PAGE> 169
o performance measurement results against commitment curves,
complete compliance required
o level 1 and level 2 support training completed
o service cost estimate compliance
o IBM System Test
o manufacturing, marketing & service readiness
C. Testing. StorageTek shall be responsible for running tests as
specified in the applicable test plan; IBM shall have the right to
monitor the tests being run to verify compliance with the
specification documents for that Specified Function. Concurrently,
IBM shall have the right to verify compliance by independently
running tests at IBM's expense.
A set of performance requirements will apply for each Specified
Functions in the PDP. These requirements will relate to **
environments appropriate to the Specified Function. The standard
set of performance benchmarks that IBM escrows pursuant to Section
5.3 will be run to verify that performance has not been degraded
for the delivered SF. Any variation from the performance
commitments specified in Appendix A for the identified "Committed
In Plans" Items must be approved in writing by the Contract
Coordinators for the respective parties, with specific reference
being made in the approval to such approval relating to varying
the otherwise applicable performance commitments.
D. Volume Shipment Compliance. StorageTek shall have met its volume
shipment date if it meets its obligation to justify volume
shipments by the Volume Date specified in Section 6.1 above.
IBM will provide written notification to StorageTek of any failure
of the SF to meet the applicable criteria which notice shall
identify the basis for any such IBM conclusion. IBM shall have
the right to verify compliance to test criteria by independently
running tests, and StorageTek shall have the opportunity to
witness any such testing.
If StorageTek fails to deliver the Specified Function by the
Volume date, in accordance with this Volume Shipment Compliance
process, then the consequences shall be as specified in Section E
below.
E. Volume Commitment Adjustment.
(1) ** . Notwithstanding any Volume Commitment Adjustment
designation in Section 6.1, if StorageTek fails to deliver
the ** by the applicable Volume shipment date of **
, then IBM shall be ** (as that ** are established by
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<PAGE> 170
Sections 6.1 and 7.6(a), respectively of the OEM Agreement)
for each ** of delay during the ** of any such delay.
If StorageTek's failure to deliver the ** continues
beyond the initial ** , then IBM shall be ** with
having ** of the respective quarter's ** applicable
to the ** that is ** beyond the ** of delay (as
that ** are established by Sections 6.1, 6.2 and 7.6(a)
of the OEM Agreement) for each ** of further delay.
(2) Other Functions. If StorageTek fails to meet the Volume
date for any Specified Function (other than the ** ),
then IBM shall be ** (as that ** are established by
Sections 6.1, 6.2 and 7.6(a) of the OEM Agreement) for
each ** of delay multiplied by a factor; that factor
is:
o ** for ** VOLUME COMMITMENT ADJUSTMENT;
o ** for ** VOLUME COMMITMENT ADJUSTMENT; and
o ** for ** VOLUME COMMITMENT ADJUSTMENT.
However, notwithstanding the above and Section 6 of the
SOW, if the ** (as it is defined in Section 6.1, with
** ) is not delivered on ** , then the factor applied
shall be ** , of which ** shall be used for **
and ** shall be used for ** .
(3) General. The ** is the ** and ** , as well as
** for ** and ** , as specified in Section 6 of
the OEM Agreement. If a SF is delivered at any time later
than 15 days after Volume date specified for such SF, then
it shall be considered to be delayed by a full month. If
multiple functions fail to be shipped in accordance with
the designated Volume shipment dates, then the **
applicable VOLUME COMMITMENT ADJUSTMENT factor shall apply.
Each such factor shall be multiplied by the percentage of
commitment applicable to the relevant subsystem, as is
established by the Current Volume Assumptions shown on the
attached Schedule 2. For ** , the percentage of
commitment is as for ** .
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<PAGE> 171
3. TEST PLAN CRITERIA
Functional Test Plan Completion/ESP Test Plan Exit Criteria/IBM System
Test Completion:
A. No known ** in any Deliverables remain open; and
B. a list of any known ** in place by StorageTek to resolve within
a specified period of time.
4. ERROR PROCESSING DURING ESP TEST
All problems found during the ESP Test will be logged by StorageTek and
reported to IBM with the following minimum information:
A. a description of the error;
B. how to reproduce the error. If it is an Information Unit error,
where the error may be found;
C. a description of what is believed to be the correct result; and
D. the Severity of the problems discovered.
StorageTek shall notify IBM of any ** errors discovered during ESP
Testing as soon as possible. Other errors shall be provided to IBM in
accordance with StorageTek's Standard Practices. StorageTek shall **
to resolve all ** reasonably possible.
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<PAGE> 172
SCHEDULE 1 TO APPENDIX B OF ATTACHMENT 1 TO EXHIBIT 3
MONTEREY SYSTEM TEST
For each specified function ("SF"), Oahu shall promptly notify Monterey In
writing when formal test, (i.e., Engineering Verification Test ("EVT")) is to
begin, and shall provide to Monterey a functional specification prior to such
time. Any changes to an early ship program ("ESP") date to test the SF, and
all design change request ("DCRs") to the functional specifications for the
Products must be supplied to and approved by Monterey.
Oahu shall provide, within **of request by Monterey, all documentation
determined by Monterey to be required to prepare for possible Monterey System
Test (MST) including but not limited to, all Oahu schedules related to the
development and test of each new SF or SFs, problem logs related to the SF(s),
detailed test plans used by Oahu for the formal testing of the SF(s), customer
and maintenance documentation associated with the SF(s), a list of product
claims for the new SF(s), and any other documentation normally produced for
marketing, service organizations, Oahu test, or for the customer.
Summary reports of test progress and problem status shall be updated and sent
to Monterey on a regular basis from this time until ESP on a schedule to be
agreed upon by Oahu and Monterey.
MONTEREY SYSTEM TEST (MST)
For each SF or group of SFs considered by Monterey to be available to the
customer as part of a single announce package with a single availability date,
Monterey shall have the right to waive execution of an MST, participate in a
joint MST with Oahu, or conduct an MST at either an Oahu or Monterey test site
location or locations, the location(s) and expected duration of such testing to
be reasonably determined by Monterey. As the duration of a test is dependent
on, among other things, the complexity of the SF(s), the number of problems
found, the problem fix rate, and the amount of resources applied to the
testing, the expected duration should not be seen as a commitment by Monterey.
It is expected that should an MST be required by Monterey, the test would run a
minimum of 3 weeks at a level of resource applied to the test as mentioned
below.
A typical MST conducted by Monterey would consist of ** , often conducted
in parallel and each utilizing approximately half the allocated test UUTs
(Units Under Test), tools and on-site support personnel.
The Monterey FVT (Functional Verification Test) would execute test scenarios,
the majority of which are run against a multi-host high stress background
(known as "(FVT) vanilla stress") driven by internally developed Monterey test
drivers. Monterey FVT tests include, but are not limited to, the following
subtests: attachment, stress, functional/algorithm, power, error injection
(interface (both internal and
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<PAGE> 173
external), logic, drive, media), and channel sequence controls.
The Monterey SLT (System Level Test) would execute test scenarios, the majority
of which are run against a ** under the MVS operating system ** , using
both externally available applications, access methods and utilities as well as
internally developed jobstreams. Monterey SLT tests include, but are not
limited to, the following subtests:
**
ENTRY REQUIREMENTS FOR MST
Receipt of all test resources as described below with adequate time to
install and configure test UUTs
Available schedule windows, CPUs, personnel and other ** resources to
conduct the MST
No staging of the ** considered to be part of the ** to be tested
in the current MST ** of contiguous ** stress runs in both the
Monterey FVT and SLT environments
Documentation as described above
**
MST REQUIRED RESOURCES
FAST, FASTER, and QUICK machines supplied to MST test locations will be
supplied at ** to Monterey. These machines will be at hardware, microcode
(including functional, service, et al.), and supporting software levels
approved by Monterey. For a ** , there are usually ** divided between
FVT and SLT.
On-site support by Oahu personnel will be supplied to Monterey for any MST.
These personnel will be supplied in a quantity and at a skill level mutually
agreed upon by Oahu and Monterey at ** to Monterey. Monterey will request
at least ** personnel, ** and ** for ** training/testing, UUTEC
(Engineering Change) maintenance, and general support including failure data
collection. This does not include any development resource which might be
required for UUT debug or fix testing.
Tools required by Oahu for its own testing of the products (including but no
limited to debug, support, and error injection) will be supplied at a quantity
and level mutually agreed to by Oahu and Monterey for any MST at ** to
Monterey.
EXIT CRITERIA FOR MST
All MST test variations attempted with ** successful as determined by
Monterey
All ** resolved with a mutually agreeable action plan for the
resolution of the remainder of the problems
Resolution of all problems considered by Monterey to be ESP gates with
adequate time to verify the fixes to such problems and ensure no
unexpected side effects of such fixes
Signoff by the Monterey test group that all claims have been met
SF(s) meets ** and other Monterey quality criteria
- -------------------
** Confidential portions omitted and filed separately with the Securities and
Exchange Commission under an application for confidential treatment.
<PAGE> 174
ENTRY CRITERIA FOR ESP
Successful exit of MST or successful Monterey pre-ESP certification of
Oahu testing or the non-default waiving of both of the prior criteria if
Monterey determines that is appropriate
Monterey agrees that all ** found in any SF test effort by either Oahu
or Monterey do not constitute ESP gates
Monterey agrees that all testing efforts by either Oahu or Monterey
(other than ESP) have been successfully concluded and that all ** met
Appropriate support structures exist to deal in a timely manner with any
field problems which may be found
SF(s) meets Monterey quality criteria for general availability
- -------------------
** Confidential portions omitted and filed separately with the Securities and
Exchange Commission under an application for confidential treatment.
<PAGE> 175
SCHEDULE 2 TO APPENDIX B TO
STATEMENT OF WORK
Current Volume Assumptions
TB's
FAST # Escon
Cache Channel **
**
System Total
Upgrade (First ** TB's, at ** **
FASTER
**
Total Faster
Total Fast & Faster
- -------------------
** Confidential portions omitted and filed separately with the Securities and
Exchange Commission under an application for confidential treatment.
<PAGE> 176
Attachment 1 to Exhibit 3
Appendix C
[Intentionally left blank]
<PAGE> 177
EXHIBIT: CERTIFICATE OF ORIGINALITY
DATED ___ (IDA DATE) ___
IBM DEVELOPER AGREEMENT
STATEMENT OF WORK
APPENDIX D
EXHIBIT: CERTIFICATE OF ORIGINALITY
NUMBER: ___(IDA NUMBER)___
DATED
__(IDA DATE)___
BETWEEN
CORPORATION
___(STREET ADDRESS)____
___(CITY, STATE)_____
AND
_____(VENDOR NAME)______
____(STREET ADDRESS)____
_____(CITY, STATE)______
1
<PAGE> 178
EXHIBIT: CERTIFICATE OF ORIGINALITY
DATED ___ (IDA DATE) ___
CONTENTS
EXHIBIT: CERTIFICATE OF ORIGINALITY APPENDIX:
<TABLE>
<S> <C>
ICON ORIGINALITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
IDENTIFICATION FORM . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
1.0 QUESTIONAIRE . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.0 ICON REPRESENTATION . . . . . . . . . . . . . . . . . . . . . . . 9
2.0 CERTIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.0 CREATOR OF ICON . . . . . . . . . . . . . . . . . . . . . . . . . 9
</TABLE>
2
<PAGE> 179
EXHIBIT: CERTIFICATE OF ORIGINALITY
DATED ___ (IDA DATE) ___
AGREEMENT # ___(IDA Number)___ DATE OF AGREEMENT ___(IDA Date)___
EXHIBIT: CERTIFICATE OF ORIGINALITY
IBM Developer Agreement Transaction Document no:
XXX
- --------------------------------------------------------------------------------
If you provide IBM any program product, offering, related documentation,
microcode or other software material (collectively, "Software Material"), you
must complete this questionnaire and send it to IBM's Contract Coordinator for
this project.
You will provide IBM with any additional information needed for copyright
registration or enforcement of legal rights relating to the Software Material.
One questionnaire can cover one complete product, even if that product includes
multiple modules. A separate questionnaire must be completed for code and
another for its related documentation. Significant changes to the Software
Material will require completion of a new questionnaire.
Please do not leave any questions blank. Write "not applicable" or "N/A" if a
question is not relevant to the Software Material. If you need additional
space to complete any question, please attach a separate sheet of paper that
identifies the question number.
3
<PAGE> 180
EXHIBIT: CERTIFICATE OF ORIGINALITY
DATED ___ (IDA DATE) ___
1.0 QUESTIONAIRE
a) Name of the Software Material (provide complete identification
including version, release and modification numbers for programs and
documentation):
b) Was the Software Material or any portion thereof:
1) Written by any person(s) other than you or your employees working
within their job assignments?
YES___ NO___
(If NO, skip to #3)
2) Did the person(s) write ALL or PART of the Software Material?
ALL___ PART___
If PART, state the percentage written by the person(s) ____%
3) Was the Software Material provided to you by COMPANY(IES) or
INDIVIDUAL(S) or both?
COMPANY(IES)___ INDIVIDUAL(S)___ BOTH___ (Completed) and
e) below)
How did you acquire title to the Software Material or the right to grant the
licenses granted to IBM?
4) For each COMPANY, provide the following information:
Name:
Address:
How did the COMPANY acquire title to the Software Material? (For example, the
Software Material was written by the COMPANY's employees as part of their job
assignment):
Did the COMPANY have each non-US contributor to the Software Material sign a
waiver of their moral rights?
4
<PAGE> 181
EXHIBIT: CERTIFICATE OF ORIGINALITY
DATED ___ (IDA DATE) ___
YES___ NO___
5) For each INDIVIDUAL(S) in 2c), provide the following:
Name:
Citizenship:
Address:
Did the INDIVIDUAL(S) create the Software Material while employed by, or under
a contractual relationship with, another party?
YES___ NO___
If YES, provide name and address of the other party:
Did the INDIVIDUAL(S) create or first publish the Software Material in a
country other than the US?
YES___ NO___
If YES, did the INDIVIDUAL(S) sign a waiver of moral rights?
YES___ NO___
(If YES, please attach a copy)
6) Was any part of the Software Material registered at any copyright office?
YES___ NO___
(If YES, provide the following registration information:)
i) Claimant Name:
ii) Registration Number:
iii) Date of Registration:
iv) Title of Work:
c) Was any part of the Software Material published?
5
<PAGE> 182
EXHIBIT: CERTIFICATE OF ORIGINALITY
DATED ___ (IDA DATE) ___
YES___ NO___
When and where was it published?
Was there a copyright notice on the published material(s)?
YES___ NO___
(If YES, provide the copyright notice below.)
Was any part of the Software Material distributed by you to any outside person
or company other than IBM?
YES___ NO___
When and where was the Software Material distributed?
To whom was the Software Material distributed?
Why was the Software Material distributed?
Under what conditions was the Software Material distributed?
(for example, under a contract.)
d) Was any part of the Software Material derived from preexisting material(s)?
YES___ NO___
(If YES, provide the following information for each of the
preexisting materials:)
1) Name of the material:
2) Author (if known):
3) Owner (if known):
4) Copyright notice appearing on the material (if any):
6
<PAGE> 183
EXHIBIT: CERTIFICATE OF ORIGINALITY
DATED ___ (IDA DATE) ___
5) Was any new function added to the preexisting software?
YES___ NO___
Briefly describe the new function(s) below:
___% of preexisting material used
___% of preexisting material modified
___% of new material consisting of or deriving from
preexisting materials
6) Briefly describe below how the preexisting material has been used:
e) Were any part of the display screens, data formats,
instruction or command formats, operator messages, interfaces,
etc. (collectively called "External Characteristics") of the
Software Material copied or derived from the External
Characteristics of another program or product of yours or a
third party?
