<PAGE>
EXHIBIT 10.30
--------------------------------------------------------------------------------
PORTIONS DENOTED WITH [***] HAVE BEEN
OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT
TO A REQUEST FOR CONFIDENTIAL
TREATMENT.
--------------------------------------------------------------------------------
SHOWA DENKO / WESTERN DIGITAL TECHNOLOGIES
SUPPLY AGREEMENT
THIS SUPPLY
AGREEMENT (this "AGREEMENT") is made and entered into as of
August 17, 2005 ("EFFECTIVE DATE"), by and
between SHOWA DENKO K.K.("SHOWA
DENKO"), with offices located at Chiba,
Ichihara, Japan, and Western Digital
Technologies, Inc., a Delaware corporation
("WESTERN DIGITAL"), with offices
located at 20511 Lake Forest Drive, Lake
Forest, California 92630.
RECITALS
WHEREAS, SHOWA
DENKO and its affiliates manufacture and design Media; and
WHEREAS, WESTERN
DIGITAL, its affiliates or subsidiaries incorporate such
Media into WESTERN DIGITAL'S hard disk
drives ("HDD"); and
WHEREAS, WESTERN
DIGITAL desires to purchase Media and SHOWA DENKO desires
to sell such Media, subject to the terms
and conditions herein stipulated.
NOW, THEREFORE,
in consideration of the above recitals, premises and the
mutual promises hereinafter contained, and
other good and valuable
consideration, the parties hereto agree as
follows:
1. DEFINITIONS.
Unless otherwise defined herein, capitalized terms in this
Agreement shall be given the meaning
ascribed to them below:
"BUSINESS DAY" means any day other than a Saturday, Sunday or
national
holiday in
United States.
"FISCAL QUARTER" means Western Digital's fiscal quarters as
identified
in EXHIBIT
3.2.
"NDA" means that certain Non-Disclosure Agreement by and
between
WESTERN DIGITAL
and SHOWA DENKO dated as of April 8, 2003.
"PURCHASE ORDER" means documents in EDI, email, or fax, issued
by
WESTERN DIGITAL
with quantities and/or shipping information, including
blanket orders
of Products and JIT HUB pull signals.
"SPECIFICATIONS" means designs, drawings, prints and written
descriptions,
specification reviews and requirements for the Products,
including any
changes or updates thereto.
"MEDIA" means a blank substrate of glass or aluminum which has
been
manufactured
through multiple process steps to form a completed magnetic
rotating disc
which is used in combination with magnetic heads.
1
<PAGE>
--------------------------------------------------------------------------------
PORTIONS DENOTED WITH [***] HAVE BEEN
OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT
TO A REQUEST FOR CONFIDENTIAL
TREATMENT.
--------------------------------------------------------------------------------
"MATERIAL DEFAULT" shall mean the occurrence of any of the
following,
provided that in
the event any of the following conditions are cured within
the time periods
set forth therein, then no Material Default shall have
occurred:
(i) a failure of SHOWA DENKO to deliver in a given Fiscal Quarter
the
Volume
Requirements (subject to Section 5.1), or the failure of SHOWA
DENKO
to accept a
Purchase Order issued in accordance with Section 4.4, and the
failure by SHOWA
DENKO to remedy such condition within ten (10) Business
Days after SHOWA
DENKO has received notice thereof;
(ii) a failure of WESTERN DIGITAL to meet its payment
obligations
under Section
3.5, and the failure by WESTERN DIGITAL to remedy such
condition within
ten (10) Business Days after WESTERN DIGITAL has received
notice thereof;
or
(iii) a material breach by either party of any obligation,
covenant,
or condition
under this Agreement that is susceptible of cure, and the
failure by the
breaching party to cure such breach within thirty (30)
Business Days
after the breaching party has received notice of such
default,
provided that if the cure requires more than thirty (30)
Business
Days, a Material
Default will be deemed to exist if the breaching party
fails to (i)
promptly take action to cure such breach as quickly as
reasonably
possible; or (ii) cure such breach within sixty (60) days after
the breaching
party has received notice of such default;
(iv) an assignment or attempted assignment in violation of Section
13.
