<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 11, 1998
REGISTRATION NO. 333-56099
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
------------------------
AMENDMENT NO. 1
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
MAXTOR CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 3572 77-0123732
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION NUMBER) IDENTIFICATION NO.)
</TABLE>
510 COTTONWOOD DRIVE
MILPITAS, CALIFORNIA 95035
(408) 432-1700
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
MICHAEL R. CANNON
PRESIDENT AND CHIEF EXECUTIVE OFFICER
MAXTOR CORPORATION
510 COTTONWOOD DRIVE
MILPITAS, CALIFORNIA 95035
(408) 432-1700
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
COPIES TO:
<TABLE>
<S> <C>
GREGORY M. GALLO, ESQ. ALAN L. BELLER, ESQ.
DIANE HOLT FRANKLE, ESQ. RAYMOND B. CHECK, ESQ.
JOSEPH B. HERSHENSON, ESQ. CLEARY, GOTTLIEB, STEEN & HAMILTON
GRAY CARY WARE & FREIDENRICH LLP ONE LIBERTY PLAZA
400 HAMILTON AVENUE NEW YORK, NEW YORK 10006
PALO ALTO, CALIFORNIA 94301-1825 (212) 225-2000
(650) 328-6561
</TABLE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are being offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended (the "Securities Act") check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration number of the earlier effective registration statement for the same
offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [ ]
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON
SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.
================================================================================
<PAGE> 2
EXPLANATORY NOTE
Amendment No. 1 is being filed solely for the purpose of making certain
changes to Part II of the Registration Statement and filing certain exhibits to
the Registration Statement.
<PAGE> 3
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth all expenses, other than the underwriting
discounts and commissions payable by the Registrant in connection with the sale
of the Common Stock being registered. The Company is paying all of the expenses
incurred on behalf of the Selling Stockholder (other than underwriting discounts
and commissions). All amounts shown are estimates except for the registration
fee and the NASD filing fee.
<TABLE>
<CAPTION>
AMOUNT TO BE
PAID
------------
<S> <C>
Registration fee............................................ $198,276
NASD filing fee............................................. 30,500
Nasdaq National Market application fee...................... *
Blue sky qualification fees and expenses.................... 10,000
Printing and engraving expenses............................. 102,000
Legal fees and expenses..................................... *
Accounting fees and expenses................................ 225,000
Transfer agent and registrar fees........................... 8,000
Miscellaneous expenses...................................... *
--------
Total....................................................... $ *
========
</TABLE>
- ---------------
* To be supplied by amendment.
ITEM 14. INDEMNIFICATION OF OFFICERS AND DIRECTORS
Section 145 of the Delaware General Corporation Law permits indemnification
of officers, directors and other corporate agents under certain circumstances
and subject to certain limitations. The Registrant's Amended and Restated
Certificate of Incorporation and Bylaws provide that the Registrant shall
indemnify its directors, officers, employees and agents to the full extent
permitted by Delaware General Corporation Law, including in circumstances in
which indemnification is otherwise discretionary under Delaware law. In
addition, the Registrant intends to enter into separate indemnification
agreements with its directors, officers and certain employees which would
require the Registrant, among other things, to indemnify them against certain
liabilities which may arise by reason of their status or service (other than
liabilities arising from willful misconduct of a culpable nature). The
Registrant also intends to maintain director and officer liability insurance, if
available on reasonable terms.
These indemnification provisions and the indemnification agreement to be
entered into between the Registrant and its officers and directors may be
sufficiently broad to permit indemnification of the Registrant's officers and
directors for liabilities (including reimbursement of expenses incurred) arising
under the Securities Act.
The Underwriting Agreements filed as Exhibit 1.1 to this Registration
Statement provide for indemnification by the Underwriters of the Registrant and
its officers and directors for certain liabilities arising under the Securities
Act, or otherwise.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
Since January 1994, the Company has sold and issued the following
unregistered securities:
(a) In February 1994, the Company sold an aggregate of 19,480,000
shares of the Company's Series A Common Stock to four Hyundai affiliated
entities. The purchase price in this transaction was $7.70 per share of
Series A Common Stock, resulting in aggregate proceeds of approximately
$150 million.
II-1
<PAGE> 4
(b) [In January 1996, upon the merger of HEA with Maxtor, following
assignment by Purchaser to HEA all pre-merger issued and outstanding shares
of Maxtor were canceled and the Company issued 300 shares of Common Stock
to HEI.]
(c) In June 1996, the Company entered into an exchange agreement with
HEA whereby HEA exchanged 300 shares of Common Stock for 58,208,955 shares
of Series A Preferred Stock, $.001 par value.
(d) In December 1997, the Company and HEA entered into a Debt Payment
and Stock Purchase Agreement pursuant to which the Company issued
29,850,746 shares of the Company's Series A Preferred Stock to HEA as
payment for the cancellation of $200 million owed to HEA by the Company.
The price in this transaction was $6.70 per share of Series A Preferred
Stock.
(e) From December 1997 through March 1998, pursuant to the Plan, the
Company issued an aggregate of 7,563 shares of the Common Stock to four
stockholders for an aggregate of $45,375 and issued options to purchase an
aggregate of shares of Common Stock with an exercise price
equal to the fair market value on the date of grant as determined by the
Board to optionholders.
There were no underwriters employed in connection with any of the
transactions set forth in Item 15.
For additional information concerning these equity investment transactions,
reference is made to the information contained under the caption "Certain
Transactions" in the form of Prospectus included herein.
The issuances described in Items 15(a) through 15(d) were deemed to be
exempt from registration under the Securities Act in reliance on Section 4(2) of
the Securities Act as transactions by an issuer not involving a public offering.
Certain issuances described in Item 15(e) were deemed exempt from registration
under the Securities Act in reliance on Section 4(2) or Rule 701 promulgated
thereunder as transactions pursuant to compensatory benefit plans and contracts
relating to compensation. The recipients of securities in each such transaction
represented their intention to acquire the securities for investment only and
not with a view to or for sale in connection with any distribution thereof and
appropriate legends were affixed to the share certificates and other instruments
issued in such transactions. All recipients either received adequate information
about the Company or had access, through employment or other relationships, to
such information.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------- -----------------------
<C> <S>
1.1 Form of U.S. Underwriting Agreement.++
1.2 Form of International Underwriting Agreement.++
3.1 Amended and Restated Certificate of Incorporation of
Registrant dated June 6, 1996.+
3.2 Amended and Restated Certificate of Incorporation of
Registrant dated , 1998.++
3.3 Amended and Restated Bylaws of Registrant dated June 6,
1996.+
3.4 Amended and Restated bylaws of Registrant dated ,
1998.++
4.1 Specimen certificate representing the Common Stock.++
4.2 Stockholder Agreement.++
5.1 Opinion of Gray Cary Ware & Freidenrich LLP.++
10.1 Form of Indemnification Agreement between Registrant and
Registrant's directors and officers.+
10.2 Indenture dated as of March 1, 1987 between Registrant and
Security Pacific National Bank, as Trustee.+
</TABLE>
II-2
<PAGE> 5
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------- -----------------------
<C> <S>
10.3 (1) Grant Agreement dated 25 October 1990 between the Industrial
Development Authority, Maxtor Ireland Limited and
Registrant.
10.4 (3) Security Agreement between Registrant and the CIT
Group/Equipment Financing, Inc., dated September 18, 1992.
10.5 (3) Deed of Priorities among Maxtor (Hong Kong) Limited,
Registrant and General Electric Capital Corporation, dated
September 25, 1992.
10.6 (3) Lease among Dares Developments (Woking) Limited, Maxtor
Europe Limited and Registrant, dated October 1992.
10.7 (2) Stock Purchase and Asset Acquisition Agreement among David
A. Eeg, Gene E. Bowles, Jr., CP Acquisition, L.P. No. 4A, CP
Acquisition, L.P. No. 4B, Capital Partners, Inc., FGS, Inc.,
Registrant, Storage Dimensions, Inc. and SDI Acquisition
Corporation, dated December 4, 1992.
10.10 (5) Lease Agreement for Premises Located at 1821 Lefthand
Circle, Suite D, between Registrant and Pratt Land Limited
Liability Company, dated October 19, 1994.
10.11 (5) Lease Agreement for Premises Located at 1841 Lefthand Circle
between Registrant and Pratt Land Limited Liability Company,
dated October 19, 1994.
10.12 (5) Lease Agreement for Premises Located at 1851 Lefthand Circle
between Registrant and Pratt Land Limited Liability Company,
dated October 19, 1994.
10.13 (5) Lease Agreement for Premises Located at 2121 Miller Drive
between Registrant and Pratt Land Limited Liability Company,
dated October 19, 1994.
10.14 (5) Lease Agreement for Premises Located at 2190 Miller Drive
between Registrant and Pratt Land Limited Liability Company,
dated October 19, 1994.
10.15 (6) Lease Agreement by and between 345 Partnership and
Registrant, dated February 24, 1995.
10.16 (6) Lease Agreement for Premises Located at 1900 Pike Road,
Suite A Longmont, CO, between Registrant as Tenant and Pratt
Land Limited Liability Company as Landlord, dated February
24, 1995.
10.17 (6) Lease Agreement for Premises Located at 2040 Miller Drive
Suite A, B, & C between Registrant as Tenant and Pratt Land
Limited Liability Company as Landlord, dated February 24,
1995.
10.18 (6) Manufacturing and Purchase Agreement by and Between
Registrant and Hyundai Electronics Industries Co., Ltd.,
dated April 27, 1995.
10.19 (6) Lease Agreement for Premises Located at 2040 Miller Drive,
Suites D, E, & F, Longmont, CO, between Registrant as Tenant
and Pratt Management Company, LLC as Landlord.
10.20 (7) Memorandum of Understanding concerning Guarantee by Hyundai
Electronics Co., Ltd. of Credit Facility for Registrant,
dated July 17, 1995.
10.21 (7) Waiver to Financing Agreement among Registrant and The CIT
Group/Business Credit, Inc., dated August 2, 1995.
10.22 (9) Credit Agreement among Registrant and The Initial Lenders
and the Issuing Bank and Citibank, N.A., dated August 31,
1995.
10.23 (9) The Guaranty and Recourse Agreement among Registrant and
Hyundai Electronics Industries Co., Ltd., dated August 31,
1995.
10.24 (9) Waiver to Financing Agreement among Registrant and the CIT
Group/Business Credit, Inc., and Assignment Agreement among
Registrant, the CIT Group/Business Credit, Inc., and Finova
Capital Corporation, dated October 11, 1995.
10.25 (9) Amendment to the Financing Agreement among Registrant and
the CIT Group/ Business Credit, Inc., dated October 17,
1995.
10.26 (10) First Supplemental Indenture, dated as of January 11, 1996,
between Registrant and State Street Bank and Trust Company.
</TABLE>
II-3
<PAGE> 6
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------- -----------------------
<C> <S>
10.27 (10) Credit Agreement, dated as of December 29, 1995 between
Registrant and Hyundai Electronics America.
10.28 (12) Maxtor Corporation 1996 Stock Option Plan.**
10.29 (12) Intercompany Loan Agreement, dated as of April 10, 1996,
between Registrant and Hyundai Electronics America.
10.30 (12) Receivables Purchase and Sale Agreement, dated as of March
30, 1996, among Registrant and Corporate Receivables
Corporation and Citicorp North America, Incorporated.
10.31 (11) Recapitalization Agreement among the Registrant,
International Manufacturing Services, Incorporated and
certain investors, dated as of May 21, 1996.
10.32 (11) Redemption Agreement between Registrant and International
Manufacturing Services, Incorporated, dated as of May 21,
1996.
10.33 (11) Manufacturing Services Agreement between Registrant and
International Manufacturing Services, Incorporated, dated
June 13, 1996.*
10.34 (12) Credit Facility, dated as of July 31, 1996, between
Registrant and Hyundai Electronics America.
10.35 (13) Exchange Agreement effective June 18, 1996, between Maxtor
Corporation and Hyundai Electronics America.
10.36 (14) 364-Day Credit Agreement, dated August 29, 1996, among
Registrant, Citibank, N.A., and Syndicate Banks.
10.37 (14) Credit Agreement, dated August 29, 1996, among Registrant,
Citibank, N.A., and Syndicate Banks.
10.38 (15) Employment Agreement between Michael R. Cannon and
Registrant, dated June 17, 1996.**
10.39 (15) Employment Agreement between Paul J. Tufano and Registrant,
dated July 12, 1996.**
10.40 (15) Employment Agreement between William Roach and Registrant,
dated December 13, 1996.**
10.41 (16) Intercompany Loan Agreement, dated as of April 10, 1997,
between Registrant and Hyundai Electronics America.
10.42 (17) Debt Payment and Stock Purchase Agreement, dated as of
December 12, 1997, between Registrant and Hyundai
Electronics America.
10.43 (17) Amendment to August 29, 1996 364-Day Credit Agreement, dated
August 27, 1997, among Registrant, Citibank, N.A. and
Syndicate Banks.
10.44 Employment Agreement between Philip Duncan and Registrant
dated July 15, 1996.**+
10.45 Receivables Purchase and Sale Agreement dated as of April 8,
1998, among Maxtor Receivables Corporation, Registrant,
Corporate Receivables Corporation, Citicorp North America
and Bankers Trust Company.+
10.46 Intercompany Loan Agreement dated as of April 10, 1998,
between Hyundai Electronics America and Registrant.+
10.47 Credit Agreement between Bank of America and Registrant
dated December 26, 1996.+
10.48 Employment Agreement between K.H. Teh and Registrant, dated
March 23, 1997.**+
10.49 Lease Agreement between Milpitas Oak Creek Delaware, Inc.
and Registrant dated as of February 23, 1998.+
10.50 Sublease Agreement, dated as of April 1, 1998, between
Registrant and Sony Electronics, Inc.++
</TABLE>
II-4
<PAGE> 7
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------- -----------------------
<C> <S>
10.51 Business Agreement dated as of April 30, 1998, between
Registrant and Texas Instruments Incorporated.*
10.52 Volume Purchase Agreement dated as of January 1, 1998,
between Registrant and Lucent Technologies, Inc.*
10.53 Land Lease between Housing Development Board and Maxtor
Singapore Limited dated as of March 28, 1991.+
10.54 R/3 Software End-User Value License Agreement between SAP
Korea Ltd. and Hyundai Information Technology Co. Ltd. dated
as of June 30, 1996.+
10.55 Sublicense Agreement between Hyundai Electronics Industries
Co., Ltd., and Maxtor Corporation dated as of January 1,
1996.+
10.56 Tax Allocation Agreement dated as of July 21, 1995 among
Hyundai Electronics America, registrant and certain other
subsidiaries.+
10.57 (8) Agreement and Plan of Merger dated November 2, 1995 between
Registrant, Hyundai Electronics America and Hyundai
Acquisition, Inc.