YES___ NO___
(If YES, provide the following information:)
a) Name of Developer's or third party's program or product:
b) Author (if known):
c) Owner (if known):
d) Copyright notice relating to the preexisting External
Characteristics (if any):
e) Have the preexisting External Characteristics been
modified?
YES___ NO___
7
<PAGE> 184
EXHIBIT: CERTIFICATE OF ORIGINALITY
DATED ___ (IDA DATE) ___
(Describe how they have been modified below:)
f) Identify below any other circumstances that may affect
IBM's ability to reproduce and market the Software Material,
including:
1) confidentiality or trade secrecy of
preexisting materials:
2) known or expected royalty obligations to
others:
3) preexisting materials developed for another
party or customer (including government)
where you may not have retained full rights
to the materials:
4) materials acquired from a person or company
possibly having no title to them:
g) Employee Identification. You recognize that for purposes
of copyright registration or enforcement of legal rights
relating to the Software Material, IBM may need to know the
names, addresses and citizenships of all persons who wrote or
contributed to the writing of the Software Materials. You
agree to keep accurate records of all such information
according to the IDA and to provide them to IBM at our
request.
h) ICON. An "ICON" is generally defined as a symbol on a
display screen that a user can point to with a device such as
a mouse in order to select a particular operation or software
application. For each ICON contained in the Software
Materials, you will haveits creator complete an ICON
IDENTIFICATION FORM and submit them as appendices to this
Certificate of Originality.
2.0 CERTIFICATION
8
<PAGE> 185
EXHIBIT: CERTIFICATE OF ORIGINALITY
DATED ___ (IDA DATE) ___
By signing below, you certify that all information contained in this
Certificate of Originality, including any attachments or appendices to it, are
accurate and complete.
(Developer Name)
--------------------------------------------------------------
Signature:
--------------------------------------------------------------------
Print name:
-------------------------------------------------------------------
(Name of Signer)
--------------------------------------------------------------
Title:
------------------------------------------------------------------------
(Title of Signer)
-------------------------------------------------------------
Date:
-------------------------------------------------------------------------
9
<PAGE> 186
EXHIBIT: CERTIFICATE OF ORIGINALITY
DATED ___ (IDA DATE) ___
APPENDIX: ICON IDENTIFICATION FORM
1.0 ICON REPRESENTATION
Word(s), function or thing represented by the ICON:
2.0 CREATOR OF ICON
a) Name:
b) Job Title:
c) Business Address:
d) Business Telephone:
e) Citizenship:
f) Date created ICON in tangible form:
1) Was the attached ICON created as an assigned work task
without reference to any preexisting icons or other work
authored or owned by another?
YES___ NO___
(If NO, identify the preexisting icon or other works
that were referenced and attach copies:)
2) If the ICON was created for inclusion in a specific
product, identify the product in which it will be (or was)
used and provide the planned availability date and country of
first publication:
3) Identify or describe any known preexisting icons that
represent the same word or function or that are similar in
appearance to the ICON (attach copies):
4) Please attach a copy of the ICON and, for identification
purposes, include on the drawing the information you provided
in response to Item 2 (a through f) above.
10
<PAGE> 187
EXHIBIT: CERTIFICATE OF ORIGINALITY
DATED ___ (IDA DATE) ___
(Creator Name)
--------------------------------------------------------------
Signature:
------------------------------------------------------------------
Print name:
-----------------------------------------------------------------
(Name of Signer)
------------------------------------------------------------
Date:
-----------------------------------------------------------------------
11
<PAGE> 188
IBM DEVELOPER AGREEMENT (EXHIBIT 3)
STATEMENT OF WORK (ATTACHMENT 1)
APPENDIX E
- --------------------------------------------------------------------------------
IBM SOURCE CODE CUSTODY AGREEMENT: BASE AGREEMENT
- --------------------------------------------------------------------------------
This Source Code Custody Agreement ("SCCA") between StorageTek, Custodian and
IBM describes the rights and obligations of the parties for the Escrowed Works
that StorageTek and IBM deliver to Custodian. StorageTek and IBM shall be
called the "parties."
The SCCA consists of this Base Agreement and its Description of Escrowed Work
("DEW"). The SCCA is our complete agreement, as it supplements the IBM
Developer Agreement ("IDA"), and replaces all prior oral or written
communications between us regarding the Escrowed Works.
By signing below for our companies, the parties agree to the terms of this Base
Agreement.
AGREED TO: AGREED TO:
Storage Technology Corporation International Business Machines
Corporation
- ----------------------------------- ------------------------------------
By: By:
-------------------------------- ---------------------------------
(Authorized Signature) (Authorized Signature)
Name: Name:
------------------------------ -------------------------------
Date: Date:
------------------------------ -------------------------------
- ----------------------------------- ------------------------------------
StorageTek Office Address IBM Office Address
1
<PAGE> 189
IBM SOURCE CODE CUSTODY AGREEMENT #:
-------------
AGREED TO:
License Agreement #:
- ------------------------------- ------------------------
Custodian Name
By:
----------------------------
(Authorized Signature)
Name:
--------------------------
Date:
--------------------------
Custodian Address:
- -------------------------------
- -------------------------------
- -------------------------------
2
<PAGE> 190
IBM SOURCE CODE CUSTODY AGREEMENT
BASE AGREEMENT
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAR TITLE PAGE
- --- ----- ----
<S> <C> <C>
1 DEFINITIONS 2
2 ESCROWED WORKS DEPOSITS 2
3 ESCROWED WORKS VERIFICATION 3
4 RELEASE OF ESCROWED WORKS 3
5 LICENSE TO ESCROWED WORKS 4
6 WARRANTY 4
7 LIABILITY AND INDEMNIFICATION 4
8 TERM AND TERMINATION 5
9 COORDINATORS 5
10 PAYMENT 5
11 GENERAL 6
</TABLE>
3
<PAGE> 191
PART 1. DEFINITIONS
Capitalized terms in the SCCA have the following meanings. The DEW may define
additional terms.
1.1 CODE is computer programming code including both Object Code and Source
Code.
a) OBJECT CODE is the computer programming code substantially in
binary form. It is directly executable by a computer after
processing, but without compilation or assembly.
b) SOURCE CODE is the computer programming code that may be displayed
in a form readable and understandable by a programmer of ordinary
skill. It includes related source code level system documentation,
comments and procedural code, such as job control language. Source
Code does not include Object Code.
1.2 DERIVATIVE WORK is a work that is based on an underlying work and that
would be a copyright infringement if prepared without the authorization of the
copyright owners of the underlying work.
Derivative Works are subject to the ownership rights and licenses of others in
the underlying work.
1.3 ESCROWED WORKS are the materials that are described in the DEW. They
include:
a) the Source Code in machine-readable form and the source code level
system documentation in hard copy form;
b) a list of all Source Code modules of the Licensed Work;
c) a directory listing for each machine-readable medium;
d) commentary required to understand and use the Source Code;
e) a list of all Tools;
f) the Tools that Developer is required to escrow under the License
Agreement; and,
g) the code for initial performance benchmarks that IBM is required to
escrow under the License Agreement.
StorageTek agrees that the source code for IXFP, IXOF, Iceberg, Kodiak and
Arctic Fox, deposited hereunder as of June 30, 1996 shall determine what is
considered Licensed Works under the Description of Licensed Works and that IBM
may rely on what is deposited as determinative for that purpose.
4
<PAGE> 192
1.4 LICENSE AGREEMENT is the IBM Developer Agreement, in which StorageTek
licenses IBM to its Licensed Works and IBM licenses the initial performance
benchmarks.
1.5 LICENSED WORKS are those deliverables that StorageTek licenses to IBM
under the License Agreement.
1.6 RELEASE EVENTS are the following occurrences when either IBM or StorageTek
may demand that Custodian deliver a copy of the Escrowed Works to the
requesting party:
a) Either IBM or StorageTek may request Custodian to provide a copy to
the requesting party at any time, but Custodian must retain the
original deposited materials.
1.7 Tools include devices, compilers, hardware, software, user and programming
documentation, media or other items required for the development, testing,
maintenance or implementation of a Licensed Work.
PART 2. ESCROWED WORKS DEPOSITS
2.1 StorageTek and IBM will:
a) deposit with Custodian two copies of their respective Escrowed
Works as described in the DEW attached hereto. StorageTek and IBM
will identify each item in the deposit by labeling it;
b) deliver the Escrowed Works in good condition in sealed containers;
c) provide Custodian with a notice that shall not be confidential
(hereafter "nonconfidential notice") of all items contained in each
container;
d) replace all lost or damaged Escrowed Works promptly upon notice
from Custodian; and
e) if either party determines that the Escrowed Works are not complete
and accurate, the depositing party shall promptly rectify the same.
2.2 Custodian will:
a) accept each Escrowed Works deposit in trust for the non-delivering
party and send the non-delivering party a notice confirming receipt
within three business days;
b) retain the Escrowed Works;
c) match all items on the nonconfidential notice to the labels on
Escrowed Works;
5
<PAGE> 193
d) take all reasonable steps to protect and store Escrowed Works in
appropriate containers and atmospheric conditions, segregated from
other materials;
e) promptly provide notice to IBM and StorageTek in the event of lost
or damaged Escrowed Works; and
f) store a copy of this SCCA and the nonconfidential notice of items
with Escrowed Works.
PART 3. ESCROWED WORKS VERIFICATION
3.1 Unless the requesting party and Custodian agree in writing, Custodian is
not responsible for technical verification that Escrowed Works are complete,
accurate and current. Each non-Custodian party may, at its expense, hire a
party qualified to do this verification. StorageTek will reimburse IBM's
expenses if the Escrowed Works do not comply with the requirements of this
SCCA, and mutatis mutandis with respect to StorageTek's expenses.
3.2 Verification includes generating Object Code from Source Code for each
Licensed Work. The verifier will witness the transfer of the verified Source
Code to deposited media. The depositing party will supervise the verification
which will be conducted at the depositing party's facilities unless the other
non-Custodian party advises otherwise.
3.3 One technical employee of the non-depositing, non-Custodian party may
witness verification. To the extent possible, verification will be done in a
way that does not expose the Source Code to this employee. If this is not
possible, this employee will treat the Source Code according to the
IBM/StorageTek Agreement for Exchange of Confidential Information, number
OEM-9447.
PART 4. RELEASE OF ESCROWED WORKS
4.1 Either IBM or StorageTek may demand delivery of Escrowed Works by notice to
Custodian pursuant to Section 1.6, copying the other non-Custodian party.
4.2 If either non-Custodian party determines that it does not have a complete
set of Escrowed Works, it may request them from the other party. The other
party will provide the materials required within three days of requesting
party's request.
4.3 Each non-Custodian party will treat Escrowed Works according to the
IBM/StorageTek Agreement for Exchange of Confidential Information.
PART 5. LICENSE TO ESCROWED WORKS
5.1 The license to Escrowed Works is governed by the IDA.
6
<PAGE> 194
PART 6. WARRANTY
Each depositing party represents and warrants that it has the authority to
deliver the Escrowed Works to the Custodian and that the Escrowed Works (other
than the Licensed Works being escrowed) are complete and accurate.
PART 7. LIABILITY AND INDEMNIFICATION
7.1 Custodian will take all reasonable precautions to prevent disclosure of
Escrowed Works to unauthorized third parties.
7.2 Custodian is liable only for willful misconduct, gross negligence and
fraud in performing its duties under this SCCA. Custodian is not liable if
StorageTek or IBM fails to comply with any provision of the License Agreement
or this SCCA. Custodian is not liable for acting on any notice that it in good
faith believes to be genuine and legitimate.
7.3 If a third party makes a claim against Custodian:
a) StorageTek will indemnify Custodian for claims based on
StorageTek's failure to comply with this SCCA; and
b) IBM will indemnify Custodian for claims based on IBM's failure to
comply with this SCCA.
These indemnities do not apply where it is found that Custodian acted with
willful misconduct, gross negligence or fraud.
7.4 The indemnifying party will pay any settlement amount that it authorizes
and all costs, damages and attorney's fees that a court finally awards if
Custodian:
a) promptly provides the indemnifying party notice of the claim; and
b) allows the indemnifying party to control and cooperates with it in
the defense of the claim and settlement negotiations.
Custodian may participate in (but not control) the proceedings at its option
and expense.
PART 8. TERM AND TERMINATION
8.1 This SCCA begins when all parties sign it and continues until terminated
by mutual written agreement of the parties. Either non-Custodian party may, at
its option, extend the term of the DEW for additional years as described in
Payment.
7
<PAGE> 195
8.2 Custodian will destroy any remaining Escrowed Works 30 days after the
expiration or termination of the DEW unless IBM or StorageTek provides notice
otherwise.
8.3 The provisions of Liability and Indemnification will survive the
expiration or termination of this SCCA. These terms will apply to the parties'
respective successors and assigns.
8.4 If Custodian cannot continue its responsibilities, Custodian may resign by
giving IBM and StorageTek 90 days' notice. IBM and StorageTek in good faith
will select a successor custodian to assume Custodian's responsibilities.
PART 9. COORDINATORS
9.1 SCCA Coordinators responsible to administer all matters associated with
this SCCA and its exhibits are:
FOR: IBM: FOR: STORAGETEK
Name: Name:
------------------------- -----------------------
Title/Dept: Title/Dept:
------------------------- -----------------------
Address: Address:
------------------------- -----------------------
FOR: ___(CUSTODIAN NAME)___
Name:
-------------------------
Title/Dept:
-------------------------
Address:
-------------------------
9.2 Each of us will assign an Escrowed Work Coordinator in the DEW. These
coordinators are responsible to administer matters associated with the DEW.
The SCCA Coordinator and the Escrowed Work Coordinator may be the same person.
A party will provide notice to the others when coordinators change.
8
<PAGE> 196
PART 10. PAYMENT
10.1 IBM will pay Custodian within 30 days after receipt of an acceptable
invoice for services under the DEW. All payments will be made in U.S. dollars.
The Exhibit: Fee Schedule identifies the specified period of Custodian's
services and the firm fees for that period. Custodian may propose a revised
fee schedule to the IBM SCCA Coordinator no later than 90 days before the end
of the specified period. The IBM SCCA Coordinator will notify Custodian if it
accepts or rejects the proposed fee schedule. If rejected, the IBM and
Custodian SCCA Coordinators will negotiate a new fee schedule for the next
period. The IBM and Custodian SCCA Coordinators add the new fee schedule to
the SCCA by initialing and dating it. If IBM and Custodian cannot agree to a
new fee schedule for the DEW, it will expire at the end of its term and IBM and
StorageTek in good faith will select a successor custodian. Custodian will
provide all assistance required to move the Escrowed Works to the successor
custodian.
10.2 Custodian will invoice IBM for:
a) all services to be performed under a DEW for one year; and
b) renewal of a DEW 60 days before it expires. IBM may renew the DEW
for an additional year by paying the renewal fees. If Custodian does
not receive the renewal fees within 30 days, it will notify in writing
the IBM Escrowed Work Coordinator and the StorageTek Escrowed Works
Coordinator.
If neither IBM nor StorageTek pay the fees by the expiration date of the DEW,
the DEW will expire, the Custodian shall thereupon notify the IBM Escrowed
Works Coordinator and the StorageTek Escrowed Works Coordinator in writing that
the Parties have thirty days from the date of the notice to cure such failure
to pay and shall continue to maintain the escrow for that period.
In addition to information required by the DEW, the invoice will identify this
SCCA, the DEW and the services invoiced plus their associated fees. Custodian
will submit all invoices as identified in the DEW.
If IBM does not renew by 30 days before the expiration date, StorageTek may pay
the such fee instead.
Each non-paying non-Custodian party shall reimburse one-half of the fee paid by
the paying party through the year **; after that, either party may elect not to
pay or to contribute to the fee (in which case continuance of the SCCA is
dependent upon the other party's actions entirely).
- ------------------
** Confidential portions omitted and filed separately with the Securities and
Exchange Commission under an application for confidential treatment.