"WDM" means Western Digital (Malaysia) Sdn Bhd.
"WDTH" means Western Digital (Thailand) Company Limited.
2. PURCHASE AND SALE OF
PRODUCTS; TERM
2.1 Term. The term of this agreement shall commence on the
Effective
Date and expire
on December 31, 2007 (the "TERM"). During the Term WESTERN
DIGITAL shall
designate SHOWA DENKO as a qualified supplier for Media and
SHOWA DENKO
shall supply to WESTERN DIGITAL the Volume Requirements,
subject to the
terms and conditions of this Agreement. To fulfill the
Volume
Requirements, SHOWA DENKO may supply to WESTERN DIGITAL or its
Affiliates the
Media manufactured by its owned and controlled affiliates,
SHOWA DENKO HD
TRACE CORPORATION, SHOWA DENKO HD K.K. and/or SHOWA DENKO HD
SINGAPORE PTD.,
LTD., (each, a "Showa Affiliate"), provided that each
location of each
Showa Affiliate can produce Media that meets WD's
Specifications
and performance and reliability standards as set forth
herein. In the
event any Showa Affiliate does not meet such Specifications
and standards,
then SHOWA DENKO must meet the Volume Requirements with
Media from a
different Showa Affiliate.
2
<PAGE>
--------------------------------------------------------------------------------
PORTIONS DENOTED WITH [***] HAVE BEEN
OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT
TO A REQUEST FOR CONFIDENTIAL
TREATMENT.
--------------------------------------------------------------------------------
2.2 Qualified Supplier. Upon completing qualification requirement
for
each Product,
SHOWA DENKO will be a qualified supplier of the particular
Product.
2.3 Conditions. WESTERN DIGITAL'S obligation to purchase any
Products
from SHOWA DENKO
under this Agreement is contingent on such Products,
including all
components thereof and the manufacturing process thereto,
being qualified
to WESTERN DIGITAL'S standards and Specifications (the
"Condition"). In
the event that this Condition is not met or is breached
for any reason,
WESTERN DIGITAL shall have the right to (A) waive such
unsatisfied
Condition, or (B) to terminate this Agreement in part with
respect to any
Product for which such Condition is not satisfied.
2.4 Limitations. Unless and until such Condition is satisfied,
WESTERN
DIGITAL shall
not be obligated under this Agreement to designate SHOWA
DENKO as a
qualified supplier of any Product for which the Conditions have
not been
satisfied or purchase any such Products under this Agreement.
2.5 Design Qualifications. When WESTERN DIGITAL and/or its
affiliates
intend to obtain
a new design qualification from its OEM and Distribution
customers with
respect to hard disk drives, WESTERN DIGITAL and its
affiliates shall
[***].
3. [***]; INVOICES AND
PAYMENT.
3.1 Products. In accordance with the terms set forth in this
Agreement,
WESTERN DIGITAL shall purchase from SHOWA DENKO the MEDIA
products set
forth on Exhibit 3.1 hereto as may be amended in writing from
time to time by
mutual agreement of the parties (the "PRODUCTS"). WESTERN
DIGITAL may
authorize its affiliates to purchase Product and place Purchase
Orders under the
terms and conditions of this Agreement.
3.2 Volume. The minimum quantities of the Products sold and
purchased
hereunder for
each Fiscal Quarter is set forth on Exhibit 3.2 hereto (the
"VOLUME
REQUIREMENTS"). Purchases by WESTERN DIGITAL'S affiliates shall
be
included in the
total Volume Requirements.
3.3 [***]. [***] for the Products and payment terms is set forth
on
EXHIBIT 3.3
hereto (the "[***]") which is incorporated herein by reference.
a. [***] In the
event that WESTERN DIGITAL elects to challenge the
[***] of the Products under this clause, the parties shall
follow the procedures set forth in Section 3.3(b) below.
3
<PAGE>
--------------------------------------------------------------------------------
PORTIONS DENOTED WITH [***] HAVE BEEN
OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT
TO A REQUEST FOR CONFIDENTIAL
TREATMENT.
