LENOVO MINIMUM ADVERTISED PRICE (MAP) POLICY

OVERVIEW

See Annoucement Letter 06-329.

Lenovo has established a unilateral policy regarding the minimum advertised price (MAP) of selected products in the United States.

Business Partners advertising Lenovo products must comply with Lenovo's Minimum Advertised Price (MAP) policy. Lenovo reserves the right to reduce the Business Partner's incentive earnings for each documented violation of Lenovo's MAP policy. For repeated violations by an Authorized Lenovo Business Partner, Lenovo may revoke the Business Partner's authorization to purchase and resell Lenovo products. For repeated violations by a reseller who purchases TopSeller products (select Think models and Lenovo 3000 models) from distribution without a Lenovo authorization, Lenovo may revoke the reseller's ability to purchase such Lenovo products from distribution.

This policy does not extend to a Business Partner's actual resale price, which the Business Partner sets in its sole discretion.

Lenovo will unilaterally enforce this policy. Lenovo reserves the right unilaterally to reduce incentive funding otherwise accrued with regard to the product family that was advertised in violation of the MAP policy. Lenovo will not communicate with any Business Partner about any other Business Partner's advertising practices.

Lenovo's Manager for Channel Strategy and Execution is the only person authorized by Lenovo to communicate MAP policy updates, changes or decisions. No other Lenovo representative is authorized to confirm compliance with this policy, discuss it, or amend it.

This policy applies to United States resellers only. It does not apply to any resellers located outside the Unites States.

RESPONSIBILITY

Each Business Partner's organization is solely responsible for its compliance with this policy.

ADVERTISING MEDIA TO WHICH MAP APPLIES

MAP policy applies to all forms of advertising including, but not limited to:

• Print ads (inserts, magazines, catalogs, newspapers, etc.)
• Broadcast (radio and TV)
• Direct Mailers, including email
• Faxes
• Internet (banner ads, broadcast emails, destination pages, third-party sites) sponsored, placed or funded by the Solution Partner
• Billboards

MAP policy does not apply to the following:

• In-store displays, In-store banners, In-store price markings
• Quotes, contracts
• Internet site "checkout" pages where the customer makes their final purchase election

MAP RULES

General

• Lenovo will announce the list of products subject to this MAP policy
• The Minimum Advertised Price (MAP) equals the Lenovo 'List' price or 'Web' price unless otherwise documented in writing to the Business Partner by the Lenovo Manager for Channel Strategy and Execution.
• An ad may not offer a Lenovo product subject to MAP at a price less than MAP.
• Lenovo products that are preloaded with Microsoft Windows XP Home software may be advertised at up to $150 below the Lenovo 'List' or 'Web' price.

By way of example, the following advertising is compliant with the MAP policy:

• Advertising without any reference to price
• Advertising that states "Call for Price" or "Price too low to print"
• Advertising that promises to match or beat prices from competitors
• Advertising that offers free installation with purchase; free delivery with purchase; free training with purchase; free service with purchase unless the ad specifies a dollar value for these activities which nets a price that is below Lenovo's MAP.
• Advertising that offers free or low-interest financing, or no money down, or delayed payments unless the ad specifies a dollar value for these terms which nets a price that is below Lenovo's MAP.

Lenovo Sponsored Mail-In Rebates:

• A Lenovo-sponsored mail-in rebate is defined as a rebate paid directly by Lenovo to an end user regardless of where the product is purchased.
• Ads may advertise any Lenovo-sponsored promotion, and may show the after-promotion price for Lenovo-sponsored promotions.

Promotions

• Bundled promotions do not violate the policy so long as the following criteria is met:
  • If a price for the Lenovo product is noted in the ad, the Lenovo MAP must be used.
  • If mutliple Lenovo products are noted in the ad, the bundle price must be at least the sum of the individual MAP prices.
  • If Lenovo products are bundled with 3rd party products, the bundle price must at least exceed the sum of the individual MAP prices for the Lenovo products.
  • Do not state a value that is less than MAP or advertise any Lenovo product as 'free' or discounted. Gift Card / Gift Certificate
• If an advertisement offers a 'gift' with the purchase of a Lenovo product, the value of the gift may be stated, but may not be subtracted from the Lenovo product to show a net price that is below MAP.
• The Gift Card (or the like) must be redeemable towards future purchase. It cannot be used towards the current purchase if subtracting the advertised gift card value from the Lenovo product's advertised price would result in a price below MAP.

Internet Advertised Price
Advertising on the Internet is subject to MAP Policy. Any Internet advertising other than the Business Partner's 'shopping cart' must adhere to the MAP policy.

Examples of Internet Advertising that must comply with the MAP policy:

• Business Partner website and banners
• Business Partner banners or advertising on sites owned by other parties (such as portal sites and news sites)
• Listings on shopper sites that accumulate and display advertised pricing from unrelated websites if sponsored or funded by the Business Partner, or if the Business Partner submits information to the shopper site.
• Autction sites where a minimum bid is communicated by the Business Partner

"Call for Price" or "Click for Price" or "Add to Cart for Price" is acceptable. A product that has been placed in the shopping cart by the customer can be shown in the shopping cart at any price.

In addition, password protected sites for a single end user that shows pricing negotiated between the Business Partner and that specific end user may be shown at any price.