9
<PAGE> 197
PART 11. GENERAL
11.1 Each party will comply with all applicable laws and regulations at its
expense. This includes all export and import laws and regulations.
11.2 Except as provided in the SCCA, none of the parties may assign or
transfer the SCCA or its rights under it or delegate or subcontract its
obligations without the prior written approval of the other parties. Any
attempt to do so is void.
11.3 No party will bring a legal action against another party more than two
years after the cause of action arose. All parties will act in good faith to
resolve disputes. All parties waive their rights to a jury trial in any
resulting litigation. Litigation will only be commenced in the State of New
York.
11.4 All notices must be in writing. Except as provided in the SCCA, for a
change to the SCCA to be valid, IBM and StorageTek must sign it. Other than
changes to the Release Events, Custodian must also sign changes that affect its
rights or obligations under the SCCA. IBM will provide Custodian with copies
of all changes that Custodian is not required to sign.
No approval, consent or waiver will be enforceable unless signed by the
granting party.
11.5 The substantive laws of the State of New York govern the SCCA.
10
<PAGE> 198
IBM SOURCE CODE CUSTODY AGREEMENT
DESCRIPTION OF ESCROWED WORK
- --------------------------------------------------------------------------------
This Description of Escrowed Work ("DEW") is a Transaction Document issued
under the IBM Source Code Custody Agreement ("SCCA").
PART 1. DESCRIPTION
1.1 The Escrowed Works required for deposit with Custodian: 1) by StorageTek,
are the source code and object code for IXFP, IXOF, ICEBERG, KODIAK and ARCTIC
FOX (Licensed Works) the applicable Development Environment and the capacity
ratio benchmark; and 2) by IBM, the initial benchmarks used to measure
performance requirements for ICEBERG and KODIAK. In each case, as more
completely described in the Statement of Work to the IBM Developer Agreement.
1.2 Deposit will occur within thirty days after the signing of this SCCA.
1.3 StorageTek agrees that the source code for IXFP, IXOF, Iceberg, Kodiak and
Artic Fox, deposited hereunder as of June 30, 1996 shall determine what is
considered Licensed Works under the Description of Licensed Works and that
IBM may rely on what is deposited as determinative for that purpose.
PART 2. ESCROWED WORK COORDINATORS
2.1 Escrowed Work Coordinators responsible to administer all matters
associated with this DEW are:
FOR: International Business FOR: Storage Technology
Machines Corporation Corporation
Name: Name:
--------------------- ---------------------
Title/Dept: Title/Dept:
--------------------- ---------------------
Address: Address:
--------------------- ---------------------
--------------------- ---------------------
--------------------- ---------------------
Phone: Phone:
--------------------- ---------------------
Facsimile: Facsimile:
--------------------- ---------------------
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<PAGE> 199
FOR: ________(CUSTODIAN NAME)_________
Name:
---------------------------------
Title/Dept:
---------------------------------
Address:
---------------------------------
---------------------------------
Phone:
---------------------------------
Facsimile:
---------------------------------
2.2 Notices are effective when received by the appropriate coordinator as
demonstrated by reliable written confirmation (for example, certified mail
receipt, courier receipt or facsimile receipt confirmation sheet.)
PART 3. PAYMENT
3.1 Custodian will send its original invoices to IBM at the following address:
_____________(street address)____________________
_____________(city, state)_______________________
One copy of each invoice will be sent by mail or facsimile to the IBM Escrowed
Work Coordinator, with a copy to the StorageTek Escrowed Work Coordinator.
3.2 Custodian's invoices will include the following information:
a) IBM Source Code Custody Agreement Number;
b) name of Custodian and "remit to" address;
c) short description of the performance for which payment is due; and
d) IBM's purchase order number (if applicable), Custodian's invoice
number and its date.
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<PAGE> 200
IBM DEVELOPER AGREEMENT (EXHIBIT 3)
STATEMENT OF WORK (ATTACHMENT 1)
APPENDIX F
================================================================================
PERFORMANCE ASSESSMENT WORKLOAD SET (PAWS)
OVERVIEW
The following document describes the methodology to be used in the
performance evaluation of the STK's ICEBERG and KODIAK DASD I/O
Subsystems.
The performance workload suite has the following attributes:
1. **
2. **
3. **
4. **
5. **
6. **
The following is a summary of the workloads included in the subsystem workload
suite.
1. Random stress test. A set of random access experiments,
called a four-corners test, evaluates performance of **
conditions, such as ** or ** , with either ** operations, or
** writes.
2. Sequential stress tests. A set of sequential experiments are
included that stress the ** of the subsystem. These tests
include both ** read and write streams, running between
** .
3. Data base workload. A data base workload is included that
tests a wide variation in ** . This workload uses ** , and
has been designed to ** the type of random access behavior
seen in the ** data.
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4. Batch workload. A batch workload is included that ** the
** seen in customer batch workloads. This workload contains
a mixture of ** activity.
5. Sort workload. A workload is included that is ** jobs.
6. Utility workload. A utility workload is included that contains
the type of "data mover" applications that might be seen in
many ** .
RANDOM STRESS TEST
The purpose of these experiments is to test variations of read and
write content with high and low reference locality.
Key workload characteristics
1. The workload consists of ** tests:
**
2. Several measurement points are run for each case. First, a **
point is taken at approximately ** to measure ** times. An
additional ** points are taken, ranging from around ** to **
for ** , and from around ** to maximum ** rate for ** .
3. ** rates are controlled by selecting various ** .The maximum
rates are tested by establishing a ** .
4. ** volumes are standardly used, a sufficient number to allow
** of ** subsystems.
5. Access are uniformly distributed across all of the ** volumes.
** are generated by a set of ** .
6. The ** tests use ** , and the ** use a ** .
7. The ** metrics for this * are:
**
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and Exchange Commission under an application for confidential treatment.
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<PAGE> 202
SEQUENTIAL STRESS TESTS
1. The following are the ** of the sequential stress tests.
**
KEY WORKLOAD CHARACTERISTICS
1. The experiments are run with ** to ensure that the ** to the
device is being ** by ** .Each data set is approximately ** .
2. Experiments are run with ** number of ** , varying from **
to ** for both ** .
3. The ** tests transfer roughly ** .The ** tests transfer ** .
4. The ** tests do not use the ** in the ** , thereby testing the
** capability of the subsystem.
5. The ** metric for this workload is the ** rate in ** per
second.
-- Table 1 shows the test variations included in this sequential
test suite.
Table 1. Sequential test. ** sequential streams
EXPERIMENT ACCESS METHOD BLKSIZE NO.BLKS # OF STREAMS
**
** DATA BASE WORKLOAD
This test includes a general ** data base workload. This workload **
the ** characteristics of a variety of ** systems, and is implemented
as an application program using ** .This program has the ability to
generate a variety of ** .Unlike some benchmarks of this type, it is
not tuned to a ** , but rather is ** , and matches the ** of
characteristic data base environments. In this way, it is a reasonable
test of the effects of ** or the efficiency of ** , with **
characteristics similar to ** and some characteristics of ** and **
data base systems.
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and Exchange Commission under an application for confidential treatment.
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<PAGE> 203
KEY WORKLOAD CHARACTERISTICS
1. The workload is run with ** , listed in order of "cache
friendliness".
a. **
b. **
c. **
d. **
In general, the less cache friendly workloads have ** and ** .
2. With the exception of the ** workload, these workloads are
run at ** measurement points, with each measurement point
representing a ** in variable user population. This means
that ** are added at higher loads, with each ** having
a ** . (Some workloads, including the ** variation,
** user population that ** at ** measurement
points.) As a result, as the user population grows at the
** measurement points, ** effects are generally observed
for a subsystem at a specific cache size.
**
The ** measurement point generates an average of **
per ** volume in the workload, attempting to drive the
workload to ** and ** per volume at the **
measurement points. However, since the ** times are
fixed, as response times increase at the ** points, the
actual subsystem throughputs ** these targets.
3. Each measurement point is run for approximately ** . The
data bases are ** (to realistically deal with **
sizes), and the ** run duration is generally not long
enough for ** design to stabilize into record caching.
This is due to the ** unique to the ** . As a result,
some of the measurements of the ** variation may be
pessimistic for the ** .
4. The workload can be configured using multiples of **
volumes. The current setup uses ** volumes, but can be
easily expanded beyond that number. It
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<PAGE> 204
should be noted than although most ** are configured with
more than ** volumes, at any given time most of those
volumes have very little activity, and most of the data is
inactive. In that sense, ** volume experiment with these work
loads represents the performance characteristics of a larger
customer configuration.
5. Except for the ** variation, ** are skewed across **
volumes. For example, at the ** measurement point for a set
of ** volumes, ** volumes attempt an ** of
approximately ** volumes attempt approximately ** that
rate, and ** volume attempts approximately ** that
rate.
6. In the cache standard variation, a few volumes have **
characteristics, while the rest of the volumes have ** .
In the other workload variations, all of the ** volumes
have ** characteristics. The standard cache workload
contains ** volumes that have ** characteristics.
7. A ** variation is included to ** throughput
capabilities of the subsystem. ** measurement points are
run, from approximately ** sec per volume at the ** rate,
to a ** rate. This workload uses a ** user
population, reducing the ** as load increases, to a **
at the ** measurement point. For this workload, ** tend
to remain constant across the measurement points.
8. The workload uses ** sizes for all variations.
9. The ** friendly variations have ** write content. All
writes are ** writes, meaning that the record is ** ,
and therefore ** a hit in cache.
10. Each ** volume in the workload has ** data set. Each
** data set is approximately ** in size.
-- Table 2 shows some of the key workload characteristics for the
random access tests and the ** workload. The caching
attributes shown are those measured on a ** configuration.
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and Exchange Commission under an application for confidential treatment.
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Table 2. Random Workload Attributes. Workload attributes for a **
EXPERIMENT RD HIT % WRITE % F/W RECRDMISS% XFER SIZ SKEW
DESTG%
**
BATCH WORKLOAD
The purpose of the batch workload is to create a test which is
representative of customer's ** batch window ** characteristics.
The following are the basic workload attributes:
KEY WORKLOAD CHARACTERISTICS
1. Contains a mixture of type of ** activity
**
2. The average transfer size is ** if ** programs
excluded). The ** applications transfer either ** or
** per ** , and the ** applications transfer
approximately ** per ** .
3. **
4. The primary metrics for the workload are ** and ** and
** times.
WORKLOAD IMPLEMENTATION
1. Contains ** jobs, each with ** job steps. The
following is the mixture of ** by the job steps:
** reads of data sets with either ** or ** block sizes.
- A sequential application ** that copies data sets with
either ** or ** block sizes.
- A ** application that updates ** of the records.
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- A ** application. This is in fact the ** variation
of the data base workload.
- A ** application.
2. Each job is ** except for the ** of the steps. This
is done to allow jobs to finish at roughly the same time, but
creates a mixture of activity at each point in time.
3. Each job has ** data sets. Except for the data base data
sets, data sets are ** distributed across ** . Each
of the ** data base data sets are distributed across each
of the ** .
SORT WORKLOAD
WORKLOAD CHARACTERISTICS
1. A ** application is included in the workload. The key
attributes of the workload are:
- The **
- **
2. ** sorting is ** , that is ** sorting options are
used. This is to ensure that this is truly a DASD benchmark,
and that ** differences are not a significant factor in
the sort elapsed times.
3. A ** size of ** is sued to ensure ** writes for
the sort work data sets.
4. The ** attributes for ** are ** and ** .
UTILITIES WORKLOAD
A collection of ** are included in the test. Customers often
focus on these types of applications when conducting **
benchmarks. The purpose of these tests are to ** the various
"data mover" type of utilities. The following are included in this
test suite:
1. ** Physical dump.
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<PAGE> 207
- A series of physical dumps are performed, using **
and ** dump operations.
- A ** has been provided which causes the output to
be ** , thereby eliminating ** as a bottleneck.
- The volumes dumped are ** approximately **
full. The volumes contain ** data sets. They
are in fact ** volumes used for the batch and
data base workloads.
- ** is used.
2. ** Physical restore.
- A series of physical restores are performed, using
** and ** restore operations. The volumes
restored are the same as the batch and data **
volumes.
3. **
- A series of ** jobs are executed.
- The data sets used are the ** as for the **
stress tests, ** with ** .
4. IEBCOPY
- A series of ** jobs are executed.
- The data sets consist of copies of a source
library **.
WORKLOAD EXECUTION TIME
-- Table 3 Shows approximate run times for each component of the
workload. These run times vary based upon the product being
evaluated. The total time to run the workloads and load and
initialize the base operating system is currently around ** .
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and Exchange Commission under an application for confidential treatment.
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Table 3. Workload execution times
COMPONENT DB LOAD EXECUTION
**
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and Exchange Commission under an application for confidential treatment.
9
<PAGE> 209
APPENDIX G TO ATTACHMENT 1 OF EXHIBIT 3
---------------------------------------
Product Development Plan
IBM SSD
BUSINESS LINE MANAGEMENT
(INTEGRATED PRODUCT DEVELOPMENT)
DEVELOP/QUALIFY/CERTIFY PHASE
FOR THE
LARGE SYSTEMS STORAGE
OPEN SYSTEMS STORAGE
AND
REMOVABLE MEDIA STORAGE SOLUTIONS
MARKET SEGMENTS
VERSION 2.0 DRAFT 4
April xx, 1996
IBM SSD
San Jose, California
This document is to be used with the IBM SSD BLM (IPD) Process Handbook
and is in review approved for use within the Removable Media Storage
Solutions, Open Systems Storage, and Large Systems Storage market
segments.
A copy of the authorization is on file with the Document Owner.
The document will be reviewed December, 1996
<PAGE> 210
+--- SOFTCOPY NOTICE ---------------------------------------------+
| |
| The current version of this document is maintained in softcopy |
| on the EE MDQ system in San Jose, the MDQ system in Tucson, and |
| on the RSPINFO system in Rochester. Printed copies are for |
| reference only. To assure that the latest version is being |
| utilized, the softcopy document must be viewed. |
| |
| Printed copies of this document may contain slight variations |
| in appearance; however, the content is the same. |
| |
+-----------------------------------------------------------------+
<PAGE> 211
DOCUMENT CONTROL INFORMATION
PROCESS OWNER: **
PROCESS OWNER NODE/ID: **
OWNING DEPARTMENT: Open Systems Business Line Management
(FK8)
DOCUMENT OWNER: **
DOCUMENT OWNER NODE/ID: **
DOCUMENT FILE NAME: BLMBOX BOOKMSTR
DOCUMENT LOCATION: EE MDQ, MDQ, RSPINFO
DOCUMENT RETENTION: **
DOCUMENT REVIEW SCHEDULE: December, 1996
DOCUMENT REVIEWED BY: List of reviewers
<TABLE>
<CAPTION>
+---------------+----------------------+---------------+----------+
| NAME | DEPT | NODE / ID | DATE |
+---------------+----------------------+---------------+----------+
<S> <C> <C> <C>
| ** ** 04/ /96
| ** ** 04/ /96
| ** ** 04/ /96
| ** ** 04/ /96
| ** ** 04/ /96
| ** ** 04/ /96
| ** ** 04/ /96
| ** ** 04/ /96
| ** ** 04/ /96
| ** ** 04/ /96
| ** ** 04/ /96
| ** ** 04/ /96
| ** ** 04/ /96
| ** ** 04/ /96
| ** ** 04/ /96
| ** ** 04/ /96
| ** ** 04/ /96
| ** ** 04/ /96
| ** ** 04/ /96
| ** ** 04/ /96
</TABLE>
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and Exchange Commission under an application for confidential treatment.
