Tape Library OEM Purchase Agreement

Agreement No. 550



CONFIDENTIAL TREATMENT REQUESTED.

CONFIDENTIAL PORTION HAS BEEN FILED

SEPARATELY WITH THE SECURITIES

AND EXCHANGE COMMISSION.



QUANTUM(R)



TAPE LIBRARY OEM



PURCHASE AGREEMENT



This Tape Library OEM Purchase Agreement ("Agreement") is entered into in Milpitas, California, as of August 28, 1996, between QUANTUM CORPORATION, a Delaware corporation with principal offices at 500 McCarthy Blvd., Milpitas, CA 95035 U.S.A. ("Quantum"), and ATL PRODUCTS, INC., a California corporation with offices at 1515 South Manchester Avenue, Anaheim, CA 92802 ("Buyer" or "ATL").



WHEREAS, Quantum develops and manufactures tape drive Products as described in Exhibit A, (hereinafter known as "Products"); and



WHEREAS, Quantum desires to offer said Products for sale to Buyer on a non exclusive basis; and



WHEREAS, Buyer has recognized capabilities in the Automated Tape Library market and desires to have the right to purchase such Products for incorporation into Buyer's product.



THE FOLLOWING TERMS AND CONDITIONS SHALL APPLY TO ALL PURCHASES BY BUYER FROM QUANTUM.



1. TAPE LIBRARY OEM PRODUCT



During the term of this Agreement, Quantum agrees to sell and Buyer

agrees to buy the types of Products listed in the Tape Library OEM

Product Exhibit A ("Exhibit A") attached hereto (the "Product" or

"Products"). Quantum will notify Buyer of any updates to the list of

Products in Exhibit A with thirty (30) days prior written notice and

new products may be added from time to time by mutual agreement of the

parties in writing.



2. PURCHASE ORDERS



(a) Buyer will initiate purchases under this Agreement by

submitting written purchase orders (the "Order[s]") to Quantum

any time from the effective date of this Agreement until

ninety (90) days before the termination date of the Agreement.

All Orders submitted by Buyer will state the requested

delivery dates which will be at least ninety (90) days after

submittal of the Order. No Order will be binding on Quantum

until accepted (in whole or in part) by Quantum. The scheduled

delivery date of a given Order will be as specified by Quantum

in writing within five (5) business days.



(b) The Order shall contain the following minimum information

relative to purchases made under this Agreement: description

of materials purchased, Quantum part number,





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COMPANY CONFIDENTIAL Agreement No. 550



quantity purchased, shipping instructions, delivery schedule,

destination, and confirmation of price. Each Order will make

specific reference to this Agreement and thereby incorporate

the terms of this Agreement. No terms or conditions in any

Order will in any way supersede, modify or supplement this



3. RESCHEDULING AND CANCELLATION



(a) The following schedule shall apply for rescheduling and

cancellation:



========================================================

# OF DAYS MAXIMUM

NOTICE MAXIMUM CANCELLATION

PRIOR TO RESCHEDULE CHARGE AT QUANTUM'S

SCHEDULED DELIVERY DECREASE AMOUNT DISCRETION

--------------------------------------------------------

0 - 60 0% 100%

61 - 90 50% 50%

91 + days 100% 0%

========================================================





Standard configurations may use the following flexibility table:



========================================================

# OF DAYS MAXIMUM

NOTICE MAXIMUM CANCELLATION

PRIOR TO RESCHEDULE CHARGE AT QUANTUM'S

SCHEDULED DELIVERY DECREASE AMOUNT DISCRETION

--------------------------------------------------------

0 - 30 0% 100%

31 - 45 50% 50%

46 + days 100% 0%

========================================================





(b) Purchase Forecasts. On a monthly basis, Buyer shall issue a

revolving twelve (12) month non-binding forecast in a

mutually agreed format so that Quantum will have an

understanding of BUYER's anticipated monthly requirements.

Every three (3) months Buyer and Quantum shall review all

shipments made by Quantum against the total anticipated

purchase commitment.



BUYER'S NON-BINDING FORECAST IS FOR INFORMATION ONLY AND DOES

NOT CREATE ANY LIABILITY BETWEEN THE PARTIES NOR DOES IT

GUARANTEE BUYER WILL ISSUE ORDERS AGAINST THE FORECAST.

