EXHIBIT 10.56
STREAMLOGIC OEM SUPPLY AGREEMENT
PARTIES TO THE AGREEMENT:
ST Chatsworth Pte Ltd (to be renamed Micropolis Pte Ltd) (hereinafter called
"Micropolis Pte Ltd") and Micropolis Corporation (to be renamed StreamLogic
Corporation) (hereinafter called "StreamLogic").
ITEMS SUBJECT TO THE AGREEMENT:
All disk drives ("Drives") manufactured or sold by Micropolis Pte Ltd for the
term of this agreement.
TERM:
Subject to the last paragraph of this Agreement, this agreement shall be in full
force and effect on the Closing Day of the Asset Purchase Agreement and run
until April 2, 1998 unless earlier terminated by either party as a result of the
material default of the other party. It shall be renewable annually thereafter
with the mutual consent of both parties.
OEM AGREEMENT:
This is an OEM agreement. Under no conditions is StreamLogic to resell Drives
into the distribution, or other market under the Micropolis name, or any other
name. All Drives sold to StreamLogic are to be incorporated in its systems or
products, and sold under StreamLogic's brand names.
RIGHT OF FIRST REFUSAL:
StreamLogic must offer all its Drive business and requirements to Micropolis Pte
Ltd on a right-of-first refusal basis. If Micropolis Pte Ltd is unable to
provide at least 50% of StreamLogic's quarterly volume and delivery requirements
and meet the other competitive terms, conditions and availability of other disk
drive providers, StreamLogic may purchase its disk drive requirements from the
other providers. However, StreamLogic will offer its business to Micropolis Pte
Ltd at least quarterly.
BUSINESS COOPERATION AND PRACTICES:
Micropolis Pte Ltd and StreamLogic will work to provide one another with all
information reasonably required by each to make their respective business
decisions. StreamLogic will provide to Micropolis Pte Ltd a six month rolling
forecast of its drive requirements. Micropolis Pte Ltd will share its
technology road maps with StreamLogic, and will provide price projections to
StreamLogic for its use in product planning. Neither party will be bound by the
forecasts and/or projections made to the other.
LEAD-TIME:
Micropolis Pte Ltd will work aggressively to reduce lead times, and will
publish its lead times (defined as time from receipt of order to delivery in
Chatsworth) on a regular basis to StreamLogic. In no event will lead time
exceed 30 days.
PURCHASE ORDERS:
StreamLogic will order Drives on the basis of purchase orders which it shall
issue monthly; such orders will be binding only upon Micropolis Pte Ltd's
acceptance of the order. The terms and other conditions of the sale and
purchase of drives not covered in this Agreement shall be governed by
StreamLogic's purchase order terms, as may be modified by Micropolis Pte Ltd and
mutually agreed by both parties. Prices and other detailed matters will be
governed by the purchase order. Purchase orders will cover lead time. Such
orders may be canceled or rescheduled unless the delivery date is within 15 days
from the proposed cancellation date.
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OEM Supply Agreement
READYSTOCK:
Micropolis Pte Ltd will make its ReadyStock program available to StreamLogic on
the following key terms. StreamLogic will issue a purchase order for each
calendar quarter, subject to acceptance by Micropolis Pte Ltd in accordance
with the prior paragraph. Micropolis Pte Ltd will maintain ReadyStock in
Chatsworth based on a rolling three-month forecast from StreamLogic. Up to 10%
of any purchase order may be canceled by StreamLogic. On the last day of every
fiscal quarter, product remaining in the ReadyStock, less the amount which can
be canceled, will be shipped to StreamLogic. No change in the payment terms
will result if StreamLogic adopts the ReadyStock program.