10.58 Tax Indemnification Agreement and Amendment to Tax
Allocation Agreement dated , 1998.++
10.59 Indemnity Agreement between HEI and Registrant dated
, 1998.++
10.60 License Agreement between Registrant and HEI dated
, 1998.++
10.61 (3) Stock Purchase Agreement between Registrant and Hyundai
Electronics Industries Co., Ltd., Hyundai Heavy Industries
Co., Ltd., Hyundai Corporation, and Hyundai Merchant Marine
Co., Ltd., dated September 10, 1993.
10.62 Purchase Agreement between Registrant and MMC.++
10.63 1998 Restricted 1998 Stock Plan.++**
10.64 Form of Change of Control Agreement.++**
10.65 Amended and Restated 1996 Stock Option Plan.++**
21.1 Subsidiaries of Registrant.+
23.1 Consent of Coopers & Lybrand L.L.P., Independent
Accountants.+
23.2 Consent of Ernst & Young LLP, Independent Auditors.+
23.3 Consent of Gray Cary Ware & Freidenrich, LLP.+
24.1 Power of Attorney (included on signature page).+
27.1 Financial Data Schedule (EDGAR filed version only).+
</TABLE>
- ---------------
* This Exhibit has been filed separately with the Commission pursuant to an
application for confidential treatment. The confidential portions of this
Exhibit have been omitted and are marked by an asterisk.
** Management contract, or compensatory plan or arrangement
+ Previously filed.
++ To be filed by amendment.
(1) Incorporated by reference to exhibits to Annual Report on Form 10-K
effective June 25, 1992.
(2) Incorporated by reference to exhibits of Form 8-K filed January 8, 1993
(3) Incorporated by reference to exhibits to Annual Report on Form 10-K
effective May 27, 1993
(4) [Incorporated by reference to exhibits of Form 10-Q filed February 7, 1994]
(5) Incorporated by reference to exhibits of Form 10-Q filed February 7, 1995
(6) Incorporated by reference to exhibits to Annual Report on Form 10-K
effective June 23, 1995
(7) Incorporated by reference to exhibits of Form 10-Q filed August 14, 1995
(8) Incorporated by reference to exhibit III of Schedule 14D-9 filed November
9, 1995
(9) Incorporated by reference to exhibits of Form 10-Q filed November 14, 1996
II-5
<PAGE> 8
(10) Incorporated by reference to exhibits of Form 10-Q filed February 14, 1996
(11) Incorporated by reference to exhibits of Form 8-K filed June 28, 1996
(12) Incorporated by reference to exhibits of Form 10-K filed July 1, 1996
(13) Incorporated by reference to exhibits of Form 10-Q filed August 13, 1996
(14) Incorporated by reference to exhibits of Form 8-K filed September 13, 1996
(15) Incorporated by reference to exhibits of Form 10-K filed March 26, 1997
(16) Incorporated by reference to exhibits of Form 10-Q filed May 12, 1997
(17) Incorporated by reference to exhibits of Form 10-K filed April 10, 1998
(b) FINANCIAL STATEMENT SCHEDULES
Schedules not listed above have been omitted because the information
required to be set forth therein is not applicable or is shown in the financial
statements or notes thereto.
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes to provide to the Underwriters
at the closing specified in the Underwriting Agreement certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.
Insofar as indemnification by the Registrant for liabilities arising under
the Securities Act may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the provisions referenced in Item 14 of
this Registration Statement or otherwise, the Registrant has been advised that
in the opinion of the Commission such indemnification is against public policy
as expressed in the Securities Act, and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer,
or controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered hereunder, the Registrant
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities
Act, the information omitted from the form of Prospectus filed as part of
this Registration Statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective; and
(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of Prospectus shall
be deemed to be a new Registration Statement relating to the securities
offered therein, and the Offering of such securities at the time shall be
deemed to be the initial bona fide offering thereof.
II-6
<PAGE> 9
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to its Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Milpitas, County of Santa Clara, State of California, on the 11th day of June
1998.
MAXTOR CORPORATION
By: /s/ MICHAEL R. CANNON
------------------------------------
Michael R. Cannon
President and Chief Executive
Officer
(Principal Executive Officer)
Pursuant to the requirements of the Securities Act, this Amendment No. 1 to
the Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ DR. CHONG SUP PARK* Chairman of the Board June 11, 1998
- -----------------------------------------------------
Dr. Chong Sup Park
/s/ MICHAEL R. CANNON President, Chief Executive June 11, 1998
- ----------------------------------------------------- Officer and Director
Michael R. Cannon
/s/ PAUL J. TUFANO* Vice President, Finance, Chief June 11, 1998
- ----------------------------------------------------- Financial Officer and Principal
Paul J. Tufano Accounting Officer
/s/ CHANG SEE CHUNG* Director June 11, 1998
- -----------------------------------------------------
Chang See Chung
/s/ CHARLES HILL* Director June 11, 1998
- -----------------------------------------------------
Charles Hill
/s/ CHARLES F. CHRIST* Director June 11, 1998
- -----------------------------------------------------
Charles F. Christ
/s/ Y.H. KIM* Director June 11, 1998
- -----------------------------------------------------
Y.H. Kim
/s/ PHILIP S. PAUL* Director June 11, 1998
- -----------------------------------------------------
Philip S. Paul
*By: /s/ MICHAEL R. CANNON June 11, 1998
------------------------------------------------
Michael R. Cannon
(Attorney-in-fact)
</TABLE>
II-7
<PAGE> 10
MAXTOR CORPORATION
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
ALLOWANCE FOR DOUBTFUL ACCOUNTS
(IN THOUSANDS)
<TABLE>
<CAPTION>
ADDITIONS CHARGED
BALANCE AT TO COST DEDUCTIONS/ BALANCE AT
PERIOD ENDED BEGINNING OF PERIOD AND EXPENSES (RECOVERIES(1)) END OF PERIOD
------------ ------------------- ----------------- --------------- -------------
<S> <C> <C> <C> <C>
March 30, 1996....................... $3,850 $1,232 $ (114) $5,196
December 28, 1996.................... $5,196 $1,355 $1,296 $5,255
December 27, 1997.................... $5,255 $1,000 $2,682 $3,573
</TABLE>
- ---------------
(1) Uncollectible accounts written off, net of recoveries.
S-1
<PAGE> 11
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------- -----------------------
<C> <S>
1.1 Form of U.S. Underwriting Agreement.++
1.2 Form of International Underwriting Agreement.++
3.1 Amended and Restated Certificate of Incorporation of
Registrant dated June 6, 1996.+
3.2 Amended and Restated Certificate of Incorporation of
Registrant dated , 1998.++
3.3 Amended and Restated Bylaws of Registrant dated June 6,
1996.+
3.4 Amended and Restated bylaws of Registrant dated ,
1998.++
4.1 Specimen certificate representing the Common Stock.++
4.2 Stockholder Agreement.++
5.1 Opinion of Gray Cary Ware & Freidenrich LLP.++
10.1 Form of Indemnification Agreement between Registrant and
Registrant's directors and officers.+
10.2 Indenture dated as of March 1, 1987 between Registrant and
Security Pacific National Bank, as Trustee.+
10.3 (1) Grant Agreement dated 25 October 1990 between the Industrial
Development Authority, Maxtor Ireland Limited and
Registrant.
10.4 (3) Security Agreement between Registrant and the CIT
Group/Equipment Financing, Inc., dated September 18, 1992.
10.5 (3) Deed of Priorities among Maxtor (Hong Kong) Limited,
Registrant and General Electric Capital Corporation, dated
September 25, 1992.
10.6 (3) Lease among Dares Developments (Woking) Limited, Maxtor
Europe Limited and Registrant, dated October 1992.
10.7 (2) Stock Purchase and Asset Acquisition Agreement among David
A. Eeg, Gene E. Bowles, Jr., CP Acquisition, L.P. No. 4A, CP
Acquisition, L.P. No. 4B, Capital Partners, Inc., FGS, Inc.,
Registrant, Storage Dimensions, Inc. and SDI Acquisition
Corporation, dated December 4, 1992.
10.10 (5) Lease Agreement for Premises Located at 1821 Lefthand
Circle, Suite D, between Registrant and Pratt Land Limited
Liability Company, dated October 19, 1994.
10.11 (5) Lease Agreement for Premises Located at 1841 Lefthand Circle
between Registrant and Pratt Land Limited Liability Company,
dated October 19, 1994.
10.12 (5) Lease Agreement for Premises Located at 1851 Lefthand Circle
between Registrant and Pratt Land Limited Liability Company,
dated October 19, 1994.
10.13 (5) Lease Agreement for Premises Located at 2121 Miller Drive
between Registrant and Pratt Land Limited Liability Company,
dated October 19, 1994.
10.14 (5) Lease Agreement for Premises Located at 2190 Miller Drive
between Registrant and Pratt Land Limited Liability Company,
dated October 19, 1994.
10.15 (6) Lease Agreement by and between 345 Partnership and
Registrant, dated February 24, 1995.
10.16 (6) Lease Agreement for Premises Located at 1900 Pike Road,
Suite A Longmont, CO, between Registrant as Tenant and Pratt
Land Limited Liability Company as Landlord, dated February
24, 1995.
10.17 (6) Lease Agreement for Premises Located at 2040 Miller Drive
Suite A, B, & C between Registrant as Tenant and Pratt Land
Limited Liability Company as Landlord, dated February 24,
1995.
10.18 (6) Manufacturing and Purchase Agreement by and Between
Registrant and Hyundai Electronics Industries Co., Ltd.,
dated April 27, 1995.
</TABLE>
<PAGE> 12
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------- -----------------------
<C> <S>
10.19 (6) Lease Agreement for Premises Located at 2040 Miller Drive,
Suites D, E, & F, Longmont, CO, between Registrant as Tenant
and Pratt Management Company, LLC as Landlord.
10.20 (7) Memorandum of Understanding concerning Guarantee by Hyundai
Electronics Co., Ltd. of Credit Facility for Registrant,
dated July 17, 1995.
10.21 (7) Waiver to Financing Agreement among Registrant and The CIT
Group/Business Credit, Inc., dated August 2, 1995.
10.22 (9) Credit Agreement among Registrant and The Initial Lenders
and the Issuing Bank and Citibank, N.A., dated August 31,
1995.
10.23 (9) The Guaranty and Recourse Agreement among Registrant and
Hyundai Electronics Industries Co., Ltd., dated August 31,
1995.
10.24 (9) Waiver to Financing Agreement among Registrant and the CIT
Group/Business Credit, Inc., and Assignment Agreement among
Registrant, the CIT Group/Business Credit, Inc., and Finova
Capital Corporation, dated October 11, 1995.
10.25 (9) Amendment to the Financing Agreement among Registrant and
the CIT Group/ Business Credit, Inc., dated October 17,
1995.
10.26 (10) First Supplemental Indenture, dated as of January 11, 1996,
between Registrant and State Street Bank and Trust Company.
10.27 (10) Credit Agreement, dated as of December 29, 1995 between
Registrant and Hyundai Electronics America.
10.28 (12) Maxtor Corporation 1996 Stock Option Plan.**
10.29 (12) Intercompany Loan Agreement, dated as of April 10, 1996,
between Registrant and Hyundai Electronics America.
10.30 (12) Receivables Purchase and Sale Agreement, dated as of March
30, 1996, among Registrant and Corporate Receivables
Corporation and Citicorp North America, Incorporated.
10.31 (11) Recapitalization Agreement among the Registrant,
International Manufacturing Services, Incorporated and
certain investors, dated as of May 21, 1996.
10.32 (11) Redemption Agreement between Registrant and International
Manufacturing Services, Incorporated, dated as of May 21,
1996.
10.33 (11) Manufacturing Services Agreement between Registrant and
International Manufacturing Services, Incorporated, dated
June 13, 1996.
10.34 (12) Credit Facility, dated as of July 31, 1996, between
Registrant and Hyundai Electronics America.
10.35 (13) Exchange Agreement effective June 18, 1996, between Maxtor
Corporation and Hyundai Electronics America.
10.36 (14) 364-Day Credit Agreement, dated August 29, 1996, among
Registrant, Citibank, N.A., and Syndicate Banks.
10.37 (14) Credit Agreement, dated August 29, 1996, among Registrant,
Citibank, N.A., and Syndicate Banks.
10.38 (15) Employment Agreement between Michael R. Cannon and
Registrant, dated June 17, 1996.**
10.39 (15) Employment Agreement between Paul J. Tufano and Registrant,
dated July 12, 1996.**
10.40 (15) Employment Agreement between William Roach and Registrant,
dated December 13, 1996.**
10.41 (16) Intercompany Loan Agreement, dated as of April 10, 1997,
between Registrant and Hyundai Electronics America.
</TABLE>
<PAGE> 13
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
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<C> <S>
10.42 (17) Debt Payment and Stock Purchase Agreement, dated as of
December 12, 1997, between Registrant and Hyundai
Electronics America.
10.43 (17) Amendment to August 29, 1996 364-Day Credit Agreement, dated
August 27, 1997, among Registrant, Citibank, N.A. and
Syndicate Banks.
10.44 Employment Agreement between Philip Duncan and Registrant
dated July 15, 1996.**+
10.45 Receivables Purchase and Sale Agreement dated as of April 8,
1998, among Maxtor Receivables Corporation, Registrant,
Corporate Receivables Corporation, Citicorp North America
and Bankers Trust Company.+
10.46 Intercompany Loan Agreement dated as of April 10, 1998,
between Hyundai Electronics America and Registrant.+
10.47 Credit Agreement between Bank of America and Registrant
dated December 26, 1996.+
10.48 Employment Agreement between K.H. Teh and Registrant, dated
March 23, 1997.**+
10.49 Lease Agreement between Milpitas Oak Creek Delaware, Inc.
and Registrant dated as of February 23, 1998.+
10.50 Sublease Agreement, dated as of April 1, 1998, between
Registrant and Sony Electronics, Inc.++
10.51 Business Agreement dated as of April 30, 1998, between
Registrant and Texas Instruments Incorporated.*
10.52 Volume Purchase Agreement dated as of January 1, 1998,
between Registrant and Lucent Technologies, Inc.*
10.53 Land Lease between Housing Development Board and Maxtor
Singapore Limited dated as of March 28, 1991.+
10.54 R/3 Software End-User Value License Agreement between SAP
Korea Ltd. and Hyundai Information Technology Co. Ltd. dated
as of June 30, 1996.+
10.55 Sublicense Agreement between Hyundai Electronics Industries
Co., Ltd., and Maxtor Corporation dated as of January 1,
1996.+
10.56 Tax Allocation Agreement dated as of July 21, 1995 among
Hyundai Electronics America, registrant and certain other
subsidiaries.+
10.57 (8) Agreement and Plan of Merger dated November 2, 1995 between
Registrant, Hyundai Electronics America and Hyundai
Acquisition, Inc.
