COMPAQ COMPUTER CORPORATION/TANISYS TECHNOLOGY, INC. REV 1.0
CORPORATE PURCHASE AGREEMENT CONTRACT NO. 1838-080100
COMPAQ COMPUTER CORPORATION &
TANISYS TECHNOLOGY, INC.
MEMORY MODULE CORPORATE PURCHASE AGREEMENT
This Memory Module Corporate Purchase Agreement (this "Agreement") is
made and entered into as of the 1st day of August, 1997 by Compaq Computer
Corporation, a Delaware corporation ("Compaq"), and by Tanisys Technology,
Inc., a Texas Corporation ("Tanisys") with its principal place of business as
00000 Xxxxxxxxxx Xxxx, Xxxxxx, XX 00000-0000 and Subsidiaries as identified
in Exhibit A
WHEREAS, COMPAQ desires to purchase memory, memory modules, and memory kits
from Tanisys as defined herein;
WHEREAS, Compaq desires for Tanisys to assemble, kit and deliver high
quality, low cost memory modules and options to Compaq and to Compaq
customers for same day and next day delivery;
WHEREAS, Tanisys is willing to sell memory modules and memory kits to Compaq
and provide for assembly, kitting and delivery of memory kits, as defined
herein;
NOW THEREFORE, For good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Compaq and Tanisys hereby agree
as follows:
1. DEFINITIONS
1.1. In addition to terms defined elsewhere in this Agreement, capitalized
terms used in this Agreement shall have the meanings given thereto in Annex I
hereto.
2. PRODUCT PURCHASES
2.1. The terms and conditions contained in this Agreement shall govern the
purchase and sale of product (the "Product") listed in a product schedule
(the "Product Schedule") entered into from time to time by Compaq and
Tanisys, which schedule shall be substantially in the form of Exhibit B.
2.2. This Agreement is not a requirements contract and does not obligate
Compaq to purchase any minimum quantity of Product but only establishes the
terms and conditions for such purchases if, as and when Compaq submits orders
in accordance with this Agreement.
3. ORDERS
3.1. Upon execution of this Agreement, Tanisys agrees that it shall be fully
capable of processing all Orders through Compaq's system for Electronic Data
Interchange ("EDI").
3.2. Compaq may purchase Products by issuing to Tanisys written purchase
orders ("Written Orders") or purchase orders by electronic data interchange
("EDI Orders"); collectively, Written Orders and EDI Orders are referred to
herein as "Order" or "Orders". Orders shall set forth the following items:
quantity, price, ship to location, shipping date, delivery date, part number
and revision level. Tanisys shall accept any Order that materially conforms
with the terms of this Agreement.
3.3. If Compaq issues a Written Order, Tanisys shall use commercially
reasonable efforts to send written confirmation of such acceptance within two
(2) days after Tanisys' receipt of a Written Order from Compaq.
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CORPORATE PURCHASE AGREEMENT CONTRACT NO. 1838-080100
3.4. If Compaq issues an EDI Order, Tanisys shall electronically acknowledge
receipt of the EDI Order which shall be confirmed by an Functional 997 issued
from Tanisys Technology's mailbox upon receipt of the EDI Order, or by an EDI
Order Verify signal sent no later than 3 hours after receipt of the EDI Order.
3.5. "Verify", or "Verification", as used herein shall mean Tanisys
Technology's determination of successful receipt, from electronic mailbox, of
all necessary Order information and requirements (e.g., quantity, price, ship
to location, shipping date, delivery dates, part number, and revision level),
and notification to Compaq, of both the receipt of the EDI Order from Compaq
and any discrepancies relating to the readability of such EDI Order. Tanisys
shall electronically verify receipt of an Order as per Table 1:Verify. EDI
Order issued on a non-Business Day shall be "verified" on the next Business
Day by 11:00AM.
Table 1: Verify
FUNCTIONAL 997 SENT BY TANISYS VERIFY REPORT SENT TO COMPAQ
MAILBOX BY
12:00AM to 8:00AM 11:00AM
8:01AM to 2:00PM 7:00PM
2:01PM to 11:59PM 11:00AM Next Business Day
3.6. Tanisys shall be conclusively presumed TO have accepted all EDI Orders
issued by Compaq that Tanisys has confirmed by a Functional 997, unless
Compaq is notified specifically, that Tanisys has not accepted a particular
EDI Order. Such notification by Tanisys must take place within fourteen (14)
hours from Tanisys Technology's Verification of Compaq's EDI Order
transmission.
3.7. All EDI Orders, Verifications, and EDI Acknowledgments (collectively,
"EDI Transmissions") and other related data electronically transmitted shall
(i) reference and be subject to the terms and conditions of this Agreement,
and (ii) contain information in a specified format in accordance with
Compaq's policies, specifications and procedures regarding electronic data
interchange information.
3.8. No additional or different provisions proposed by either party hereto
in any oral, written or electronic data interchange acceptance, Written
Order, EDI Order, confirmation, verification or acknowledgment shall apply
unless expressly agreed to in writing by the other party. Tanisys and Compaq
hereby give notice of their objection to any additional or different terms.
3.9. Tanisys agrees that all of Compaq's Affiliates, wherever located, shall
be entitled to make purchases under this Agreement.
4. TERM OF AGREEMENT
4.1. The term of this Agreement shall be three (3) years, commencing on the
date of this Agreement (the "Effective Date"). This Agreement will be
automatically renewed at the conclusion of the initial 3 year period for a 12
month period unless one of the parties notifies the other party not less than
180 days prior to the end of such 1 year period that it does not intend to
renew this Agreement. Such automatic renewal provision shall apply at the end
of each successive 12 month period unless either xxxxx indicates, in
accordance with the 180 day notice provision described in the preceding
sentence, that renewal is not intended. This Agreement may terminate prior to
the aforementioned stated term under the circumstances set forth in Section
15. Notwithstanding the foregoing, this Agreement shall remain in full force
and effect and shall be applicable to any Order issued by Compaq and received
by Tanisys during the term of this Agreement until all obligations under such
Order have been fulfilled.
