12/9/96
PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT (the "Agreement") is effective this 17th day of
December, 1996, and entered into by and between GATEWAY 2000, INC., a Delaware
corporation, 000 Xxxxxxx Xxxxx, Xxxxx Xxxxx Xxxx, XX 00000 and its Subsidiaries
(hereafter "Gateway") and STB SYSTEMS, INC., a Texas corporation, -0000 Xxxxx
Xxxxxxxxx, Xxxxxxxxxx, XX 00000-0000 (hereafter "Supplier").
Gateway, a recognized manufacturer and/or distributor of computer-related
equipment, desires to secure a proven source of Product as defined in this
Agreement and attached Exhibits. Gateway prefers to establish a strong relation
with Supplier so as to determine that Supplier is identified as a "Preferred
Supplier".
Supplier manufactures and/or sells and distributes Product as defined in
this Agreement and aft ached Exhibits, and related equipment.
It is mutually agreed that Gateway will purchase and accept from Supplier,
and Supplier will deliver to Gateway, Product as defined in this Agreement and
attached Exhibits, pursuant to and in accordance with the following definitions,
terms, and conditions.
AGREEMENT:
1. DEFINITIONS.
A. "Product", as used in this Agreement shall mean the deliverables in
accordance with the product specifications mutually agreed to between the
parties, as listed on Exhibit "A".
B. "Specifications" as used in this Agreement shall mean the
specifications for the Product to be sold by Supplier to Gateway as described on
Exhibit "A".
C. "Defect(s)" as used in this Agreement shall mean a deficiency,
imperfection or insufficiency in the Product such that it is not fit for
ordinary purposes for which it was purchased, sold or used.
D. "Order", as used in this Agreement shall mean those purchase orders
that Gateway shall provide to Supplier.
E. "Confidential Information", as used in this Agreement shall mean
components, types of systems, new product development, technical information,
data, formulas, patterns, compilations, programs, devises, methods, techniques,
marketing plans, business procedures, customer and supplier lists, agreements
with any suppliers,
supplements, techniques, or know-how, processes or other proprietary or
confidential or intellectual property information which is received from the
other under this Agreement, which is transmitted from the other party in written
form and which, if disclosed to the general public, would cause harm to the
transmitting party.
F. "Epidemic Failures", as used in this Agreement shall mean that
percentage of the units of Product accepted by Gateway in an Order therefor
which fails to operate in accordance with performance specifications applicable
to such Product solely as a result of the failure of such Product to conform
with the warranty applicable to such Product as set forth in Section 9 of this
Agreement.
G. "Preferred Supplier", as used in this Agreement shall mean a supplier
who is capable of meeting schedule, quality, and pricing requirements.
H. The following Exhibits are incorporated into this Agreement:
Exhibit A - Product, Packaging and Performance Specifications
Exhibit B - Pricing
Exhibit C - Gateway's Sample Purchase Order
Exhibit D - Routing Guide(s)
Exhibit E - Engineering Change Requests
Exhibit F - Regulatory Compliance
Exhibit G - Supplier Certification
Exhibit H - Inspection Procedure
Exhibit I - Supplier Quality Engineering
Exhibit J - Federal Acquisition Regulations
2. TERMS AND CONDITIONS.
All purchase of Product shall be subject only to the terms and conditions
of this Agreement and any other terms and conditions, oral or written,
including, without limitation, any terms and conditions referenced in any Order,
shall have no force or effect, except for Product description, Delivery
Schedule, Price, and Amount of Product ordered.
3. ORDERING PROCEDURE AND DELIVERY.
A. Gateway shall place all Orders under this Agreement by using Gateway's
model numbers for Product. All Orders are subject to acceptance by Supplier and
may be accepted in whole or in part within two (2) working days after Supplier's
receipt of each Order. If Supplier fails to give written notice of rejection of
any part of the Order within the time stated, the Order shall be deemed
accepted.
B. Gateway agrees to place a ninety (90) day Order upon execution of this
Agreement and maintain a continual ninety (90) day Order, subject to the
cancellation and rescheduling provisions of Section 7 for the term of this
Agreement.
2
C. Gateway shall use its best efforts to forecast its intended purchases
of Product for the next six (6) month period. These forecasts are intended for
planning purposes only and shall not be considered as firm commitments to
purchase.