10.58 Tax Indemnification Agreement and Amendment to Tax
Allocation Agreement dated , 1998.++
10.59 Indemnity Agreement between HEI and Registrant dated
, 1998.++
10.60 License Agreement between Registrant and HEI dated
, 1998.++
10.61 (3) Stock Purchase Agreement between Registrant and Hyundai
Electronics Industries Co., Ltd., Hyundai Heavy Industries
Co., Ltd., Hyundai Corporation, and Hyundai Merchant Marine
Co., Ltd., dated September 10, 1993.
10.62 Purchase Agreement between Registrant and MMC.++
10.63 1998 Restricted 1998 Stock Plan.++**
10.64 Form of Change of Control Agreement.++**
10.65 Amended and Restated 1996 Stock Option Plan.++**
21.1 Subsidiaries of Registrant+
23.1 Consent of Coopers & Lybrand L.L.P., Independent
Accountants.+
23.2 Consent of Ernst & Young LLP, Independent Auditors.+
23.3 Consent of Gray Cary Ware & Freidenrich, LLP.+
</TABLE>
<PAGE> 14
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
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<C> <S>
24.1 Power of Attorney (included on signature page).+
27.1 Financial Data Schedule (EDGAR filed version only).+
</TABLE>
- ---------------
* This Exhibit has been filed separately with the Commission pursuant to an
application for confidential treatment. The confidential portions of this
Exhibit have been omitted and are marked by an asterisk.
** Management contract, or compensatory plan or arrangement
+ Previously filed.
++ To be filed by amendment.
(1) Incorporated by reference to exhibits to Annual Report on Form 10-K
effective June 25, 1992.
(2) Incorporated by reference to exhibits of Form 8-K filed January 8, 1993
(3) Incorporated by reference to exhibits to Annual Report on Form 10-K
effective May 27, 1993
(4) [Incorporated by reference to exhibits of Form 10-Q filed February 7, 1994]
(5) Incorporated by reference to exhibits of Form 10-Q filed February 7, 1995
(6) Incorporated by reference to exhibits to Annual Report on Form 10-K
effective June 23, 1995
(7) Incorporated by reference to exhibits of Form 10-Q filed August 14, 1995
(8) Incorporated by reference to exhibit III of Schedule 14D-9 filed November
9, 1995
(9) Incorporated by reference to exhibits of Form 10-Q filed November 14, 1996
(10) Incorporated by reference to exhibits of Form 10-Q filed February 14, 1996
(11) Incorporated by reference to exhibits of Form 8-K filed June 28, 1996
(12) Incorporated by reference to exhibits of Form 10-K filed July 1, 1996
(13) Incorporated by reference to exhibits of Form 10-Q filed August 13, 1996
(14) Incorporated by reference to exhibits of Form 8-K filed September 13, 1996
(15) Incorporated by reference to exhibits of Form 10-K filed March 26, 1997
(16) Incorporated by reference to exhibits of Form 10-Q filed May 12, 1997
(17) Incorporated by reference to exhibits of Form 10-K filed April 10, 1998
<PAGE> 1
EXHIBIT 10.51
BUSINESS AGREEMENT
PREAMBLE
This Business Agreement ("Agreement"), effective April 30, 1998
("Effective Date") is made by and between Maxtor Corporation, a Delaware
corporation, having principal places of business at 510 Cottonwood Drive,
Milpitas, California 95035 and 2190 Miller Drive, Longmont, Colorado 80501
("Maxtor"), and Texas Instruments Incorporated, a Delaware corporation, and its
wholly owned subsidiaries having its principal place of business at 8505 Forest
Lane, Dallas Texas 75243 ("TI").
RECITALS
WHEREAS, TI is in the business of designing, manufacturing and selling
integrated circuits ("Product") for hard disk drives and wishes to sell such
Product to manufacturers of disk drives such as Maxtor, (line items on Exhibit
A);
WHEREAS, "Maxtor" shall include Maxtor Peripherals (S) Pte Ltd, having a
place of business at No 2 Ang Mo Kio Street 63, Ang Mo Kio Industrial Park 3,
Singapore 569111;
WHEREAS, Maxtor wishes to secure a supply of Product and to purchase
quantities of such Product from TI meeting the specifications set forth on
Exhibit A and for use in Maxtor's application ("Application");
WHEREAS, TI shall manufacture and deliver to Maxtor, its agents, and/or
its subsidiaries, Product as set forth in this Agreement, including its Terms
and Conditions;
WHEREAS, the parties recognize that the disk drive market is very
demanding of quality, timeliness, and price, and that the essence of the
relationship between Maxtor and TI is flexibility; timely delivery of necessary
quantities of qualified, high-yield Products; and low costs;
WHEREAS, if problems should be encountered with respect to any aspect of
this Agreement or if the parties should encounter any problems not covered by
this Agreement, Maxtor and TI shall discuss them in a cooperative and sincere
spirit and attempt to arrive at a mutually acceptable solution; and
WHEREAS, this Agreement commences on the Effective Date and terminates
on December 31, 2002, ("Termination Date") unless terminated earlier;
NOW, THEREFORE, FOR GOOD AND VALUABLE CONSIDERATION, THE RECEIPT AND
ADEQUACY OF WHICH IS HEREBY ACKNOWLEDGED, AND IN CONSIDERATION OF THE ABOVE
PREMISES AND THE MUTUAL PROMISES CONTAINED IN THIS AGREEMENT, THE PARTIES AGREE
AS FOLLOWS:
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TERMS AND CONDITIONS
ARTICLE I - PRODUCTS
1.1 Product.
1.1.1 Purchase and Supply. Maxtor wishes to secure a supply of
Product and to purchase quantities of such Product from TI meeting the
respective specifications set forth on Exhibit A hereto which, when agreed upon
in writing by the parties shall be integrated to this Agreement, and for use in
Maxtor's Application. TI wishes to supply such Product to Maxtor on such
conditions and on the terms and conditions of this Agreement. Therefore, subject
to the terms and conditions of this Agreement, Maxtor will purchase and TI will
supply Product for the term of this Agreement. Maxtor's obligation to purchase
Product from TI is contingent upon TI's Product meeting agreed upon time to
market requirements, Product specifications and functional requirements, price
requirements, and the other terms and conditions of this Agreement. Nothing in
this Agreement shall be construed as an obligation for Maxtor to purchase any
Products, except as expressly provided in any Order (as defined below) issued by
Maxtor.
1.1.2 Specification. As of the Effective Date, Exhibit A may not be
attached. The parties will from time to time agree in writing upon
specifications for the Product or amendments to agreed-upon specifications and
such agreed-upon specifications or amendments shall become part of Exhibit A and
shall be incorporated into this Agreement when each such written agreement is
made.
1.1.3 Packing. Unless otherwise specified in this Agreement or an
Order, all Products are to be packed and identified in accordance with sound
commercial practices to:
(i) obtain reasonable transportation rates;
(ii) comply with requirements of common carriers; and
(iii) ensure arrival at the intended destination without
damage.
Packages shall be construed for handling with a mechanical device. A complete
packing list specifying Maxtor's applicable purchase order number, quantity of
Products shipped, and part number shall be enclosed with all shipments under
this Agreement. TI shall mark each container with necessary shipping
information, including the applicable purchase order number, date of shipment,
and name and address of TI and Maxtor.
1.1.4 Freedom of Action. Nothing in this Agreement shall prevent
either party from engaging in similar business with other persons, including,
without limit, competitors of the other party, provided that the confidentiality
terms of this Agreement are not breached.
1.1.5 Sole Source. TI will use due care to provide an uninterrupted
supply of Product.
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<PAGE> 3
1.2 Warranty. Each of TI's warranties made hereunder is materially
relied upon by Maxtor in entering into this Agreement or any Order.
1.2.1 Authority Warranty. Each party represents and warrants that
all corporate action necessary for the authorization, execution and delivery of
this Agreement by such party and the performance of its obligations under this
Agreement has been taken. Further, each party represents and warrants that
neither the execution of this Agreement nor any performance of this Agreement
shall conflict with or be prohibited by any interest, agreement, obligation,
contract, order, law, regulation, or duty, oral or written, to which it is a
party by which it is bound.
1.2.2 Product Warranty. TI warrants the Product, within three (3)
years after shipment, to:
(i) have a clear title, free of all security interests,
encumbrances, or liens;
(ii) be new
(iii) be free from defects in workmanship and materials;
(iv) conform to applicable agreed upon specifications,
drawings, or other descriptions given, including those set forth in this
Agreement;
The above is the Product Warranty ("Product Warranty"). A unit of Product which
meets all of the standards of the Product Warranty shall be a Conforming Product
("Conforming Product"). Replaced Product shall be subject to the provisions of
this warranty to the same extent as the original Product except that the
warranty period shall run from the last delivery date of the Replaced Product.
1.2.3 Price Warranty. [*]
1.2.4 Scope of Warranty. The above warranties shall run to Maxtor.
(i) Warranty Disclaimer. EXCEPT FOR THE WARRANTIES SET FORTH
ABOVE, TI GRANTS NO OTHER WARRANTIES, EITHER EXPRESS OR IMPLIED, FOR THE
PRODUCT, AND DISCLAIMS ALL IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR
A PARTICULAR PURPOSE.
1.3 Remedies. If TI breaches its warranties as contained herein, TI's
sole, maximum liability shall be (by mutual agreement of the parties) to repair,
replace, or credit Maxtor's account for any goods which are returned by Maxtor
during the warranty period set forth above, provided that (a) TI is promptly
notified in writing upon discovery by Maxtor that the Products failed to conform
to this contract with a reasonably detailed explanation of any alleged
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<PAGE> 4
deficiencies, (b) the Products are returned to TI, F.O.B. Maxtor, and (c) TI's
examination of the goods shall disclose that such alleged deficiencies actually
exist and were not caused by accident, misuse, neglect, alteration, improper
installation, unauthorized repair or improper testing. If the Products were
improperly sent to TI, Maxtor shall reimburse TI for the transportation charges
paid by TI for the Products. If TI elects to repair or replace the goods, TI
shall have a reasonable time to make the repairs or replacement. Such repair,
replacement or credit shall constitute fulfillment of all liability of TI to
Maxtor whether based in contract, tort, indemnity, statutory provision or
otherwise.
1.4 Prices.
[*]
ARTICLE II - PROCEDURES
2.1 Qualification.
2.1.1 Qualification. The respective obligations of the parties
pursuant to this Agreement shall be subject to the successful qualification of
TI's Product and its manufacturing process in Maxtor's Application, as Maxtor
deems necessary. Maxtor and TI shall cooperate to set up the necessary processes
and procedures to accomplish and facilitate such qualification. TI's Product
must complete qualification by Maxtor in order to be tendered under this
Agreement, and must consistently perform according to the applicable agreed upon
specification. Maxtor will use its reasonable commercial efforts to qualify and
utilize TI's Product in new or additional Applications.
2.1.2 Changes. TI shall make reasonable efforts to provide Maxtor
ninety (90) days notice in writing of any changes in Product design, material,
production process, or plant
-4-
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TREATMENT AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
<PAGE> 5
location which affect the form, fit or function of the product in order to allow
it to requalify the Product, before any Product is manufactured by the new
design, material, process or in the new location and sold to Maxtor.
2.2 Tooling. Unless otherwise specified in this Agreement, all tooling
and/or all other articles required for TI's performance under this Agreement
shall be furnished by TI, maintained in good condition and replaced when
necessary at TI's expense. If Maxtor agrees to pay TI for special tooling or
other items either separately or as a stated part of the unit price of Products,
title to same shall be and remain in Maxtor upon payment, and the tooling shall
be treated as property of Maxtor, furnished by Maxtor to TI.
2.3 Forecasts. Maxtor shall forecast its requirements for Products to
TI, as provided below, on a non-binding basis, and TI shall use its reasonable
commercial efforts to maintain the ability to supply Maxtor's requirements from
TI. Notwithstanding the above, nothing in this Agreement shall be construed as
an obligation for Maxtor to purchase any Products, or for TI to supply any
Products, except as expressly provided in any Order issued by Maxtor and
accepted by TI.
2.3.1 Forecasts. During the term of this Agreement, Maxtor shall
provide TI, on a monthly basis, with a nine (9) month rolling forecast setting
forth its estimated requirements and shall provide Orders based on its
requirements for the first three (3) months of the forecast. Product lead-times
will [be] as set forth in Exhibit A or as later mutually agreed by the parties.
Maxtor's forecast is provided solely for TI's convenience and for its planning
purposes; no forecast shall be construed as an authorization by Maxtor to order
any materials for, or to allocate any labor or equipment for the manufacture of
the Product nor impose on TI any obligation to supply Product. Maxtor will not
be responsible for any of TI's cost or expense for materials, Product, labor, or
other commitments or expenses, other than as authorized in Orders.
2.4 Orders.
2.4.1 Orders. All purchases and sales shall be initiated by Maxtor's
issuance of written purchase orders sent via airmail, facsimile or courier
("Order"). Such Orders shall reference this Agreement and state the unit
quantities, unit descriptions, price, requested delivery dates and shipment
instructions. The receipt by TI of an Order shall be indicated by written
acknowledgment within five (5) work days. TI shall accept all Orders which
conform to the requirements of this Agreement and which, cumulatively, do not
for any quarter exceed Maxtor's most recent forecast by more than thirty percent
(30%). Acceptance of Orders in excess of such limit shall be subject to
negotiation and agreement by the parties. Nothing in this Agreement shall be
construed as an obligation for Maxtor to purchase any Products, except as
expressly provided in any Order issued by Maxtor. No modification of this
Agreement will be effective unless made in writing signed by both parties, which
expressly intends to modify this Agreement. The preprinted terms and conditions
of purchase orders, acceptances, confirmations and similar business documents
shall have no effect as amendments of, objections to, or modifications of this
Agreement.
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<PAGE> 6
2.4.2 End of Life. In the event that TI determines that a Product is
at end of life, TI shall give Maxtor at least twelve (12) months advanced notice
of such projected end of life. Such notice shall include the planned last
purchase order date and the planned last shipment date for the end of life
Product. Within a reasonable time following such notice, the parties will
negotiate in good faith purchase of life-time buy quantities (including price
and delivery) and/or other alternatives to satisfy Maxtor's reasonable need for
the discontinued product.
2.4.3 End of Term. In the event of the expiration or termination of
this Agreement, any Orders placed and accepted before such expiration or
termination shall be completed according to the terms of this Agreement.
2.5 Inspection. Maxtor and TI shall cooperate to inspect Products, and
nothing in this section shall limit Maxtor's other rights and remedies.