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COMPAQ COMPUTER CORPORATION/TANISYS TECHNOLOGY, INC. REV 1.0
CORPORATE PURCHASE AGREEMENT CONTRACT NO. 1838-080100
5. PRICING
5.1. The prices for the Products, including memory components, memory module
assembly, kitting material and kitting services, shall be established from
time to time by the parties executing and delivering a pricing schedule in
the form set forth as Exhibit B (the "Pricing Schedule"). The Product prices
(the "Prices") set forth in any Pricing Schedule shall be fixed for the
period set forth therein.
5.2. Tanisys will use commercially reasonable efforts to purchase memory
components based on supplier share. Compaq will update the allocation matrix
on a monthly basis and/or as needed.
5.3. The Compaq Contract Price may be updated at any time that Compaq
negotiates a new contract price. The Compaq Contract Price and allocation
will be distributed to Tanisys as identified in Exhibit B.
5.4. The Prices shall include all inbound to Tanisys direct, indirect and
incidental charges relating to the sale of title Product to Compaq including,
without limitation, packaging and kitting, in-bound freight shipping charges,
forwarding agent and brokerage fees, insurance costs, document fees, and
duties, and any and all sales, use, excise and similar taxes: provided that
all such charges for semiconductor memory devices shall be included in the
Compaq Contract Price. All Product sold hereunder shall be shipped to Compaq
Ex-Works upon delivery to a common carrier.
5.5. Tanisys must receive written authorization from Compaq prior to all
spot market transactions that exceed the percentage of Spot Market purchases
outlined in Exhibit B. Spot market transactions by Tanisys will follow the
terms and conditions outlined within Exhibit B.
5.6. Tanisys is responsible for monitoring and determining the inventory
levels which will allow Tanisys to reach the On-Time-Delivery requirements of
this Agreement.
5.7. It shall be Tanisys Technology's responsibility to inform Compaq where
the supplier is unable to deliver to the commitments. Compaq will use
commercially reasonable efforts to ensure that the supplier can meet the
commitments. In the event that product can not be obtained to the allocation,
Tanisys shall use commercially reasonable efforts to obtain supply from the
other Compaq Contract Suppliers.
5.8. To the extent permitted by applicable law, Tanisys shall offer Compaq
the lowest prices and most favorable terms that Tanisys offers or intends to
offer its other customers purchasing similar quantities to those purchased or
expected to be purchased by Compaq hereunder during the same or similar
periods of time. This Section 5.8 shall apply to all Products purchased and
services provided by Compaq hereunder, including but not limited to all
memory modules, memory option kitting and DRAM's, as identified in Exhibit B.
5.9. Tanisys shall use its best efforts to maintain a vigorous cost
reduction program and to ensure that the Prices and terms set forth in this
Agreement and Exhibit B hereunder are aggressive and competitive at all
times. If Compaq does not consider the quoted pricing and terms to be
aggressive and competitive, Compaq shall have the right, at any time and from
time to time, to request an immediate meeting with Tanisys Technology, and
Tanisys shall use its best efforts to amend the quoted pricing and terms to
comply with this Section 5.9 by entering into a new Pricing Schedule (if
required).
6. EXCLUSIVITY AND MANUFACTURING RIGHTS
6.1. Compaq may, from time to time, engage Tanisys in the design and
manufacture of Compaq unique memory modules. Compaq unique memory modules
will be separately identified in Exhibit B Pricing), Exhibit C
(Specifications) and Exhibit D Memory Flex Model) of the Corporate Purchase
Agreement and
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COMPAQ COMPUTER CORPORATION/TANISYS TECHNOLOGY, INC. REV 1.0
CORPORATE PURCHASE AGREEMENT CONTRACT NO. 1838-080100
may include unique terms and conditions regarding their purchase. All unique
terms and conditions will be negotiated during Compaq's and Tanisys
Technology's regular negotiations sessions and incorporated into the
Exhibits. Compaq and Tanisys further agree that Compaq is hereby granted
exclusive use of Compaq unique memory module designs, whether created by
Compaq or Tanisys Technology, for all Products purchased by Compaq, as
defined in Exhibits B, C and D hereunder; provided that Compaq notifies
Tanisys in writing which modules it considers to be Compaq unique memory
modules prior to the design of such modules.
6.2. Tanisys hereby grants to Compaq manufacturing rights to produce and
manufacture and/or to have manufactured Product for Compaq in sufficient
quantities to meet demand. Compaq shall be prohibited from exercising such
manufacturing rights except where Compaq determines in good faith that
Tanisys lacks sufficient production capacity to meet Compaq's forecast
production requirements. Compaq and Tanisys agree that Tanisys Technology's
line manufacturing capacity model (Exhibit F - Tanisys Manufacturing Capacity
Model) shall be used to determine key process capacities including:
A. SURFACE MOUNT PICK AND PLACE CAPACITY
B. BOARD REFLOW CAPACITY
C. FUNCTIONAL AND PARAMETRIC MEMORY TEST CAPACITY
D. KIT ASSEMBLY & SHIPPING CAPACITY.
6.3. Factory loading of greater than 70% of the theoretical limits for more
thin thirty (30) days in any consecutive ninety (90) day period, shall be
defined as insufficient capacity. The theoretical manufacturing capacity
limit shall be established as three (3) eight hour shifts per day operating
seven (7) days per week in Tanisys's Compaq qualified manufacturing
operations.
6.4. If Compaq determines pursuant to Sections 6.2 and 6.3 that Tanisys
lacks sufficient production capacity to meet Compaq's forecast production
requirements, Tanisys shall provide Compaq the information required to
manufacture and/or to have manufactured the Product, including but not
limited to Tanisys Technology's then current drawings, bills of material,
Gerber files, and vendor lists, and Tanisys agrees to provide to Compaq the
support and information required by Compaq to manufacture or to have
manufactured such product, including authorization to purchase any necessary
proprietary components from Tanisys Technology's suppliers.
6.5. Upon Compaq's determination pursuant to Sections 6.2, 6.3 and 6.4,
Tanisys will also provide to Compaq, at Compaq's request and on a
commercially reasonable basis, telephone and on-site personnel support as
Compaq may request from Tanisys to assist and enable Compaq to manufacture or
to have manufactured such Product in commercial quantities.