D. The prices set forth on Exhibit B hereto include packaging for either
air or surface transportation. All Product shall be suitably packaged to comply
with the method of transportation and in compliance with the specifications set
forth in this Agreement and the attached Exhibit A.
E. A sample purchase order is attached hereto as Exhibit C. In the event
of a conflict between the terms and conditions of this Agreement and the
purchase order, the terms of this Agreement shall apply.
4. PRICES.
A. PRODUCT PRICES. The prices applicable to Product are listed in U.S.
Dollars on Exhibit B. Supplier and Gateway shall conference monthly to discuss
issues such as performance and price changes with respect to unfilled and future
orders. The prices are intended to remain in effect for the term of this
Agreement, but may be equitably adjusted upon review, at least quarterly, by
Gateway and Supplier consistent with a price reduction based upon product
maturation, equitable lot buys, and/or materials cost reduction.
B. PRICE PROTECTION. Supplier warrants and agrees that each of the
charges, prices and fees, terms, warranties or benefits granted to Gateway
pursuant to this Agreement are comparable to or better than the equivalent
charge, price or fee, term, warranty or benefit being offered by Supplier to any
like customer of similar volumes of Supplier. Should Supplier negotiate sales
prices for any Product upon more favorable terms than those provided to Gateway,
Supplier agrees to provide to Gateway the benefit of such more favorable terms
including, but not limited to, reduced prices.
C. ADVERTISING. In addition to any other volume discounts that Supplier
may afford to Gateway, Supplier will provide Gateway an additional 0.25%
discount for listing Supplier's name. This discount will apply to Gateway on a
region-by-region basis and be deducted from the invoice for all shipments during
the actual month that the campaign is in print. Gateway will also evenly split
with Supplier any and all co-op funds that Gateway receives from a third party
chip vendor that pertains to Supplier's Products shipped to Gateway. These funds
will be used by Gateway to help promote the chip vendor. Supplier will use its
portion of the co-op funds to promote Supplier and its Products. This discount
does not apply to the fourth Quarter 1996 shipments of the Virge VX board or
module.
3
5. PAYMENT.
Both parties acknowledge that all prices for Product shall be made in U.S.
Dollars. Terms of payment are net thirty (30) days from date of delivery by
Supplier to a carrier for transportation to Gateway, or date of invoice, if
later. The prices include all fees for licenses, taxes and import fees.
6. TITLE AND DELIVERY.
A. PLACE OF DELIVERY AND SHIPPING DESTINATIONS. All deliveries of Product
shall be F.O.B. the Gateway Regional Facility. Gateway shall arrange
transportation at Gateway's cost.
B. TITLE AND RISK OF LOSS. Title and risk of loss to Product will pass to
Gateway upon delivery to a Gateway Regional Facility hereinafter referred to as
"Delivery" as set forth in Exhibit D.
C. EXPEDITED DELIVERIES. Supplier will make reasonable efforts to
deliver, within two (2) business days, of the delivery dates provided by
Gateway. If Supplier fails to deliver within five (5) days of the agreed upon
delivery date, Supplier will pay for all expedited shipping costs or Gateway may
cancel the affected Order without penalty.
D. QUANTITIES. Supplier shall deliver the Products in the quantities
specified in Gateway's Orders against the Order and line item specified.
7. CANCELLATION AND RESCHEDULING.
The following guidelines will apply to cancellation and rescheduling:
0-30 days can
reschedule 15%
or
31-60 days can
reschedule or cancel up to 40%
or
61-90 days can
reschedule or cancel up to 60%
91+ days can
reschedule or cancel up to 100%
8. ENGINEERING CHANGES.
A. Gateway will continuously work with Supplier on final approval of all
phases of Product design verification including, but not limited to, Xxxx of
Materials
4
(BOM) and changes or additions to the Approved Supplier List (ASL) and on-going
approvals of Supplier Engineering Changes Requests/ Notices (SECRs/ECNs). No
changes will be made in the form, fit, function, design or appearance of the
Product without the express written consent of Gateway. The engineering
specifications (revision level) of Product will not be changed without
forty-five (45) days prior written notice to and approval by Gateway, except as
noted below.
B. Supplier will provide Gateway with a written description of the
proposed change and the proposed implementation date by utilizing Gateway's SECR
set forth in the attached Exhibit E. A minimum of fifteen (15) component samples
will be provided for qualification to the Gateway compatibility department.