QUANTUM'S ONLY OBLIGATION TO MANUFACTURE AND SHIP PRODUCT

WILL BE IN ACCORDANCE WITH THE TERMS OF THIS AGREEMENT AND

PURSUANT TO A PURCHASE ORDER ISSUED BY BUYER AND ACCEPTED BY



(c) Upside Support. Quantum agrees to use reasonable efforts to

accommodate any request to accelerate delivery of Upside

quantities. With respect to any request for





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COMPANY CONFIDENTIAL Agreement No. 550



quantities in excess of Upside, the parties agree to negotiate

in good faith the delivery dates and additional costs to

Buyer, if any, related thereto.



(d) Allocation. If it becomes necessary for Quantum to allocate

production capacity, Buyer Forecast and Purchase Orders will

be reviewed and reasonable efforts will be undertaken to treat

Buyer consistently with similarly situated customers.



4. PACKING, SHIPPING, AND TITLE



The method of packaging will be in accordance with Quantum's standard

practices. Shipments will be to Buyer's address set forth above or, if

different, to the address specified in the Order. Product will be

shipped in accordance with Quantum's standard procedures and will be Ex

Works Quantum's designated facility. Buyer will be responsible for all

shipping expenses, insurance, duties and similar charges which, if paid

by Quantum, will appear as additional items on Quantum's invoice to

Buyer. Title to the Product and risk of loss will pass to Buyer upon

Quantum's delivery to Buyer's carrier.



5. INSPECTION AND ACCEPTANCE



Buyer will have thirty (30) days after delivery to inspect and test

each Product to assure conformance to Quantum's applicable Product

Specification(s) attached hereto by reference. If any Products are

deemed defective by Buyer in any material way, Buyer shall, within such

thirty (30) day period, notify Quantum, obtain a customer return order

number from Quantum and return such defective Product to Quantum in the

same condition as delivered and in the same or equivalent shipping

container, with a description of said defect. If Quantum confirms the

defect, Quantum shall, at its option, rework or replace and re-deliver

the returned Product to Buyer. Shipment of Product to one of Buyer's

customers or failure to return Product within said thirty (30) day

period shall constitute acceptance of the Product.



6. SOURCE INSPECTION



Upon two (2) business days written request to Quantum, and at Quantum's

sole discretion, Buyer may conduct an inspection of Quantum's

facilities during normal business hours. Such inspections shall be to

inspect and review the work, including the Products being purchased

pursuant to this Agreement. Should the presence of Buyer delay any

shipment of Product, Quantum shall not be held liable for a delayed

ship date. The Parties agree that source inspection shall not

constitute acceptance of the Product by Buyer and that acceptance by

Buyer shall be the process outlined in the Section titled Inspection

and Acceptance.



7. QUALITY ASSURANCE



Quantum shall maintain an effective quality/manufacturing control

system and ensure that the entire process of design, manufacture and

repair, including packaging and shipping, is maintained under

continuous control and improvement. The purpose of the quality control

system will be to verify all requirements of the Product Specifications

and Test Specifications are satisfied.



Buyer performs out-of-box quality audits on all Products received. In

the event any failure occurs in these audits, upon Buyer's specific

request, Quantum shall analyze the root cause and





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COMPANY CONFIDENTIAL Agreement No. 550



take appropriate corrective actions including providing Buyer with a

root cause analysis of the failure (within seventy-two (72) hours of

receipt of the failing part) and implementing corrective actions to

prevent recurrence of the failure. Such corrective actions shall be

implemented within thirty (30) days of Quantum's receipt of the failed



Quantum shall generate Failure Analysis Reports of each failure and

maintain records of the corrective actions and an evaluation of its

effectiveness. Such records shall be provided to Buyer upon Buyer's



8. CHANGES



Quantum shall give thirty (30) days prior written notice to Buyer of

any changes to the Products prior to implementation that affect form,

fit or function or could affect both forward and backward

compatibility. Buyer shall give written notice to Quantum of its

approval or disapproval of the change in writing within thirty (30)

days of the date Buyer receives such written notice. If written notice

is not received by Quantum from Buyer within thirty (30) days either

approving or disapproving the change, Quantum shall consider the change



If it is determined by Buyer or Quantum that a Mandatory Change is

required to make the Product conform to the Product Specification,

Quantum shall make the changes at no charge to Buyer in all units that

are not yet delivered to Buyer. In the event such changes are required

to make previously delivered Product conform to the Product

Specification, they shall be supplied in the form of a Mandatory Field

Change Kit at no charge to Buyer in accordance with the procedure set

forth in Exhibit D. Quantum shall pay Buyer's expenses to install the

Mandatory Field Change Kit.