6.6. Compaq is hereby granted a license under trade secrets and patents to
access and to use all of Tanisys Technology's drawings, bills of material,
and suppliers to make or to have made Products and to create improvements.
Compaq shall be prohibited from exercising such grant except in the event
that (i) Tanisys merges into or is acquired by any third party and materially
becomes unable to meet Compaq's demand for Product as required by this
Agreement, and/or (ii) Tanisys is acquired by a Compaq competitor, and/or
(iii) Tanisys enters into business proceedings including, going out of
business, filing for bankruptcy or reorganization, or going into
receivership. Tanisys agrees that the presentation of this Agreement by
Compaq to Tanisys Technology's successors and assigns shall be sufficient for
such successors and assigns to make Tanisys drawings, bills of material, and
vendor lists accessible to Compaq.
6.7. Tanisys agrees to provide actual capacity utilization for each section
as identified in Section 6.2 as identified in Exhibit J.
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COMPAQ COMPUTER CORPORATION/TANISYS TECHNOLOGY, INC. REV 1.0
CORPORATE PURCHASE AGREEMENT CONTRACT NO. 1838-080100
7. SHIPMENT AND DELIVERY
7.1. Tanisys shall ship Product to Compaq, its Affiliates, and/or to
Compaq's authorized resellers on the date (the "On-dock Date") and to the
location (the "Specified Location") specified in the related Order. Tanisys
Shall ship all Orders complete, unless authorized by Compaq to ship a partial
order. Tanisys and Compaq agree to the terms in Table 3: On-Time Shipment
Metrics to establish Tanisys Technology's performance against this term.
Table 3: On-Time Shipment Metrics
Shipment Period ON-TIME SHIPMENT METRIC COMMENT:
July 1st, 1997 95% On-Time Performance Term
through term
7.2. Tanisys will use commercially reasonable efforts to ship Orders on a
First In First Out (FIFO) basis by part number. In the event that Tanisys
fails to ship an Order based on the On-Time Shipment Metrics, then that Order
should be shipped prior to shipping new Orders of the same part number.
7.3. The failure of Tanisys to meet the On-Time Shipment Metrics over a
calendar quarter, provided that the Orders received are in compliance with
the terms, conditions and lead times of this Agreement, shall constitute a
material breach of this Agreement. Tanisys shall notify Compaq in writing
immediately if Tanisys has knowledge of any event which is reasonably likely
to delay any agreed ship date or shipment plan.
7.4. Orders being delivered to a Compaq facility, shall have title pass to
Compaq on Compaq's receiving dock and will be delivered duty paid. Orders
being sent to a Compaq customer shall have title pass to Compaq on Tanisys's
shipping dock.
7.5. If Tanisys delivers Product more than two days in advance of the
On-dock Date therefor, Compaq may, at its option, either (i) return such
Product to Tanisys at Tanisys Technology's risk and expense, including but
not limited to any transportation, import, or export related expenses or
duties, (in which case Tanisys Technology, at its expense, shall redeliver
such Product to Compaq on the correct On-dock Date therefor) or (ii) retain
such Product and make payment on the date payment would have been due based
on the correct On dock Date therefore.
7.6. Changes to shipping and/or delivery dates may only be made by Compaq's
authorized purchasing representatives as designated in writing from time to
time. Compaq may, without cost or liability, issue change orders for Product
quantities and schedule dates in accordance with the flexibility agreement
attached as Exhibit D (the "Memory Flexibility Agreement"). If any change
Order is made orally, Compaq shall provide an Order confirming such change
within one (1) Business Day, and Tanisys shall provide written confirmation
of such change within one (1) Business Day of receiving Compaq's confirming
Order.
7.7. Compaq may measure Tanisys Technology's On Time Delivery performance
against commitments for the purpose of establishing Tanisys Technology's rate
of On Time Delivery, lead time and cycle time improvement against Compaq's
requirements. On Time Delivery shall mean delivery of scheduled Product no
more than two (2) days early and zero (0) days late as measured on Compaq's
and/or Compaq's reseller's receiving dock.
7.8. In addition, Compaq may measure Tanisys Technology's On-Time Order
Receipt to Shipment Cycle Time as a function of the elapsed time between
Tanisys Technology's receipt of Compaq's EDI 850 Order Release and Compaq's
receipt of Tanisys Technology's EDI 856 Ship Notification. On-Time Sipping
Performance Metrics are defined in Table 4:, Portables , Server Products.
Desktop, Portable and Server product are defined in Exhibit B Table B.2:
Memory Module Assembly Pricing.
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CORPORATE PURCHASE AGREEMENT CONTRACT NO. 1838-080100
Table 4: Desktop/Portable/Server Products:
Compaq EDI 850 Order Compaq EDI 850 Order Tanisys EDI 856 Tanisys EDI 856
Transmit Transmit Date Ship Notice Ship Date
12:00AM to 8:00AM Business Day 0 11:59PM Business Day 1
8:01AM to 2:00PM Business Day 0 11:59PM Business Day 1
2:0 1PM to 11:59PM Business Day 0 11:59PM Business Day 2
7.9. Lead times for all Product ordered hereunder shall not exceed that
listed in the Exhibit D - Memory Flexibility Agreement. Tanisys shall provide
status reports identified in Exhibit J on Tanisys Technology's manufacturing
cycle times.
7.10. Within twelve (12) months of the date in which Compaq receives Product,
Compaq may request the return, at Compaq's expense, of unused standard
Product to Tanisys for credit. Product may be returned and credited at a then
negotiated price.
7.11. Tanisys shall use commercially reasonable efforts to ship on the same
day for Orders of Desktop Product received prior to 8:00AM.
8. PACKING, MARKING, AND SHIPPING INSTRUCTIONS
8.1. All products shall be prepared and packaged in accordance with Compaq's
memory packaging specifications and bills of materials. A sample memory
packaging specification and xxxx of material is included in Exhibit C.