--------------------------------------------------------------------------------
b. [***]. With
respect to [***] clause in Section 3.3(a) above and
Exhibit 3.3 hereto, [***].
c. In the event
the parties [***] as described in this Section 3.3,
either party may, upon written notice to the other, submit such
dispute to the Chief Executive Officer of SHOWA DENKO and the
Chief Operating Officer of WESTERN DIGITAL, or their respective
designees, who shall meet to attempt to resolve the dispute by
good faith negotiations. In the event the parties are unable to
come to agreement upon [***] within five (5) Days after such
notice is given, either party may proceed with arbitration in
accordance with the Commercial Arbitration Rules of the
American
Arbitration Association and each party shall appoint one
arbitrator, and the two arbitrators thus appointed will appoint
a
third arbitrator.
3.4 Submission of Invoices. WESTERN DIGITAL shall order Products
under
this Agreement
by submitting Purchase Orders in accordance with Section 4.4
hereof. SHOWA
DENKO will submit invoices to WESTERN DIGITAL or its
affiliates no
earlier than (i) with respect to direct shipments to
WDM/WDTH, the
date of receipt of Products by WDM/WDTH's third party
transporter at
the airport in the country where WDM/WDTH's plant is
located; (ii)
with respect to direct shipments to WESTERN DIGITAL or its
affiliates other
than WDM/WDTH, the date of shipment of Products to WESTERN
DIGITAL or its
affiliates; and (iii) with respect to Products pulled from a
JIT Hub, the
date of withdrawal from the JIT Hub.
3.5 Payment of Invoices. The Price for Product shall be paid in
United
States currency.
Payment from WESTERN DIGITAL for undisputed amounts due
under an
appropriately submitted invoice shall be made within [***] days
(or such longer
period as mutually agreed upon by the parties) after the
date of the
invoice issued in accordance with Section 3.4.
4. FORECASTS AND ORDERS.
4.1 Long-Term Forecast. In order to assist SHOWA DENKO in
planning
production,
WESTERN DIGITAL shall provide SHOWA DENKO on a calendar month
basis with a
four quarter rolling forecast of the quantities and
configurations
of Products required by WESTERN DIGITAL and its affiliates,
including
projected volumes by program (the "WD QUARTERLY FORECASTS").
The
rolling WD
Quarterly Forecasts shall be by week for first quarter of each
forecast and by
month for the second, third and fourth quarters of each
forecast. In
addition, WESTERN DIGITAL will provide SHOWA DENKO with a
forecast at
least annually of its anticipated Product needs extending for a
one year period
after the then applicable WD Quarterly Forecast (the
"LONG-TERM
FORECASTS"). The parties understand and agree that the WD
Quarterly
Forecasts and the Long-Term Forecasts are intended to be
estimates for
planning purposes only and shall not be binding upon WESTERN
DIGITAL.
4
<PAGE>
--------------------------------------------------------------------------------
PORTIONS DENOTED WITH [***] HAVE BEEN
OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT
TO A REQUEST FOR CONFIDENTIAL
TREATMENT.
--------------------------------------------------------------------------------
4.2 13-Week Forecasts. WESTERN DIGITAL shall use commercially
reasonable
efforts to provide SHOWA DENKO with a thirteen (13) week
rolling
forecast (the
"13 WEEK FORECAST") of its Product requirements, updated
weekly on or
before the close of business, California time, on an
agreed-upon
Business Day of each week. The parties understand and agree
that all 13 Week
Forecasts are intended to be estimates for planning
purposes only
and shall not be binding upon both Parties.
4.3 SHOWA DENKO will procure and maintain all necessary
equipment,
personnel,
facilities, and other materials required to manufacture
Products
in volumes
sufficient to meet the Volume Requirements.
4.4 Order. WESTERN DIGITAL (or its affiliates) shall, if it desires
to
purchase
Products from SHOWA DENKO, furnish to SHOWA DENKO a quarterly
firm
Purchase Order
for the purchase of such Products not later than [***]
before such
Fiscal Quarter. Purchase Orders will include (i) Product's
description, and
(ii) the ship-to and bill-to addresses.