2.5.1 Inspection by Maxtor. Maxtor may test each lot or Order of
Product to ensure that the Products meet the agreed upon specifications and
acceptance criteria, and TI shall not ship any Products that do not Conform. All
Product (including raw materials, components, subassemblies, and end products)
may be inspected and tested by Maxtor or Maxtor's agent at all reasonable times
and places before, during and after manufacture or shipment. In no event shall
Maxtor be liable for any reduction in value of samples used in connection with
any inspection or test. If any inspection or test is to be made on TI's
premises, Maxtor shall provide at least ten (10) work days notice thereof and TI
shall, without additional charge, provide reasonable facilities and assistance
during normal business hours for the safety and convenience of inspectors in
such manner as not unduly to delay the work. In the event of a TI device
epidemic failure (as defined below), Maxtor has the right to inspect TI's
facilities where the product is manufactured with two working days notice.
Inspection of Products at TI's facility shall be without prejudice to Maxtor's
right to inspect and reject such Products upon delivery to Maxtor's facility.
Where applicable, Maxtor may, at its option, inspect all products or inspect a
statistical sample selected from each lot, and Product, lots or Orders may be
inspected more than once.
2.5.2 Inspection by TI. TI will ensure that all Product are tested
in accordance with the agreed upon specifications and requirements, as may be
amended from time to time. TI will provide only those Product conforming to the
agreed upon specifications and requirements, unless TI has obtained prior
written approval from Maxtor for any deviation from such specifications. TI
further agrees to maintain adequate authenticated inspection test documents that
relate to work performed under this Agreement. Such records shall be retained by
TI for a period of three (3) years after completion of this Agreement and made
available to Maxtor upon request. TI agrees to supply Maxtor with inspection and
test reports, affidavits, certifications, or any other documents as may be
reasonably requested, subject to appropriate confidentiality restrictions.
2.5.3 In Case of Failure of Inspection. If the above inspection or
testing detects Products which do not Conform to the agreed upon specifications
or the requirements of this Agreement, Maxtor and TI will closely cooperate to
identify and find a way to correct the causes of the problem(s). Maxtor may
refuse to accept Product which do not conform. Maxtor may
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<PAGE> 7
reject entire lots or Orders if lot acceptance criteria established in the
specifications are not fulfilled; provided that any canceled portion of an Order
shall nevertheless by counted as purchased for purposes of determining Maxtor's
right to any quantity discounts. The rejected Product may, at Maxtor's
discretion, be returned to TI at TI's expense in accordance with Section 1.3,
Remedies. Maxtor may immediately stop future shipments of Product until the
cause(s) for non-conformity, as mutually determined by parties, has been
corrected. Maxtor will use its reasonable commercial efforts to assist TI in
identifying the cause(s) for rejection.
2.6 Shipping.
2.6.1 Shipping. TI shall use the freight carrier designated by
Maxtor in its order.
2.6.2 Timeliness. TI shall use its reasonable efforts to meet a 100%
on time delivery commitment. If TI's performance falls below 100% on-time
deliveries, then TI shall implement a corrective action plan acceptable to
Maxtor which brings the deliveries back to 100% on-time. If TI is unable to
deliver any Product on schedule, TI shall promptly notify Maxtor giving a new
delivery date, and Maxtor may:
(i) accept the new delivery date; or
(ii) reschedule the delivery by means of a Change Order, or
(iii) cancel the delayed portion of the Order if TI fails to
meet the originally promised delivery date plus 10 days; provided that any
cancelled portion of an Order shall nevertheless by counted as purchased for
purposes of determining Maxtor's right to any quantity discounts.
At Maxtor's request, TI will provide Maxtor with daily notification
of shipping delays. Such notification will include action plans for recovery or
expediting of the affected Product. TI shall provide Maxtor notice of the
departure of any shipment of Product from TI's site.
2.8 Acceptance. If, after [*] from the date of receipt by Maxtor, Maxtor
has not rejected the Product, it will be deemed to have been accepted by Maxtor.
Maxtor also may accept the Product by written notice. The act of inspection or
payment by Maxtor for the Product will not be construed as Maxtor's acceptance
of any Product. Acceptance of any Product shall not affect the Product warranty
or any related remedy.
2.9 Returns. Returns of product to TI under warranty shall be in
accordance with Section 1.3, Remedies. If TI requests, Maxtor will apply TI's
Return Materials Authorization (RMA) or similar number to the returned Products
and/or related documentation, provided, however, that TI must supply such RMA
number to Maxtor on a timely basis.
-7-
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<PAGE> 8
2.10 Epidemics. The procedures and remedies for epidemics are in
addition to all other of Maxtor's rights and remedies available under this
Agreement.
2.10.1 Epidemic Defined. An epidemic failure shall occur when a) one
half of one percent (.5%) or the threshold amount stated in the Specification,
whichever is less, of the Product shall be non-conforming over a period of
thirty (30) days or more or b) one percent (1%) of Maxtor's application
delivered to one or more customers shall fail due to a failure of the TI device
within six (6) months of delivery.
2.10.2 Effect of Epidemic. In the event that the Products supplied
by TI to Maxtor should develop any epidemic failure, the parties will meet in
order to work out technical methods to remedy the problem. In such event,
shipment of undelivered Products related to the Order or Orders will be
postponed, at Maxtor's written request, until the cause of the epidemic has been
corrected. In case upon the expiration of 30 (thirty) days from the date of
Maxtor's notice regarding the epidemic, TI has not yet remedied the same, then
Maxtor shall be entitled to cancel pending Orders without any liability for such
cancellation and without prejudice to Maxtor's rights for damages or any other
remedy as may specifically be provided for in this agreement; provided that any
cancelled portion of an Order shall nevertheless be counted as purchased for
purposes of determining Maxtor's right to any quantity discounts. In the event
that a remedy has been found, all Product units subsequently delivered to Maxtor
shall incorporate the modification remedying the defect. Product units
previously delivered to Maxtor will be remedied in accordance with Section 1.3,
Remedies.
2.11 Invoicing. TI will issue the invoices for the Products and will
date them with a date equal or subsequent to shipment date. Invoices shall
reference purchase order number, item number and description of Products, unit
price of Products, and total amounts due.
2.12 Payment.
2.12.1 Terms. Invoices shall be due and payable within [*] after the
date of invoice. In cases where an invoice is not issued, payment shall be due
within [*] after the delivery of the Product. Maxtor's payment advice shall
reference TI's invoice number(s) and date(s).
2.12.2 Currency. Unless expressly provided to the contrary, all
amounts stated in this Agreement and all sums payable under this Agreement shall
be denominated in United States Dollars and all payments made under this
Agreement shall be made by wire transfer, cashier's check, or other ready funds
(as mutually agreed) in United States Dollars to payee's account at payee's
designated United States bank.
2.12.3 Disputes. Maxtor shall have [*] after the invoice date to
contest in good faith the amounts and items charged.
2.12.4 Bills. TI's bills shall list all open invoices, invoice
dates, and amounts unpaid; payments received, and credits issued.
-8-
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<PAGE> 9
2.12.5 Payment Applications. Payments shall be applied to open
invoices according to Maxtor's payment advice, but, in the event the payment
advice does not specify invoices, then payments shall be applied to oldest items
first.
2.13 Order Changes. No Order shall be deemed or construed to be
modified, amended, rescinded, canceled, or waived in whole or in part, except by
a written Change Order signed by a Maxtor authorized representative.
2.13.1 Reschedules. Maxtor may reschedule delivery of products
ordered upon thirty (30) days' written notice for standard Products and ninety
(90) days' written notice for custom Products.
2.13.2 Cancellation. Maxtor may cancel Order(s) for any reason by
notifying TI in writing upon thirty (30) days prior to the scheduled shipment
date for standard Products and ninety (90) days prior to the scheduled shipment
date for custom Products. TI will cease work on the affected Order in accordance
with such notice. Maxtor will:
(i) purchase and pay for any units of Product that have been
completed as of the effective date of the cancellation;
(ii) will pay TI the actual overhead, labor and materials
costs incurred by TI in connection with the Production of any Products that are
partially completed as of the effective date of cancellation up to the total
purchase price under the canceled order(s);
(iii) pay the costs of components and other materials procured
by TI specifically on account of the canceled order(s), and receive title to
such items;
(iv) pay any cancellation or restocking charges imposed by
vendors on account of any canceled orders pursuant to clauses (iii) and (iv)
above.
TI will use its reasonable efforts to return components and other materials to
its vendors and/or use them in other activities at TI. TI will in any event use
its reasonable efforts to mitigate the cancellation charges under this
Agreement.
2.14 Engineering Changes. TI shall not make any changes in the form,
fit, or function of the Product or any process by which they are produced except
as set forth in this section.
2.14.1 Definition. Engineering change(s) are those mechanical,
electrical, firmware, piece part, or software design or specification changes,
made to the Products, or, which, if made, could materially affect the
qualification, schedule, performance, reliability, availability, serviceability,
appearance, dimensions, tolerances, safety or costs, such determination to be
made by mutual agreement of the parties.
2.14.2 TI Changes. TI will notify Maxtor of any engineering changes
proposed to be made by TI to Products or any process by which they are produced
as outlined in the Maxtor Specification for General Semiconductor.
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<PAGE> 10
2.14.3 Maxtor Change(s). Maxtor may request, in writing and in a
manner similar to TI's request, that TI incorporate any non-critical engineering
change into the Products, and TI will provide to Maxtor its written response as
to its willingness to make such change within five (5) working days after
receipt of Maxtor's request. For critical engineering changes, as determined by
Maxtor, TI will respond within two (2) working days of Maxtor's written request.
TI's response will state the estimated production price change and non-recurring
expenses, if any, expected to be created by the engineering change, and the
effect on the schedule, performance, reliability, availability, safety,
serviceability, appearance, dimensions, tolerances, composition of bills of
material, and of the Products. The parties will agree to any additional costs to
be paid by Maxtor prior to the change being made. TI will not unreasonably
refuse to incorporate Maxtor's engineering changes into the Products.
2.14.4 Unforeseen Changes. In the event of a serious and unforeseen
safety or technical problem with the Products provided under this Agreement, an
emergency engineering change may be required. Such problem may or may not result
in the Products failing to meet the applicable Specifications. Maxtor and TI
shall mutually agree as to the resolution of such problems.
2.14.5 Impacts. In the event an engineering change is implemented,
the applicable Specifications will be amended as required and the Product will
be subject to requalification. In the event any Maxtor required engineering
change directly causes a negative financial impact to TI due to incorporation of
such change into a Product, the parties agree to promptly meet to discuss fair
allocation of such financial impact. TI agrees to use its reasonable efforts to
notify Maxtor of such financial impact prior to incorporation of such
engineering change, and in any event, notify Maxtor as soon as TI becomes aware
of such impact. Maxtor will determine whether the Product must be requalified in
whole or in part as a result of any engineering change.
2.15 Shortages. TI agrees that in the event of a shortage of capacity or
material that will affect the supply of the Product, Maxtor's Order(s), subject
to normal lead-time requirements, shall always be filled according to an
allocation plan at least as favorable as those provided to all other TI
customers with similar or lesser quantity forecasts and Orders, purchasing under
similar conditions. TI shall provide Maxtor with as much notice as possible if
it anticipates or has reason to believe that TI's output of the Product will not
be sufficient to meet all of Maxtor's requirements for any period.
ARTICLE III - INTELLECTUAL PROPERTY
3.1 Confidentiality.
3.1.1 Confidential Information. "Confidential Information" shall
mean any information disclosed by one party to the other pursuant to this
Agreement which is in written, graphic, machine readable or other tangible form
and is marked "Confidential", "Proprietary" or in some other manner to indicate
its confidential nature. Confidential Information may also include oral
information disclosed by one party to the other pursuant to this Agreement,
provided that such information is designated as confidential at the time of
disclosure and reduce to a
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<PAGE> 11
written summary by the disclosing party, within thirty (30) days after its oral
disclosure, which is marked in a manner to indicate its confidential nature and
delivered to the receiving party. Each party shall treat as confidential all
Confidential Information of the other party, shall not use such Confidential
Information except as expressly set forth in this Agreement or otherwise
authorized in writing, shall implement reasonable procedures to prohibit the
disclosure, unauthorized duplication, misuse or removal of the other party's
Confidential Information and shall not disclose such Confidential Information to
any third person except as may be necessary and required in connection with the
rights and obligations of such party under this Agreement, and subject to
confidentiality obligations at least as protective as those set forth in this
Agreement. Each of the parties shall use the same procedures and degree of care
which its uses to prevent the disclosure of its own confidential information of
like importance to prevent the disclosure or misuse of Confidential Information
disclosed to it by the other party under this Agreement, but in no event less
than reasonable care. The party disclosing an item of Confidential Information
shall be the Discloser ("Discloser"), and the party receiving an item of
Confidential Information shall be the Receiver ("Receiver"). Notwithstanding the
above, neither party shall have liability to the other with regard to any
Confidential Information of the other which:
(i) was generally known and available in the public domain
at the time it was disclosed or becomes generally known and available in the
public domain through no fault of Receiver;
(ii) was known to Receiver at the time of disclosure;
(iii) is disclosed with the prior written approval of
Discloser;
(iv) was independently developed by Receiver without any use
of the Confidential Information;
(v) becomes known to Receiver from a source other than the
Discloser without breach of this Agreement by Receiver and otherwise not in
violation of the Discloser's rights;
(vi) is disclosed pursuant to the order or requirement of a
court, administrative agency, or other governmental body; provided that Receiver
shall provide prompt, advanced notice to Discloser;
(vii) is disclosed by Discloser to a third party without
obligation of confidentiality.
3.1.2 Use of Confidential Information. Notwithstanding any
termination, expiration, or cancellation under this Agreement, Receiver will not
use the Confidential Information for a period of three (3) years, for any other
purpose than pursuing the transactions and relationship contemplated by this
Agreement.
3.1.3 Term of Nondisclosure Obligation. Notwithstanding the term of
this Agreement, the obligations of TI and Maxtor under this Agreement with
respect to any
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<PAGE> 12
Confidential Information shall continue for a period of three (3) years after
the date of disclosure of the Confidential Information.
3.1.4 Export Controls. Recipient agrees that it will not knowingly
(i) export or re-export, directly or indirectly, any
technical data (as defined by the U.S. Export Administration regulations)
received under this Agreement to,
(ii) disclose such technical data for use in, or
(iii) export or re-export, directly or indirectly, as any
direct product of such technical data to, any destination to which such export
or re-export is restricted or prohibited by U.S. law, without obtaining prior
authorization from the U.S. Department of Commerce.
3.2 Publicity. Neither party shall publicly announce or disclose the
existence of this Agreement or its terms and conditions, or advertise or release
any publicity or press release regarding this Agreement, without the prior
written consent of the other party. Nothing in this Agreement shall limit a
party from making such disclosures as are required by law or court order,
provided notice of such disclosures is given to the other party.
ARTICLE IV - LIABILITIES
4.1 Compliance with Laws. Each party shall, in the performance of work or
services under this Agreement, fully comply with all applicable national, state,
and local laws, rules, regulations, and ordinances.