Compaq, at its sole discretion, from time to time may alter packaging
specifications. If Compaq's alterations result in a material change in
Tanisys Technology's costs or in the time for performance, Tanisys and Compaq
shall negotiate in good faith such adjustments as the parties deem
appropriate to address such changes.
8.2. Tanisys shall xxxx, or cause to be marked, each shipping container to
adequately show Compaq's Order number, part number, revision level, lot
number, and quantity contained therein, and appropriate country of origin
marking. In addition, Tanisys will conform to Compaq's bar code specification
which will be provided to Tanisys Technology. A packing list showing the
Order number shall be included in each shipment. These data fields are
identified in Compaq's Bar Code Label Specification, Rev. K, in Exhibit C.
9. QUALITY
9.1. Tanisys commits to use commercially reasonable efforts to provide
defect free Product to Compaq. Tanisys shall ensure that all Products conform
to the specifications, drawings, samples, revision levels and other
descriptions designated in the Product Schedule for such Product (the
"Specifications"). The Specifications shall include any labeling requirements
imposed by applicable law.
9.2. Compaq's Approved Vendor List (AVL) shall only come from Compaq.
Tanisys may request an updated AVL at any time from Compaq. Tanisys shall use
Compaq's AVL for all Memory Components to be used for Compaq unless a
"written waiver is provided from Compaq. Tanisys shall use Compaq's AVL for
all Memory Modules to be used for Compaq unless a written waiver is provided
from Compaq.
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COMPAQ COMPUTER CORPORATION/TANISYS TECHNOLOGY, INC. REV 1.0
CORPORATE PURCHASE AGREEMENT CONTRACT NO. 1838-080100
Example of Compaq AVL:
**COMPAQ CONFIDENTIAL**
Date of report: January 1 1997
Compatible Supplier Parts List for...
Compaq Part Number: XXXXXX Page: X
Part Description: DI MM, BUFF,XMxX,ECC,EDO,XOnS
Part Revision Level: X
Part Class Code: Xxxx
Part Project Number: XXXXX
Supplier Part #
ABCABC-6 ABC SUPPLIER APPROVED
DEFDEF-6 DEF SUPLLIER DISAPPROV
9.3. Tanisys and Compaq agree that a statistically significant 250 DPPM
threshold, measured at the module level at Tanisys, will be used to trigger
Supplier Corrective Action Requests (SCARS). Tanisys shall report the outgoing
module level DPPM as identified in Exhibit J to Compaq.
9.4. Tanisys shall establish and/or maintain a Quality Manual acceptable to
Compaq. Tanisys Technology's Quality Manual is attached to this Agreement as
Exhibit E (the "Quality Manual") and shall not be amended without written notice
to Compaq.
9.5. Upon reasonable notice, Compaq shall be entitled to visit and inspect
Tanisys Technology's facility sites during normal business hours and Tanisys
shall cooperate to facilitate such visits. Compaq's inspections shall in no way
relieve Tanisys of its obligation to deliver conforming Product or waive
Compaq's right of inspection and acceptance at the time the Products are
delivered.
9.6. At Compaq's request, Tanisys shall provide Compaq with relevant
inspection, quality, and reliability data.
9.7. Tanisys and Compaq agree to provide reports identified in Exhibit J.
10. CHANGE ORDERS
10. 1. Compaq may from time to time change the Specifications for the
Products, and Tanisys shall use its best efforts to ensure that all Product
complies therewith. If' Compaq's changes result in a material change in Tanisys
Technology's costs or in the time for performance, Tanisys and Compaq shall
negotiate in good faith such adjustments as the parties deem appropriate to
address such changes. Any request by Tanisys for any such adjustment must be
made in writing to Compaq within ten (10) days' of Tanisys Technology's receipt
of Compaq's notice of change in specifications.
10.2. Tanisys agrees to advise Compaq of any changes to process, materials,
or sources of supply and ensure that such changes do not compromise
specifications, quality, reliability or availability of Products ordered by
Compaq.
11. INSPECTION AND ACCEPTANCE
11.1. Products purchased or to be purchased pursuant to this Agreement shall
be subject to inspection and test by Compaq, its Affiliates, and its authorized
resellers including during the period of manufacture or development. Inspection
may occur at Compaq, its Affiliate, or reseller locations as well as at Tanisys
Technology's facilities and/or those of Tanisys Technology's subcontractors.
Unless otherwise specified in the Order, final inspection and
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acceptance of Product by Compaq shall be at (i) Compaq's facilities and/or
(ii) those of Compaq's authorized resellers. Compaq reserves the right to
reject Product which does not conform to the Specifications or that contains
any defect in material, workmanship or Tanisys design (the "Defective
Product"). Compaq may in accordance with Section 11.2 return Defective Product
to Tanisys Technology, at Tanisys Technology's expense, for corrective action,
which corrective action shall include and be prioritized as follows: (i)
Tanisys shall first attempt to repair or replace said Defective Product, and
(ii) if repair or replacement is not possible and if Compaq has credited its
customer for said Defective Product pursuant to its warranty to said customer,
then Tanisys shall credit Compaq for its purchase price for said Defective
Product, (iii) exercise any other rights as Compaq may have at law or in
equity that are consistent with the other provisions of this Agreement.
Product required to be corrected or replaced shall be subject to the same
inspection and acceptance provisions of this Agreement as Product originally
delivered under any Order. Tanisys shall reimburse Compaq for the costs of any
reasonable inspection measures deemed necessary by Compaq.
11.2. If Compaq returns Defective Product to Tanisys for correction or
replacement, Tanisys shall repair or replace same within 5 days of receipt
thereof. Tanisys will issue a "Return Material Authorization" ("RMA") within
twenty four (24) hours of request to minimize field exposure associated with any
suspect material. Prior to shipping any defective Product back to Tanisys
Technology, Compaq shall use commercially reasonable efforts, including
performing testing to verify that said product is defective. Compaq will include
a statement with each lot returned explaining the basis and reason for said
Product's return and including the appropriate RMA number.
11.3. Tanisys agrees to provide failure analysis of Defective Product within
5 days after receipt thereof. Tanisys will also provide Compaq with a written
corrective action report addressing the steps that will be taken to eliminate
the recurrence of the problem, and will use commercially best efforts to
implement the actions addressed in such report.