Time is of the essence for Buyer to incorporate a change. In the event

that Buyer requests a sample of a change, Quantum will use reasonable

efforts to provide such sample to Buyer so that Buyer can approve the

change within the thirty (30) day approval period. Any extension to the

approval period shall be by written mutual agreement.



Quantum may from time to time make compatible changes or modifications

to the Product (i) that do not affect form, fit, or function, and (ii)

that are compatible and interchangeable with and shall not require the

retrofit of Product previously delivered. If Quantum makes such

modification, Quantum shall give prior written notice (ECN) to Buyer

upon delivering to Buyer any Product containing such modification. Such

written notice shall describe the changes and update any documentation.



9. PRICES, DISCOUNTS, AND TAXES



(a) The purchase price for each Product sold hereunder shall be

the prices set forth on the attached Exhibit A.



(b) Product prices are exclusive of all taxes. With the exception

of taxes measured by Quantum's income, Buyer shall be

responsible for all federal, state or local sales, use,

property, export, excise and other similar taxes that may be

levied as a result of the sale or delivery of any Product sold

under this Agreement. Such taxes will appear as a separate

item on Buyer's invoice unless Quantum receives a valid tax

exemption certificate from Buyer prior to shipment.





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COMPANY CONFIDENTIAL Agreement No. 550





10. PAYMENT



Subject to approval of Buyer's credit by Quantum, payment terms are net

(thirty) 30 days. All payments will be in U.S. dollars. Overdue

payments will be subject to a service charge of one and one-half

percent (1 1/2%) per month or the maximum rate permitted by applicable

law, which ever is lower.



11. TAPE LIBRARY OEM CERTIFICATION



Buyer certifies that it is purchasing the Product under this Agreement

as a Tape Library OEM, that the Product will be incorporated by Buyer

as a part of another system or subsystem which Buyer assembles together

with such Product under its own name for sale or lease in the regular

course of its business. Such system or subsystem shall include hardware

and/or software other than the Product and shall, by an objective

examination of such factors as cost, pricing, and Product features,

represent approximately a thirty percent (30%) enhancement and

transformation of the Product. Product intended for other purposes

shall not be purchased under this Agreement. Buyer will sell only to

resellers and will not sell to end-users of the Product. Buyer will

furnish to Quantum an Exhibit B - Business Plan ("Exhibit B") which

defines Buyer's product. Buyer will furnish further evidence of

compliance with this paragraph and Exhibit B upon Quantum's reasonable

request. Notwithstanding Section 13 below, failure of Buyer to comply

with this Section 11, will be cause for immediate termination of this

Agreement by Quantum.



12. BUSINESS REVIEWS



Buyer and Quantum shall conduct quarterly Product reviews to keep Buyer

informed with regard to the progress of the development of New

Product(s) and enhancement(s). Buyer and Quantum shall, each at their

own expense, meet on a quarterly basis to review pricing, review

performance and business transacted, and to resolve those issues that

may have arisen since the last business review meeting.



13. TERM AND TERMINATION



This Agreement will be effective on the date of its execution by

Quantum, and will continue for three (3) years unless terminated by

either party in accordance with the termination provisions herein.

After the initial term, this Agreement will continue in effect until

terminated in accordance with this Section 13. The parties may at any

time after the initial term, negotiate a replacement long-term

agreement. Either party may terminate this Agreement, for convenience,

with ninety (90) days prior written notice. Quantum may terminate this

Agreement upon the insolvency, bankruptcy or voluntary dissolution or

assignment for the benefit of creditors of or by Buyer. In addition, in

the case of a default, the non-defaulting party may terminate this

Agreement upon the failure of a defaulting party to cure a default in

the performance of any provision hereof within thirty (30) days after

written notice thereof by the non-defaulting party. The provisions of

Sections 11, 13, 14, 15, 17, 18, and 19 hereof shall survive the

termination of this Agreement for any reason.



In the event Quantum terminates this Agreement for convenience, ATL may

continue to place Orders for Product for ninety (90) days after the

termination date. All such Orders will ship according to Quantum's

then-current standard terms and conditions.





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COMPANY CONFIDENTIAL Agreement No. 550



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