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Customer ContractsOur contractual relationships with our top three customers are governed by framework supplyagreements. Actual sales and purchases of our products are made pursuant to individual purchaseorders issued under the respective framework supply agreement. Our customers issue purchase ordersfor the supply of specified products on an as needed basis. Each framework supply agreement sets forththe general terms and conditions governing individual purchase orders, an initial minimum price list foreach of our products and a form of forecasted supply schedule for the products to be supplied. Theminimum price lists and forecasted supply schedules are non-binding. We frequently issue revised pricelists and issue new forecasted supply schedules. The framework supply agreements also:• require us to notify the customer of engineering changes to our products;• provide that we retain intellectual property rights to our products and any improvements to ourproducts and to all foreground intellectual property and technology;• grant the customer a nonexclusive, worldwide, license to use our intellectual property in thecustomer’s product offerings; and• contain certain non-disclosure, confidentiality, assignment, termination, product andmanufacturer’s warranty, inventory consignment, and indemnification provisions.ISO 9001 RegistrationsAs part of IBM UK Limited, the Havant site first achieved certification to BS 5750 Part 1 (theforerunner of ISO 9001) in 1984 and we have continued to the present day to be registered to theequivalent of ISO 9001 at our headquarters, adding to this ISO 9001 registration for the locations atSeremban (1999) and Sacramento (initially ISO 9002 in 2000 then ISO 9001 in 2001).Environmental Commitments and EU LegislationXyratex aims to identify and minimize the negative environmental impacts of its products andbusiness activities, specifically to ensure that• Xyratex complies with all relevant environmental legislation and regulations;• we reduce the use of materials, or alternatively re-use, recycle and recover materials, tominimize the overall consumption of natural resources and prevent pollution;• we support our customers in the pursuit of their environmental objectives;• we communicate appropriately on environmental matters internally and externally;• we present an image which accurately reflects our environmental performance and objectives;• we continually improve our environmental performance.Xyratex will prohibit the use of all substances identified within the RoHS Directive (restriction onthe use of certain hazardous substances) and it is Xyratex’s objective, where possible, to ensure all ofits products sold within the European Union comply with the RoHS Directive by August 2006. Xyratexis committed to designing for the environment to ensure all products are capable of being recycledwithin the requirements of the WEEE Directive (waste electrical and electronic equipment).In 2005 Xyratex successfully met the compliance requirements for ISO 14001 for its UK researchand production facility in Havant. Our strategy is to achieve ISO 14001 compliance across all of ourworldwide locations over time.33