11.4. If Product changes are necessary to correct Tanisys design, material
or workmanship defects, Tanisys shall bare the costs of correction. If Compaq
incurs any costs associated with such corrections arising out of Compaq stock,
reseller, and end user inventory purges and service costs, Tanisys will
reimburse Compaq for the costs incurred.
12. WARRANTY
12.1. Tanisys hereby warrants to Compaq that Product purchased hereunder
shall (i) vest in Compaq good and valid title to such Product free and clear
of all liens, encumbrances, security interests, burdens and other claims and
(ii) be free from infringements or violations described in Section 19.1. In
addition, for a period of three (3) years from the date of Compaq's acceptance
of Product delivered hereunder, Tanisys hereby warrants to Compaq that such
Product shall be free from defects in material, workmanship and Tanisys design
and be in conformity with the Specifications. The warranty for replaced or
repaired Product will be the same as the original Product, and the three (3)
year warranty period for replaced or repaired Product shall begin on the date
of acceptance of the replaced or repaired Product by Compaq. In the case of
Epidemic Failure as defined by a statistically significant Compaq line fallout
equal to 7,500 DPPM or a statistically significant Customer return rate equal
to 5,000 DPPM, Tanisys shall repair, replace or credit Compaq in accordance
with the provisions of Section 11. Upon discovery of a defect in material,
workmanship or Tanisys design in any Product or the discovery of a Product
that is not in compliance with the Specifications during the three 3 year
warranty period, Tanisys shall repair, replace or credit Compaq in accordance
with the provisions of Section 11.
12.2 Tanisys warrants that there are no claims of infringement or violation of
the type described in Section 18.1 with respect to the product.
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13. OUT OF WARRANTY REPAIRS
13.1. Tanisys agrees to use commercially reasonable efforts to refurbish to
a "like new" condition any Memory Module no longer covered by the express
warranties set forth elsewhere in this Agreement (an "Out of Warranty Product").
Refurbishment prices shall be set at the time refurbishment is required and will
not exceed 1 .2X the then current material and conversion costs.
14. PAYMENT
14.1. Compaq shall make payment in full for the purchase price of all
Product purchased hereunder (other than items disputed by Compaq in good faith)
and received by Compaq on or before the 45th day after the date of Tanisys's
Technology's invoice; provided, Tanisys Technology's invoice shall not be dated
earlier than the shipment date of Product covered thereby. Payment of invoices
shall not constitute acceptance of the Product.
14.2. Payment shall be made in U.S. dollars.
15. TERMINATION
15.1. Either party (the "Non-Defaulting Party") may terminate this Agreement
and/or any Order issued hereunder at any time by written notice to the other
party (the "Defaulting Party") upon the occurrence of a Default by the
Defaulting Party. In addition, Compaq may terminate this Agreement and/or any
Order issued hereunder at any time for any reason upon giving 30 days written
notice of termination to Tanisys Technology. This Agreement shall terminate at
the end of the notice period.
15.2. Upon termination by Tanisys of this Agreement and/or any Order due to
Compaq's default or upon termination by Compaq for reasons other than Tanisys
Technology's Default, Compaq's entire liability shall be to purchase the
following, without duplication: (i) at the Order purchase price, all finished
goods, and at Tanisys Technology's cost all work in progress, and unique
materials that have been purchased within reasonable lead times as identified in
Exhibit B, and (ii) all Product that Compaq has received and had not previously
paid for.
15.3. Upon termination by Compaq of this Agreement and/or any Order due to
Tanisys Technology's Default, (i) Compaq shall have the option to purchase any
materials or work in progress which Tanisys may have purchased or processed for
the fulfillment of any Order at Tanisys Technology's cost, (ii) Compaq shall
have such additional remedies as may be available at law or in equity and that
are consistent with the terms of this Agreement and (iii) Compaq shall have no
obligation to Tanisys other than payment of any balance due for Products
delivered by Tanisys before termination.
16. FORCE MAJEURE
16.1. Neither party shall be liable for its failure to perform any of its
obligations hereunder during any period in which performance is delayed by fire,
flood, hurricane, tornado, earthquake, war, embargo, riot or an unforeseeable
intervention of any government authority that causes a complete interruption of
manufacturing operations, ("Force Majeure"), provided that the party suffering
such delay immediately notifies the other party of the delay.
16.2 If, however, either party's performance is delayed for reasons set forth
above for a cumulative period of 30 days or more, the other party,
notwithstanding any other provisions of this Agreement to the contrary, may
terminate this Agreement and/or any Order issued hereunder by notice to the
delayed party. In the event Tanisys claims delay due to Force Majeure and
Compaq elects to terminate this Agreement as provided herein, Compaq's sole
liability hereunder shall be for the payment to Tanisys of any balance due and
owing for Product previously delivered by Tanisys and accepted by Compaq. In the
event the parties do not terminate this Agreement and/or Order due to a Force
Majeure, the time for performance or cure will be extended for a period equal to
the duration
COMPAQ/TANISYS CONFIDENTIAL PAGE -9- 7/8/97
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CORPORATE PURCHASE AGREEMENT CONTRACT NO. 1838-080100
of the Force Majeure.
17. PRODUCT NOTICES
17.1. Any notice given under this Agreement shall be in writing and will be
effective (i) when delivered, if delivered in person, (ii) during the business
hour of receipt (or the next business hour if not received during a normal
business hour), if by telecopy or (iii) 3 days after depositing same in the U.S.
mail, postage prepaid and addressed to Tanisys at the address set forth below or
to such other address as Tanisys may specify to Compaq in accordance with this
Section 17.1 or to Compaq at the address set forth below or at such other
address as Compaq may specify to Tanisys in accordance with this Section 17.1:
IF to Compaq: If to Tanisys Technology:
COMPAQ COMPUTER CORPORATION TANISYS TECHNOLOGY, INC.
P.O. BOX 692000 12201 TECHNOLOGY BLVD.
