Apple 2003 Annual Report Download - page 111

by Apple or third parties not authorized by IBM in writing; (v) removal or alteration of labels by Apple or a third party; or (vi) failure caused
by a product which IBM did not provide or for which IBM is not responsible. IBM does not warrant uninterrupted or error free operation of
the Products or that IBM will correct all defects.
13.3 THE FOREGOING WARRANTIES ARE IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING
THE IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS OR USAGE FOR PARTICULAR PURPOSE OR NON-
INFRINGEMENT.
13.4 This warranty is not transferable. No course of dealing, course of performance, usage of trade, or description of Product or Service
shall be deemed to establish a warranty, express or implied.
13.5 If an Authorized Purchaser or Designee claims that any Products or Services are nonconforming, the Authorized Purchaser or
Designee shall, (i) promptly notify IBM, in writing, of the basis for such claim of nonconformity; (ii) follow IBM’s instructions for the prompt
return of the Products; and (iii) return such Products freight collect to IBM’s designated facility. If IBM determines that the returned Products
are nonconforming and such returned Products were shipped with Apple’s consent prior to their qualification, IBM’s sole and exclusive
obligation will be to, at IBM’s option, repair or replace the defective Products, or issue a credit for the purchase price (e.g., Section 14.0 will
not apply to such Product units delivered before the Product is qualified). If IBM determines the Products are nonconforming and they were
shipped subsequent to their qualification, IBM will issue a credit or rebate for the purchase price.
13.6 Prior to returning any defective Products to IBM, the Authorized Purchaser or Designee shall obtain a Return Merchandise
Authorization number (“RMA”) from IBM (which IBM will provide within [**] Business Days of the request) and provide the specific
description of the problem, by part number for the total quantity of the defective Products. The Authorized Purchaser or Designee shall only
return the exact quantity authorized in each RMA by following IBM’s RMA instructions . Each shipping container shall contain only one (1)
RMA.
13.7 IBM’s sole liability and Apple’s exclusive remedy for breach of warranty shall be limited as stated in this Section 13, except that
Product Failures which exceed the applicable Failure Threshold shall be governed by Section 14 below.
[**] = information redacted pursuant to a confidential treatment request. Such omitted information has been filed separately with the Securities
and Exchange Commission.
14.0 FREQUENT FAILURES
14.1 Test Specification. (i) U3 and any other ASIC Product that the parties may agree to treat in a similar manner: Apple shall define and
implement its own design verification tests, which testing activities shall be no less thorough than those testing activities generally conducted
by Apple but not less thorough than those testing activities generally conducted by other personal computer manufacturers (but not
microprocessor manufacturers) in the industry (receipt by IBM of Apple’s Prototype Acceptance as set forth in the ASIC Development
Agreement, Agreement No. 000798 shall establish that the Prototype design revision conformed with the agreed-upon specifications as set
forth in the RTM); and (ii) other Exhibit 4 Products: Apple and IBM shall agree on a test specification that shall set forth the minimum level
of testing of the other Exhibit 4 Products sold hereunder both (a) by IBM prior to shipment from IBM to Apple and (b) by Apple prior to
shipment to end-user customers, and other matters such as a returned-parts process and regular communications expected between the parties.
Either party shall be free to exceed the agreed-upon level of testing.
14.2 IBM will promptly notify Apple if IBM believes that a Product contains a defect that could result in Failed Units exceeding the Failure
Threshold. IBM may stop shipments of all such Products [**] while IBM and Apple analyze the defect and discuss whether shipments should
resume. If the Product contains such a defect, IBM will use diligent efforts to promptly: (i) cure such defect and resume shipments as quickly
as possible; or (ii) make available a replacement Product that meets the agreed specifications for the Product but does not contain such a defect.
[**] The modified or replacement Products shall be fully warranted as set forth in Sections 13 and this Section 14 once qualified by Apple.
If Apple provides IBM written instructions acknowledging IBM’s notice of a defect but instructing IBM to resume shipments in advance of a
cure or replacement, IBM will resume such shipments as quickly as possible; provided, however that: (a) Apple’s instructions will not relieve
IBM of its obligation to cure the defect or make a replacement part available as set forth above; and (b)
uncured Products shipped pursuant to such written instructions will be shipped without warranty, express or implied, or Frequent Failure
protection with regard to such defect or any related defect rendered undetectable due to the presence of such defect.
[**] = information redacted pursuant to a confidential treatment request. Such omitted information has been filed separately with the Securities
and Exchange Commission.