4.5 Order Reschedule; Cancellation. WESTERN DIGITAL or its
affiliates
may reschedule
the shipment date of any undelivered Products multiple times
within any
Fiscal Quarter, and may reschedule up to [***]% of the Volume
Requirements for
any Fiscal Quarter in the subsequent Fiscal Quarter,
without charge
or liability under this Agreement. WESTERN DIGITAL shall be
responsible for
reasonable charges for rescheduling shipment dates other
than in
accordance with the preceding sentence. WESTERN DIGITAL may
redirect
shipments of Products under any Purchase Order to alternate
locations, and
WESTERN DIGITAL shall be responsible only for the difference
(if any) between
the shipping costs to the original shipment location and
the new
location. WESTERN DIGITAL may cancel a Purchase Order within
[***]
of a scheduled
delivery date only with consent from SHOWA DENKO. If SHOWA
DENKO consents,
then WESTERN DIGITAL or its affiliates may be liable for
certain "ORDER
CANCELLATION FEES" (unless such cancellation was for cause).
Such Order
Cancellation Fees shall include only the cost of materials that
SHOWA DENKO
cannot cancel, return to its supplier for credit, sell or
divert to
another use. In addition, such Order Cancellation Fees shall
not
in any event
exceed the Price for any finished goods inventory manufactured
by SHOWA DENKO
consistent with the 13 Week Forecast that is attributable to
such
cancellation, modification or termination, and in no event more
than
[***] of
finished goods inventory of Products.
4.6 Direct Order Acknowledgement. If Products are not ordered
by
WESTERN DIGITAL
or its affiliates through the JIT Hub, and WESTERN DIGITAL
or its
affiliates instead issues to SHOWA DENKO a direct purchase order
for
Product, then an
order acknowledgement shall be provided by SHOWA DENKO to
WESTERN DIGITAL
or its affiliates within ninety-six (96) hours of receipt
of the purchase
order for Product from WESTERN DIGITAL or its affiliates.
Failure by SHOWA
DENKO to send an order acknowledgement shall not be deemed
to signify SHOWA
DENKO'S objection to or disapproval of a purchase order
for a Product
(as defined in this Agreement), but shall be deemed to be
SHOWA DENKO'S
acknowledgement thereof.
5
<PAGE>
--------------------------------------------------------------------------------
PORTIONS DENOTED WITH [***] HAVE BEEN
OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT
TO A REQUEST FOR CONFIDENTIAL
TREATMENT.
--------------------------------------------------------------------------------
4.7 Obligation to Fulfill Orders. SHOWA DENKO must accept all
Purchase
Orders for
Products issued by WESTERN DIGITAL or its affiliates, if the
offered volumes
of the Products in such Purchase Orders do not exceed the
Volume
Requirements. In the event that a Purchase Order for such
Products
issued by an
WESTERN DIGITAL or its affiliates offers a volume of the
Products in
excess of the Volume Requirements and if SHOWA DENKO does not
desire to accept
such Purchase Order, SHOWA DENKO shall promptly (and in no
event later than
ninety-six (96) hours from the time SHOWA DENKO receives
such Purchase
Order) notify the WESTERN DIGITAL or its affiliates so that
the parties may
discuss to attempt to avoid disruption in the supply chain.
Notwithstanding
the foregoing, WESTERN DIGITAL shall have the opportunity
to amend any
Purchase Order to be consistent with the Volume Requirements
and SHOWA DENKO
shall at all times be required to supply WESTERN DIGITAL
the Volume
Requirements.
5. DELIVERY.
5.1 General. SHOWA DENKO shall deliver the Volume Requirements
to
WESTERN DIGITAL
or its affiliates in during each Fiscal Quarter in
accordance with
Purchase Orders in amounts equal to (i) a minimum of [***]
percent ([***]%)
of the Volume Requirements for each of the first two
months of the
then applicable Fiscal Quarter and (ii) [***] percent
([***]%) of the
Volume Requirements by the end of the eleventh (11th) week
of the
applicable Fiscal Quarter and (iii) [***] percent ([***]%) of
the
Volume Requirements by
the end of the last week of the applicable Fiscal
Quarter.