<PAGE> 212
<TABLE>
<S> <C> <C>
| ** ** 04/ /96
| ** ** 04/ /96
| ** ** 04/ /96
| ** ** 04/ /96
| ** ** 04/ /96
| ** ** 04/ /96
| ** ** 04/ /96
| ** ** 04/ /96
</TABLE>
DOCUMENT APPROVAL: Approver's names, dept. and date of approval
<TABLE>
<CAPTION>
+--------------------------+---------------------------+----------+
| NAME | TITLE | DATE |
+--------------------------+---------------------------+----------+
<S> <C> <C> <C>
| ** ** 04/ /96
| ** ** 04/ /96
| ** ** 04/ /96
| ** ** 04/ /96
| ** ** 04/ /96
</TABLE>
DOCUMENT DISTRIBUTION: Softcopy is on EE MDQ in San Jose,
MDQ in Tucson, and RSPINFO in Rochester
- ------------------------
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and Exchange Commission under an application for confidential treatment.
<PAGE> 213
CHANGE HISTORY
<TABLE>
<CAPTION>
+---------+----------+--------------------------------------------+
| VERSION | DATE | CHANGE DESCRIPTION |
+---------+----------+--------------------------------------------+
<S> <C> <C>
| 0.6 | 01/ /95 | Initial Draft of NPI Handbook |
+---------+----------+--------------------------------------------+
| 1.0 | 02/24/95 | Approved version of NPI Handbook |
+---------+----------+--------------------------------------------+
| 2.0 | 04/19/96 | Draft of BLM Handbook for LSS, OSS, & RMS
</TABLE>
<PAGE> 214
CONTENTS
<TABLE>
<S> <C>
BLM (IPD) DEVELOP/QUALIFY/CERTIFY PHASE . . . . . . . . . . . 7
DEVELOP/QUALIFY/CERTIFY PHASE STEPS . . . . . . . . . . . . . 9
Step 4. ** . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Step 5. ** . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Step 6. ** . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Step 7. ** . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Step 8. ** . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Step 9. ** . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Step 10. ** . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Step 11. ** . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Step 12. ** . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Step 13. ** . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Step 14. ** . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Step 15. ** . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Step 16. ** . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Step 17. ** . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Step 18. ** . . . . . . . . . . . . . . . . . . . . . . . . . . 58
FIGURES
1. BLM Process Overview . . . . . . . . . . . . . . . . 10
</TABLE>
TABLES
- ------------------------
** Confidential portions omitted and filed separately with the Securities
and Exchange Commission under an application for confidential treatment.
<PAGE> 215
BLM (IPD) DEVELOP/QUALIFY/CERTIFY PHASE
This document represents the Business Line Management (Integrated Product
Development) Process as implemented in the following market segments:
o Large Systems Storage
o Open Systems Storage
o Removable Media Storage Solutions
The history of this process and its phases and decision checkpoints are
described in the IBM Storage Systems Division Business Line Management
(Integrated Product Development) Process Handbook, Version 2.0.
This document describes the work that goes on in each phase in more detail
including inputs needed at each step, deliverables from each step, and the
tasks performed in each step. It does not include the very detailed processes
for how code is written, reviewed and tested, how vendor parts are qualified,
how chips are designed, simulated and tested, ... It does describe how the work
product of the various disciplines comes together in an integrated product
offering.
<PAGE> 216
PLEASE NOTE: Pages 8 through 60 (Parts 4 through 18) of this Appendix G
Attachment 1 of Exhibit 3, entitled to "Product Development Plan," have been
omitted in their entirety (rather than redacting all of the information on each
and every page) as the Company believes that these pages are comprised
completely of proprietary information regarding numerous phases of IBM's
product development process. The disclosure of such information would be
harmful to IBM and, moreover, to the Company's relationship with IBM as IBM
will not consent to the disclosure of this confidential information.
<PAGE> 217
ATTACHMENT 2 TO EXHIBIT 3
IBM DEVELOPER AGREEMENT
DESCRIPTION OF LICENSED WORK
This Description of Licensed Works ("DLW") is a Transaction Document issued
under the IBM Developer Agreement ("IDA") for the license to IBM of an
existing Licensed Works owned by StorageTek. StorageTek retains ownership of
its intellectual property rights in the Licensed Works, but grants IBM licenses
to such Licensed Works, as set forth in this DLW Transaction Document. IBM owns
intellectual property rights in IBM Materials included in Deliverables provided
to IBM in accordance with the IDA , but grants StorageTek licenses to such IBM
Materials as set forth in this DLW Transaction Document.
1. DEFINITIONS
1.1 Royalty Accounting Month: Is the time frame during which
licenses fees become due. The start and end dates of a
Royalty Accounting Month vary by the IBM geographic area where
licenses are granted. The Royalty Accounting Months are:
a. For StorageTek Worldwide and for IBM in the United
States/Puerto Rico: begins on the first business day of
the current calendar month and ends on the last business
day of that month.
b. For IBM in the Americas/Far East Countries (Excluding
U.S.): begins on the first business day of the prior
calendar month, ending on the last business day of that
month.
c. For IBM in Europe/Middle East/Africa Countries: begins
on the first business day of the last week of the prior
calendar month. It includes the first three weeks of
the current calendar month and ends on the last business
day of that third week.
1.2 "Tape Server" shall be as defined in the OEM Agreement.
1.3 "Iceberg, Kodiak, Arctic Fox Storage System" (hereinafter "IKA
Storage System") shall mean any storage system which is
primarily designed for storing data, includes controller
Microcode of which more than **of its total lines of
ultimately executable Source Code (including data
declarations, but not including any
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confidential treatment.
<PAGE> 218
comments, dummy, nonoperational, or nonfunctional lines of
Source Code), consists of Licensed Works and IBM Materials in
combination, and either (a) represents itself to a host
computer system as a disk drive storage system, or (b) has
more than ** of its total data storage capacity on ** .
1.4 "IBM Material Use License" shall mean a ** , nonexclusive,
** license to ** Derivative Works of, the Licensed Works
and its Derivative Works. Such license includes the right of
IBM to authorize others to do any of the above, and also
applies to associated audio and visual works. Except for the
right to sublicense Subsidiaries pursuant to Section 11.0 of
the IDA, the right to sublicense under this definition is
limited to granting sublicenses for ** which include terms
and conditions ** , and to ** under terms and
conditions that IBM uses for similar ** of its own, and to
granting sublicenses to ** under reasonable terms and
conditions.
1.5 "StorageTek ** License" shall mean a ** ,
nonexclusive, ** license to ** and prepare Derivative
Works, of the IBM Materials and its Derivative Works. Such
license includes the right of StorageTek to authorize others
to do any of the above, and also applies to associated audio
and visual works. Except for the right to sublicense
Subsidiaries pursuant to Section 11.0 of the IDA, the right to
sublicense under this definition is limited to granting
sublicenses for ** which include terms and conditions **
, to granting ** under terms and conditions that
StorageTek uses for similar ** of its own, and to granting
sublicenses to ** under reasonable terms and conditions
1.6 "IBM ** License" shall mean a nonexclusive, ** license
to use: (a) the ideas, concepts, and techniques contained in;
(b) the structure, sequence and organization of, and (c) other
nonliteral aspects of, Licensed Works and their Derivative
Works owned by StorageTek. Such license shall not include the
right of IBM to make a copy of any of the Licensed Works or
Derivative Work thereof owned by StorageTek which is
substantially similar thereto and would constitute literal
infringement under applicable copyright law.
1.7 "StorageTek ** License" shall mean a nonexclusive, **
license to use: (a) the ideas, concepts, techniques contained
in; (b) the structure, sequence and organization of, and (c)
other nonliteral aspects of IBM Materials and their Derivative
Works. Such license shall not include the right of StorageTek
to make a copy of any of the IBM Materials or any Derivative
Work thereof owned by IBM which is substantially similar
thereto and would constitute literal infringement under
applicable copyright law.
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Securities and Exchange Commission under an application for
confidential treatment.
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<PAGE> 219
1.8 "SSIKA Storage System" shall mean any storage system which is
primarily designed for storing data, which includes controller
Microcode of which more than ** of its total lines of
ultimately executable Source Code (including data
declarations, but not including any comments, dummy,
nonoperational, or nonfunctional lines of Source Code),
consists of lines of Source Code from any Licensed Work, and
either (a) represents itself to a host computer system as a
disk drive storage system, or (b) has more than ** of its
total data storage ** .
1.9 "Microcode" is defined as a set of instructions that is either
imbedded into or is to be loaded into the Product and executes
below the external user interface of such Product. Microcode
may be in magnetic or other storage media, integrated
circuitry or other media.
1.10 "Maintenance Code" is defined as software other than
Microcode, including data files, which executes and exercises
the Product and Upgrades, and which detects, records, displays
and/or analyzes malfunctions, errors or other events in the
Product and Upgrades.
1.11 "Non-RMM Device" shall mean a storage system primarily
designed for storing data which has less than ** of its
total data storage capacity on rotating magnetic media disk
drives (other than magneto-optical) or in semiconductor
memory.
1.12 "Arctic Fox Storage System" shall mean any IKA Storage System
manufactured by or for StorageTek which is primarily designed
for storing data, includes controller Microcode of which more
than **
of its total lines of ultimately executable Source Code
including data declarations, but not including any comments,
dummy, nonoperational, or nonfunctional lines of Source Code,
consists of Licensed Works and IBM Materials in combination,
or solely IBM Materials, represents itself to a host computer
systems as a disk drive storage system, and includes only
semiconductor memory.
1.13 "Snapshot Feature(s)" means the software with the capability
to enable Snapshot from within IXFP and from within Iceberg.
1.14 All other capitalized terms shall have the meanings defined
elsewhere in the Agreement, as that term is defined in the OEM
Agreement between the Parties hereto, of even date herewith.
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Securities and Exchange Commission under an application for
confidential treatment.
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<PAGE> 220
2. DESCRIPTION
2.1 The Licensed Works are the StorageTek software and Microcode,
both including Code as defined in the IDA, documentation and
related written materials for the StorageTek Iceberg , Kodiak
and Arctic Fox products, and Licensed Programs, including
Snapshot and the Snapshot Feature, all as they exist on **
and are required to be escrowed pursuant to the IDA.
2.2 StorageTek shall provide maintenance and support Services for
the Licensed Works, as described in a Statement of Work.
3. GRANT OF LICENSES
3.1 StorageTek hereby grants to IBM:
a. A IBM ** License: (i) ** prior to ** , and
** thereafter, for any purpose in connection with IKA
Storage Systems, except for manufacturing IKA Storage
Systems or SSIKA Storage Systems, and except that the
license for developing and distributing Basic
Enhancements and Maintenance Modifications for IKA
Storage Systems shall remain ** and (ii) ** for
manufacturing, selling or leasing IKA Storage Systems
except for SSIKA Storage Systems which becomes effective
upon termination or expiration of the Agreement.
b. A IBM ** License for any purpose;
c. A ** IBM Material Use License for developing and
distributing Basic Enhancements and Maintenance
Modifications for products other than IKA Storage
Systems;
d. For products other than IKA Storage Systems, a **
IBM ** License for any purpose except for developing
and distributing Basic Enhancements and Maintenance
Modifications (which is subject to Section 3.1c);
e. Notwithstanding any other provisions of the Agreement, a
nonexclusive, ** license to use, execute, reproduce,
display, perform, transfer, distribute, sublicense, and
prepare Derivative Works of, the IXFP software for the
purposes of enabling the connectivity of IKA Storage
Systems to IBM's operating systems and application
software. Such license includes the right of
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Securities and Exchange Commission under an application for
confidential treatment.
4
<PAGE> 221
IBM to authorize others to do any of the above, and also
applies to associated audio and visual works.
f. Notwithstanding any other provisions of the Agreement, a
** , nonexclusive, ** license to use, execute,
reproduce, display, perform and distribute internally,
and prepare Derivative Works of, Maintenance Code and
related documentation, if any, and Product service
documentation for the sole use in the maintenance of
products. StorageTek agrees, upon request from ** ,
to make available a license of the same scope as
heretofore provided under reasonable terms and
conditions to such ** .
g. Notwithstanding any other provisions of the Agreement,
IBM may grant limited sublicenses to its Subsidiaries
and ** to use such Maintenance Code and related
documentation, and such Product service manuals, and
Derivative Works prepared by IBM hereunder, solely for
the purpose of maintaining Products purchased by IBM
under the Agreement, such sublicenses to be
nontransferable and lasting only so long as such
entities are Subsidiaries of IBM, or ** IBM.
h. A ** IBM Material Use License to use the Snapshot
Feature to enable Snapshot.
i. No rights or licenses are granted to IBM under this DLW
with respect to manufacturing of IKA Storage Systems
prior to expiration or termination of the Agreement or
SSIKA Storage Systems at any time. Rights of IBM to use
Licensed Works to manufacture Devices in the case of a
Triggering Event are set forth in Section 23.6 of the
OEM Agreement.
j. Under no circumstances will StorageTek make any claim
against IBM with respect to infringement of StorageTek
patents or copyrights with respect to any software which
is provided to IBM by StorageTek under the Agreement and
is not a Licensed Work.
3.2 IBM hereby grants to StorageTek:
a. An StorageTek ** License (i) for any purpose in
connection with products other than IKA Storage Systems
during the term of the IDA, (ii) for performing
development activities, including Major Enhancements, in
connection with IKA Storage Systems (but not for
manufacturing, selling or leasing IKA
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<PAGE> 222
Storage Systems) after ** , and (iii) for any
purpose after the expiration or termination of the IDA;
b. A ** StorageTek Material Use License for (1)
developing and manufacturing Products and Upgrades and
(2) developing and distributing Basic Enhancements and
Maintenance Modifications for (i) Tape Servers and (ii)
products other than IKA Storage Systems;
c. For products other than IKA Storage Systems, a **
StorageTek ** License for any purpose except for
developing and distributing Basic Enhancements and
Maintenance Modifications for (i) Tape Servers and (ii)
all other products except IKA Storage Systems (which is
subject to Section 3.2b);
d. An StorageTek ** License for developing and
distributing Basic Enhancements and Maintenance
Modifications: (i) ** on the StorageTek Installed
Base (as defined in the OEM Agreement), and (ii) **
for a period of ** from the Effective Date of the
Agreement and ** thereafter, for IKA Storage Systems
other than those in the StorageTek Installed Base;
e. For IKA Storage Systems, a ** StorageTek **
License, which becomes effective upon expiration or
termination of the IDA (unless stated otherwise in
Section 6), or on the date that StorageTek begins the
sale, lease or other distribution of Devices which
include IBM Materials pursuant to Section 6.2(f) of the
OEM Agreement, for any purpose whatsoever, except for
developing and distributing Basic Enhancements and
Maintenance Modifications for IKA Storage Systems (which
is subject to Section 3.2d); and
f. A ** StorageTek ** License, which becomes
effective on ** and continues until expiration or
termination of the IDA (unless stated otherwise in
Section 6), for performing development activities,
including Major Enhancements, in connection with IKA
Storage Systems, but not for manufacturing, selling or
leasing IKA Storage Systems.
g. A ** StorageTek ** License for any purpose in
connection with Arctic Fox Storage Systems, which
include IBM Materials, subject to revocation pursuant to
Section 6.7b.(6) of the OEM Agreement.
h. A ** StorageTek ** License, which becomes
effective on ** , for any purpose in connection with
Non-RMM Devices which include IBM Materials.
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** Confidential portions omitted and filed separately with the
Securities and Exchange Commission under an application for
confidential treatment.
6
<PAGE> 223
i. A ** License for the purposes set forth in Sections
6.7a.(2), 6.7a.(3), 6.7b.(2) and 6.7b.(3) of the OEM
Agreement.
4. COPYRIGHT
4.1 StorageTek is responsible for copyright registration and
maintenance of, and for taking reasonable efforts for,
enforcement of the copyrights for the Licensed Works.
StorageTek authorizes IBM to act as its agent in the copyright
registration of the Licensed Works.
4.2 IBM is responsible for copyright registration and maintenance
of, and for taking reasonable effort for enforcement of
copyrights for the IBM Materials.