Gateway shall have the minimum number of days indicated by the Class of change
and identified in Exhibit E to approve or reject the change.
C. Within ten (10) business days of receipt of Gateway's written
response, Supplier will provide Gateway any updated specification material that
has changed as a result of the engineering change.
D. If Gateway wants to initiate an SECR/ECN, it must do so by utilizing a
mechanism similar to Exhibit j and obtaining Supplier's approval.
E. Supplier Engineering Change Requests/Notices shall be sent to the
following addresses:
Supplier: Gateway:
1651 North Glenville Supplier Quality Engineering, MS Y-09
Suite 210 610 Gateway Drive
Richardson, TX 75081 North Xxxxx Xxxx, XX 00000
Attn: OEM Program Manager
F. Supplier shall implement a method of identification which clearly
distinguishes the changed Product.
9. WARRANTY, WARRANTY RETURNS, FIELD FAILURE RATE.
A. WARRANTY.
i. The Product will comply with all Gateway approved product
descriptions and specifications, and other printed information relating to the
Product, provided to Gateway by Supplier and in effect as of the date of the
applicable Order.
ii. The Product, (a) will be new, (b) will be free from defects in
manufacture, materials and design, (c) will function properly under ordinary
use, and (d) will perform in accordance with all applicable specifications and
documentation for such Product for a period of thirty-six (36) months from date
of delivery.
5
iii. Supplier warrants that title to all Product purchased by
Gateway, no matter where delivered, shall be free and clear of all liens,
encumbrances, security interest, or other adverse interests or claims.
iv. The aforementioned warranties shall not apply to any Product
which has been altered or changed without Supplier's authorization after receipt
by Gateway or to any failure of the Product to conform to such warranties as a
result of improper maintenance, installation or service, operation and use
contrary to furnished instructions, the transportation or improper storage of
such items, abuse, misuse, neglect, negligence of end-users. It is understood
and agreed that the Product shall be used in connection with and as components
of a larger system, and that such inclusion into the larger system does not and
shall not constitute an unauthorized alteration or change in the Product;
provided that the design and implementation of such inclusion into the larger
system is in conformity with specifications set forth in Exhibit A. However,
should the Gateway misuse the Product when performing its inclusion, the
warranty is void.
v. The warranties set forth in this Section 9 are the only
warranties made by Supplier to Gateway with respect to Product. SUPPLIER
DISCLAIMS ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, WITH REGARD TO PRODUCT SOLD
PURSUANT TO THIS AGREEMENT AND EXHIBITS, INCLUDING ALL IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. IN NO EVENT SHALL EITHER
PARTY BE LIABLE TO THE OTHER FOR INCIDENTAL OR CONSEQUENTIAL DAMAGES, ARISING
OUT OF OR IN CONNECTION WITH THE SALE, USE OR PERFORMANCE OF PRODUCT, EXCEPT
INDEMNIFICATION.
B. WARRANTY RETURNS/REPAIR.
i. Warranty Returns shall be Product which has been delivered to
Gateway or by Gateway to its customers and rejected by them due to defect(s).
ii. All Product returned will require a Return Material
Authorization (RMA) number which will be issued by Supplier. Supplier will pay
return shipping charges to Supplier.
iii. All Warranty Returns shall be returned to Supplier within thirty
(30) days of issuance of the RMA notice.
iv. All Warranty Returns shall be debited by Gateway against
outstanding invoices payable to Supplier. All Warranty Returns will be for
credit only. In the event of No Defects Found (NDF) or a physically damaged
and/or altered Product, Supplier shall return the Product to Gateway at the
original invoice price. Warranty returns for credit will be for currently
shipping products (Velocity 3D, Nitro 64 Video, Video Rage) and all future STB
products. All earlier generation of STB products will fall under the previous
return for repair policy.
6
v. Supplier will acknowledge receipt of returned product and
quantities received within five (5) business days of receipt of the returned
Product from Gateway. If Supplier fails to give written acknowledgment of
receipt and quantities received within the time stated, Supplier shall be deemed
to have received Gateway's product and quantities listed on the vendor return
form.
C. EPIDEMIC FAILURES. Gateway will consider an Epidemic Failure as being
a single failure type, if the failure is .7% of the Product shipped during a
three (3) month period. Supplier will take action to correct the defect in
subsequent deliveries of Product and will notify Gateway of its corrective
action plan. The defect must be corrected by upgrading some or all of the
Product previously shipped within the twelve (12) months prior to Gateway's
notice to Supplier. Supplier will provide parts for the upgrades, perform
associated labor costs and pay freight to the customer.