MAP Communication
Lenovo will communicate the list of products subject to MAP. The Lenovo price-list will communicate the MAP price. This will be available on the Lenovo Reseller website.

Once a product is withdrawn, it is no longer subject to MAP. In addition, Lenovo may publish a list of products that while not withdrawn are approaching the end of their marketing life and which Lenovo has determined will no longer be subject to MAP. Lenovo's Manager for Channel Strategy and Execution is the only person that is authorized to communicate MAP updates, changes and policy decisions. All communications must be in writing. MAP can be changed immediately by Lenovo without advance notice.

Resale Price
The Business Partner is free to set actual resale price for any product.

Non-compliance with MAP Policy
Lenovo reserves the right to reduce the Business Partner's incentive earnings for a particular product family for each documented violation of Lenovo's MAP policy relating to that product family. For repeated violations by an Authorized Lenovo Business Partner, Lenovo may revoke the Business Partner's authorization to purchase and resell Lenovo products. For repeated violations by a reseller who purchases TopSeller products (select Think models and Lenovo 3000 models) from distribution without a Lenovo authorization, Lenovo may revoke the reseller's ability to purchase such Lenovo products from distribution.

Questions Regarding Lenovo's MAP Policy:
MAP compliance is the responsibility of the Business Partner. All questions should be in writing and submitted to your Lenovo Client Representative. Lenovo will endeavor to provide a response to questions raised within three (3) business days from receipt of the question. In the absence of a response from Lenovo, the ad placement is at Business Partner's own risk.

Lenovo will not respond to any questions or comments from one Business Partner about the activties of any other Business Partner.

Key Points and Examples

1. Lenovo has established a unilateral policy regarding the minimum advertised price (MAP) of selected products in the United States. In general, Lenovo gathers input and feedback from Business Partners about policies and practices. However, in this case, based on U.S. anititrust law, Lenovo cannot and will not discuss this unilateral minimum advertised price policy with Business Partners outside of providing the terms of the policy and examples of compliant and non-compliant advertising.
2. All types of advertising are covered by the policy with the exception the Business Partner's in-store merchandising and Internet shopping cart.
3. The Business Partner sets their actual resale price.
4. If an advertisement is placed which does not comply with the MAP policy, Lenovo will send a written notice to a representative of the Business Partner outlining the Lenovo action to be taken.
5. A single violation is defined by a product family advertising message that runs on one or more advertising vehicles for up to a five day period.

Examples

1. One advertising message and one advertising vehicle - Such as a ThinkPad T60 advertised on a web banner at below MAP value. One ad that runs for 1 day that violates MAP would be considered a single violation. If that same ad runs for 5 straight days, it would still be considered a single violation. On the 6th day, it would be considered a second violation.
2. One advertising message and multiple advertising vehicles - Such as a ThinkPad T60 advertised on a web banner, a newspaper ad and via email at below a MAP value. Multiple ads with the same advertising message that runs for 1 day that violates MAP would be considered a single violation. If those same ads run for 5 straight days, it would still be considered a single violation. On the 6th day, it would be considered a second violation.
3. Multiple advertising messages on multiple advertising vehicles. Such as a ThinkPad T60 advertised on a web banner at below MAP and a 3000 N100 advertised in newspaper at below MAP. This would be considered 2 violations. Two separate advertising messages on two separate advertising vehicles.
4. Incentive reduction - For each violation, Lenovo will reduce the Business Partner's incentive earnings for the product family which was the subject of MAP violation based on applying a 5% rate to the previous two weeks of the violating product reported sales out or purchases from the date of the violation, plus a 5% rate to the reported sales out or purchases of the violating products for two weeks forward from the date of the violation.

The calculation will be at the family level (example. ThinkPad T60 or ThinkCentre M52).

The 5% incentive reduction will be based on the bid index of the product family sales.

The calculation will be capped at $25,000 per incident.

Lenovo reserves the right to apply approximate violation measures to situations where the exact purchase or sales out data is not available.

For repeated violations by an Authorized Lenovo Business Partner, Lenovo may revoke the Business Partner's authorization to purchase and resell Lenovo products. For repeated violations by a reseller who purchases TopSeller products (select Think models and Lenovo 3000 models) from distribution without a Lenovo authorization, Lenovo may revoke the reseller's ability to purchase such Lenovo products from distribution.

Example #1:
ThinkPad T60 advertisement at below MAP value on June 15th
Purchases of ThinkPad T60 products between June 1st and June 15th = $50,000
Sales out of ThinkPad T60 products between June 16 and June 30th = $75,000
Incentive reduction = 5% X (previous 2 weeks of purchases $50,000 + forward looking 2 weeks of sales out $75,000)
Incentive reduction = 5% X $125,000
Incentive reduction = $6,250 against any incentives earned for this product family

Example #2:
ThinkPad T60 and ThinkCentre E50 advertisement below MAP value on June 15th, June 16th, June 17th, June 18th, June 19th
Purchases of ThinkPad T60 and ThinkCentre E50 products between June 1st and June 19th = $75,000
Using the latest date to factor the window.
Sales out of ThinkPad T60 and ThinkCentre E50 products between June 15th and July 3rd = $100,000
Using the earliest date to factor the window.

Incentive reduction = 5% X (previous 2 weeks of purchases $75,000 + forward looking 2 weeks of sales out $100,000)
Incentive reduction = 5% X $175,000
Incentive reduction = $8,750 against any incentives earned for this product family