OEM Purchase Agreement

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What is an OEM Purchase Agreement?

An OEM purchase agreement is a contract between an original product manufacturer and another party that allows them to use components to build a new product. The contract states what components are authorized to be used by the OEM and what the approved resulting new product is. The contract also states what compensation the OEM will receive from the other contracted party in exchange for the allowance to use the OEM components.

The purpose of hte OEM purchase agreement is to create a legal agreement between an OEM and an acquiring party that is legally enforceable.

Common Sections in OEM Purchase Agreements

Below is a list of common sections included in OEM Purchase Agreements. These sections are linked to the below sample agreement for you to explore.

OEM Purchase Agreement Sample

CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THE EXHIBIT BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED, AND THE EXCLUDED TERMS HAVE BEEN MARKED AT THE APPROPRIATE PLACE WITH THREE ASTERISKS [***].

This Original Equipment Manufacturer (OEM) Purchase Agreement (“Agreement”) is made and entered into by and between SUPER MICRO COMPUTER INC. (“Supplier”), a Delaware corporation having its principal place of business at 980 Rock Avenue, San Jose, CA 95131 and NUTANIX, INC. (“OEM”), a Delaware corporation and an original equipment manufacturer having its principal place of business at 1740 Technology Drive, Suite 150, San Jose, California, 95110, United States.

This Agreement is effective as of May 16, 2014 (“Effective Date”) and will continue thereafter until terminated in accordance with this Agreement.

Under the terms of this Agreement OEM may purchase servers and computer components listed on Exhibit A as updated in writing by the parties hereto on a quarterly basis (“Product(s)”) as an original equipment manufacturer. Additional Products may be ordered by mutual agreement.

The current prices (“Prices”) for Product purchased hereunder are listed on Exhibit A and will be updated in writing by the parties hereto on a quarterly basis (“Price List”). Prices include drop shipment handling fee; there shall be no additional drop shipment handling fee. Both parties shall proactively plan and implement cost reduction plan on quarterly basis. Supplier agrees to make reasonable commercial efforts to reduce cost on a continuing basis to make the price more competitive in the market.

4.1 OEM may order Products by submitting written purchase orders or orders via XML to Supplier (each an “Order”). Purchase orders will contain, at a minimum; (i) Product part number, (ii) Product quantity, (iii) requested delivery dates, (iv) Product Price, and (v) delivery address. OEM’s tax exemption certificate number to be provided as a blanket for all production items, if applicable. Orders containing the information listed in this Section 4.1 will be accepted by Supplier [***].

4.2 All Orders will be exclusively governed by the terms and conditions of this Agreement, notwithstanding any contrary terms and conditions contained on any OEM purchase order or Supplier acknowledgment thereof.

In order to control the quality of Products and any after sales service, OEM may use the Products solely for integration into systems or subsystems designed by OEM and or assembled for OEM for sale or lease in its regular course of business. OEM expressly agrees that it will use Product ordered only for this purpose.

To assist Supplier with respect to planning, OEM may, from time-to-time, provide Supplier with a quarterly non-binding forecast and a six-month rolling non-binding forecast [***].

OEM may reschedule or cancel any Order provided that Supplier receives written notice prior to later of: (i) date the Products with respect to such Order are shipped; or (ii) the deliver date specified on such Order. OEM’s liability with respect to any canceled or rescheduled Orders is set forth in Section 9.

9.1 OEM shall have no liability for any inventory other than non-standard material, defined as those finished goods, WIP [***] and raw material set forth in Exhibit C (“Non-Standard Material”). Inventory liability for Non-Standard Material shall be as follows:

b. Obsolete Inventory: OEM shall take receipt of Non-Standard Material inventory that is: (i) aged inventory for a period of [***], and (ii) is not included in the monthly forecast (the “Obsolete Inventory”). [***]

9.2 Supplier will undertake reasonable efforts to reduce Excess Inventory and Obsolete Inventory through open order cancellations, return for credit programs, reworks or allocation to alternative programs (if available and appropriate) for a period not to exceed thirty days beyond end customer demand change.

9.3 Both parties shall meet monthly regarding Excess Inventory and Obsolete Inventory to determine the best method to mitigate OEM’s potential inventory liability. Inventory liability for Non-Standard Material will be evaluated monthly or as mutually agreed by the parties.

OEM will be responsible for all taxes with respect to Orders for Products placed by OEM (except Supplier’s income taxes), unless OEM provides Supplier with tax exemption documentation required by the applicable taxing authority.