10. PRODUCT ACCEPTANCE.
A. Design verification testing (DVT) is to be performed on all newly
designed products purchased by Gateway. DVT testing is to be completed and
results submitted to Gateway's supplier quality engineer (SQE) responsible for
the Product. DVT results are to be reported with respect to the original Gateway
approved design specification for the Product.
B. Supplier shall submit a capability analysis which indicates the
Supplier's equipment, staff and Supplier's ability to understand, support and
process to the level of design technology required by Gateway.
C. Reliability testing shall be performed using four (4) corner testing.
Four corner testing is defined as a combination of temperature, humidity and
voltage in high and low conditions. Reliability testing shall be performed at
ten percent (10%) beyond the agreed upon design specification limitations set by
Gateway's Global Product Organization (GPO) and Supplier.
D. The design shall specify the expected process, test and field
performance level of the Product. Supplier shall demonstrate the actual
performance level during a site risk analysis and assessment survey.
E. Gateway will consider an epidemic failure as being a single failure
type, if the failure is .7% of the Product shipped during a three (3) month
period. An epidemic failure could have a cost impact to Supplier.
F. Supplier shall perform a structural design test using Gateway's
standard for testing, unless Supplier's test procedure is more rigid than
Gateway's test procedure. Testing shall be conducted at a test provider location
agreed to between Gateway and Supplier. Testing shall include all packaging
which is used during transportation of the Product to Gateway's customer.
7
G. Supplier Engineering Change Requests (SECR) will be completed pursuant
to the guidelines set forth on Exhibit E and will be routed to the appropriate
SQE in Singapore and North Sioux City, South Dakota. Gateway's SQE in both
locations will ensure that all SECR's are managed from submission to approval.
H. Regulatory approval is the responsibility of the Supplier to ensure
that all newly designed and/or changed Products meets Gateway's dB margins in
conjunction with FCC industrial standards. All engineering changes that affect
the original test grant are Supplier's responsibility to ensure that the change
is tested and grant status is maintained. Supplier represents and warrants that
Supplier has obtained the necessary regulatory approvals for the Product as set
forth on Exhibit F.
I. Product purchased pursuant to this Agreement shall meet all
established industry operating standards. Product that is combined with other
technology shall be compatible with that standard.
J. Supplier accepts full responsibility for Product failure caused by a
safety defect and for corrective action regardless of when such defect is
detected. Corrective action for a major defect must be implemented within three
(3) business days and corrective action for a minor defect must be implemented
within seven (7) business days upon notification by Gateway.
K. Gateway requires its suppliers to go through the SQE procedure in
order to become a Preferred Supplier. Supplier shall follow and work with
Gateway on achieving Supplier Certification. The criteria for Supplier
Certification is defined within the attached Exhibit G.
L. Incoming Quality Assurance sample acceptable quality level (AQL) for
the three (3) main types of commodity families as per Mil Spec 105E are set
forth on Exhibit H.
M. None of the foregoing shall limit any warranties as set out in Section
9 or affect quality level of Product ordered by Gateway.
11. SERVICE AND ROOT CAUSE FAILURE ANALYSIS.
A. Supplier agrees to enter into a service agreement to support all
in-warranty defective product returned from Gateway's customers. The service of
common Product used by Gateway regions, globally, are to be considered when
service centers are being planned.
B. Supplier shall record all root causes for failures repaired and report
this information on a weekly basis to Gateway and the Supplier's original
manufacturing location.
8
C. Gateway's SQE department shall create a corrective action response to
the root cause for failure. This action is to be completed monthly. If a
critical issue arises, Corrective Action Request (CAR) will be issued as set
forth in Exhibit I, to ensure the action taken has improved the reliability of
the Product.
12. PATENT, COPYRIGHT AND TRADE SECRET INDEMNITY.
A. Supplier represents and warrants that:
i It has sufficient right, title and interest in all Product to
enter into this Agreement;
ii. The Product does not infringe any United States, Canada,
Australia, Japan, Malaysian, European Community, Ireland, Sweden, Norway, or
Finland patent, copyright or trade secret;
iii. The combination, operation, or use of the Product with equipment,
data or programs Gateway sells the Product with, does not infringe any United
States, Canada, Australian, Japan, Malaysian, European Community, Ireland,
Sweden, Norway or Finland patent, copyright or trade secret.
iv. The Product does not violate the trade secret or confidentiality
rights of a third party.