Delivery terms are DDU WESTERN DIGITAL or its affiliates
facility
or JIT Hub.
SHOWA DENKO shall fulfill Purchase Orders in exact quantities,
provided,
however if the difference between actual SHOWA DENKO Product
deliveries and
the Volume Requirements for a Fiscal Quarter is not more
than [***]
percent ([***]%) of the Volume Requirements for such Fiscal
Quarter, SHOWA
DENKO may increase the Volume Requirement for the subsequent
Fiscal Quarter
by a number of Products equal to such shortfall. In the
event of an
incomplete shipment, and provided that WESTERN DIGITAL or its
affiliates has
not notified SHOWA DENKO that WESTERN DIGITAL or its
affiliates will
not accept an additional partial shipment to complete the
incomplete
shipment, SHOWA DENKO shall promptly make up any incomplete
shipments as
soon as possible (and in no event later than [***] days),
using expedited
means of transportation at SHOWA DENKO'S sole expense.
5.2 Just-in-Time Hub. SHOWA DENKO will provide just-in-time
delivery
using hubs
located at or near WESTERN DIGITAL'S manufacturing or
distribution
facilities in Malaysia and Thailand ("JIT HUBS"). SHOWA DENKO
will: (i) bear
all costs associated with warehousing Products in the JIT
Hub(s); (ii)
ensure that WESTERN DIGITAL or its affiliates may withdraw
Products from
the JIT Hub(s) as needed; (iii) retain title to Products
until they are
physically delivered to WESTERN DIGITAL or its affiliates or
its carrier upon
withdrawal from the JIT Hub(s); (iv) fully insure or
require the JIT
Hub(s) operator to fully insure all Products in transit to
or stored at a
Hub against all risk of loss or damage until such time as
WESTERN DIGITAL
or its affiliates
6
<PAGE>
--------------------------------------------------------------------------------
PORTIONS DENOTED WITH [***] HAVE BEEN
OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT
TO A REQUEST FOR CONFIDENTIAL
TREATMENT.
--------------------------------------------------------------------------------
takes title to
them; and (v) require that the Hub operator take all steps
necessary to
protect all Products in a JIT Hub consistent with good
commercial
warehousing practice.
5.3 JIT Hub Inventory Levels. SHOWA DENKO will maintain inventory
of
Products at the
JIT Hub(s) of not less than [***], and not more than [***],
of the WESTERN
DIGITAL or its affiliates scheduled pulls based on the 13
Week Forecasts
consistent with the relevant Volume Requirements in effect
at the lead time
necessary for SHOWA DENKO to manufacture the Products (the
"JIT HUB
INVENTORY"). As WESTERN DIGITAL or its affiliates purchase
Product
from the JIT
Hub(s), SHOWA DENKO will replenish the inventory in accordance
with the 13 Week
Forecast consistent with the relevant Volume Requirements
in effect at the
lead time necessary for SHOWA DENKO to manufacture such
replenishing
inventory.
5.4 On-Time Delivery. TIME IS OF THE ESSENCE as to the delivery
of
Products. In the
event SHOWA DENKO anticipates that it will not be able to
make shipments
in conformance with a Purchase Order, without limiting
WESTERN
DIGITAL'S rights or remedies under this Agreement, SHOWA DENKO
will
promptly notify
the WESTERN DIGITAL or its affiliates and will work with
the WESTERN
DIGITAL or its affiliates to remedy the issues giving rise to
such
nonconformance and to limit the impact of such nonconformance
in
accordance with
the following procedures:
a. SHOWA DENKO
shall use its best efforts to provide WESTERN DIGITAL
with a remedy/corrective action plan within twenty four (24)
hours after notice to the WESTERN DIGITAL or its affiliates and
WESTERN DIGITAL;
b. In the event
SHOWA DENKO is unable to provide a remedy/corrective
action plan within twenty four (24) hours, SHOWA DENKO will
provide daily updates until a remedy/corrective action plan is
identified;
c. If WESTERN
DIGITAL is not satisfied with SHOWA DENKO' progress on
the remedy/corrective action plan, WESTERN DIGITAL may initiate
a
management level discussion;
d. If the
managers are unable to agree on a satisfactory resolution,
the management may initiate a vice president level discussion
to
resolve WESTERN DIGITAL'S concerns; and
e. If the
parties are unable to reach a mutually agreeable
resolution within five (5) days of the commencement of the
escalation process described in (c) above, then each party
shall
be entitled to enforce its rights and remedies under this
Agreement and pursuant to applicable law.