4.2 Infringement Indemnity.
4.2.1 TI shall defend any proceeding brought against Maxtor insofar
as the proceeding is based on a claim that any Products manufactured and
supplied by TI to Maxtor directly infringes any duly issued United States,
European Union or Japan patent, copyright or trademark and TI shall pay all
damages and costs finally awarded therein against Maxtor, provided that TI is
promptly informed and furnished a copy of each communication, notice or other
action relating to the alleged infringement and is given authority, information
and assistance (as TI's expense) necessary to defend or settle the proceeding.
TI shall not be obligated to defend or be liable for costs and damages if the
infringement arises out of compliance with Maxtor's specifications, or from a
combination with, an addition to, or a modification of the Products after
delivery by TI, or from use of the Products, or any part thereof, in the
practice of a process. Subject to Section 4.2.2 below, TI's obligations
hereunder shall not apply to any infringement occurring after Maxtor has
received notice of such proceeding or other communication alleging the
infringement unless TI has given written permission for such continuing
infringement.
4.2.2 If the Products manufactured and supplied by TI to Maxtor
shall be held to infringe any United States, European Union or Japan patent,
copyright or trademark, and Maxtor
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<PAGE> 13
shall be enjoined from using same, or if TI discontinues shipment pursuant to
Section 4.2.3 below, TI will exert all reasonable efforts, at its option and at
its expense, to:
(a) procure for Maxtor the right to use such Products free
of any liability for patent infringement, or
(b) replace such Products with a noninfringing substitute
otherwise complying substantially with all requirements of this Agreement, or
(c) refund the purchase price and the transportation costs
of such Products.
4.2.3 If the infringement by Maxtor is alleged prior to completion
of delivery of the Products under this Agreement, TI may decline to make further
shipments without being in breach of this Agreement. If TI has not been enjoined
from selling the Products to Maxtor, Maxtor may opt for TI to continue shipments
whereupon the obligations herein stated with respect to TI shall reciprocally
apply to Maxtor. This obligation by Maxtor shall include, but is not limited to,
all damages awarded under 35 U.S.C. Sections 284 and 285.
4.2.4 THE SALE BY TI OF THE PRODUCTS ORDERED HEREUNDER DOES NOT
GRANT TO, CONVEY OR CONFER UPON MAXTOR OR MAXTOR'S CUSTOMERS, OR UPON ANYONE
CLAIMING UNDER MAXTOR A LICENSE, EXPRESS OR IMPLIED, UNDER ANY PATENT RIGHT,
COPYRIGHT, MASK WORK RIGHT OR OTHER INTELLECTUAL PROPERTY RIGHT OF TI COVERING
OR RELATING TO ANY COMBINATION, MACHINE OR PROCESS IN WHICH SAID PRODUCTS MIGHT
BE OR ARE USED. THE FOREGOING STATES THE SOLE LIABILITY OF THE PARTIES FOR
INTELLECTUAL PROPERTY RIGHTS INFRINGEMENT AND IS IN LIEU OF ALL WARRANTIES,
EXPRESS, IMPLIED OR STATUTORY, IN REGARD THERETO.
4.3 Insurance. TI shall maintain commercial general liability insurance
in appropriate amounts and shall furnish proof of such insurance to Maxtor upon
request.
4.4 Limitation of Liability. IN NO EVENT SHALL EITHER PARTY BE LIABLE
FOR ANY SPECIAL, CONSEQUENTIAL, INDIRECT, OR INCIDENTAL DAMAGES, HOWEVER CAUSED,
ON ANY THEORY OF LIABILITY AND WHETHER OR NOT SUCH PARTY HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES, ARISING IN ANY WAY OUT OF THIS AGREEMENT OR ANY
AGREEMENT, UNDERTAKING, OR PERFORMANCE THAT MAY BE PROMISED, PERFORMED, OR
EXECUTED TO IMPLEMENT THIS AGREEMENT.
ARTICLE V - DISPUTE RESOLUTION
5.1 Escalation.The parties agree that any material dispute between the parties
relating to this Agreement will be submitted to a panel of two senior executives
of Maxtor and TI. Either party may initiate this proceeding by notifying the
other party pursuant to the notice provisions of this Agreement. Within five (5)
days from the date of receipt of the notice, the parties' executives shall
confer (via telephone or in person) in an effort to resolve such dispute. Each
party's
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<PAGE> 14
executives shall be identified by notice to the other party, and may be
changed at any time by notice.
5.2 Choice of Law. This Agreement and any agreement, undertaking, or
performance that may be promised, performed, or executed to implement this
Agreement shall be governed by and construed under the laws of the State of
California, as they apply to agreements made between residents of California for
performance solely within California. The parties expressly agree that this
Agreement and any agreement, undertaking, or performance that may be promised,
performed, or executed to implement this Agreement shall not be subject to and
shall not be interpreted by the United Nations Convention on Contracts for the
International Sale of Goods.
5.3 Limit of Time to Bring Action. No actions, regardless of form,
arising out of this Agreement, may be brought by either party more than two (2)
years after such actions arose, or in the case of nonpayment, more than two (2)
years from the date the last payment was due.
ARTICLE VI - GENERAL
6.1 Term and Termination.
6.1.1 Term. This Agreement shall become effective on the Effective
Date and shall remain in force until the Termination Date, and on and effective
the Termination Date this Agreement shall terminate.
6.1.2 Renewal. The parties may agree in writing to extend this
Agreement for one or more terms of one (1) year.
6.1.3 Termination for Convenience. Maxtor may terminate this
Agreement at any time for any reason or no reason upon giving written notice of
termination to TI. Upon receipt of such notice, TI shall immediately cease to
incur expenses pursuant to this Agreement that has been terminated unless
otherwise directed in the termination notice. TI shall also take all reasonable
steps to mitigate the cost to Maxtor for terminating this Agreement. Within
sixty (60) days from the date of notice, TI shall notify Maxtor of costs
directly incurred under this agreement up to the date of termination. In no
event shall such cost exceed the unpaid balance due:
(i) for conforming material delivered prior to receipt of
Maxtor's termination notice; and
(ii) on purchase orders previously issued in conformance with
this Agreement.
In addition to the foregoing, in the event that this Agreement is terminated
pursuant to Section 6.1, Maxtor's entire liability shall be to purchase all
finished goods, die bank inventory work in progress, and Maxtor unique materials
that have been purchased within lead time by TI to fulfill Maxtor's Order(s), at
the costs shown in the table below:
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<PAGE> 15
<TABLE>
<CAPTION>
COST OF GOODS SOLD*
<S> <C>
Work-in-Progress/Finished Die 65%
Assembly/Test/Finished Goods 100%
</TABLE>
Percentages are of the costs of goods sold charged to Maxtor at the time of
termination.
6.1.4 Termination for Cause. This Agreement shall be terminated for
cause:
(i) If either party materially defaults in the performance
of any provision of this Agreement, then the non-defaulting party may give
written notice to the defaulting party that if the default is not cured within
thirty (30) calendar days, the Agreement will be terminated at the end of that
period and such termination shall not prejudice or limit either party's
remedies; or
(ii) If either party violates any intellectual property,
confidentiality, or license provision of this Agreement, then the non-defaulting
party may give written notice to the defaulting party of such violation and of
immediate termination and the Agreement will be terminated when such notice is
given and such termination shall not prejudice or limit either party's remedies;
or
(iii) Upon:
(a) the institution by or against either party of
insolvency, receivership or bankruptcy proceedings or any other proceedings for
the settlement of its debts; or
(b) either party's making an assignment for the
benefit of creditors; or
(c) either party's dissolution,
this Agreement shall terminate immediately without notice and shall be deemed to
have been terminated by the party not so affected and such termination shall not
prejudice or limit either party's remedies.
6.1.5 Duties Upon Termination. Upon any termination or expiration of
this Agreement:
(i) neither party shall retain any copies of any
Confidential information which may have been entrusted to; and
(ii) neither party shall be liable to the other because of
such termination for compensation, reimbursement or damages on account of the
loss of prospective profits or anticipated sales or on account of expenditures,
investments, leases or commitments in
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<PAGE> 16
connection with the business or good will of Maxtor or TI, or for any other
reason growing out of such termination.
6.1.6 Survival. The terms of this Agreement which by their nature
may survive the termination or expiration of this Agreement shall survive the
termination or expiration of this Agreement.
6.2 General.
6.2.1 Assignment. Neither party shall transfer or assign its rights
under this Agreement directly or indirectly including without limit in the cases
of merger, acquisition of greater then fifty percent (50%) ownership or control
interest in such party by any party, or sale of its assets, without the prior
written consent of the other party, which consent shall not be unreasonably
withheld. Subject to the above sentence, this Agreement shall be binding upon
and inure to the benefit of the parties, their successors and assigns. Any
purported assignment of this Agreement by a party without the prior written
consent of the other party shall be void.
6.2.2 Consents. No consent required to be given under this Agreement
shall be unreasonably withheld.
6.2.3 Counterparts. This Agreement shall be prepared in two
identical and original counterparts and both of which together shall be one and
the same instrument and either of which may be used for purposes of proof.
6.2.4 Cumulation of Remedies. All remedies available to either party
under this Agreement are cumulative and may be exercised concurrently or
separately, and the exercise of any one remedy shall not be deemed an election
of such remedy to the exclusion of other remedies.
6.2.5 Independent Parties. Persons furnished by each party shall be
solely the employees or agent of such party and shall be under the sole and
exclusive direction and control of the furnishing party. They shall not be
considered employees of the other party for any purpose. Each party shall remain
an independent contractor and shall be responsible for compliance with all laws,
rules and regulations involving, but not limited to, employment of labor, hours
of labor, health and safety, working conditions and payment of wages. Each party
shall also be solely responsible for payment of taxes, including federal, state
and municipal taxes, chargeable or assessed with respect to its employees, such
as social security, unemployment, worker's compensation, liability insurance and
federal and state withholding. Neither party nor its employees, officers,
directors, or agents shall hold itself out as the agent, employee, legal
partner, or joint venturer of the party, and shall make no commitment or
engagement on the account of or on behalf of the other party.
6.2.6 Force Majeure. Nonperformance of either party shall be excused
to the extent that performance is rendered impossible by strike, fire, flood,
governmental acts, orders or restrictions, or any other reason where failure to
perform is beyond the control and not caused by the negligence of the
nonperforming party. In the event of any delay caused by such
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<PAGE> 17
contingency, the delayed party may defer any performance or delivery prevented
by the force majeure condition for a period equal to the time lost by reason of
such delay, provided, however, that the delayed party promptly commences and
reasonably and diligently pursues actions to cure or circumvent such cause.
Whenever any cause delays or threatens to delay the timely performance of this
Agreement, TI shall immediately notify Maxtor of all relevant information with
respect to such cause. If TI is delayed in any performance or delivery by more
than thirty (30) days, Maxtor may terminate the delayed performance or delivery
or this Agreement and such termination shall not be a breach of this Agreement
and shall be without penalty.
6.2.7 Governing Language. English shall be the language of this
Agreement and the English language shall govern all disputes, performance and
interpretations.
6.2.8 Headings. The descriptive headings of the several Articles and
Sections of this Agreement are inserted for convenience only and do not
constitute a part of this Agreement and shall not affect the interpretation of
this Agreement.
6.2.9 Joint Work Product. The parties further acknowledge that they
have thoroughly reviewed this Agreement and bargained over its terms and that
for convenience, Maxtor has written down the terms of this Agreement.
Accordingly, this Agreement shall be construed without regard to the party or
parties for its preparation and shall be deemed to have been prepared jointly by
the parties.
6.2.10 Notices. Any notice required or permitted to be given under
this Agreement shall be in writing and shall be deemed to be sufficiently given
if delivered by hand or if sent by courier with a receipt requested or by
registered air mail, postage prepaid, addressed to Maxtor or to TI, as the case
may be, at the addresses first set forth above or to such other address as may
be furnished for such purpose by notice duly given under this Agreement. Such
notice shall be deemed to have been given when delivered by hand or five (5)
days after deposit with the courier or mail service. Any party may change its
address for such communications by giving such notice to the other party in
conformance with this section.
6.2.11 Severance. If any provision of this Agreement is held to be
invalid by a court of competent jurisdiction, then the remaining provisions
shall nevertheless remain in full force and effect. The parties agree to
renegotiate any term held invalid and to be bound by the mutually agreed
substitute provisions.
6.2.12 Time. The words day, month, quarter, year, and the like shall
mean calendar day, month, quarter, year, and the like, unless expressly provided
to the contrary.
6.2.13 Waiver. The failure of any party to this Agreement at any
time or times to require performance of any provision of this Agreement shall in
no manner affect such party's available remedies or right at a later time to
enforce the same. No waiver by any party of any condition, or of the breach of
any term, covenant, representation or warranty contained in this Agreement,
whether by conduct or otherwise (in any one or more instances) shall be deemed
to be or construed as a further or continuing waiver of any such condition or
breach or of any
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<PAGE> 18
remedy or as a waiver of any other condition or as a breach of any other term,
covenant, representation or warranty of this Agreement.
ARTICLE VII - EXECUTION
7.1 Entire Agreement. The terms and conditions of this Agreement are the
entire agreement between the parties and supersede all previous agreements,
proposals, and understandings, whether oral or written, between the parties with
respect to the subject matter of this Agreement (except for confidentiality
agreements governing the exchange of information prior to the Effective Date
which shall continue to govern periods prior to the Effective Date) and no
agreement or understanding varying or extending the same shall be binding upon
either party unless in a written document signed by both parties. This Agreement
shall supersede all inconsistent or additional terms contained in any future
purchase orders, sale acknowledgments or other similar documents delivered by
the parties.
7.2 Execution. This Agreement shall not be effective until it has been
executed by TI and accepted by an authorized representative of Maxtor at a
principal place of business.
7.3 Electronic Execution. To expedite the process of entering into this
Agreement, the parties acknowledge that Transmitted Copies of this Agreement
shall be equivalent to original documents until such time as original documents
are completely executed, produced, and delivered, and in the event of the use of
Transmitted Copies, each party shall use its reasonable efforts, at its own to
expense, to execute, produce, and deliver original copies. "Transmitted Copies"
shall mean copies which are reproduced or transmitted via photocopy, facsimile,
or other process of complete and accurate reproduction and transmission.
In witness whereof, the parties have executed this Agreement as of
the Effective Date.