Supplier agrees to indemnify, hold harmless and defend Gateway, Gateway's agents
and customers from and against any and all damages, losses, costs, expenses,
including attorneys' fees (including allocated costs for in-house legal
services), and liability incurred in connection with a claim for infringement
which constitutes a breach of the foregoing warranty (hereinafter "Infringement
Claims") whether in this or a foreign country; provided that Supplier is
notified promptly in writing of an Infringement Claim. Supplier shall have sole
control over the defense and settlement of such a claim so long as no settlement
adversely affects Gateway's ability to exercise its rights under this Agreement.
Gateway shall provide reasonable assistance in defense of same. Supplier will
pay all damages and costs finally awarded against Gateway.
B. In the event that a final judgment is obtained against the use of any
Product by Gateway by reason of infringement of any such Intellectual Property
Right, or, if in Supplier's opinion the Product is likely to become the subject
of such a claim of infringement, Supplier shall, at its option and expense:
(a) procure for Gateway the right to continue using the Product; or
(b) replace or modify the Product so that it no longer causes any
such infringement but is still capable of performing its original function.
9
13. PARTS
A. Supplier agrees to provide Gateway one hundred twenty (120) days
written notice prior to the discontinuance of any Product purchased by Gateway
pursuant to this Agreement. Upon notification by Supplier, Supplier shall allow
Gateway to make a final purchase of Product at prices agreed to between the
parties.
B. During the term of this Agreement, and for three (3) years after the
termination of this Agreement or any extension of it, Supplier shall make
services and parts available to Gateway at a mutually agreed upon price. In the
event said parts are no longer available, Supplier will provide like parts or
better (in terms of features and performance) in accordance with the provisions
of this section.
C. During the term of this Agreement, and for three (3) years after the
termination of this Agreement or any extension of it, Supplier shall make
available to Gateway custom plastics, custom packing material, and other custom
components for use by Gateway in providing on-going Product support after
Supplier's warranty period has ended.
14. ENVIRONMENTAL.
A. Supplier shall comply with all applicable federal, state and local
environmental laws, ordinances, orders or regulations affecting the Product.
Supplier does hereby agree to indemnify and hold Gateway harmless of; from and
against any and all claims, actions, liens, demands, costs, expenses, fines and
judgments (including legal costs and attorney's fees) resulting from or arising
by reason of the use of Hazardous Substances (as defined in applicable federal,
state, and local environmental laws, ordinances, orders or regulations) or CFCs
and HCFCs in the Product's manufacturing process or included in the Product.
B. Supplier agrees to use reusable and recyclable packaging for Product
purchased under this Agreement.
15. CONFIDENTIALITY.
Each party agrees that it will keep in confidence and prevent the
acquisition, disclosure, use or misappropriation by any person or persons all
types of and/or quantities of components, types of systems, new product
development, technical information, data, formulas, patterns, compilations,
programs, devices, methods, techniques, marketing plans, business procedures,
customer and supplier lists, agreements with any suppliers, supplements,
techniques or know-how, processes or other proprietary or confidential or
intellectual proprietary information which is received from the other under this
Agreement, provided; however, that neither party shall be liable for disclosure
of any data if the same is disclosed with the prior written approval of the
other party. Each party agrees that if it
10
breaches the non-disclosure agreement, the owner of the confidential or
proprietary information shall suffer irreparable injury and be entitled
immediately to a temporary and permanent injunction, in addition to the other
remedies for breach of the entire agreement.
This non-disclosure agreement shall survive the termination or expiration
of the entire agreement.
Both parties shall be entitled to attorneys' fees for enforcement of this
section.
The foregoing confidentiality obligation shall not apply to information
which the recipient can demonstrate by written evidence was (i) lawfully in its
possession prior to its first receipt from the deliverer (ii) is or becomes
publicly available without breach of this Agreement by the party receiving the
Confidential Information; (iii) is released for disclosure by the disclosing
party with its written consent; (iv) is known by the receiving party prior to
the disclosure; (v) is rightly received by the receiving party from a third
party without confidential limitations; (vi) is hereafter disclosed to a third
party without restriction on disclosure, which at the date hereof or hereafter
becomes available in the public domain without breach by the recipient of this
Agreement or any unlawful act.