4.3 Each party agrees, upon the request of the other party, to
provide a copy of the Source Code for software and/or
Microcode incorporated in the nonrequesting party's product,
to an independent third party mutually agreed to by the
parties to determine if such software and/ or Microcode makes
Material Use of the requesting party's software and/or
Microcode.
4.4 The provisions of this Section 4 shall survive termination or
expiration of the IDA.
5. PAYMENT
5.1 In consideration for the licenses indicated as being royalty
bearing in Section 3.1 granted to IBM in this DLW, IBM will
pay StorageTek royalties against revenues received by IBM and
its Subsidiaries as defined below:
a. ** of (1) all license fees collected for ** which
include Licensed Works or Derivative Works thereof (but
not including any works which consist only of IBM
Materials or Derivative Works thereof) for storage
systems other than IKA Storage Systems, and (2) all
license fees collected for software or Microcode other
than Major Enhancements, which include Licensed Works or
Derivative Works thereof, distributed separately from
hardware;
b. The lesser of ** for each ** , which includes
Licensed Works or Derivative Works thereof (but not
including any works which consist only of IBM Materials
or Derivative Works thereof), and not including **
by IBM or its Subsidiaries, or ** of: (a) the
actual revenue received for such **
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** Confidential portions omitted and filed separately with the
Securities and Exchange Commission under an application for
confidential treatment.
7
<PAGE> 224
or (b) in the case of a ** , the average price of
all such IBM ** by IBM in the calendar quarter prior
to the sale or lease of such ** ;
c. ** of all license fees collected for ** , which
include Licensed Works and Derivative Works thereof (but
not including any works which consist only of IBM
Materials or Derivative Works thereof), installed on
** after ** ;
d. Notwithstanding any other provision in this Description
of Licensed Works, IBM will pay StorageTek ** as
specified in Attachment 3 to Exhibit 1 to the OEM
Agreement for each copy of the Snapshot Feature that IBM
distributes, except that copies acquired for internal
testing, technical evaluation and field support of
Equipment by IBM shall be ** ; and
e. All royalty obligations will be paid-up for the Licensed
Works when total royalties in the amount of ** have
been paid by IBM or on ** , whichever occurs first.
All the licenses granted to IBM by StorageTek will be
irrevocable at that time.
5.2 In consideration for the licenses indicated as being ** in
Section 3.2 granted to StorageTek in this DLW, StorageTek will
pay IBM ** received by StorageTek and its Subsidiaries as
defined below:
a. ** of (i) all license fees collected for ** ,
which include IBM Materials or Derivative Works thereof,
for storage systems other than IKA Storage Systems, (ii)
the list price charged for customer service which
includes the right to install Basic Enhancements and
Maintenance Modifications on IKA Storage Systems, and
(iii) all license fees collected for software and
Microcode other than Major Enhancements, which include
IBM Materials or Derivative Works thereof, distributed
separately from hardware;
b. The lesser of ** for each (i) ** , other than an
** , or ** therefor, which includes IBM Materials
or Derivative Works thereof, and (ii) each ** or
controller therefor, sold or leased by StorageTek or its
Subsidiaries, or, in the case of (i) above, ** of (x)
the actual revenue received for such ** or (y) in
the case of a ** , the average price of all
StorageTek storage subsystems sold or leased by
StorageTek in the calendar quarter prior to the sale or
lease of such controller;
c. ** of all license fees collected for ** , which
include IBM Materials and Derivative Works thereof, made
in connection with ** ;
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** Confidential portions omitted and filed separately with the
Securities and Exchange Commission under an application for
confidential treatment.
8
<PAGE> 225
d. The lesser of ** for each ** . sold or leased by
StorageTek, or ** of: (i) the actual revenue
received for each such ** , or (ii) in the case of
an ** , the average price of all StorageTek **
sold or leased by StorageTek in the calendar quarter
prior to the sale or lease of such controller.
e. All royalty obligations will be paid-up for the IBM
Materials when total royalties in the amount of **
have been paid by IBM or on ** whichever occurs
first. All the licenses granted to IBM by StorageTek
will be irrevocable at that time.
5.3 ** Payment will be made by the last day of the calendar
month following the calendar quarter. Royalties will be paid
less adjustments and refunds due to the owing party. The
owing party will provide a statement summarizing the royalty
calculation with each payment.
5.4 Notwithstanding any other provision of the Agreement, and
except for StorageTek's obligation to pay royalties pursuant
to Section 3.2d(ii) herein, neither Party shall be liable to
the other for royalties based on de minimis use, as determined
by applicable copyright law, of the other Party's Code,
documentation, and other written materials.
5.5 The provisions of this Section 5 shall survive termination of
the Agreement.
6. TERMINATION
6.1 The termination of the Base Agreement or a Transaction
Document will not affect previously granted paid-up rights or
licenses to IBM or StorageTek or product users.
6.2 Any license, which is subject to a royalty, granted hereunder
may be terminated by the licensor if the licensee fails to pay
any royalty due with respect to such grant and fails to cure
such nonpayment by the end of the next calendar quarter after
written notice from the Licensor.
6.3 All licenses will survive termination for convenience by IBM
subject to the obligations to pay royalties where applicable,
except that, as set forth in Section 23.7 of the OEM
Agreement, the StorageTek ** License for ** Devices
and providing ** for such Devices will become effective
and fully paid up; provided, however that royalties will be
due for ** .
- ------------------------------
** Confidential portions omitted and filed separately with the
Securities and Exchange Commission under an application for
confidential treatment.
9
<PAGE> 226
6.4 Upon termination of the Agreement for cause by IBM, all of the
licenses granted to IBM in Section 3.1 shall survive such
termination subject to the obligations to pay royalties where
applicable, except that the IBM ** License set forth in
Section 3.1(a) hereof, shall become effective and shall become
fully paid up and irrevocable. Upon termination of the
Agreement for cause by StorageTek, all of the licenses granted
to IBM in Section 3.1 shall survive such termination subject
to the obligations to pay royalties where applicable.
6.5 Upon termination of the Agreement for cause the licenses
granted to StorageTek in Section 3.2 shall be treated as
follows:
a. All licenses will survive termination for cause by
StorageTek subject to the obligations to pay royalties
where applicable except that the StorageTek **
Licenses set forth in Sections 3.2d and 3.2e shall
become ** ; and
b. If terminated for cause by IBM:
All licenses granted to StorageTek to use IBM Materials
under Section 3.2, above, will survive such termination,
and be ** as provided herein, provided, however,
that, if StorageTek elects to maintain or effectuate,
whichever the case may be, the StorageTek ** Licenses
set forth in Section 3.2d(ii) ( ** for a period of
** from the Effective Date, becoming royalty-free
thereafter, for use in developing and distributing Basic
Enhancements and Maintenance Modifications for IKA
Storage Subsystems other than those in the StorageTek
Installed Base), and in Section 3.2e ( ** license
for use in IKA Storage Systems or IKA Storage System
controllers for any purpose other than developing and
distributing Basic Enhancements and Maintenance
Modifications), then StorageTek must first pay to IBM
the sum of ** and also pay to IBM royalties as set
forth in Section 5.2 above for such license, except that
such royalty shall be ** for each IKA Storage System
or IKA Storage System controller sold or leased by
StorageTek following the date of StorageTek's receipt of
IBM's written notice of termination, and, except that,
once StorageTek has paid in royalties pursuant to this
section the sum of an additional **, then such license
shall become fully paid up and irrevocable, and
provided further, that any sums paid by StorageTek to
IBM under this section shall be in addition to any
royalty payments due pursuant to Section 5.2 hereof for
products other than as covered in Sections 3.2d and 3.2e
hereof, and shall have no effect on the total royalties
to be paid pursuant to Section 5.2e hereof.
- ------------------------------
** Confidential portions omitted and filed separately with the
Securities and Exchange Commission under an application for
confidential treatment.
10
<PAGE> 227
ATTACHMENT 2 To EXHIBIT 3
APPENDIX A
<PAGE> 228
IBM CUSTOMER AGREEMENT
PART 3 - MACHINES
- --------------------------------------------------------------------------------
3.1 TITLE AND RISK OF LOSS
When we accept your order, we agree to sell you the Machine described
in a Transaction Document. We transfer title to you or, if you
choose, your lessor when we ship the Machine. However, we reserve a
purchase money security interest in the Machine until we receive the
amounts due. For a feature, conversion, or upgrade involving the
removal of parts which become our property, we reserve the security
interest until we receive the amounts due and the removed parts. You
agree to sign an appropriate document to permit us to perfect our
purchase money security interest.
We bear the risk of loss for the Machine through its Date of
Installation. Thereafter, you assume the risk.
3.2 PRODUCTION STATUS
Each IBM Machine is manufactured from new parts, or new and used
parts. In some cases, the Machine may not be new and may have been
previously installed. Regardless of the Machine's production status,
our warranty terms apply.
3.3 INSTALLATION
For the Machine to function properly, it must be installed in a
suitable physical environment. You agree to provide an environment
meeting our specified requirements for the Machine.
We have standard installation procedures. We will successfully
complete these procedures before we consider an IBM Machine (other
than a Customer-set-up Machine) installed.
You are responsible for installing a Customer-set-up Machine (we
provide instructions to enable you to do so) and a non-IBM Machine.
MACHINE FEATURES, CONVERSIONS, AND UPGRADES
We sell features, conversions, and upgrades for installation on
Machines, and, in certain instances, only for installation on a
designated, serial-numbered Machine. Many of these transactions
involve the removal of parts and their return to us. As applicable,
you represent that you have the permission from the owner and any
lien holders to 1) install features, conversions, and upgrades and 2)
transfer ownership and possession of removed parts (which become our
property) to us. You further represent that all removed parts are
genuine and unaltered. A part that replaces a removed part will
assume the warranty and Maintenance Service status of the replaced
part.
You agree to allow us to install the feature, conversion, or upgrade
within 30 days of its delivery. Otherwise, we may terminate the
transaction and you must return the feature, conversion, or upgrade
to us at your expense.
<PAGE> 229
3.4 LICENSED INTERNAL CODE
Certain Machines we specify (called "Specific Machine") use Licensed
Internal Code (called "Code"). We own copyrights in Code. We own all
copies of Code, including copies made from them.
We will identify each Specific Machine in a Transaction Document. If
you are the rightful possessor of a Specific Machine, we grant you a
license to use the Code (or any replacement we provide) on, or in
conjunction with, only the Specific Machine, designated by serial
number, for which the Code is provided. We license the Code to only
one rightful possessor at a time.
Under each license, we authorize you to do only the following:
1. execute the Code to enable the Specific Machine to function according
to its Specifications;
2. make a backup or archival copy of the Code (unless we make one
available for your use), provided you reproduce the copyright notice
and any other legend of ownership on the copy. You may use the copy
only to replace the original when necessary; and
3. execute and display the Code as necessary to maintain the Specific
Machine.
You agree to acquire any replacement for, or additional copy of, Code
directly from us in accordance with our standard policies and
practices. You also agree to use that Code under these terms.
You may transfer possession of the Code to another party only with
the transfer of the Specific Machine. If you do so, you must 1)
destroy all your copies of the Code that were not provided by us, 2)
either give the other party all your IBM-provided copies of the Code
or destroy them, and 3) notify the other party of these terms. We
license the other party when it accepts these terms by initial use of
the Code. These terms apply to all Code you acquire from any source.
Your license terminates when you no longer rightfully possess the
Specific Machine.
ACTIONS YOU MAY NOT TAKE
You agree to use the Code only as authorized above. You may not do,
for example, any of the following:
1. otherwise copy, display, transfer, adapt, modify, or distribute the
Code (electronically or otherwise), except as we may authorize in the
Specific Machine's Specifications or in writing to you;
2. reverse assemble, reverse compile, or otherwise translate the Code
unless expressly permitted by applicable law without the possibility
of contractual waiver;
<PAGE> 230
3. sublicense or assign the license for the Code; or
4. lease the Code or any copy of it.
<PAGE> 231
ATTACHMENT 2 TO EXHIBIT 3
APPENDIX B
<PAGE> 232
MICROCODE LANGUAGE
FOR
INCORPORATION INTO CONSOLIDATED END USER CONTRACT
TO BE ISSUED IN JULY
MICROCODE
1. Definitions: The following terms are defined as follows:
A. "Microcode" is defined as a set of instructions (software) that is either
imbedded into or is to be loaded into the Equipment and executes below the
external user interface of such Equipment. Microcode includes both Internal
Code and Maintenance Code, and may be in magnetic or other storage media,
integrated circuitry or other media.
B. "Internal Code" is Microcode that (a) is an integral part of the Equipment,
(b) is required by such Equipment to perform its data storage and retrieval
functions, and (C) executes below the user interface of such Equipment.
Internal Code does not include other Microcode or software, including data
files, which may reside or execute in or be used by or in connection with such
Equipment, including, without limitation, Maintenance Code.
C. "Maintenance Code" is defined as Microcode and other software, including
data files, which may reside or execute in or be used by or in connection with
Equipment, and which detects, records, displays and/or analyzes malfunctions,
errors or other events occurring in the Equipment.
D. "Derivative Works" are defined as works (including software) based upon one
or more preexisting works such as a translation or a musical arrangement, or
any other form in which a work may be recast, transformed or adapted. A work
consisting of editorial revision, annotations, elaboration, or other
modifications which, as a whole, represent an original work of authorship, is
a Derivative Work.
2. The Equipment you have acquired by purchase or lease is manufactured by or
for StorageTek and contains Microcode. By accepting and using this Equipment
you acknowledge that StorageTek or its licensor(s) retains title to and
ownership of all Microcode, as well as all copies thereof, that may execute in
or be used in the operation of servicing of the Equipment and that the
copyright in such Microcode is owned by StorageTek or its licensor(s).
3. StorageTek hereby grants you, the end user of the Equipment, a personal,
non-transferable (except as permitted in the transfer terms in paragraph 5
below), nonexclusive license to use
<PAGE> 233
and execute each copy of the Internal Code (or any replacement provided
by StorageTek or your authorized StorageTek distributor or reseller) solely to
enable the specific unit of Equipment for which the copy of Internal Code is
provided to perform its data storage and retrieval functions in accordance
with StorageTek's (or its licensor's) official published specifications. If
the Internal Code is provided to you in any fashion other than preloaded into
an integrated circuit, then you may make a single archival copy to be used
only to restore the Internal Code on the specific unit of Equipment for which
the copy of Internal Code is provided.
4. Your license is limited to the use of the Internal Code as set forth in
paragraph 3 above. You may not use the Internal Code for any other purpose.
You may not, for example, do any of the following:
(i) access copy, display, print, adapt, alter, modify, patch, prepare
Derivative Works of, transfer or distribute (electronically or otherwise) or
otherwise use the Internal Code;
(ii) reverse assemble, decode, translate, decompile or otherwise
reverse engineer the Internal Code (except, for use in European jurisdictions,
as decompilation may be expressly permitted under applicable European law
solely for the purpose of gaining information that will allow interoperability
when such information is not otherwise readily available); or
(iii) sublicense, assign or lease the Internal Code or permit another
person to use such Internal Code, or any copy of it.
5. You may transfer possession of the Internal Code to another party only with
the transfer of the specific Equipment on which its use is authorized, and
your license to use the Internal Code is discontinued when you are no longer
an owner or a rightful possessor the Equipment. You must give such transferee
all copies of the Internal Code for the transferred Equipment that are in your
possession, along with a copy of all the provisions of this Notice. Any such
transfer by you is automatically (without further action on the part of either
party) expressly subject to all the terms and conditions of this Notice
passing in full to the party to whom such Equipment is transferred, and such
transferee accepts the provisions of this license by initial use of the
Internal Code. You cannot pass to the transferee of the Equipment any greater
rights than granted under this Notice, and shall hold StorageTek harmless from
any claim to the contrary by your transferee or its successors or assigns. In
addition, the terms and conditions of this Notice apply to any copies of
Internal Code now in your possession or use or which you hereafter acquire
from either StorageTek or another party.