00000 X.X. 000 XXXXXX, XX 00000-0000
XXXXXXX, XXXXX 00000-0000 ATTN: PRESIDENT
ATTN.: DIRECTOR, CORPORATE MEMORY PROCUREMENT
WITH A COPY TO:
COMPAQ COMPUTER CORPORATION TANISYS TECHNOLOGY, INC.
P.O. BOX 692000 12201 TECHNOLOGY BLVD.
20555 S.H. 249 AUSTIN, TEXAS 78727-6101
XXXXXXX, XX 00000-0000 ATTN: CFO
ATTN.: DIVISION COUNSEL - OPERATIONS
18. COMPLIANCE WITH LAWS
18.1. All Product supplied and work performed under this Agreement shall
comply with all applicable laws and regulations including, without limitation,
all laws governing Tanisys Technology's relationship with its employees, agents
or subcontractors. Upon request, Tanisys shall certify compliance with such
applicable laws and regulations, and provide such evidence of compliance as
Compaq may reasonably request.
19. INDEMNIFICATION; REMEDIES
19.1. Except as otherwise provided herein, Tanisys shall indemnify, defend
and hold harmless Compaq and its Affiliates and their respective directors,
officers, shareholders, employees and agents (collectively, the "Compaq
Indemnified Parties") from and against any and all claims, demands, suits,
actions, judgments, costs and liabilities (including reasonable attorneys' fees)
(each, an "Indemnified Loss") relating to or arising out of any allegation that
Products furnished under this Agreement infringe or violate any third party's
patent, copyright, trade secret, trade name, trade dress, mask work, mask
rights, trademark or any other proprietary right (each, an "IP Claim") and shall
pay all costs and damages awarded; provided, Tanisys shall have no obligation
whatsoever pursuant to this Agreement or otherwise (i) for or with respect to
any IP Claim relating to or arising out of designs, instructions specifications
or intellectual property furnished by Compaq, (ii) for or with respect to any IP
Claim relating to or arising out of the combination of the Products with any
hardware, products, equipment, materials, text, graphics, software or the like
supplied by a party other than Tanisys where such combination is beyond the
Products intended use, or (iii) for any settlement entered into without Tanisys
Technology's prior written consent. Compaq shall notify Tanisys of such claim,
cooperate and assist Tanisys with the defense of such claim, and permit Tanisys
to defend and compromise such claim; provided, Compaq's failure to so notify
Tanisys shall not diminish
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Tanisys Technology's indemnity obligations hereunder except to the extent any
Compaq delay in notifying Tanisys materially prejudices Tanisys Technology's
defense of such matter.
19.2. IF during the course of any IP Claim covered under Section 19.1 herein
the use of the allegedly infringing Product is finally enjoined, Tanisys shall,
at Tanisys Technology's OPTION AND EXPENSE, USE commercially reasonable efforts
to do one of the following (in addition to its obligations under Section 19.1
herein): (i) procure for Compaq the right to use or sell, as applicable, the
allegedly infringing Product, (ii) replace the allegedly infringing Product or
the affected part thereof with equivalent non-infringing technology, (iii)
modify the allegedly infringing Product or the affected part thereof to make it
non-infringing Product, (iv) refund to Compaq an amount equal to the price paid
by Compaq for said allegedly infringing Product less any discounts or credits
granted to Compaq. Compaq agrees to return allegedly infringing product to
Tanisys in the event of refund under (iv).
19.3. Tanisys shall indemnify, defend and hold harmless the Compaq
Indemnified Parties from and against any Indemnified Loss relating to or arising
out of any personal injury or death resulting from (i) the use of any Product or
(ii) Tanisys Technology's acts or omissions; provided, the foregoing indemnity
shall not apply to the extent any such claim is attributable solely to design
specifications furnished by Compaq to Tanisys Technology.
19.4. THIS SECTION 19 SHALL BE ENFORCEABLE TO THE EXTENT SET FORTH ABOVE
NOTWITHSTANDING THE SOLE, CONCURRENT, ACTIVE OR PASSIVE NEGLIGENCE OF ANY
OF THE COMPAQ INDEMNIFIED PARTIES.
19.5. Subject to Section 19.6, upon the occurrence of a Default by a party
hereto the other party shall be entitled to exercise such rights and remedies as
are available at law or in equity including the right to seek specific
performance upon Tanisys Technology's failure to deliver on a timely basis
unique products in conformity with the Specifications.
19.6. NEITHER PARTY SHALL BE LIABLE FOR ANY CONSEQUENTIAL DAMAGES
(INCLUDING, WITHOUT LIMITATION, LOST PROFITS AND UNLIQUIDATED INVENTORY),
INDIRECT, SPECIAL OR PUNITIVE DAMAGES EVEN IF THE OTHER PARTY HAS BEEN
ADVISED OF THE POSSIBILITY OF SUCH DAMAGES EXCEPT (I) IN CONNECTION WITH A
BREACH OF THE CONFIDENTIALITY PROVISIONS SET FORTH IN THIS AGREEMENT AND (II)
TO THE EXTENT ANY SUCH DAMAGES OF A THIRD PARTY ARE A PART OF AN
INDEMNIFIED LOSS AGAINST WHICH COMPAQ IS ENTITLED TO BE INDEMNIFIED
PURSUANT TO THE OTHER PROVISIONS OF THIS SECTION 19.
20 TRADEMARKS; LOGOS
20.1. Tanisys is authorized to use the Compaq logo and trademark only to the
extent necessary to meet the required specification for the Product. Tanisys is
authorized to use Compaq labels only as necessary to identify Product for sale
hereunder. No other rights with respect to Compaq's logos, labels, trademarks,
trade names or brand names are conferred, either expressly or by implication,
upon Tanisys Technology.
20.2. Tanisys shall maintain strict accountability for Compaq's security
labels. Compaq security labels identified in the kit bills of materials must be
maintained as a secure stock room item, kitted and issued for each module
assembly build, and managed under Tanisys Technology's daily cycle count process
for A-Item materials. Tanisys will provide Compaq with a monthly reconciliation
of module shipments and security label consumption in addition security labels
held in stock, work-in-process, and finished goods.