MAXTOR CORPORATION TI
By: /s/ DA Wickersham By: /s/ Jeffrey S. McCreary
---------------------------- -----------------------------------
(signature) (signature)
DA Wickersham Jeffrey S. McCreary
- ------------------------------- --------------------------------------
(print name) (print name)
VP, Materials Vice President
- ------------------------------- --------------------------------------
(title) (title)
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<PAGE> 19
EXHIBIT A
PRODUCTS AND PRICING
<TABLE>
<CAPTION>
ITEM TI REFERENCE % OF BUSINESS LEAD-TIME PRICE TIME
- ---- ------------ ------------- --------- ----- ----
<S> <C> <C> <C> <C> <C>
[*]
</TABLE>
[*] IDENTIFIES REDACTED MATERIAL DELETED PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
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<PAGE> 20
BUSINESS AGREEMENT
MAXTOR CORPORATION
BUSINESS AGREEMENT
NO. TXN002
ADDENDUM TO EXHIBIT A
PRODUCTS AND PRICING
REASON FOR ADDENDUM
<TABLE>
<CAPTION>
ITEM TI REFERENCE % OF BUSINESS LEAD-TIME PRICE TIME (UPDATE OR ADD)
- ---- ------------ ------------- --------- ----- ---- ---------------
<S> <C> <C> <C> <C> <C> <C>
</TABLE>
Comments:
OFFER EXPIRATION DATE FOR QUOTATION
TERMS AND CONDITIONS
Upon signing of this document by both TI and Maxtor, the above pricing will be
added to the Maxtor Business Agreement (#TXN002) as shown and will be subject to
all terms and conditions included therein. If this document is not signed by
both TI and Maxtor by the expiration date shown above, then the offer is
invalidated and will have to be re-quoted.
MAXTOR CORPORATION TI
BY: BY:
---------------------------- -----------------------------------
(signature) (signature)
- ------------------------------- --------------------------------------
(print name) (print name)
- ------------------------------- --------------------------------------
(title) (title)
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<PAGE> 1
EXHIBIT 10.52
MAXTOR STANDARD VOLUME PURCHASE AGREEMENT
PREAMBLE
This Maxtor Standard Volume Purchase Agreement ("Agreement"),
effective as of January 1, 1998 ("Effective Date") is made by and between Maxtor
Corporation, a Delaware corporation, having principal places of business at 510
Cottonwood Drive, Milpitas, California 95035 U.S.A. and 2190 Miller Drive,
Longmont, Colorado 80501 U.S.A.("Maxtor"), and Lucent Technologies Inc., a
Delaware company, having a place of business at 2 Oak Way, Berkeley Heights, New
Jersey 07922 ("Lucent USA") and Lucent Technologies Singapore Pte. Ltd., a
Singapore corporation, having a place of business at 77 Science Park Drive,
#03-18 Cintech III, Singapore 118256 ("Lucent Singapore"), ( both Lucent
entities are referred to herein as "Seller").
RECITALS
Whereas, Seller is in the business of designing, manufacturing and
selling integrated circuits, both custom and standard, _ ("Product") for hard
disk drives and wishes to sell such Product to manufacturers of disk drives such
as Maxtor;
Whereas, "Maxtor" shall include Maxtor Peripherals (S) Pte Ltd.,
having a place of business at No 2 Ang Mo Kio Street 63, Ang Mo Kio Industrial
Park 3, Singapore 569111;
Whereas, Maxtor wishes to secure a supply of Product and to purchase
quantities of such Product from Seller meeting the Specifications furnished by
Lucent in the case of standard products and meeting the specifications agreed to
in writing in the case of custom products (the "Specifications") and operating
in Maxtor's application ("Application");
Whereas, Maxtor may place orders for Product either on Lucent USA or
Lucent Singapore;
Whereas, Seller shall manufacture and deliver to Maxtor, its agents,
and/or its subsidiaries, Product as set forth in this Agreement, including its
Terms and Conditions;
Whereas, the parties recognize that the disk drive market is very
demanding of quality, timeliness, and price, and that the essence of the
relationship between Maxtor and Seller is flexibility; timely delivery of
necessary quantities of qualified, high-yield Products; and low costs;
Whereas, if problems should be encountered with respect to any aspect
of this Agreement or if the parties should encounter any problems not covered by
this Agreement, Maxtor and Seller shall discuss them in a cooperative and
sincere spirit and attempt to arrive at a mutually acceptable solution; and
Whereas, this Agreement commences on the Effective Date and
terminates on December
[*] IDENTIFIES REDACTED MATERIAL DELETED PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
<PAGE> 2
31, 2001, ("Termination Date") unless terminated earlier;
NOW, THEREFORE, FOR GOOD AND VALUABLE CONSIDERATION, THE RECEIPT AND
ADEQUACY OF WHICH IS HEREBY ACKNOWLEDGED, AND IN CONSIDERATION OF THE ABOVE
PREMISES AND THE MUTUAL PROMISES CONTAINED IN THIS AGREEMENT, THE PARTIES AGREE
AS FOLLOWS:
TERMS AND CONDITIONS
ARTICLE I - PRODUCTS
1.1 Product.
1.1.1 Purchase and Supply. Maxtor wishes to secure a supply of
Product and to purchase quantities of such Product from Seller meeting the
Specifications. Products shall be manufactured by Lucent according to the
functional, technical and other specifications in the data sheet furnished by
Lucent, in the case of standard products and those agreed upon by the parties in
writing for each custom integrated circuit ("ASIC Product"). As used herein
"Product" refers to both standard Products and ASIC Products unless the context
suggests otherwise. Seller wishes to supply such Product to Maxtor on such
conditions and on the terms and conditions of this Agreement. Therefore, subject
to the terms and conditions of this Agreement, Maxtor will purchase and Seller
will supply Product as provided herein for the term of this Agreement. Maxtor's
obligation to purchase Product from Seller is contingent upon Seller's Product
meeting Maxtor's Application requirements, time to market requirements, Product
Specifications and functional requirements, price requirements, and the other
terms and conditions of this Agreement. Nothing in this "Agreement shall be
construed as an obligation for Maxtor to purchase any Products, except as
expressly provided in any Order (as defined below) issued by Maxtor or as
expressly set forth in quotations accepted by Maxtor covering ASIC Products (See
Section 1.1.6). This agreement is not a requirements contract. Any Product
purchased from Seller is covered under this Agreement whether or not the Order
expressly references this Agreement.
1.1.2 Specification. Specifications for Products being purchased
by Maxtor as of the date of execution of this Agreement are identified in
Exhibit A. Specifications for other standard Products that will be purchased by
Maxtor will be deemed to be included as part of Exhibit A and incorporated into
this Agreement upon furnishing of same to Maxtor. Specifications for custom
integrated circuits or ASIC Products must be mutually agreed to in writing, and
upon such agreement the ASIC Specifications shall become part of Exhibit A and
incorporated into this Agreement.
1.1.3 Packing. Unless otherwise specified in this Agreement or
an Order, all Products are to be packed and identified in accordance with
customary industry practice. Packages shall be constructed for handling with a
mechanical device. A complete packing list specifying Maxtor's applicable
purchase order number, quantity of Products shipped, and part
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<PAGE> 3
number shall be enclosed with all shipments under this Agreement. Seller shall
mark each container with necessary lifting, loading and shipping information,
including the applicable purchase order number, date of shipment, and name and
address of Seller and Maxtor.
1.1.4 Freedom of Action. Nothing in this Agreement shall prevent
either party from engaging in similar business with other persons, including,
without limit, competitors of the other party, provided that the confidentiality
terms of this Agreement are not breached. Nothing in this Agreement shall
prevent Seller from selling Products or the same or substantially similar goods
or materials to other customers, provided that the confidentiality and
intellectual property rights terms of this Agreement are not breached.
1.1.5 Sole Source. Nothing in this Agreement will prevent Maxtor
from procuring Products or the same or substantially similar goods or materials
from other sources than Seller or from providing the same itself, provided that
the confidentiality and intellectual property rights terms of this Agreement are
not breached.
1.1.6 Design and Development Terms for ASIC Product. From time
to time Maxtor may enter into design and development agreements with Seller for
ASIC Products. Any such development effort will be the subject of quotations
provided by Seller covering the specific terms of such design and development
("Quotation"). The Quotation and the terms contained in Exhibit B apply with
respect to any such design and development, in addition to the general terms and
conditions contained herein. In the event of any conflict between the general
terms of this Agreement and Exhibit B, concerning ASIC Products, Exhibit B
prevails (but for all standard Products the general terms and Conditions of this
Agreement prevails). In the event of any such conflict with the Quotation and
this Agreement or Exhibit B, the Quotation prevails.
1.2 Warranty. Each of Seller's warranties made hereunder is
materially relied upon by Maxtor in entering into this Agreement or any Order.
1.2.1 Authority Warranty. Each party represents and warrants
that all corporate action necessary for the authorization, execution and
delivery of this Agreement by such party and the performance of its obligations
under this Agreement has been taken. Further, each party represents and warrants
that neither the execution of this Agreement nor any performance of this
Agreement shall conflict with or be prohibited by any interest, agreement,
obligation, contract, order, law, regulation, or duty, oral or written, to which
it is a party or by which it is bound.
1.2.2 Product Warranty. Seller warrants the product as a
production item ("Item"), but not related services or prototypes of any such
Items, to be free from defects in material and workmanship and to be in
conformance with the written specification, if any, and referenced in an order
accepted by Seller. If any defect in material or workmanship or failure to
conform to such specification ("Defect) is suspected in any such Items, Maxtor,
after obtaining a Returned Material Authorization number from Seller, shall ship
suspected defective samples of the items to Seller, following Seller's
instructions regarding the return. No product will be accepted for replacement,
credit or refund without the written authorization of and in accordance with
Seller's instructions. Seller shall analyze the failures, making use, when
appropriate, of technical information provided by Maxtor relating to the
circumstances surrounding the failures.
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Seller will verify whether any Defect appears in the Items. If Seller determines
that the returned products are not defective, Maxtor shall pay Seller all costs
of handling, inspection, repairs and transportation at Seller's then prevailing
rates. Seller shall, at Seller's s option, taking Maxtor's request into
reasonable account, either credit or refund the purchase price, or replace the
defective product without charge with the same or equivalent product provided:
(i) Maxtor notifies Seller in writing of the claimed Defect within thirty (30)
days after Maxtor knows or reasonably should know of the claimed Defect, (ii)
Seller's examination of the Items discloses that the claimed Defect actually
exists and (iii) in the case of any product other than packaged monolithic
integrated circuits, the defect appears within twelve (12) months from the date
of shipment of the product. In the event of a replacement, Seller shall ship the
replacing Items FOB point of origin, freight prepaid to Maxtor's destination.
Any replaced Item shall become Seller's property. The method of disposition of
any replaced Items will be as mutually agreed by both parties in writing. In no
event shall Seller be responsible for deinstallation or reinstallation of any
Item or for the expenses thereof. Replacements covered by the above warranty are
warranted to be free from defects as set forth above. Inspection and acceptance
of Items by Maxtor and/or payment therefor shall not relieve Seller of
responsibilities hereunder.
The above warranty does not apply to, and Seller makes no warranties
with respect to products that: are software programs, experimental products or
prototypes (all of which are provided "AS IS") or to Items which have been
subjected to misuse, neglect, accident or abuse or operating or environmental
conditions that deviate from the parameters established in applicable
specifications; or have been improperly installed, stored, maintained, repaired
or altered by anyone other than Seller; or have had their serial numbers or
month and year of manufacture or shipment removed, defected or altered. This
warranty does not extend to any system into which a product is incorporated. NO
OTHER WARRANTY, INCLUDING WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE IS GIVEN WITH RESPECT TO SUCH SERVICE OR ANY OTHER SERVICE
PROVIDED BY SELLER UNDER THIS AGREEMENT. This warranty applies only to Maxtor
and may not be assigned or extended by Maxtor to any of its customers or other
users of the Items. Seller will not accept any returns from Maxtor's customers
or users of Maxtor's products.
EXCEPT AS STATED IN THE SECTION ENTITLED WARRANTY, SELLER, ITS
SUBSIDIARIES AND AFFILIATES, SUBCONTRACTORS AND SUPPLIERS MAKE NO WARRANTIES,
EXPRESS OR IMPLIED, AND SPECIFICALLY DISCLAIM ANY WARRANTY OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE. MAXTOR'S SOLE AND EXCLUSIVE REMEDY SHALL BE
SELLER'S OBLIGATION TO REPLACE OR CREDIT OR REFUND AS SET FORTH ABOVE.
1.3 Remedies.
A. For purposes of the exclusive remedies and limitations of
liability set forth in this section, Seller shall be deemed to include Lucent
Technologies Inc., its subsidiaries and affiliates and the directors, officers,
employees, agents, representatives, subcontractors and suppliers of each of
them; and "damages" shall be deemed to refer collectively to all injury, damage,
loss or expense incurred.
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B. Seller's entire liability and Maxtor's exclusive remedies against
Seller for any damages caused by any product defect or failure, or arising from
the performance or non-performance of any work, regardless of the form of
action, whether in contract, tort including negligence, strict liability or
otherwise shall be:
1. For infringement, the remedies set forth in the section
entitled intellectual property indemnity;
2. For failure of product or work performed, the remedies stated
in the section entitled Product Warranty;
3. For failure to deliver or for delays in delivery of
production quantities, Seller shall have no liability unless the delivery is
delayed by more than fifteen(15) days by causes not attributable either to
Maxtor or to conditions beyond Seller's reasonable control, in which case Maxtor
shall have the right, as its sole remedy, to cancel the order without incurring
cancellation charges;
4. For bodily injury or death to any person proximately caused
by Seller, Maxtor's right to proven direct damages; and
5. For claims other than set forth above, seller's liability
shall be limited to direct damages that are proven, in an amount not to exceed
[*]
C. Notwithstanding any other. provision of this agreement, Seller
shall not be liable for incidental, indirect, special, exemplary or
consequential damages or for lost profits, savings or revenues of any kind,
whether or not seller has been advised of the possibility of such damages;
provided, however, this limitation shall not apply to a breach of the
confidentiality obligations of this Agreement if such breach is the result of
intentional misconduct or gross negligence. This provision shall survive failure
of an exclusive remedy.
1.4 Prices, Delivery; Taxes.
[*]
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[*]
ARTICLE II - PROCEDURES
2.1 Qualification.
2.1.1 Qualification. The respective obligations of the parties
pursuant to this Agreement shall be subject to the successful qualification of
Seller's Product and its manufacturing process in Maxtor's Application ,
provided, however, that this will not relieve Maxtor of its obligations
respecting any firm orders placed by Maxtor prior to such qualification provided
the Product meets the Specifications. Maxtor and Seller shall cooperate to set
up the necessary processes and procedures to accomplish and facilitate such
qualification. Except for firm orders placed by Maxtor prior to qualification,
Seller's Product must complete qualification by Maxtor in order to be tendered
under this Agreement, and must consistently perform according to the qualified
standard. After Maxtor's approval or acceptance of the initial qualification
prototypes of the Products, any changes in the Product design, material or any
processes used in producing the Product shall be subject to change notification
in accordance with Exhibit D. Maxtor will use its reasonable commercial efforts
to qualify and utilize Seller's Product in new or additional Applications.