6. Nothing in the license set forth in paragraph 3 above or in this entire
Notice shall convey,
<PAGE> 234
in any manner, to you any license to or title to or other right to use
any Maintenance Code, or any copy of such Maintenance Code. You agree that you
shall not use or attempt to use the Maintenance Code or permit any other third
party to use or access such Maintenance Code. You acknowledge that copies of
both Internal Code and Maintenance Code may be installed on the Equipment
before shipment or included with the Equipment and other material shipped to
you, all for the convenience of StorageTek's service personnel or service
providers licensed by StorageTek, and that during the warranty period, if any,
associated with the Equipment, and during periods in which the Equipment is
covered under maintenance contract with StorageTek or service providers
licensed by StorageTek, both Internal Code and Maintenance Code may reside and
be executed in or used in connection with such Equipment, and you agree that
no rights to Maintenance Code are conferred upon you by such facts. StorageTek
or the licensed service provider may keep Maintenance Code, service tools and
manuals on your premises but they are to be used only by StorageTek's customer
service personnel or those of service providers licensed by StorageTek. You
further agree that upon (I) any termination of such warranty period or
maintenance contract period; or (ii) transfer of possession of the Equipment
to another party, StorageTek and its authorized service providers shall have
the right with respect to the affected Equipment to remove all service tools
and manuals and to remove or disable all Maintenance Code and/or replace
Microcode which includes both Internal Code and Maintenance Code with
Microcode that consists only of Internal Code.
7. You, the end user, agree to take all appropriate steps to ensure that all
of your obligations set forth in this Notice, particularly in paragraphs 4 and
6, are complied with by any third party having access to the Equipment.
<PAGE> 235
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NOTICE
INTERNAL CODE LICENSE AND TERMS OF SALE
PLEASE READ THIS NOTICE CAREFULLY BEFORE INSTALLING AND OPERATING THIS
EQUIPMENT. THIS IS A LEGAL AGREEMENT BETWEEN YOU (EITHER AN INDIVIDUAL OR
ENTITY), THE END USER, AND STORAGE TECHNOLOGY CORPORATION ("STORAGETEK") THE
MANUFACTURER OF THE EQUIPMENT. BY ACCEPTING AND USING ANY UNIT OF EQUIPMENT
DESCRIBED IN THIS DOCUMENT AND THE ASSOCIATED MICROCODE, YOU AGREE TO BE BOUND
BY THE TERMS OF T HIS AGREEMENT. IF YOU DO NOT AGREE WITH THE TERMS OF THIS
AGREEMENT, DO NOT USE THE EQUIPMENT AND ASSOCIATED MICROCODE. IF YOU DO NOT
HAVE THE AUTHORITY TO BIND YOUR COMPANY, DO NOT USE THE EQUIPMENT AND
ASSOCIATED MICROCODE. IF YOU HAVE ANY QUESTIONS, CONTACT THE AUTHORIZED
STORAGETEK DISTRIBUTOR OR RESELLER FROM WHOM YOU ACQUIRED THIS EQUIPMENT. IF
THE EQUIPMENT WAS OBTAINED BY YOU DIRECTLY FROM STORAGETEK, CONTACT YOUR
STORAGETEK REPRESENTATIVE.
MICROCODE
1. Definitions: The following terms are defined as follows:
A. "Microcode" is defined as a set of instructions (software) that is either
imbedded into or is to be loaded into the Equipment and executes below the
external user interface of such Equipment. Microcode includes both Internal
Code and Maintenance Code, and may be in magnetic or other storage media,
integrated circuitry or other media.
B. "Internal Code" is Microcode that (a) is an integral part of the Equipment,
(b) is required by such Equipment to perform its data storage and retrieval
functions, and (c) executes below the user interface of such Equipment.
Internal Code does not include other Microcode or software, including data
files, which may reside or execute in or be used by or in connection with such
Equipment, including, without limitation, Maintenance Code.
C. "Maintenance Code" is defined as Microcode and other software, including
data files, which may reside or execute in or be used by or in connection with
Equipment, and which detects, records, displays and/or analyzes malfunctions,
errors or other events occurring in the Equipment.
D. "Derivative Works" are defined as works (including software) based upon one
or more preexisting works such as a translation or a musical arrangement, or
any other form in which a work may be recast, transformed or adapted. A work
consisting of editorial revision, annotations, elaboration, or other
modifications which, as a whole, represent an original work of authorship, is
a Derivative Work.
2. The Equipment you have acquired by purchase or lease is manufactured by or
for StorageTek and contains Microcode. By accepting and using this Equipment
you acknowledge that StorageTek or its licensor(s) retains title to and
ownership of all Microcode, as well as all copies thereof, that may execute in
or be used in the operation of servicing of the Equipment and that the
copyright in such Microcode is owned by StorageTek or its licensor(s).
<PAGE> 236
3. StorageTek hereby grants you, the end user of the Equipment, a personal,
non-transferable (except as permitted in the transfer terms in paragraph
5 below), nonexclusive license to use and execute each copy of the Internal
Code (or any replacement provided by StorageTek or your authorized StorageTek
distributor or reseller) solely to enable the specific unit of Equipment for
which the copy of Internal Code is provided to perform its data storage and
retrieval functions in accordance with StorageTek's (or its licensor's)
official published specifications. If the Internal Code is provided to you in
any fashion other than preloaded into an integrated circuit, then you may make
a single archival copy to be used only to restore the Internal Code on the
specific unit of Equipment for which the copy of Internal Code is provided.
4. Your license is limited to the use of the Internal Code as set forth in
paragraph 3 above. You may not use the Internal Code for any other
purpose. You may not, for example, do any of the following:
(i) access copy, display, print, adapt, alter, modify, patch, prepare
Derivative Works of, transfer or distribute (electronically or otherwise) or
otherwise use the Internal Code;
(ii) reverse assemble, decode, translate, decompile or otherwise
reverse engineer the Internal Code (except, for use in European jurisdictions,
as decompilation may be expressly permitted under applicable European law
solely for the purpose of gaining information that will allow interoperability
when such information is not otherwise readily available); or
(iii) sublicense, assign or lease the Internal Code or permit another
person to use such Internal Code, or any copy of it.
5. You may transfer possession of the Internal Code to another party only with
the transfer of the specific Equipment on which its use is authorized, and
your license to use the Internal Code is discontinued when you are no longer
an owner or a rightful possessor the Equipment. You must give such transferee
all copies of the Internal Code for the transferred Equipment that are in your
possession, along with a copy of all the provisions of this Notice. Any such
transfer by you is automatically (without further action on the part of either
party) expressly subject to all the terms and conditions of this Notice
passing in full to the party to whom such Equipment is transferred, and such
transferee accepts the provisions of this license by initial use of the
Internal Code. You cannot pass to the transferee of the Equipment any greater
rights than granted under this Notice, and shall hold StorageTek harmless from
any claim to the contrary by your transferee or its successors or assigns. In
addition, the terms and conditions of this Notice apply to any copies of
Internal Code now in your possession or use or which you hereafter acquire
from either StorageTek or another party.
6. Nothing in the license set forth in paragraph 3 above or in this entire
Notice shall convey, in any manner, to you any license to or title to or other
right to use any Maintenance Code, or any copy of such Maintenance Code. You
agree that you shall not use or attempt to use the Maintenance Code or permit
any other third party to use or access such Maintenance Code. You acknowledge
that copies of both Internal Code and Maintenance Code may be installed on the
Equipment before shipment or included with the Equipment and other material
shipped to you, all for the convenience of StorageTek's service personnel or
service providers licensed by StorageTek, and that during the warranty period,
if any, associated with the Equipment, and during periods in which the
Equipment is covered under maintenance contract with StorageTek or service
providers licensed by StorageTek, both Internal Code and Maintenance Code may
reside and be executed in or used in connection with such Equipment, and you
agree that no rights to Maintenance Code are conferred upon you by such facts.
StorageTek or the licensed service provider may keep Maintenance Code, service
tools and manuals on your premises but they are to be used only by
StorageTek's customer service personnel or those of service providers licensed
by StorageTek. You further agree that upon (I) any termination of such
warranty period or maintenance contract period; or (ii) transfer of possession
of the Equipment to another party, StorageTek and its authorized service
providers shall have the right with respect to the affected Equipment to
remove all service tools and manuals and to remove or disable all Maintenance
Code and/or replace Microcode which includes both Internal Code and
Maintenance Code with Microcode that consists only of Internal Code.
<PAGE> 237
7. You, the end user, agree to take all appropriate steps to ensure that all
of your obligations set forth in this Notice, particularly in paragraphs 4 and
6, are complied with by any third party having access to the Equipment.
<PAGE> 238
WARRANTY
(a) StorageTek warrants that at the time of shipment, and for a period of
twelve (12) months thereafter (the "Warranty Period"), the Equipment and the
Internal Code will be in conformance with StorageTek's published
specifications. Equipment purchased hereunder may consist in part of used
components which are warranted equivalent to new in performance. No warranty
of any kind is extended with respect to Maintenance Code, as to which you have
no right or license as provided above.
(b) During the Warranty Period, StorageTek will, at no charge to you, make all
adjustments, repairs and parts replacements necessary, in StorageTek's
opinion, to fulfill the above warranty. Any parts so replaced will become the
property of StorageTek on a substitution basis.
(c) Service pursuant to this warranty, as required at any time during the
Warranty Period, will be provided upon return of the Equipment to the nearest
StorageTek authorized service depot. StorageTek will return a repaired or
replacement unit (which may be used and/or reconditioned) to you within
[?thirty 30] days of receipt by StorageTek of the unit to be repaired. Any
such repaired or replacement Equipment unit will be covered by the above
warranty for the balance of the original Warranty Period.
(d) The foregoing warranty shall not apply if any adjustment, repair or parts
replacement is required because of accident, transportation by anyone other
than StorageTek, neglect, abuse or misuse, use of unauthorized supplies,
failure of electrical power, air conditioning or humidity controls, theft,
fire or water damage, or causes other than ordinary use. StorageTek shall not
be required to adjust or repair any Equipment or part if it would be
impractical to do so because of non-StorageTek alterations to the Equipment,
the Equipment's connection by mechanical or electrical means to unauthorized
equipment devices, or if the Equipment is moved outside the United States.
(e) THE FOREGOING WARRANTY IS IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR
IMPLIED, AND STORAGETEK SPECIFICALLY DISCLAIMS ANY IMPLIED WARRANTIES OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, OR NON-INFRINGEMENT OF
THIRD PARTY RIGHTS ALL WITH RESPECT TO BOTH EQUIPMENT AND MICROCODE.
PATENT AND PROPRIETARY RIGHT INDEMNITY
(a) StorageTek shall defend, at its own expense, any action brought against
you to the extent that it is based upon a claim that the Equipment or Internal
Code infringes upon any United States patent, copyright, trademark, mask work,
trade secret or other proprietary right. In the event of such infringement,
StorageTek shall pay those costs and damages agreed upon in settlement or
compromise or finally assessed against you in any such action. The obligation
to undertake such defense and make such payments shall be conditioned upon the
following: (1) StorageTek shall be notified promptly in writing by you of such
claim, but in no event later than ten (10) days from the date you received
notice thereof; (2) StorageTek shall have sole control of the defense of any
action on such claim and all negotiations for its settlement or compromise;
(3) you shall provide reasonable assistance and cooperation to StorageTek in
defending such an action; and (4) should the use of Equipment become, or in
StorageTek's opinion be likely to become, the subject of an injunction,
StorageTek shall at its option and expense: (i) procure for you the right to
continue using
<PAGE> 239
the Equipment; (ii) replace or modify the same so that such Equipment
becomes non-infringing; or (iii) grant you a refund for such Equipment, less
accumulated depreciation, and accept its return. The depreciation shall be an
equal amount per year over the lifetime of the Equipment as established by
StorageTek.
(b) StorageTek shall not have any liability to you under the provisions of
this Section 9 for any infringement, or claim thereof, to the extent based
upon the use of said Equipment in combination with other machines, apparatus
or devices not manufactured by StorageTek or sold by StorageTek to you, or the
use of the Equipment in a manner or for a purpose other than that for which it
was sold, or the use of the Equipment in a modified condition if such
modification was not authorized in writing by StorageTek. StorageTek will not
defend or indemnify you if any claim of infringement is asserted by your
parent, subsidiary or affiliate.
(c) THE FOREGOING STATES THE ENTIRE LIABILITY OF STORAGETEK AND YOUR SOLE AND
EXCLUSIVE REMEDY WITH RESPECT TO INFRINGEMENT OF ANY PROPRIETARY RIGHT BY
THE EQUIPMENT OR INTERNAL CODE OR ANY PART THEREOF.
LIMITATION OF LIABILITY
(a) Your sole and exclusive remedy for any breach of the warranty set forth in
Section 8(a) above, shall be limited to the remedies set forth in paragraph
(b) of the section on WARRANTY above. If StorageTek is unable to effect such
remedy within a reasonable time, and such remedy fails of its essential
purpose, you may recover your actual loss directly resulting from the breach,
subject, however, to the limitations set forth below.
(b) StorageTek's entire cumulative liability from any cause whatsoever, and
regardless of the form of action or actions, whether in contract, warranty or
tort (including negligence), arising under this Agreement, shall in no event
exceed the greater of $50,000 or the purchase price for the specific Equipment
that is the subject matter of or is directly related to the cause of action.
The foregoing limitation shall not apply to claims for proprietary right
infringement under Section 9 or to claims by third parties for personal injury
or damage to real or tangible personal property arising out of the negligence
of StorageTek. Except for the two exceptions set forth in the preceding
sentence, StorageTek shall have no liability for claims against you for loss
or damage suffered by third parties.
(c) IN NO EVENT WILL STORAGETEK BE LIABLE FOR ANY INDIRECT, SPECIAL,
CONSEQUENTIAL OR INCIDENTAL DAMAGES IN CONNECTION WITH OR ARISING OUT OF THE
PROVIDING, PERFORMANCE OR USE OF THE EQUIPMENT, PARTS OR SERVICES PROVIDED
UNDER THIS AGREEMENT, OR LOSS OF, OR DAMAGE TO, YOUR RECORDS OR DATA. IT IS
YOUR RESPONSIBILITY TO ADEQUATELY SAFEGUARD (BACK UP) YOUR DATA USED IN
CONJUNCTION WITH THE EQUIPMENT.
(d) StorageTek shall not be liable for any failure or delay in performance
hereunder which is due, in whole or in part, to any cause beyond its control.
<PAGE> 240
EXHIBIT 4
This is an Agreement between IBM and STK ("Contractor"), pursuant to which IBM
will consign certain disk drives on a no- charge basis to Contractor for
incorporation into Equipment that Contractor is producing for IBM, subject to
the following terms and conditions:
1. DEFINITION OF CONSIGNED GOODS
For the purpose of this Agreement, consigned goods are defined as all items
furnished by IBM or caused by IBM to be furnished to Contractor which are not
purchased by Contractor. Consigned goods include certain disk drives that
Contractor will use to fabricate Equipment for IBM. Consigned goods do not
include capital equipment or tooling.
The goods that are to be consigned under this Agreement are:
PART NUMBER DESCRIPTION
** **
IBM may, at its option and in its sole discretion, consign additional items to
Contractor under the terms of this Agreement.
2. TERM OF AGREEMENT
The term of this Agreement will begin on the date it is signed by Contractor
and will end when IBM no longer has an obligation under Section 12 of the OEM
Agreement to consign drives, or earlier, when it is terminated by either party
as provided for in Section 3 below or when it is terminated by IBM as provided
for in Section 13 below.
3. TERMINATION OF AGREEMENT
Either party may terminate this Agreement at any time for cause by giving
thirty (30) days' prior written notice to the other.