12.1 Title. Title to the Products and all risk of loss or damage thereto will pass to OEM according to the following delivery term: [***].

12.2 Time. Supplier will use commercially reasonable efforts to ship Products from its warehouse by the shipment date specified on the Order, provided that the date of shipment will be [***]. Supplier will use best commercial efforts to make shipment within no more than [***] from Order date for any other inventory, or inform OEM within 24 hours from the date of the placement of the Order if Supplier cannot make the shipment within [***] from Order date.

In the event of a shortage of any Products, Supplier will first fulfill OEM’s Order in quantities equal to the order rate as measured by the monthly order rate during the preceding three-month period (the “Order Rate”). Supplier will use its best commercial efforts to satisfy OEM’s demand in excess of the Order Rate.

Supplier represents and warrants that no Products sold by or otherwise transferred by Supplier to OEM contain: lead, cadmium, mercury, hexavalent chromium, polybrominated biphenyls (PBBs), polybrominated biphenyl ethers (PBDE), or any other hazardous substances the use of which is restricted under EU Directive 2011/65/EU (8 June 2011) (RoHS Recast); chemicals restricted under the Montreal Protocol on ozone-depleting substances or the law of the countries into which Product is shipped; or other materials restricted by applicable law unless expressly agreed otherwise by OEM in writing in advance. From time to time, OEM may request evidence of Supplier’s compliance with EU Directive 2011/65/EU, and Supplier shall make best efforts to provide this information in a timely manner.

OEM may conduct incoming inspection testing to confirm that the Product conforms to any mutually agree upon specification. Product found to be nonconforming or otherwise fails to operate (“DOA”) within the greater of: (i) initial 45 days period from the delivery date, or (ii) the period set forth in the warranty table on Exhibit B, may be returned by OEM to Supplier for replacement. Supplier will replace the Products within fifteen (15) business days. Product returned by OEM must be in Supplier’s standard packaging or similar packaging agreed to by the parties. Transportation charges associated with the replacement (a) to be shipped from OEM to Supplier will be borne by OEM and reimbursed by the Supplier, (b) to be shipped back to OEM, or original delivery destination (as directly by OEM) will be borne by Supplier.

Epidemic Failures. For purposes of this Agreement, “Epidemic Failure Event” shall mean the Product failures (i) having a similar cause related to a particular component, verified by the supplier, and by OEM, or an independent third party on behalf of OEM, (ii) occurring at any time during the applicable warranty period (as set forth in Section 17) with respect to the particular Product (iii) resulting from defects in materials, workmanship, manufacturing process or design or failure to conform with the Specifications, (iv) [***]. Upon occurrence of an Epidemic Failure Event, the remedies of this Section 16 shall apply to the entire Product population affected by the root cause failure until corrective action is complete. Supplier’s obligation to ensure that components meet the Specification include, but are not limited to, incoming quality control, sub-tier audits, statistical process control, control of workmanship, outgoing quality inspection and all other relevant elements of quality set forth in this Agreement.

Notwithstanding the foregoing, this Section 16 shall apply or be enforced with respect to third party components listed below only during the respective warranty period set forth in Section 17:

Upon occurrence of an Epidemic Failure Event, OEM shall promptly notify Supplier, and shall provide, if known and as may then exist, a description of the failure, and the suspected lot numbers, serial numbers or other identifiers, and delivery dates, of the failed Products. OEM shall make available to Supplier, samples of the failed Products for testing and analysis. Upon receipt of product from OEM, Supplier shall promptly provide its preliminary findings regarding the cause of the failure. The parties shall cooperate and work together to determine the root cause. Thereafter, Supplier shall promptly provide the results of its root cause corrective analysis, its proposed plan for the identification of and the repair and/or replacement of the affected Products, and such other appropriate information. Supplier shall recommend a corrective action program which identifies the affected units for repair or replacement, and which minimizes disruption to the end user. OEM and Supplier shall consider, evaluate and determine the corrective action program.

Upon occurrence of an Epidemic Failure Event, Supplier shall: (a) at OEM’s option: (i) either repair and/or replace the affected Products; or (ii) provide a credit or payment to OEM in an amount equal to (a) the cost to OEM for qualified, replacement Products acceptable to OEM; and (b) all labor, equipment and processing costs incurred by OEM or third parties in the implementation of the corrective action program, including test procedures, test equipment, the testing of Products, the cost of repairing and/or replacing the affected Products; and (c) reasonable freight, transportation, customs, duties, insurance,

storage, handling and other incidental shipping costs incurred by OEM in connection with the repair and/or replacement of the affected Products.