COMPAQ/TANISYS CONFIDENTIAL PAGE -11- 7/8/97
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CORPORATE PURCHASE AGREEMENT CONTRACT NO. 1838-080100
21. CAPACITY PLANNING
21.1. Tanisys agrees to review weekly forecasts of at least 6 months duration,
as provided by Compaq, and to advise Compaq if Tanisys anticipates that it will
be unable to achieve the requested volumes. Tanisys may from time to time
request Compaq to review Compaq's forecast and advise of any changes.
22. GRATUITIES
22.1. Each party represents that it has not offered nor given and will not (i)
offer nor give any employee, agent, or representative of the other party any
gratuity, or (ii) influence such person's normal job responsibilities in any way
with a view toward securing any business from the other party or influencing
such person with respect to the business between the parties.
23. INSURANCE.
23.1. Tanisys shall maintain such minimum insurance coverage as is described
in Exhibit H. All insurance policies maintained by Tanisys in accordance with
this Section 23 shall name Compaq as an additional insured and loss payee.
24. CONFIDENTIAL INFORMATION
24.1. Each party recognizes that it may have previously entered or will in the
future enter into various agreements with the other party which obligates it to
maintain as confidential certain information disclosed to it by the other party.
To the extent that such information or any further confidential information,
which might include but is not limited to business plans, forecasts, capacity,
pricing, inventory levels, etc., (collectively referred to hereinafter as
"Information") is disclosed in furtherance of this Agreement or any Order issued
hereunder, such Information shall be so disclosed pursuant to the minimum terms
and conditions listed below; provided, however, the minimum terms and conditions
listed below shall in no way relieve the parties from any obligation or modify
such obligations previously agreed to in other agreements. Both parties agree
that this Agreement and any other agreements regarding confidential information
shall hereafter be considered as coterminous, and shall expire no earlier than
the date of expiration or termination of this Agreement
24.2. Both parties agree that the party receiving Information will maintain
such Information in confidence for a period of three years from the date of
disclosure of such Information and will not use such information except for the
purposes contemplated hereby or in any other applicable agreements regarding
said information.
24.3. Each party shall protect the other party's Information to the same
extent that it protects its own confidential and proprietary information and
shall take all reasonable precautions to prevent unauthorized disclosure to
third parties.
24.4. The parties acknowledge that the unauthorized disclosure of such
Information will cause irreparable harm. Accordingly, the parties agree that
the injured party shall have the right to seek immediate injunctive relief
enjoining such unauthorized disclosure.
24.5. The provisions of this Section 24 shall not apply to information (i)
known to the receiving party at the time of receipt from the other party, (ii)
generally known or available to the public through no act or failure to act by
the receiving party; (iii) furnished to third parties by the disclosing party
without restriction on disclosure, (iv) furnished to the receiving party by a
third party as a matter of right and without restriction on disclosure or (v)
furnished as required by court order or similar governmental authority, or by
the imminent likelihood thereof or by applicable law.
COMPAQ/TANISYS CONFIDENTIAL PAGE -12- 7/8/97
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CORPORATE PURCHASE AGREEMENT CONTRACT NO. 1838-080100
24.6. Immediately upon termination of this Agreement or at the request of the
other party, each of the parties shall promptly return all materials in its
possession containing Information of the other party.
25. COUNTRY OF ORIGIN
25.1. For each Product purchased under this Agreement, Tanisys shall furnish
Compaq with the manufacturer and date code, by quantity and part number
(Compaq's and Tanisys Technology's). Product shall be marked with the country of
origin as required by applicable law.
25.2. Tanisys agrees to provide necessary documents to facilitate the import
and export of Product. Tanisys's further agrees to assist Compaq's import and
export of Product as reasonably requested by Compaq.
26. MATERIAL FURNISHED BY COMPAQ
26.1. The parties anticipate that, from time to time, Compaq shall sell or
consign to Tanisys certain material to be used in manufacturing Product (the
"Compaq Furnished Material"). Tanisys agrees that each item of Compaq Furnished
Material shall be used solely for the purpose of manufacturing Product ordered
by Compaq under this Agreement.
26.2. Each item of material furnished by Compaq to Tanisys on a consignment
basis shall be identified on the books and records of Tanisys by the letter "CQ"
following such item's part number or by such other distinguishing xxxx as Compaq
and Tanisys may agree upon. Title to consigned material shall remain with Compaq
at all times.
26.3. Compaq shall issue an invoice and a debit memo with respect to the
purchase price of Compaq Furnished Material sold by Compaq to Tanisys
Technology, and Compaq immediately may apply such debit memo against any amounts
then owing by Compaq to Tanisys Technology. In the event any amount reflected in
an invoice has not been satisfied in full by means of applying the corresponding
debit memo against amounts owed by Compaq to Tanisys within 30 days following
the invoice date, Tanisys shall pay Compaq in US dollars (or such other currency
as Compaq and Tanisys may agree upon) the remaining balance of such invoice on
or before such 30 day period. To secure Tanisys Technology's payment obligations
hereunder, Tanisys hereby grants to Compaq a security interest and purchase
money security interest in all Compaq Furnished Material and all accounts
receivable and other proceeds thereof. Compaq may take any action (without
notice, presently, demand, protest, notice of protest or dishonor, notice of
acceleration or notice of intent to accelerate, all of which Tanisys hereby
waives) afforded a secured party under the Uniform Commercial Code upon the
occurrence of a Default by Tanisys Technology, and upon such occurrence, all
payment obligations of Tanisys to Compaq shall, upon notice by Compaq, become
immediately due and payable; provided, if the Default giving rise to the
foregoing remedies is attributable to Tanisys Technology's insolvency or any
bankruptcy related proceeding affecting Tanisys Technology, all obligations of
Tanisys to Compaq shall automatically become due and payable.
26.4. Tanisys shall not allow or permit to exist any lien, security interest
or other encumbrance to be placed on or otherwise affect the Compaq Furnished
Material other than security interests and other encumbrances granted to Compaq.