Each party (i) agrees not to disclose Confidential Information given to it
by the other party to any person, real or legal, except as necessary for the
other party to perform its obligation under this Agreement; (ii) shall require
its employees having access to Confidential Information and any third party to
whom disclosure of Confidential Information is necessary to sign a
confidentiality agreement containing provisions similar to this Agreement; (iii)
shall exercise the same degree of care to safeguard the confidentiality of such
Confidential Information as it would exercise in protecting the confidentiality
of similar property of its own (but in no event less than is standard in the
industry); and (iv) agrees to use its diligent efforts to prevent inadvertent or
unauthorized disclosure, publication or dissemination of any Confidential
Information.
Each party shall notify the other of any actual or suspected unauthorized
use or disclosure of Confidential Information or infringement of any of
Supplier's proprietary rights of which such party has knowledge and will
reasonably cooperate with the other party in the investigation and prosecution
of such unauthorized use, disclosure or infringement.
16. FORCE MAJEURE.
In the event that either party is prevented from performing or is unable to
perform any of its obligations under this Agreement due to any Act of God, fire,
casualty, flood, war, strike, lockout, epidemic, destruction of production
facilities, riot, insurrection, or any other cause beyond the reasonable control
of the party invoking this section, and if such party shall have used its best
efforts to mitigate its effects, such party shall give prompt written notice to
the other party, its performance shall be excused, and the time for the
performance shall be extended for the period of delay or inability to perform
due to
11
such occurrences. However, if such inability to perform continues for fifteen
(15) days, the other party may terminate this Agreement without penalty and
without further notice.
17. TERM/TERMINATION.
A. Unless sooner terminated, this Agreement shall remain in effect for a
period of one (1) year. This Agreement may be renewed for additional one (1)
year periods upon mutual written agreement between the parties. Either party
shall have the right to terminate this Agreement immediately if the other
breaches any of the material provisions of this Agreement and fails to cure the
breach within thirty (30) days after receipt of written notice.
B. If either Gateway or Supplier should become insolvent, or make any
assignment for the benefit of creditors, or enter into any compromise with
creditors or a general agreement for referral of payment with its creditor, or
make or suffer to be made any transfer to any person, trustee, receiver,
liquidator, or referee for the benefit of creditors, or file a voluntary
petition in bankruptcy, or suffer an involuntary petition in bankruptcy to be
filed against it, or file any petition in any reorganization, arrangement,
compromise, readjustment, liquidation, or dissolution or similar relief for
itself, or becomes unable to pay its debts generally as they become due, the
other party shall have the immediate right to terminate this Agreement upon
delivery of written notice without any liability to the insolvent party and
without further notice to it.
C. Either party may terminate this Agreement without cause by giving
ninety (90) days written notice to the other party.
18. APPLICABLE LAW AND JURISDICTION.
This Agreement shall be governed by and construed in accordance with the
laws of the State of South Dakota without resort to conflict of law principles.
The parties agree that any legal action by either party against the other
relating to this Agreement or Schedule as contained therein shall be commenced
in a court of competent jurisdiction in the State of South Dakota.
19. DISPUTE RESOLUTION.
Each company shall designate in writing to the other the following
individuals for the following purposes:
A. Designated Representatives. Each company shall designate one Primary
Representative. These Primary Representatives shall also act as the designated
persons to resolve disputes under Section 20 (B) herein.
12
B. Senior Officers. Each company shall designate a Senior Officer of the
company, who is not an attorney, who shall serve for the purpose of resolving
disputes under Section 20 (C) herein.
C. Executive Officers. Each company shall designate its Chief Executive
Officer or its Chief Operating Officer who shall serve for the purpose of
resolving disputes under Section 20 (D) herein.
D. Changes in Designation. Each party may change such designated
representatives within the parameters called for hereunder for such
representatives upon the giving of advance written notice to that effect.
20. PROCEDURES FOR HANDLING OF DISPUTES.
All disputes under this Agreement, of any nature whatsoever, shall be
handled in strict accordance with the following procedure, and the parties agree
that legal remedies cannot be resorted to until such time that each step of this
procedure has been followed:
A. A dispute shall be formalized, by the party raising the dispute, when
the issues relating to the dispute are placed in writing and submitted to the
other party with adequate backup material, in the submitting party's reasonable
judgment, to substantiate the dispute and the amount of claim under the dispute.