Upon termination of this Agreement, Contractor will return to IBM any consigned
goods then in its possession (including any parts, subassemblies, or assemblies
containing any consigned goods). Contractor will account for all consigned
goods within five (5) calendar days.
4. LOCATION OF CONSIGNED GOODS
The consigned goods will be located and used during the term of this Agreement
at a location that has been approved by IBM. Contractor will not move the
consigned goods to another location without IBM's prior written approval.
- --------------------------
** Confidential portions omitted and filed separately with the Securities
and Exchange Commission under an application for confidential treatment.
<PAGE> 241
5. IBM'S PROPERTY
The consigned goods are and will remain the property of IBM.
6. IBM'S INSPECTION OF CONSIGNED GOODS
During the term of this Agreement, IBM will have the right to enter
Contractor's property and facilities on reasonable notice during Contractor's
normal business hours and subject to Contractor's normal security requirements
to physically inspect the consigned goods, conduct physical inventories, and
audit stock-handling procedures (including receiving, storing and
distribution).
7. CONTRACTOR INSPECTION OF CONSIGNED GOODS
Contractor will inspect all consigned goods for type, quantity and condition
upon receipt. Contractor will notify IBM of any reasonably apparent
discrepancies within five (5) days of receipt. Contractor's notification to
IBM will include a description of all discrepancies. Discrepancies will be
described on the acknowledgement copy of the packing list accompanying the
shipment. The packing list must be signed and dated before it is returned to
IBM.
8. CONTRACTOR RESPONSIBILITIES
Contractor agrees that with respect to the consigned goods it will
A. Not commingle consigned goods with those of its own or third
parties. Contractor will stock all consigned goods separately
and will specifically identify them as IBM property.
B. Not represent to any person for any reason that the consigned
goods belong to Contractor or to any third party.
C. Not attempt to sell, mortgage, pledge, assign, borrow against,
or otherwise create a security interest in favor of third
parties in the consigned goods. Any such attempt will be void
and will constitute a breach of this Agreement.
D. Not use the consigned goods for any purpose except for the
performance of the OEM Agreement.
E. Maintain records of all consigned goods received from or
returned to IBM. Contractor will maintain an effective
consigned goods inventory system and will use the consigned
goods on a first-in, first-out basis.
F. Perform a reasonable number of physical counts upon IBM's
request (to confirm records), and provide IBM with the
results.
G. Carefully store the consigned goods so as to prevent
deterioration.
<PAGE> 242
H. Incorporate into Equipment only those consigned goods that
meet the Specifications. Nonconforming goods must be returned
to IBM for replacement, accompanied by a IBM "Authorization
for Return of Material" form.
9. CONTRACTOR RESPONSIBILITY FOR LOST OR DAMAGED GOODS
Consigned goods are insured by IBM. Notwithstanding that insurance, Contractor
agrees that it will be fully liable for any loss or damage occasioned by
Contractor's fault or negligence. If any consigned goods are lost or damaged,
Contractor will notify IBM immediately. Payment to IBM for consigned goods
lost or damaged due to Contractor fault or negligence will be at an amount
equal to IBM's replacement cost for such lost or damaged consigned goods plus
transit costs.
10. TAXES AND ASSESSMENTS
IBM will pay all personal property taxes and assessments levied on the
consigned goods while they are in Contractor's possession.
11. SEPARATE AGREEMENTS
This Agreement will not apply to any tools, tooling, gauges, or capital
equipment fabricated or acquired by Contractor pursuant to IBM Purchase Orders
or loaned or leased to Contractor by IBM. All such equipment will be covered
by a separate Tooling, Equipment, Use, or other agreement.
12. CONTRACTOR'S INABILITY TO PRODUCE
If Contractor's facility where the consigned goods are located and used is
involved in any Force Majeure Event by reason of which Contractor cannot
fulfill the terms of IBM Purchase Orders (which conform to the OEM Agreement),
or if for any other reason Contractor is unable or unwilling to perform under
IBM's Purchase Orders (which conform to the OEM Agreement), Contractor agrees
to immediately notify IBM and further agrees, if requested by IBM, to return
any or all of the consigned goods to IBM within ten (10) days of IBM's request
without charge to IBM except that transportation charges shall be billed
collect.
13. BREACH OF CONTRACT
Failure of Contractor to materially comply with the terms and conditions of
this Agreement will be considered a breach of this Agreement unless IBM has
given specific written authorization for each particular occurrence of each
particular deviation. IBM will notify Contractor of any breach by Contractor.
Contractor will have ten (10) business days to rectify the breach to Monterey's
satisfaction. IBM may extend this period, in writing, at IBM's discretion. If
Contractor fails to rectify the breach to IBM's satisfaction, IBM will have the
right to terminate this Agreement immediately at no charge to IBM for such
termination.
If Contractor fails to perform any of its obligations under this Agreement, or
either party terminates this Agreement, IBM will have an irrevocable right to
enter Contractor's property and
<PAGE> 243
facilities at any time during IBM's normal business hours for the purpose of
removing the consigned goods. Contractor expressly waives any right or
remedies Contractor has with regard to the consigned goods, including, but not
limited to, any right Contractor has to notice and a hearing or to a bond,
undertaking or surety before a writ of replevin, order of seizure, or similar
writ or order will issue or become enforceable.
The rights and remedies under this Section 13 are not exclusive and are in
addition to any other rights or remedies provided by law or by this Agreement.
14. ASSIGNMENT
Contractor will not assign this Agreement or any right or obligation created
under this Agreement except in connection with a permitted assignment under the
OEM Agreement. Any attempted assignment will be void.
15. IBM SUPPLIER CONSIGNMENT GUIDE
The "IBM Supplier Consignment Guide" is expressly incorporated and made a part
of this Agreement.
16. COMMUNICATIONS AND NOTICES
All communications and notices between the parties concerning this Agreement,
if given to Contractor, will be in writing and sent by first class mail to:
Attention
------------------------------
---------------------------------------
---------------------------------------
---------------------------------------
---------------------------------------
and if given to IBM, will be in writing and sent by first class mail to:
Attention
------------------------------
---------------------------------------
---------------------------------------
---------------------------------------
---------------------------------------
For the purposes of this Agreement, a "Notice" is deemed given upon receipt by
the addressee.
Either party may change the above individual, title, department, or address by
notifying the other party in the same manner as any notice.
17. CHANGES OR AMENDMENTS
Except as provided for in Section 17 above, this Agreement may not be changed
or amended except by a written agreement between the parties.
<PAGE> 244
18. CONSTRUCTION
In the event of any inconsistency between the terms and conditions of this
Agreement, the "IBM Supplier Consignment Guide," or the terms and conditions of
the OEM Agreement, the order of precedence shall be: first, the terms and
conditions of the OEM Agreement; second, the terms and conditions of this
Consignment Agreement, and lastly the "IBM Supplier Consignment Guide".
19. CONTINUING OBLIGATIONS
Any obligations and duties that by their nature extend beyond the expiration or
termination of this Agreement shall survive any such expiration or termination
and remain in effect.
20. SEVERABILITY
If any provision of this Agreement shall be held by a court of competent
jurisdiction to be invalid, illegal, or unenforceable, the validity, legality,
and enforceability of the remaining provisions of this Agreement shall in no
way be affected or impaired thereby.
21. LIMITATION OF LIABILITY
Neither party shall be in default nor liable for damages for any delay or
failure to perform hereunder due to causes beyond its reasonable control,
including fires, strikes, riots, and acts of war, provided the defaulting party
provides the non-defaulting party with immediate notice of the anticipated
delay or failure to comply.
In no event shall either party be liable for indirect, special, or
consequential damages, including attorney's fees, even if advised in advance of
the possibility of such damages.
Neither party may bring an action, regardless of the form, arising out of this
Agreement more than two (2) years after the cause of action arose.
22. GOVERNING LAW
The relationship between the Parties and this Agreement are governed by the
substantive laws of the state of New York. Any action between the Parties must
be brought before a court of competent jurisdiction located in the United
States Southern District of New York. Each party hereby waives any right to a
jury trial in any dispute between them. The parties will first use the Dispute
Resolution escalation procedures described in the OEM Agreement to resolve any
disputes before any action is to be commenced in a court of competent
jurisdiction.
23. SOLE AGREEMENT
This Agreement together with the OEM Agreement and its Exhibits, Schedules and
Attachments is the entire agreement about this subject between the parties.
This Agreement supersedes all prior or contemporaneous written or oral
agreements about this subject between the parties or any of their officials or
representatives.
<PAGE> 245
IBM STK
By By
------------------------------ ------------------------------
Name Name
---------------------------- ----------------------------
Title Title
--------------------------- ---------------------------
Date Date
---------------------------- ----------------------------
<PAGE> 246
CONSIGNMENT INVENTORY CONTROL
All correspondence regarding consigned material should be sent to:
IBM CORPORATION
Department 617
5600 Cottle Road
San Jose, CA 95193
All routine questions or problems should be directed to the Consignment
Coordinator assigned or the buyer.
All questions or problems of a critical nature should be directed to the IBM
Purchasing Department Buyer.
Revised: January 1992. Please note key changes preceded with (*).
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SUPPLIER RESPONSIBILITIES
FOR MATERIAL HANDLING AND CONTROL
OF IBM CONSIGNED MATERIAL
1. INTRODUCTION
As an IBM Supplier, you are responsible for IBM's inventory while in
your possession. This agreement has been prepared for handling and
control of IBM consigned material. Most questions that could arise
involving consignment are addressed to aid the supplier. IBM may
request space and facilities for an on site consignment representative
to assist.
If questions should arise that have not been explained fully by this
document, please contact Consignment Inventory Control (CIC),
Department 617.
2. IBM SHIPMENT OF CONSIGNED MATERIAL TO SUPPLIER
a. Material will be shipped to supplier prepaid unless a
different arrangement has been agreed to in advance.
b. Partial shipment of Consigned material may be made when:
1) The entire quantity is not readily available from IBM
stock (an IBM backorder is automatically created when
this situation occurs).
2) If the size or quantity of a given item would cause
storage difficulties, the supplier may notify the IBM
Buyer and the buyer will arrange CIC for partial
shipments to be made. The notification must be made
on a timely basis, preferably when the order is
placed.
3. RECEIPT AND INSPECTION OF CONSIGNMENT BY SUPPLIER
a. All shipments of consigned material by IBM to the supplier
will be accompanied by two copies of an IBM packing list (see
Exhibits A, B, and C).
b. Immediately upon receipt, supplier is responsible for checking
all cartons for any sign of visible damage and noting such
damage on the consignee memo/bill of lading or delivery
receipt. Also, note any shortages or overages of containers,
boxes, pallets, etc., if not as already noted on the freight
bill.
c. Visual external damage - Parts that are received by supplier
in packaging that exhibit external damage must be rejected and
held until disposition is made. Supplier must note damage on
the delivery receipt and have the driver sign that exception
is taken. Immediately call the carrier for a formal
inspection of the damage. Carrier should make inspection
within five (5) working days. If the carrier does not respond
within the five (5) days, supplier must notify the IBM Buyer.
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<PAGE> 248
In the event the carrier elects not to make an inspection, the
carrier must provide the supplier with a letter stating that
inspection has been waived. The letter should include the
necessary information to identify the damaged shipment. The
inspection report or letter of waiver and a copy of the
delivery receipt must be sent to the appropriate IBM Buyer who
will notify the IBM Traffic Department.
Please Note: Should the part be identified as "DFM", supplier
must notify the IBM Buyer and Traffic Department immediately
upon receipt. The Traffic Department will instruct the
carrier to make an expedited 24 hour disposition.
d. All packing material must be available for the carrier's
inspection.
e. Hidden/concealed damage - Parts that are received with
external packaging intact, but parts inside damaged, must be
rejected. If damage is discovered within ten (10) days of
receipt, the carrier must be notified to make a formal
inspection report and a copy of the bill of lading or delivery
receipt and carrier's damage inspection report must be
forwarded to the appropriate IBM Buyer; who in turn will
notify the Traffic Department. IBM Material Review must be
notified in order to set up the necessary documentation for
the return of the defective parts.
f. Verification of Count - Hand or scale counts must be made on
all receipts of consigned material, rework material, or
material purchased from IBM. A copy of the packing list must
be signed and returned to IBM CIC Department within five (5)
work days after receipt of materials. It should be noted on
the form (see Exhibit D) that all items received were correct,
or items received were correct with the exception of any
shortage, overage or incorrect part indicated. The method of
count should also be indicated. Notify the IBM CIC Department
by telephone if the discrepancy cannot be reported within the
five day period.
g. All shipments received by supplier should be verified against
the Consignment Inventory Listing (CIL) and any discrepancies
should be referenced to a shipment and a CIL.
h. For audit purposes, supplier should retain one copy of the
updated packing list, along with the date the receipt
acknowledgement was returned to IBM.
i. If supplier receives parts that should have been consigned,
contact your Consignment Coordinator and set the parts aside.
Request an ARCM (Authorization to Return Consigned Material)
so that they may be returned to IBM.
j. Supplier should notify the IBM CIC Department immediately of
parts movement to and from supplier premises without
authorization, i.e., at the direction of the Buyer or
Engineer.
4. DROP SHIPMENT (Interplant & Supplier)
a. IBM May instruct other IBM plants or another supplier to ship
parts directly to a
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consigned supplier.
b. The IBM Buyer will notify your company of this condition. Any
attempt to ship to you without this prior notification should
be handled as explained in Section 3 Item A.
c. Upon receipt of an authorized drop shipment, receive the
material as a normal consigned shipment.
NOTE: All drop shipments must be source stamped signifying
good parts. If you receive unstamped parts, set
aside and contact the Buyer immediately. Parts
should not be used until inspected.
d. Once quantities are verified, the receiving supplier should
indicate the actual quantity received on packing slip. Sign
and date the packing slip and DELIVERY RECEIPT, staple the
original packing slip to the delivery receipt and forward to
the IBM Receiving Department with 24 hours. Retain a copy of
the packing slip and delivery receipt for audit purposes.
e. If there are count discrepancies or defective parts on an
interplant drop shipment, notify the CIC Department
immediately. If discrepancies or defective parts are received
on a drop shipment from another supplier, contact the Buyer
immediately.
f. Drop shipments from another supplier must have a drop ship
sequence number assigned by the sending supplier. A separate
series of numbers should be used if parts are drop shipped to
more than one supplier.
*g. All drop shipments must be labeled in accordance with IBM
packaging specifications GA21-9261-08 as indicated below.
All articles must be marked with the country of origin.
Country Customs Organizations require every article of foreign
origin be marked in a conspicuous place as legibly, indelibly,
and permanently as the nature of the article will permit. The
country of origin is defined as that manufacturing country
wherein the article obtained its present identity as a part,
sub-assembly or finished product.
All domestic and foreign shipping containers must be
identified as described below; this includes bagged or boxed
parts within a container or containers within a unit load
shipper.
IBM P/N
---------------------------------
E/C LEVEL
-------------------------------
PKG QTY
---------------------------------
COUNTRY OF ORIGIN
-----------------------
Figure 1. Identification required on each individual package
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<PAGE> 250
* In addition, the date of manufacture is required on each
container when shipping shelf-life items.
If size permits, this information should appear on two adjacent,
vertical sides of the container when it is in the normal shipping
position.
Figure 2. Label placement - unit package
*h. Audit all (100%) world trade receipts and maintain
documentation by month.
1) Review receipts for container identification of
Country of Origin. In those instances where COO is
not obvious, annotate the packing list and forward to
IBM receiving in your normal manner.
5. STOCKING AND CONTROL OF CONSIGNED MATERIAL BY SUPPLIER
a. Store IBM San Jose consigned material in an area separate from
your own material, another company's material, IBM rework
material, or another IBM plant's material.
1) If parts are required for a rework purchase order,
these must be provided. Consigned inventory should
not be used.