2.1.2 Changes. Seller shall promptly notify Maxtor in writing of
any change in Product design, material, production process or in plant location
in accordance with Seller's change notification policy outlined on Exhibit D in
order to allow Maxtor to requalify the Product, before any Product is
manufactured by the new design, material, process or in the new location and
sold to Maxtor. Any Product delivered to Maxtor after such change and without
change notification in accordance with Exhibit D may be rejected by Maxtor for a
full refund. Notwithstanding the foregoing, in no event will Seller make any
circuit design changes to an ASIC Product without Maxtor's written consent.
2.2 Number Not Used.
2.3 Forecasts. Maxtor shall forecast its requirements for Products to
Seller, as provided below, on a non-binding basis, and Seller shall use its
reasonable commercial efforts to maintain the ability to supply Maxtor's
requirements from Seller. Notwithstanding the above, nothing in this Agreement
shall be construed as an obligation for Maxtor to purchase any Products, except
as expressly provided in any Order issued by Maxtor.
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2.3.1 Forecasts. During the term of this Agreement, Maxtor shall
provide Seller, on a monthly basis, with a nine (9) month rolling forecast
setting forth its estimated requirements and shall provide Orders based on its
requirements for the first three (3) months of the forecast. Orders will be
placed ninety (90) days in advance of the date as of which the Products are to
be delivered. Seller shall be required to accept any Order consistent with the
forecast and the terms contained herein. Maxtor may request a shorter lead time
and Seller shall use its reasonable commercial efforts to meet such date.
Maxtor's forecast is provided solely for Seller's convenience and for its
planning purposes; no forecast shall be construed as an authorization by Maxtor
to order any materials for, or to allocate any labor or equipment for the
manufacture of the Product nor impose on Seller any obligation to supply
additional Product. Maxtor will not be responsible for any of Seller's cost or
expense for materials, Product, labor, or other commitments or expenses, other
than as authorized in Orders or as otherwise expressly provided herein.
2.3.2 Upside Capability. Seller agrees to accept Orders outside
the forecast and ordering cycle ("Upside Quantities") as follows:
The Upside Quantities will depend upon the requested delivery time of
Maxtor from time the order for Upside Quantities is placed (RDT) and the
applicable percentage applied to the quantity of Product ordered by Maxtor for
the then current quarter ("CQ").
<TABLE>
<CAPTION>
RDT Upside Quantity
<S> <C>
1 to 4 weeks 10% of CQ
4 to 8 weeks 20% of CQ
8 to 12 weeks 30% of CQ
</TABLE>
2.4 Orders.
2.4.1 Orders. All purchases and sales shall be initiated by
Maxtor's issuance of written purchase orders sent via airmail, facsimile or
courier ("Order"). Such Orders shall reference this Agreement and state the unit
quantities, unit descriptions, price, requested delivery dates and shipment
instructions. Such stated items included in an Order shall be consistent with
the terms and conditions contained herein. The acceptance or rejection by Seller
of an Order shall be indicated by written acknowledgment within five (5) work
days. By shipping the Products, or by confirming or accepting an Order, or by
performing the work described in an Order Seller agrees to the Order and to the
terms and conditions of this Agreement. All Orders meeting the terms and
conditions of this Agreement shall be accepted by Seller. Nothing in this
Agreement shall be construed as an obligation for Maxtor to purchase any
Products, except as expressly provided in any Order issued by Maxtor.
2.4.2 Objections. Each Order is placed subject to the terms and
conditions of this Agreement. Accordingly, if Seller objects to any of the terms
of an Order, Seller must notify Maxtor in writing stating the specific terms
objected to, the reasons for the objection and the wording proposed to be
substituted before Seller's acceptance of such Order. Under no circumstances
will Seller's objection notice itself constitute a modification of the terms of
an
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Order. No modification of this Agreement will be effective unless made in
writing signed by both parties, which expressly intends to modify this
Agreement. The preprinted terms and conditions of purchase orders, acceptances,
confirmations and similar business documents shall have no effect as amendments
of, objections to, or modifications of this Agreement. Any different or
additional terms in Orders or Seller's acceptance of this Agreement will be
construed as proposals for additions to this Agreement and will not be binding
unless agreed to in writing by both parties.
2.4.3 Precedences. Any terms and conditions added or referenced
by either party in any purchase order, confirmation, acceptance or any similar
document purporting to modify the terms and conditions contained in this
Agreement, shall be disregarded unless expressly agreed upon in writing signed
by the parties, which expressly amends this Agreement. The preprinted terms and
conditions of purchase orders, acceptances, confirmations and similar business
documents shall have no effect as amendments of, objections to, or modifications
of this Agreement.
2.4.4 End of Life. In the event that Seller determines that a
Product is at end of life, Seller shall give Maxtor at least three (3) months
advanced notice of such projected end of life. Such notice shall include the
planned last purchase order date and the planned last shipment date for the end
of life Product. Notwithstanding the foregoing, during the term of this
Agreement, Lucent agrees that, for Maxtor sole sourced Product, Lucent will
supply such Products through the life of the Maxtor HDD program or programs that
use this Product or either provide a mutually agreeable alternative part that is
compatible with the part that is being phased out or give Maxtor at least twelve
months advanced notice of such projected end of life.
2.4.5 End of Term. In the event of the expiration or termination
of this Agreement, any Orders placed before such expiration or termination shall
be completed according to the terms of this Agreement.
2.5 Inspection. Maxtor and Seller shall cooperate to inspect
Products, and nothing in this section shall limit Maxtor's other rights and
remedies.
2.5.1 Inspection by Maxtor. Maxtor may test each lot or Order of
Product to ensure that the Products meet the Specifications and acceptance
criteria as may be established by mutual agreement, and Seller shall not ship
any Products that do not Conform. Any inspection and testing by Maxtor will be
performed at Maxtor's facility. However, Seller will permit Maxtor the right to
audit its facilities and inspect Product (including raw materials, components,
subassemblies and end products) before, during and after manufacture, once a
year or more frequently in writing if agreed to by Seller or in the event that
there has been a lot rejection under Section 2.5.3. Where applicable, Maxtor
may, at its option, inspect all Products or inspect a statistical sample
selected from each lot, and Product, lots or Orders may be inspected more than
once.
2.5.2 Inspection by Seller. Seller will ensure that all Product
are tested to assure that Products meet the applicable Specifications. Seller
will provide only those Product conforming to the Specifications, unless Seller
has obtained prior written approval from Maxtor
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for any deviation from such Specifications. Seller further agrees to maintain
adequate authenticated inspection test documents that relate to work performed
under this Agreement. Such records shall be retained by Seller for a period of
three (3) years after completion of this Agreement and made available to Maxtor
upon request. Seller agrees to supply Maxtor with inspection and test reports,
certifications or any other inspection and test documents as may be reasonably
requested.
2.5.3 In Case of Failure of Inspection. If the above inspection
or testing detects Products which nonconform to the Specifications or the
requirements of this Agreement, Maxtor and Seller will closely cooperate to
identify and find a way to correct the causes of the problem(s). Maxtor may
refuse to accept Product which do not conform. Maxtor may reject entire lots or
Orders if lot acceptance criteria mutually agreed to by the parties are not
fulfilled; provided that any canceled portion of an Order shall nevertheless be
counted as purchased for purposes of determining Maxtor's right to any quantity
discounts. The rejected Product may, at Maxtor's discretion, be returned to
Seller at Seller's expense. Maxtor may immediately stop future shipments of
Product until the cause(s) for non-conformity, as mutually determined by
parties, has been corrected. Maxtor will use its reasonable commercial efforts
to assist Seller in identifying the cause(s) for rejection.
2.6 Shipping.
2.6.1 Timeliness. Seller shall use its diligent efforts to meet
a one hundred percent (100%) on-time delivery commitment. If Seller's
performance falls below one hundred percent (100%) on-time deliveries, then
Seller shall implement a corrective action plan acceptable to Maxtor which
brings the deliveries back to one hundred percent (100%) on-time. If Seller is
unable to deliver any Product on schedule, Seller shall promptly notify Maxtor
giving a new delivery date, and Maxtor may:
(i) accept the new delivery date; or
(ii) reschedule the delivery by means of a Change
Order; or
(iii) if the delay is in excess of fifteen days,
cancel the delayed portion of the Order without liability; provided that any
canceled portion of an Order shall nevertheless be counted as purchased for
purposes of determining Maxtor's right to any quantity discounts.
At Maxtor's request, Seller will provide Maxtor with daily
notification of shipping delays or of the progress of delayed Products in
transit. Such notification will include action plans to for recovery or
expediting of the affected Product. Seller shall provide Maxtor notice of the
departure of any shipment of Product from Seller's site.
2.7 Delivery.
2.7.1 Delivery Document. Either invoice or delivery order may be
used when making deliveries. Each set must contain three (3) copies. Each copy
must show this Agreement number, item number and description of Products,
purchase order number, and quantity of
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Products shipped. Bills of Lading shall be mailed in triplicate to the
destination address shown on the face of the Order, or to the consignee of the
Order on the day shipment is made. All documents accompanying the Products shall
reference the purchase order number and, if not, Maxtor shall have the right to
reject delivery and return the Products at Seller's expense.
2.7.2 Delivery Early or Late. If Seller's deliveries fail to
meet schedule, Maxtor, without limiting its other rights and remedies, may:
(i) In the case of late Products:
(a) direct expedited routing, and any
excess costs for such expedited routing shall be paid by Seller; or
(b) cancel the delayed portion as
permitted under Section 2.6.2;
(ii) In the case of early Products
(a) return the Products at Seller's
expense for proper delivery; or
(b) accept the Products, but Maxtor may
charge Seller with storage expenses incurred because of the advance delivery.
2.8 Acceptance. If, after [*] from the date of receipt by Maxtor,
Maxtor has not rejected the Product, it will be deemed to have been accepted by
Maxtor. Maxtor also may accept the Product by written notice. The act of
inspection or payment by Maxtor for the Product will not be construed as
Maxtor's acceptance of any Product. Acceptance of any Product shall not affect
the Product warranty or any related remedy.
2.9 Returns. Permitted returns of product to Seller are at Seller's
expense for packing and shipping. Return shipments are F.O.B. Maxtor, and title
and risk of loss pass to Seller upon delivery to the return F.O.B. Point. If
Seller requests, Maxtor will apply Seller's Return Materials Authorization (RMA)
or similar number to the returned Products and/or related documentation,
provided, however, that Seller must supply such RMA number to Maxtor on a timely
basis.
2.10 Epidemic Failure. In the event that the Products supplied by
Seller to Maxtor should develop any Epidemic Failure, the parties will meet in
order to work out technical methods to remedy the problem. Product will undergo
failure mode analysis (FMA) by Seller pursuant to the terms of the Warranty
provisions to determine whether the Product in fact defective and the cause of
the Epidemic Failure. In such event, shipment of undelivered Orders of Products
which are the subject of the Epidemic Failure and FMA will be postponed, at
Maxtor's request until FNM has been Performed and the cause of the epidemic has
been corrected if the Product is found to be defective. In case upon the
expiration of forty-five (45) days from the date of Maxtor's notice regarding
the Epidemic Failure and FMA has determined that the Product is defective and
Seller has not yet remedied the same, then Maxtor shall be
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entitled to cancel Pending Orders without any liability for such cancellation
and return any defective Products under the Warranty Provision. As used herein,
"Epidemic Failure" means over one half of one percent (.5%) of the Product shall
be non-conforming to Specifications over a period of thirty (30) days.
2.11 Invoicing. Seller will issue the invoices for the Products and
will date them with a date equal or subsequent to shipment date. Invoices shall
reference purchase order number, item number and description of Products, unit
price of Products, and total amounts due.
2.12 Payment.
2.12.1 Terms. Invoices shall be due and payable within [*] after
the date of invoice, with a [*] grace period for actual receipt of payment.
Maxtor's payment advice shall reference Seller's invoice number(s) and date(s).
2.12.2 Currency. Unless expressly provided to the contrary, all
amounts stated in this Agreement and all sums payable under this Agreement shall
be denominated in United States Dollars and all payments made under this
Agreement shall be made by wire transfer, cashier's check, or other ready funds
in United States Dollars to payee's account at payee's designated United States
bank.
2.12.3 Disputes. Maxtor shall have [*] after the invoice date to
contest in good faith the amounts and items charged. Amounts subject to good
faith contest are not due and payable until [*] after the dispute is resolved.
2.12.4 Bills. Seller's bills shall list all open invoices,
invoice dates, and amounts unpaid; payments received, and credits issued.
2.12.5 Payment Applications. Payments shall be applied to open
invoices according to Maxtor's payment advice, but, in the event the payment
advice does not specify invoices, then payments shall be applied to oldest items
first.
2.12.6 Credits. Credits or credit memos shall be paid
immediately to Maxtor, unless Maxtor directs in writing that the amounts are to
be applied as offsets to any open invoices.
2.13 Order Changes.
2.13.1 Rescheduling Of Orders. Maxtor may reschedule an Order
pursuant to the following schedule:
[*]
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2.13.2 Cancellation of Orders. Should Maxtor cancel any Order
which has been acknowledged and a shipping date assigned, either in whole or in
part, such cancellation shall be upon terms and conditions that will compensate
Seller for any loss or damage resulting from such cancellation. No cancellation
will be permitted if a reschedule has been previously negotiated at Maxtor's
request, unless the delivery date that was rescheduled was outside lead-time.
Compensation by Maxtor for production quantities of the Product shall
be according to the following schedule:
[*]
Standard Products:
<TABLE>
<CAPTION>
DAYS PERCENT OF LIABILITY
- ---- --------------------
<S> <C>
[*]
</TABLE>
ASIC Product:
<TABLE>
<CAPTION>
DAYS PERCENT OF LIABILITY
- ---- --------------------
<S> <C>
[*]
</TABLE>
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[*]
2.14 Number not Used
2.15 Shortages. In the event of a shortage of capacity or material
that will affect the supply of the Product, Seller may allocate in a fair and
reasonable manner, taking into account Seller's contractual commitments, its
available production output among itself and its other customers under contract.
Seller shall provide Maxtor with as much notice as possible if it anticipates or
has reason to believe that Seller's output of the Product will not be sufficient
to meet all of Maxtor's requirements for any period based on the forecast
furnished by Maxtor.