5.5
Process Management Plans. If requested by WESTERN DIGITAL in
writing, SHOWA
DENKO shall provide Process Management Plans ("PMP'S") for
all
7
<PAGE>
--------------------------------------------------------------------------------
PORTIONS DENOTED WITH [***] HAVE BEEN
OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT
TO A REQUEST FOR CONFIDENTIAL
TREATMENT.
--------------------------------------------------------------------------------
parts or
processes as they relate to the production of Products within
five
(5) days after
receipt of the request.
5.6 Supply Chain Management. Quarterly, or as requested by
WESTERN
DIGITAL, SHOWA
DENKO shall provide to WESTERN DIGITAL supply chain
information
including worldwide inventory volumes of the Products sold or
to be sold to
WESTERN DIGITAL or its affiliates and pull rates for such
Products.
5.7 Process and Design Changes. The parties will agree upon a
qualification
process or plan for process or design changes that will
provide WESTERN
DIGITAL with modeling (where applicable), prototyping,
testing and
approval by WESTERN DIGITAL prior to cut-in on WESTERN
DIGITAL'S
production or development lines. SHOWA DENKO shall respond in
writing to
WESTERN DIGITAL within five (5) Business Days after receiving a
WESTERN DIGITAL
requested process or design change. SHOWA DENKO response
shall confirm
the nature of the change, analyze the impact of the change on
both SHOWA DENKO
and WESTERN DIGITAL and identify a plan of action. SHOWA
DENKO will not
modify the Products, any of their components or materials,
or any related
manufacturing processes without obtaining WESTERN DIGITAL'S
prior written
consent.
5.8 Quarterly Business Reviews. WESTERN DIGITAL and SHOWA DENKO
shall
meet on a
quarterly basis for a quarterly business review. The parties
shall review
SHOWA DENKO'S performance during the preceding quarter,
identify areas
for improvement and recommend actions to be taken by either
party to satisfy
the parties' business goals. In addition, each quarterly
business review
will allocate time to review future product roadmap plans
between the
parties, and also product, process, cost and quality
improvements.
6. WARRANTY.
6.1 Warranty Period. The warranty period for the Products is for
a
period of one
(1) year commencing upon the date of delivery of the Products
(or the date
pulled from the JIT Hub, as applicable) (the "WARRANTY
PERIOD").
6.2 Warranties. SHOWA DENKO represents and warrants to WESTERN
DIGITAL
and its
affiliates the following (the "MEDIA WARRANTY"):
a. During the
Warranty Period, the Products conform to all
applicable Specifications; and
b. During the
Warranty Period, the Products will be free from
defects in material and workmanship; and
c. The Products
do not infringe any patent rights, copyrights,
trademarks, trade secret, mask work right or other
intellectual property right of any third party; and
8
<PAGE>
--------------------------------------------------------------------------------
PORTIONS DENOTED WITH [***] HAVE BEEN
OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT
TO A REQUEST FOR CONFIDENTIAL
TREATMENT.
--------------------------------------------------------------------------------
d. The Products
are new and comprised of new materials, are not
misbranded, falsely labeled or invoiced.
6.3 WESTERN
DIGITAL'S acceptance, testing or approval of the goods,
design or
materials will not relieve supplier of any warranty
obligations.
6.4 EXCLUSIVE WARRANTIES; THIRD PARTY BENEFICIARIES. THE
WARRANTIES
SET FORTH ABOVE
ARE EXCLUSIVE, AND NEITHER PARTY MAKES ANY OTHER WARRANTY,
EXPRESS OR
IMPLIED, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTY OF
MERCHANTABILIT