The submittal in writing shall be delivered to the other party as required under
Section 21 of this Agreement.
B. The dispute shall be handled by resolution by the two designated
Primary Representatives within thirty (30) days from submittal. The parties must
mutually agree to the resolution.
C. Failing resolution under B. above, the dispute, including all
supporting documentation and the positions of the parties from step B. above,
shall be submitted for resolution to the Senior Officers so designated for this
purpose by each company in Section 19 (13), within thirty (30) days from
submittal. The parties must mutually agree to the resolution.
D. Failing resolution under C. above, the dispute, including all
supporting documentation and the positions of the parties under steps B. and C.
above, shall be submitted for resolution to the respective Chief Executive
Officer or Chief Operating Officer, as has been so designated for this purpose
in Section 19 (C), within thirty (30) days from submittal. The parties must
mutually agree to the resolution.
E. Failing resolution under D above:
All disputes under this Agreement shall be submitted to arbitration
under the rules of the American Arbitration Association ("AAA") with the
location for arbitration to be in the State of South Dakota. The dispute shall
be decided by one neutral
13
arbitrator, to be selected by the parties by providing to each other a list of
three (3) names. If the parties are unable to initially agree on the arbitrator,
the selection process will be as follows: The parties will submit the initial
list of six (6) names to the AAA. Each party will rank the six (6) names
submitted in the order of their choice. The first time a name in order of
ranking on each list is common (the level of ranking need not be common), that
person shall be selected as the arbitrator. Failing agreement under this
procedure, the selection shall be made by the AAA under its established rules.
The parties shall agree on mutually acceptable procedures and standards for said
arbitration including, but not limited to: authority of arbitrator respecting
discovery and procedures, form of evidence and/or witness evidence and
presentation, submission and/or hearing procedures, and other such matters;
provided, however, that the scope of the question to be decided by the
arbitrator shall be narrowly construed and shall be limited to the express issue
presented, and there shall be no punitive or exemplary damages allowed to be
awarded. In the event the arbitrator attempts to or does award incidental,
exemplary, special, indirect, consequential or punitive damages in favor of
either party, the jurisdiction of the arbitrator shall be and is hereby
automatically terminated and any decision as to such damages shall be void and
of no force or effect. The party prevailing as to the entire claim shall have
its costs and the other costs of arbitration, including the arbitrator's fees,
if any, paid by the other party, except where neither party prevails entirely,
the arbitrator may apportion such costs in accordance with the disposition of
the matter. The decision of the arbitrator shall be final and binding upon the
parties, except as to the propriety of the scope of the award and disposition;
and provided that the decision of the arbitrator must not be against public
policy, nor may it be arbitrary or capricious, as determined by whether it is
fairly supported by the evidence presented (including the failure, if any, of
either party to comply with the agreed arbitration procedures), which shall mean
that the decision of the arbitrator must be such that it cannot be said that no
reasonable person could reasonably and logically have reached such result based
upon the said evidence.
F. Failure to Act. Failure to take any action on the part of either or
both parties under any step of this procedure for the specified thirty (30) day
period shall automatically move the dispute process to the next step in the
procedure. After having given notice in accordance with A. above for the first
step of this procedure, the completion of the thirty (30) day time period in
each step shall be deemed to constitute notice to initiate the next step of the
procedure.
21. NOTICES.
Notices and other communication under this Agreement will be sent by
certified mail, return receipt requested, addressed to the other party at its
address as follows, provided either party may change its address by written
notice thereof.
14
Supplier: Gateway:
1651 North Glenville 000 Xxxxxxx Xxxxx
Xxxxx 000 Xxxxx Xxxxx Xxxx, XX 00000
Xxxxxxxxxx, XX 00000 Attn: Director of Supply Management
Attn: President
with a copy to Gateway's Law
Department.
22. PRODUCTS LIABILITY INDEMNITY.
Supplier shall indemnify, defend and save Gateway harmless from and against
any and all claims, demands, damages, liability, loss, cost, expense or
attorneys' fees which Gateway may incur, suffer or be required to pay arising
from damage to property, or bodily injury to or death of any person arising out
of or resulting from any defect in design, material, manufacture or performance
of the Product.