2) Contact the IBM Buyer if this situation exists.
b. Maintain adequate inventory records on all IBM consigned
material including quantity of each part number received by
job number, assembly number and purchase order number.
c. It is recommended that a withdrawal system from the stock room
to the production line be set up and controlled, including a
parts inventory system. Parts should be issued on a First In,
First Out basis (FIFO). This location file can be either
computer system or card file for warehouse locations and card
file with assembly areas. IBM identifies suppliers by
supplier number. If your physical location has been assigned
more than one supplier number, you must segregate IBM's
inventory at your location by supplier number.
d. Selected suppliers will be required to prepare a critical
parts list reflecting parts that will represent a shortage
problem within a specified number of working days. This
notification is not to be used for parts required for rework
or reconditioning. These lists are to be forwarded to IBM CIC
Department. Contact your IBM Buyer when delivery
5
<PAGE> 251
problems arise (see Exhibit E).
e. Discrepant parts found during the manufacturing process are to
be held until dispositioned by IBM. When this condition
exists, contact IBM CIC, Material Review or the IBM Buyer.
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6. RETURN OF CONSIGNED MATERIAL TO IBM
a. All consigned material returned to IBM must be listed on an
Authorization for Return of Consigned Material (ARCM), Form
Number 927-0342 (see Exhibit F). A separate ARCM Document for
each category of material (excess, defective, down level,
wrong part issue or parts requested by IBM Analyzer) must be
attached to all parts. The only exception is when parts have
been authorized to be scrapped on supplier's location. See
page 7, Section 8d. When this condition exists, only the ARCM
document is returned to IBM.
All Returns:
1) An ARCM document will be prepared by CIC upon
notification from supplier that wrong part, excess,
down level or defective material exists at its
location.
2) Periodically (at a minimum of twice per year),
contact IBM CIC to review the current IBM consigned
part number list to the established IBM manufacturing
process. Any down level parts currently resident in
your facility should be dispositioned via ARCM
documents.
3) CIC will send the ARCM document to supplier with
authorized signatures within 24 hours of notification
(see Exhibit F).
4) When appropriate, CIC will notify IBM Inspector to
schedule a review of the material at supplier's
location.
5) The IBM inspector will inspect the material and
indicate on the ARCM document if it is acceptable for
IBM stock. Damaged material will be routed to IBM
Material Review.
6) Include the number of boxes shipped to IBM on bottom
of form. Remove and retain pink copy of ARCM
document for your records.
7) Package individual parts in separate containers with
separate packing list. All parts listed on an ARCM
must accompany the ARCM and preferably unitized. The
ARCM document number must be clearly marked on the
outside of each container. Containers should be
identified by number of boxes, i.e., 1 of 6, 2 of 6,
etc.
8) Return remaining copies (white, green and yellow) of
the ARCM document along with the material (within
five days of receipt of the ARCM document) to IBM
receiving. A bill of lading should be enclosed and a
notation that an ARCM is enclosed.
9) Damaged parts listed on the ARCM document that
supplier agrees are supplier's responsibility must be
signed and dated by supplier. Any disagreement will
be resolved through the IBM Buyer.
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10) All parts are to be packaged in accordance with IBM
General Packaging Specifications. Transportation
charges will be paid by IBM.
11) If a part is sent on a rework purchase order, the
document to return unreworkable parts is the Request
for Return Material (RRM), Form Number 927-8671 (see
Exhibit 11). The RRM is provided by the responsible
Buyer.
7. INVENTORY AND AUDIT REQUIREMENTS
a. A yearly physical inventory is required on all IBM consigned
material.
b. Additional audits may be required and will be arranged by the
IBM Buyer and/or the IBM Consignment Auditor.
c. RICS (Rotating Inventory Counts) may be performed on a weekly
or monthly basis by CIC. These may be handled over the
telephone or in person by the Consignment Coordinator.
d. Actual inventory counts will be compared to the IBM
Consignment records and a percent-of-variance record will be
kept. The control of consignment may be a factor in IBM's
determination of supplier's ability to perform current and
future subcontract work for IBM San Jose.
e. IBM requires that supplier keep inventory records. These
records should indicate current IBM inventory and a record of
finished assemblies shipped to IBM as well as that inventory
received on consignment from IBM or an IBM supplier. These
records are commonly referred to as in-transit records (i.e.
receipts, shipments, returned parts on the ARCM Documents,
drop shipments and hand carried parts). Maintenance of these
records is an indication of supplier's ability to control
IBM's assets. An acceptable sample log is attached for your
review (Exhibit G).
f. When a subcontractor is used to complete operations on IBM
material at supplier's direction or based upon an agreement
with IBM, supplier is responsible for being able to account
for that portion of the inventory that may be at the
subcontractor's location. Supplier is also responsible for
informing IBM auditors of the subcontractor, its location and
what portion of IBM's inventory is located at subcontractor's
premises or at a subsequent location of supplier's.
g. Domestic Subsidiary - This involves assists that are given to
a domestic supplier who in turn gives it to their foreign
subsidiary for use in the production of goods to be imported
into the U.S. with the U.S. supplier as the Importer of
Record.
If you are the Importer of Record for goods benefiting from
this consignment, you may have value declaration
responsibilities to U.S. customs. Contact the IBM Buyer for
customs valuation information.
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8. SUPPLIER RESPONSIBILITY FOR LOST OR DAMAGED GOODS
a. IBM Consigned material is insured by IBM; however, supplier
will be held liable for loss occasioned by supplier's fault or
negligence. It is the supplier's responsibility to obtain
insurance to protect itself from loss due to its negligence.
b. Control and reporting as described in this instruction is
necessary to properly account for all IBM consigned material
and to prevent audit discrepancies.
c. IBM consigned parts are to be used only on new production
purchase orders. Special arrangements with IBM Buyer are
necessary to use consigned parts for other orders, i.e.
rework, engineering jobs, etc.
d. There are occasions when IBM desires to scrap good or
defective parts at supplier locations versus returning the
inventory to IBM. No parts are to be scrapped until supplier
received written authorization from an IBM Buyer or IBM
Material Review (MR). The physical destruction of the
inventory must be witnessed by an IBM representative and
documented on an ARCM.
9. SUPPLEMENTAL STANDARD TERMS AND CONDITIONS - IBM PARTS
a. Supplier acknowledges that all consigned material described in
the Consignment Agreement (Consignment Inventory Listing) has
been received in good condition and in the quantities stated
thereon except when supplier has notified IBM, in writing and
within five days following the receipt of the materials, or
specific damage or quantity discrepancies. IBM acknowledges
that Supplier may not discover defects that are not reasonably
apparent until the consigned material is integrated into
systems and tested.
b. Title to all consigned materials shall remain in IBM.
c. For all materials lost, destroyed, or damaged through the
fault or negligence of the supplier, supplier will pay IBM, at
IBM's option, either the cost of such materials or the cost of
replacement materials required to complete the performance of
this order.
d. Supplier at its own expense will:
1) Separately account for all IBM Material.
2) Maintain current and accurate inventory records.
3) Take an accurate physical inventory thereof as
required by IBM (not more often than once each three
months).
4) Return all unused materials to the consigning IBM
location promptly upon completion, cancellation or
expiration unless otherwise agreed, or at any time
after completion, cancellation, or expiration of this
order upon IBM's request.
9
<PAGE> 255
5) IBM shall have the right to examine and audit said
records and to verify said inventories at any time
upon reasonable notice.
10. EC - ENGINEERING CHANGES
IBM may require supplier to change the parts or process used in
assemblies. Supplier should maintain records related to which
purchase orders the change affects.
If this change affects orders where IBM has already shipped supplier
parts, contact your Consignment Coordinator to make sure correct parts
have been forwarded for these orders.
Supplier should call CIC if any problems occur with implementing an
Engineering Change, including completing the phase-in within the agree
upon time frame and/or quantity.
11. SHIPMENTS TO IBM
When supplier complete assemblies to be shipped to IBM, supplier will
prepare the shipment and assign a control number in a sequential
manner. The purchase order number for the particular assembly must be
shown.
NOTE: Suppliers are not authorized to overship on Consignment
Purchase Orders. Packing slip and invoice quantities must
match shipment quantity.
10
<PAGE> 256
EXHIBIT 5: FRU PRICES AND LEADTIMES
05/28/96
FREEZER III FRUs
<TABLE>
<CAPTION>
NOT TO EXCEED
PRICE FOR
** |(- PRICE FOR NEW PARTS -)| |(- PRICE FOR CODE A PARTS (1) -)| REWORKED PARTS**
MONTEREY P/N OAHU P/N DESCRIPTION ** ** ** ** **
- ------------ -------- ----------- ------- ------- ------ ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
**
NOTE 1: PRICE FOR CODE A PART B WILL BE PER THIS CHART OR ** , WHICHEVER IS LESS.
NOTE 2: PRICE FOR REWORKED PARTS WILL BE PER THIS CHART OR ** , WHICHEVER IS LESS.
NOTE 3: PRICES ARE SUBJECT TO CHANGE SEMI-ANNUALLY.
NOTE 4: LEAD TIMES FOR ALL PARTS WILL BE FOUR (4) WEEKS PROVIDED QUANTITY ORDERS - (/=10% OF NORMAL PRODUCTION USAGE VOLUMES, OTHER
WISE LEAD TIMES WILL BE AS QUOTED.
NOTE 5: TOTAL COST SPENT FOR FRU'S WILL BE ** ON AVERAGE PER MACHINE PER YEAR.
NOTE 6: (*) IN DESCRIPTION INDICATES THAT THIS P/N IS TO BE SERIALIZED.
</TABLE>
- ----------------------------------
** Confidential portions omitted and filed separately with the Securities
and Exchange Commission under an application for confidential treatment.
MONTEREY CONFIDENTIAL
<PAGE> 257
EXHIBIT 5: FRU PRICES AND LEADTIMES
05/28/96
PENGUIN FRUs
<TABLE>
<CAPTION>
NOT TO EXCEED
PRICE FOR
** |(- PRICE FOR NEW PARTS -)| |(- PRICE FOR CODE A PARTS (1) -)| REWORKED PARTS(2)
MONTEREY P/N OAHU P/N DESCRIPTION ** ** ** ** **
- ------------ -------- ----------- ------- ------- ------ ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
**
NOTE 1: PRICE FOR CODE A PART B WILL BE PER THIS CHART OR ** WHICHEVER IS LESS.
NOTE 2: PRICE FOR REWORKED PARTS WILL BE PER THIS CHART OR ** , WHICHEVER IS LESS.
NOTE 3: PRICES ARE SUBJECT TO CHANGE SEMI-ANNUALLY.
NOTE 4: LEAD TIMES FOR ALL PARTS WILL BE FOUR (4) WEEKS PROVIDED QUANTITY ORDERS - (/=10% OF NORMAL PRODUCTION USAGE VOLUMES, OTHER
WISE LEAD TIMES WILL BE AS QUOTED.
NOTE 5: TOTAL COST SPENT FOR FRU'S WILL BE ** ON AVERAGE PER MACHINE PER YEAR.
NOTE 6: (*) IN DESCRIPTION INDICATES THAT THIS P/N IS TO BE SERIALIZED.
</TABLE>
- ----------------------------------
** Confidential portions omitted and filed separately with the Securities
and Exchange Commission under an application for confidential treatment.
MONTEREY CONFIDENTIAL
<PAGE> 258
EXHIBIT 5: FRU PRICES AND LEADTIMES
05/28/96
KODIAK FRUs
<TABLE>
<CAPTION>
NOT TO EXCEED
PRICE FOR
** |(- PRICE FOR NEW PARTS -)| |(- PRICE FOR CODE A PARTS (1) -)| REWORKED PARTS**
MONTEREY P/N OAHU P/N DESCRIPTION ** ** ** ** **
- ------------ -------- ----------- ------- ------- ------ ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
**
NOTE 1: PRICE FOR CODE A PART B WILL BE PER THIS CHART OR ** WHICHEVER IS LESS.
NOTE 2: PRICE FOR REWORKED PARTS WILL BE PER THIS CHART OR ** , WHICHEVER IS LESS.
NOTE 3: PRICES ARE SUBJECT TO CHANGE SEMI-ANNUALLY.
NOTE 4: LEAD TIMES FOR ALL PARTS WILL BE FOUR (4) WEEKS PROVIDED QUANTITY ORDERS - (/=10% OF NORMAL PRODUCTION USAGE VOLUMES, OTHER
WISE LEAD TIMES WILL BE AS QUOTED.
NOTE 5: TOTAL COST SPENT FOR FRU'S WILL BE ** ON AVERAGE PER MACHINE PER YEAR.
NOTE 6: (*) IN DESCRIPTION INDICATES THAT THIS P/N IS TO BE SERIALIZED.
</TABLE>
- ----------------------------------
** Confidential portions omitted and filed separately with the Securities
and Exchange Commission under an application for confidential treatment.
MONTEREY CONFIDENTIAL
<PAGE> 259
Exhibit 6
DATA ITEMS
1. IBM RESPONSIBILITIES
a. Item b. Date Due c. Date Completed
2. STORAGETEK RESPONSIBILITIES
a. Item b. Date Due c. Date Completed
<PAGE> 260
EXHIBIT 7
LIST OF COUNTRIES FOR
INTELLECTUAL PROPERTY INDEMNITY
COUNTRIES FOR INDEMNIFICATION
**
- ---------------------------
** Confidential portions omitted and filed separately with the Securities
and Exchange Commission under an application for confidential treatment.
<PAGE> 261
EXHIBIT 8
Examples of Calculation of IBM Volume Credits Due to RAS Criteria
<TABLE>
<CAPTION>
Q1/Y1 Q2/Y1 Q3/Y1 Q4/Y1 YR 1 TTL Q1/Y2 Q2/Y2 Q3/Y2 Q4/Y2 YR 2 TTL
----- ----- ----- ----- -------- ----- ----- ----- ----- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Quality Goal ** ** ** ** ** ** ** **
EXAMPLE I Quality Actual ** ** ** ** ** ** ** **
Action Reqd ** ** ** ** ** ** ** **
Plan Volume ** ** ** ** ** ** ** ** ** **
Volume Credit ** ** ** ** ** ** ** ** ** **
Quality Goal ** ** ** ** ** ** ** **
EXAMPLE II Quality Actual ** ** ** ** ** ** ** **
Action Reqd ** ** ** ** ** ** ** **
Plan Volume ** ** ** ** ** ** ** ** ** **
Volume Credit ** ** ** ** ** ** ** ** ** **
Quality Goal ** ** ** ** ** ** ** **
EXAMPLE III Quality Actual ** ** ** ** ** ** ** **
Action Reqd ** ** ** ** ** ** ** **
Plan Volume ** ** ** ** ** ** ** ** ** **
Volume Credit ** ** ** ** ** ** ** ** ** **
Quality Goal ** ** ** ** ** ** ** **
EXAMPLE IV Quality Actual ** ** ** ** ** ** ** **
Action Reqd ** ** ** ** ** ** ** **
Plan Volume ** ** ** ** ** ** ** ** ** **
Volume Credit ** ** ** ** ** ** ** ** ** **
Quality Goal ** ** ** ** ** ** ** **
EXAMPLE V Quality Actual ** ** ** ** ** ** ** **
Action Reqd ** ** ** ** ** ** ** **
Plan Volume ** ** ** ** ** ** ** ** ** **
Volume Credit ** ** ** ** ** ** ** ** ** **
NOTES:
(1) C.A.P. = Corrective Action Plan
(2) ** unit annual volume ** (quarterly breakdown) ** = ** unit volume credit (applied to ** )
(3) ** unit annual volume ** (quarterly breakdown) ** = ** unit volume credit (applied to ** )
(4) ** unit annual volume ** (quarterly breakdown) ** = ** unit volume credit (applied to ** )
</TABLE>
- ---------------------
** Confidential portions omitted and filed separately with the Securities
and Exchange Commission under an application for confidential treatment.