PRICE:
The prices to be paid for the Drives by StreamLogic will be US dollar prices and
shall be either the lower of 1) most favored OEM, or 2) a 15% markup over the
standard factory cost of Micropolis Pte Ltd. Standard factory cost is defined
as actual material cost, labor and factory burden as set on a quarterly basis by
Micropolis Pte Ltd using its accounting practices. Prices will be set
quarterly, and StreamLogic will have the right to select, at the commencement
of each calendar quarter, the price basis (cost plus or most favored OEM) on a
product by product basis. Prices will be verified to be in accordance with this
agreement by a mutually agreed upon third-party audit firm which shall be
appointed on an annual basis. The cost of the third-party audit, which shall be
conducted quarterly, will be shared equally by the parties to this agreement.
The third-party audit firm shall be required only to verify whether the prices
paid by StreamLogic are in accordance with their selection (cost plus or most
favored OEM) and it shall not reveal any other information, in particular prices
paid by Micropolis Pte Ltd's other customers.
PAYMENT TERMS:
Payments will be due 60 days from invoice date, in US dollars, to the remittance
address provided by Micropolis Pte Ltd.
ACCOUNT MANAGER:
Micropolis Pte Ltd will appoint an account manager to be the point of contact
for StreamLogic staff on all Drive issues. The account manager will have the
authority and ability to interact with all levels of the Micropolis Pte Ltd
organization in order to meet the requirements of StreamLogic.
WARRANTY:
Drives shall come with the standard Micropolis Pte Ltd's warranty, as shall be
published from time to time by Micropolis Pte. Ltd.
WARRANTY REPAIR:
Upon verbal request (which shall be followed up in writing), Micropolis Pte Ltd
will issue a Returned Goods Authorization (RGA) to StreamLogic to return failed
drives for warranty repair. Such RGA shall be issued within 24 hours of a
request for same. Replacement Drives will be shipped to StreamLogic within 7
days after the receipt by Micropolis Pte Ltd of the failed units. StreamLogic
must properly label all such returns, clearly showing the RGA number and other
required, customary documentation in order to facilitate the processing of the
return by Micropolis Pte Ltd.
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OEM Supply Agreement
Micropolis Pte Ltd reserves the unconditional right to inspect all such returns
and determine the cause of failure. If the cause of failure is found to be
"customer damage", i.e. damage as a result of handling or other procedures,
Micropolis Pte Ltd will notify StreamLogic of its findings and offer a price to
repair the drive. StreamLogic may accept or decline such offer.
DEAD ON ARRIVAL:
Drives which fail out-of-the-box , which shall be defined as no more than 90
days after receipts by StreamLogic, shall be deemed "dead on arrival". Such
drives will be replaced within 48 hours by Micropolis Pte Ltd; if replacement
Drives are not so furnished, StreamLogic may return the Drives for a full credit
of the purchase price which had been charged StreamLogic.
ASSIGNMENT:
This Agreement shall not be assigned by either party without the prior written
consent of the other party.
GOVERNING LAW:
This agreement shall be construed in accordance with, and all disputes arising
hereunder shall be governed by, the laws of the State of California. The
parties hereto subject themselves to the jurisdiction of the state and federal
courts to the State of California with respect to any dispute, disagreement or
claim arising hereunder, and agree that any such dispute, disagreement or claim
shall be resolved by such California state and federal courts.
SUBJECT TO CLOSING OF ASSET PURCHASE AGREEMENT:
The rights and obligations of the parties to this agreement are conditional upon
the closing of the sale of the disk drive assets by StreamLogic to Micropolis
Pte Ltd as set forth in the Asset Purchase Agreement dated January 24, 1996,
made between the parties hereto.
Agreed to this 4th of March 1996.
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/s/ Xxx Xxxx
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Dr. Xxx Xxxx
President, ST Chatsworth Pte. Ltd. (to be renamed Micropolis Pte Ltd)
/s/ J. Xxxxx Xxxxx
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Mr. J. Xxxxx Xxxxx
Chairman of the Board, CEO and President
Micropolis Corporation (to be renamed StreamLogic Corporation)