23. USE OF SUPPLIER DOCUMENTS
Supplier further grants Gateway the right to modify, reproduce, publish,
and sell the Product documentation and to use internally the (1)
instruction/user manuals, including portions of supplier's manuals or product
information in Gateway's manuals, data sheets, faxable materials, training
materials, brochures, catalogs--any printed material Gateway creates. Supplier
grants Gateway the right to distribute and transmit in electronic form,
including CD-ROM, disk, preload, FAX, video tape, through the Bulletin Board
Service or telephone line; (2) packaging copy and artwork, as a component of the
Product, provided that Gateway's modifications shall not render the Product
documentation incomplete or inaccurate. Gateway shall have the right to continue
using the documentation after the term of this Agreement for limited use to
support Products in the field.
24. U.S. EXPORT CONTROLS
Supplier refers to the U.S. Export Administration Regulations ("EAR") and
the Commerce Control List therein. Supplier agrees that it will not reexport any
technical data or software programs received from Gateway or any direct products
thereof without first obtaining the permission of the U.S. Department of
Commerce or State, either in writing or as provided by an applicable regulation.
Such permission is required in addition to any authorization required to be
obtained from Gateway. Supplier agrees that it shall not use or transfer without
U.S. Government permission U.S. Origin products, technology, or software of any
type if Supplier knows that the products, technology, or software will be used
in the design, development, production, or use of missiles, chemical or
biological weapons, or sensitive nuclear end uses in certain specific countries
of concern designated from time to time by the Commerce Department in Part 778
of the U.S. Export Administration Regulations, as amended from time to time.
This requirement shall survive the term or termination of this contract.
15
Supplier certifies that the Products, which are the subject of this
Agreement, are not subject to the International Traffic and Arms Regulation
(ITAR) set forth at 22 C.F.R., Sections 120, et. seq.
25. FEDERAL ACQUISITION REGULATIONS
Contract clauses from the Federal Acquisition Regulations ("FAR") (48
C.F.R. Chapter 1) are attached hereto as Exhibit J, incorporated herein by
reference and shall have the same force and effect as if set forth in full text.
In all of the attached clauses, "Contractor" and "Offeror" shall mean Supplier.
The clauses are those in effect as of the date of this Agreement.
26. REGULATORY COMPLIANCE
Supplier shall obtain regulatory compliance approval as referenced in
Exhibit F.
27. GENERAL.
A. All rights and remedies, whether conferred hereunder, or by any other
instrument or law will be cumulative and may be exercised singularly or
concurrently. Failure by either party to enforce any term will not be deemed a
waiver of future enforcement of that or any other term. The terms and conditions
stated herein are declared to be severable.
B. Neither party may assign or delegate any rights hereunder without the
prior written approval of the other party and any attempt to assign any rights,
duties or obligations hereunder without the other party's written consent will
be void.
C. These terms and conditions constitute the entire agreement between the
parties with respect to the subject matter hereof Those terms and conditions
will prevail notwithstanding any different, conflicting or additional terms and
conditions which may appear on any order submitted by Gateway.
D. It is understood that neither party is constituted an agent, employee
or servant of the other for any purpose whatsoever. Each party shall conduct its
business in its own name and shall be solely responsible for its acts, conduct
and expenses and the acts, conduct and expenses of its employees and agents.
E. Each party acknowledges that the other party's employees are critical
to the servicing of its customers. Each party agrees not to employ or otherwise
engage the other party's employees for a period of one (1) year following any
employee's involvement in the performance of this Agreement. Should a party
violate this provision, the hiring parry will pay the other party the former
employee's annual salary.
16
F. Neither party shall publicly announce or disclose the existence of
this Agreement or its terms and conditions or advertise or release any publicity
regarding this Agreement without the prior written consent of the other party.
This provision shall survive termination of this Agreement.
G. Supplier will provide to Gateway a list of those persons who license
to Supplier intellectual property used by Supplier under this Agreement.
Supplier will update this list by written notice to Gateway, as soon as
practicable and as required during the term of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Purchase
Agreement as of the date and year written below.
GATEWAY 2000, INC. STB SYSTEMS, INC.
By: /s/ Xxxxxxx X. Xxxxxxx By: /s/ J. Xxxxx Xxxx
-------------------------- ---------------------------
Xxxxxxx X. Xxxxxx
Title: Sr. Vice President and Title: VP of Sales & Marketing
----------------------- ------------------------
General Counsel
Date: 12/17/96 Date: 12/27/96
------------------------ -------------------------
17