26.5. Tanisys agrees to sign financing statements, continuation statements,
notices to other creditors and such other instruments as Compaq may reasonably
request to maintain a first priority, perfected security interest in the Compaq
Furnished Material that Compaq sells to Tanisys from time to time. Tanisys
agrees that a copy of this Agreement shall be sufficient to serve as a financing
statement and may be filed or recorded by Compaq in any public records or
offices reasonably required by Compaq. In addition, with respect to consigned
materials, Tanisys agrees to make such filings and given notice to its creditors
to ensure that such consigned materials remain free from claims of Tanisys
Technology's creditors.
COMPAQ/TANISYS CONFIDENTIAL PAGE -13- 7/8/97
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CORPORATE PURCHASE AGREEMENT CONTRACT NO. 1838-080100
26.6. Tanisys shall receive Compaq's consigned material per the Sub-Contract
Physical Inventory Process.
26.7. Compaq shall carry the insurance for all the Compaq's consigned
inventory and equipment while at Tanisys Technology's facility, with the
exception of the first $1,000,000 of any loss (per occurrence). Tanisys shall
reimburse Compaq for any loss up to and including $1,000,000. Compaq will insure
the losses above that point.
26.8. Compaq understands that a certain amount of material furnished to
Tanisys to assemble under consigned Orders will be subject to scrap. Component
material and finished assemblies will be considered in total scrap count. Over a
period of three (3) months the ratio of scrap dollars to delivered Product
dollars for which Compaq will accept liability up to twenty five hundredths of
one percent (0.25%) for SOJ packaged devices and up to forty five hundredths of
one percent (0.45) for TSOP packaged devices. Tanisys accepts liability for
scrap Product over and above these limits. At the end of three (3) month time
frame, Tanisys will provide Compaq an accounting of scrap versus delivered
Product and, if due, a credit memo will be issued to Compaq. . Reporting period
will commence within one month of execution of this Agreement.
26.9. Tanisys shall report and dispose of all the Compaq's consigned
material to either Compaq's facility or other site as requested by Compaq per
the Material Transfer process (Exhibit F).
26.10. All Compaq consigned material shall be acceptable and supplied to
Tanisys Technology's dock (i) if said material is to be used in desktop product,
forty-eight (48) hours prior to start of production for mutually agreed
production start schedule, and (ii) if said material is to be used in server or
portable products seventy-two (72) hours prior to start of production for a
mutually agreed production start schedule. Each shipment of Compaq consigned
material shall contain a packing list itemizing material contained within each
container. Tanisys shall have a reasonable amount of time not less than one (1)
Business Day to verify any discrepancies between said packing lists and the
Compaq consigned material actually delivered.
26.11. Any tools, drawings, specifications, or other materials furnished by
Compaq for use by Tanisys in its performance under this Agreement or any Order
issued hereunder shall be identified and shall remain the property of Compaq and
shall be used by Tanisys only in its performance hereunder. Such property shall
be delivered, upon request, to a destination specified by Compaq in good
condition, except for normal wear and tear.
27. GENERAL
27.1. Any obligations and duties which by their nature extend beyond the
expiration or earlier termination of this Agreement shall survive any such
expiration or termination and remain in effect.
27.2. If any provision or provisions of this Agreement shall be held to be
invalid, illegal or unenforceable, such provision shall be enforced to the
fullest extent permitted by applicable law and the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
27.3. Any waiver of any kind by a party of a breach of this Agreement must
be in writing, shall be effective only to the extent set forth in such writing
and shall not operate or be construed as a waiver of any subsequent breach. Any
delay or omission in exercising any right, power or remedy pursuant to a breach
or default by a party shall not impair any right, power or remedy which either
party may have with respect to a future breach or default.
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27.4 Tanisys shall not export, re-export or otherwise disclose, directly or
indirectly, technical data received from Compaq or the direct product of such
technical data to any person or destination when such export, re-export or
disclosure is prohibited by the laws of the United States or regulations of a
Department of the United States. Similarly, Compaq shall not export, re-export
or otherwise disclose, directly or indirectly, technical data received from
Tanisys or the direct product of such technical data to any person or
destination when such export, re-export or disclosure is prohibited by the laws
of the United States or regulations of a Department of the United States.
27.5. With respect to any payment, reimbursement or other amount owed by one
party (the "First Party") to the other (the "Second Party") under this
Agreement, the First Party may offset, with notice, any such amount owed against
any amount then owing (including amounts to be owed under future invoices) by
the Second Party to the First Party under this Agreement or any other agreement.
27.6. This Agreement is hereby identified as "Compaq and Tanisys
Confidential," and any additional confidentiality requirements between the
parties (now or in the future) applicable to material identified as such shall
apply to this Agreement.
27.7. Except to the extent the confidentiality provisions set forth in
Section 24 conflict with confidentiality provisions set forth in any other
confidentiality or non-disclosure agreement between the parties hereto, this
Agreement represents the entire agreement with respect to the subject matter
hereof and supersedes all prior discussions and agreements between the parties
relating to the subject matter hereof. This Agreement can be modified only by a
written amendment duly signed by persons authorized to sign agreements on behalf
of both parties, and shall not be supplemented or modified by any course of
dealing or trade usage. Variance from or addition to the terms and conditions of
this Agreement in any Order, or other written notification from either party
will be of no effect.
27.8. THE CONSTRUCTION, VALIDITY, AND PERFORMANCE OF THIS AGREEMENT AND
ANY ORDER ISSUED UNDER IT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF
TEXAS, USA. THE PARTIES HEREBY WAIVE APPLICATION OF THE U.N. CONVENTION ON
CONTRACTS FOR THE INTERNATIONAL SALE OF GOODS.
27.9. EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT WARRANTIES EXPRESS
OR IMPLIED, STATUTORY OR OTHERWISE) OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE ARE HEREBY DISCLAIMED IN THEIR ENTIRETY.
IN WITNESS, THE AUTHORIZED REPRESENTATIVES OF THE PARTIES HAVE EXECUTED THIS
AGREEMENT AS OF THE DATE FIRST WRITTEN ABOVE.
For Compaq For Tanisys Technology
/s/ Xxxxx Xxxxx /s/ Xxxx X. Xxxxxxxx
------------------------- ---------------------------
Signature Signature
Director 7/22/97 President & COO
COMPAQ/TANISYS CONFIDENTIAL PAGE -15- 7/8/97
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