ARTICLE III - INTELLECTUAL PROPERTY
3.1 Confidentiality.
3.1.1 Confidential Information. "Confidential Information" shall
mean any information disclosed by one party to the other pursuant to this
Agreement which is in written, graphic, machine readable or other tangible form
and is marked "Confidential", "Proprietary" or in some other manner to indicate
its confidential nature. Confidential Information may also include oral
information disclosed by one party to the other pursuant to this Agreement
provided that such information is designated as confidential at the time of
disclosure and reduce to a written summary by the disclosing party, within
thirty (30) days after its oral disclosure, which is marked in a manner to
indicate its confidential nature and delivered to the receiving party. In
addition, all technical and confidential information marked in a manner to
indicate its confidential nature exchanged prior to the date of this Agreement
shall be Confidential Information. Each party shall treat as confidential all
Confidential Information of the other party, shall not use such Confidential
Information except as expressly set forth in this Agreement or otherwise
authorized in writing, shall implement reasonable procedures to prohibit the
disclosure, unauthorized duplication, misuse or removal of the other party's
Confidential Information and shall not disclose such Confidential Information to
any third person except as may be necessary and required in connection with the
rights and obligations of such party under this Agreement, and subject to
confidentiality obligations at least as protective as those set forth in this
Agreement. Without limiting the above, each of the parties shall use at least
the same procedures and degree of care which it uses to prevent the disclosure
of its own confidential information of like importance to prevent the disclosure
of Confidential Information disclosed to it by the other party under this
Agreement, but in no event less than due care. The party disclosing an item of
Confidential Information shall be the Discloser ("Discloser"), and the party
receiving an item of Confidential Information shall be the Receiver
("Receiver"). Notwithstanding the above, neither party shall have liability to
the other with regard to any Confidential Information of the other which:
(i) was generally known and available in the public domain
at the time it was disclosed or becomes generally known and available in the
public domain through no fault of Receiver;
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(ii) was known to Receiver at the time of disclosure;
(iii) is disclosed with the prior written approval of
Discloser;
(iv) was independently developed by Receiver without any
use of the Confidential Information and by employees or other agents of Receiver
who have not been exposed to the Confidential Information;
(v) becomes known to Receiver from a source other than the
Discloser without breach of this Agreement by Receiver and otherwise not in
violation of the Discloser's rights; or
(vi) is disclosed pursuant to the order or requirement of
a court, administrative agency, or other governmental body; provided that
Receiver shall provide prompt, advanced notice to Discloser.
3.1.2 Employee Agreements. Each party shall obtain the execution
of non-disclosure agreements with its employees, agents and consultants having
access to Confidential Information of the other party, and shall diligently
enforce such agreements, or shall be responsible for the actions of such
employees, agents, and consultants in this respect.
3.1.3 Use of Confidential Information. At all times, and
notwithstanding any termination, expiration, or cancellation under this
Agreement, Receiver will use the Confidential Information for no purpose other
than pursuing the transactions and relationship contemplated by this Agreement.
3.1.4 Return of Materials. Upon termination, cancellation or
expiration of this Agreement, or upon written request of the other party, each
party shall promptly return to the other all documents or other tangible
materials representing the other's Confidential Information, including all whole
or partial copies.
3.1.5 Term of Nondisclosure Obligation. Notwithstanding the term
of this Agreement, the obligations of Seller and Maxtor under this Agreement.
with respect to any Confidential Information shall continue for a period of
three (3) years after the Termination Date.
3.1.6 Injunctive Relief. If either party breaches any of its
obligations with respect to confidentiality and unauthorized use of Confidential
information under this Agreement, it being recognized that the damages flowing
from such breach are difficult to ascertain and liquidate, the other party shall
be entitled to seek equitable relief to protect its interest in such
Confidential Information, including but not limited to injunctive relief, as
well as all other rights and remedies.
3.1.7 Export Controls. Recipient agrees that it will not
knowingly
(i) export or re-export, directly or indirectly, any
technical data (as defined by the U.S. Export Administration regulations)
received under this Agreement to,
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(ii) disclose such technical data for use in, or
(iii) export or re-export, directly or indirectly, as any
direct product of such technical data to, any destination to which such export
or re-export is restricted or prohibited by U.S. law, without obtaining prior
authorization from the U.S. Department of Commerce.
3.1.8 Items Declared Confidential. This Agreement, its terms and
conditions, Maxtor's specifications, and all Orders are Confidential
Information.
3.2 Publicity. Neither party shall publicly announce or disclose the
existence of this Agreement or its terms and conditions, or advertise or release
any publicity or press release regarding this Agreement, without the prior
written consent of the other party. Nothing in this Agreement shall limit a
party from making such disclosures as are required by law or court order,
provided notice of such disclosures is given to the other party.
3.3 Intellectual Property Rights. Seller exclusively shall own all
right, title and interest in and to any inventions, discoveries, improvements,
methods, ideas, computer and other apparatus programs and related documentation,
other works of authorship fixed in any tangible medium of expression, mask works
or other forms of intellectual property, whether or not patentable,
copyrightable or subject to mask work rights or other forms of protection, which
are made, created, developed, written, conceived or first reduced to practice by
Seller solely, jointly or on its behalf, in the course of, arising out of or as
a result of work done under this Agreement. Seller hereby grants to Maxtor a
nonexclusive, worldwide license to Seller intellectual property to use, sell and
distribute the Product purchased from Seller, provided, however, that such
license shall not include any license with respect to the combination of the
Product with any other product, even if such other product has been purchased
from Seller, nor any license to any method or process, even if such method or
process is the inherent use of the Product.
No title or other ownership rights in any licensed products or any
copies thereof shall pass to Maxtor under this Agreement or any performance
hereunder.
Maxtor agrees that it will not alter any notices on, prepare
derivative works based on, or reproduce, reverse engineer, disassemble or
decompile any software embodied in licensed products or recorded in the
purchased products furnished under this Agreement.
Except as expressly set forth in this Agreement, nothing contained in
this Agreement shall be deemed to grant, either directly or by implication,
estoppel or otherwise, any license on the patents, patent applications,
copyrights or proprietary information arising out of any other inventions of
either party.
3.4 Property. Title to all property not otherwise specifically
addressed in this Agreement owned by one party ("Furnisher") and furnished to
the other party ("Recipient"), shall remain with the Furnisher. Any such
property owned by Furnisher and in Recipient's possession or control shall be
used only in the performance of this Agreement unless otherwise authorized in
writing by the Furnisher. Recipient shall keep adequate records of such property
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<PAGE> 16
and such records shall be made available to Furnisher upon request, and shall
store, protect, preserve, repair, and maintain such property in accordance with
sound commercial practice, all at Recipient's expense. Unless otherwise agreed
to by Furnisher, Recipient shall insure Furnisher's interest in such material
against loss or damage by reason of fire (including extended coverage), flood,
accident, theft, riot or civil commotion. In the event that Furnisher's property
becomes lost or damaged to any extent while in Recipient's possession, Recipient
agrees to indemnify Furnisher or replace such property at Recipient's expense,
in accordance with Furnisher's request. At the expiration or termination of this
Agreement, Recipient shall request disposition instructions for all such
property, whether in original form or otherwise. Recipient agrees to make such
property available as directed by Furnisher, including preparation, packaging,
and shipping. Preparation for shipment shall be at Furnisher's expense and
shipment shall be FOB Recipient.
ARTICLE IV - LIABILITIES
4.1 General Indemnity. Seller shall in the performance of work or services under
this Agreement, fully comply with all applicable national, state, and local
laws, rules, regulations, and ordinances and shall indemnify and hold harmless
Maxtor from and against any loss, claim, damage, liability, expense, or cost
(including without limitation attorney's fees and court costs) resulting from
failure of such compliance.
4.2 Intellectual Property Indemnity. Seller will: (i) defend or
settle, at its option and expense, any claim against Maxtor alleging that any
Product furnished under this Agreement directly infringes any patent, copyright
or trademark; (ii) reimburse Maxtor for any costs incurred at Seller's written
request relating to such claim; and (iii) pay damages and costs assessed by
final judgment against Maxtor and attributable to such claim.
In addition, Seller will have the right, at any time and at its
option and expense to: (i) procure for Maxtor the right to continue using such
Product; (ii) replace or modify any such Product provided or to be provided to
be free of the infringement; or (iii) require return of such Product and refund
the purchase price.
Seller's obligations hereunder are conditioned upon: (i) Maxtor
giving Seller written notice within thirty (30) days of any such claim; (ii)
Seller having complete control of the defense and settlement thereof, (iii)
Maxtor cooperating fully with Seller to facilitate the defense or settlement of
such claim; and (iv) Maxtor's full compliance with this Agreement.
Notwithstanding the foregoing, Seller shall have no obligation to
defend or settle any claim, and Maxtor shall indemnify and save harmless Seller
and its suppliers and affiliated companies from all costs, expenses, liabilities
and claims, for any such claim: (i) arising from Seller's compliance with
Maxtor's specifications, designs or instructions; or (ii) relating to any
Product furnished hereunder in combination with item(s), whether or not
furnished by Seller, even if such combination results from the Product's
necessary or inherent use or the use for which the Product is purchased.
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<PAGE> 17
The sale of any Product by Seller shall not in any way confer upon
Maxtor, or upon anyone claiming under Maxtor, any license (expressly, by
implication, by estoppel or otherwise) under any patent claim of Seller or
others covering or relating to any combination, machine or process in which such
product is or might be used, or to any process or method of making such product.
THE FOREGOING STATES THE SOLE AND EXCLUSIVE REMEDY AND OBLIGATION OF
THE PARTIES HERETO FOR INFRINGE OR OTHER VIOLATION OF ANY INTELLECTUAL PROPERTY
RIGHTS ARISING OUT OF THIS AGREEMENT AND IS IN LIEU OF ALL WARRANTIES, EXPRESS,
IMPLIED OR STATUTORY, IN REGARD THERETO.
4.3 Strict Liability. Each party will indemnify the other against and
hold it harmless from any loss, cost, liability or expense (including court
costs and reasonable fees of attorneys and other professionals) to the extent it
arises out of or in connection with, in whole or in part, any negligence or
willful act or omission of it of its employees or agents including but not
limited to any such act or omission that contributes to:
(i) any bodily injury, sickness, disease or death; or
(ii) any injury or destruction to tangible or intangible
property of the other or any related loss of use.
4.4 Limitation Of Liability. IN NO EVENT SHALL EITHER PARTY BE LIABLE
FOR ANY SPECIAL, CONSEQUENTIAL, INDIRECT, OR INCIDENTAL DAMAGES, HOWEVER CAUSED,
ON ANY THEORY OF LIABILITY AND WHETHER OR NOT SUCH PARTY HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES, ARISING IN ANY WAY OUT OF THIS AGREEMENT OR ANY
AGREEMENT, UNDERTAKING, OR PERFORMANCE THAT MAY BE PROMISED, PERFORMED, OR
EXECUTED TO IMPLEMENT THIS AGREEMENT, PROVIDED, HOWEVER, THIS LIMITATION SHALL
NOT APPLY TO A BREACH OF THE CONFIDENTIALITY OBLIGATIONS OF THIS AGREEMENT IF
SUCH BREACH IS THE RESULT OF INTENTIONAL MISCONDUCT OR GROSS NEGLIGENCE.
ARTICLE V - DISPUTE RESOLUTION
5.1 Escalation. The parties agree that any material dispute between the parties
relating to this Agreement and unresolved for a period exceeding thirty days may
be submitted to a panel of two senior executives of Maxtor and Lucent USA,
Microelectronics Group. Either party may initiate this proceeding by notifying
the other party pursuant to the notice provisions of this Agreement. Within
fifteen days (15) days from the date of receipt of the notice, the parties'
executives shall confer (via telephone or in person) in an effort to resolve
such dispute. The decision of the executives will be final and binding on the
parties. In the event the executives are unable to resolve such dispute within
twenty (20) days after submission to them, the parties agree to submit the
dispute to a sole mediator selected by the parties or, at any time at the option
of a
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<PAGE> 18
party, to mediation by a mediator selected by the American Arbitration
Association ("AAA"). The parties agree to make good faith efforts to resolve
disputes by mediation within thirty (30) days. If not thus resolved such dispute
shall be settled by means of arbitration as provided below. Each party's
executives shall be identified by notice to the other party, and may be changed
at any time by notice.
5.2 Arbitration.
5.2.1 Binding Arbitration. Any controversy, claim, or action,
whether in law or at equity, whether in tort, contract, warranty, or otherwise,
arising out of, relating to, or involving this Agreement and any agreement,
undertaking, or performance that may be promised, performed, or executed to
implement this Agreement will be settled by arbitration, subject to Section 5.1,
as follows:
(i) Any arbitration proceeding shall be conducted under
the laws of the state of New York and the Federal Arbitration Act, and pursuant
to the Commercial Arbitration Rules of the American Arbitration Association
insofar as such Commercial Arbitration Rules do not conflict with the provisions
of this Section.
(ii) Either party may initiate arbitration by giving
notice to the other stating an intention to arbitrate, the issue to be
arbitrated, and the relief sought. The site for any arbitration proceeding shall
be San Jose, California. Within twenty (20) days from the date of the notice
("Notice Date"), the parties shall agree on one (1) neutral arbitrator. If the
parties cannot agree on one (1) neutral arbitrator within such twenty (20) day
period, then each shall select one (1) party-appointed arbitrator within thirty
five (35) days from the Notice Date. The two (2) party-appointed arbitrators so
selected by the parties shall designate the third (3rd) arbitrator within fifty
(50) days from the Notice Date. Each arbitrator shall be knowledgeable in the
law and technology at issue. No arbitrator shall have been employed or retained
in any capacity or affiliated with either party during the prior two (2) years.
(iii) The arbitrators shall promptly, by majority vote,
make such award and determination as is appropriate and in accordance with the
terms of this Agreement. The arbitrator shall not have authority to award
punitive, exemplary or other damages in excess of compensatory damages and each
party irrevocably waives any claim thereto. The parties will faithfully abide by
and perform any award rendered by the arbitrators. Further, any such award and
determination shall be final and binding upon the parties and enforceable in any
court of competent jurisdiction.
5.2.2 Injunctive Relief. Notwithstanding the above, the parties
may apply to any court of competent jurisdiction for injunctive relief without
breach of this arbitration provision.
5.2.3 Governing Language. The arbitration proceedings and all
pleadings and written evidence shall be in the English language. Any written
evidence originally in a language other than English shall be submitted in
English translation accompanied by the original or a true copy.
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5.2.4 Costs and Fees. Each Party shall bear its own expenses and
those of the arbitrator shall be borne equally. The arbitrator, parties, their
representatives and other participants shall hold the existence, content and
result of the mediation and arbitration in confidence.
5.3 Choice of Law.
5.3.1 Choice of Law. This Agreement and any agreement,
undertaking, or performance that may be promised, performed, or executed to
implement this Agreement shall be governed by and construed under the
substantive laws, but not the conflicts of law, of the State of New York. The
parties expressly agree that this Agreement and any agreement, undertaking, or
performance that may be promised, performed, or executed to implement this
Agreement shall not be subject to and shall not be interpreted by the United
Nations Convention on Contracts for the International Sale of Goods.
5.3.2 Compliance with Laws. Seller shall be responsible for
obtaining, at Seller's cost, all necessary administrative and governmental
licenses, approvals, and permits and shall generally comply with all laws and
regulations for the performance of this Agreement ("Governing Law").
5.3.3 Foreign Corrupt Practices Act. Maxtor is subject to the
laws and regulations of the United States including the Foreign Corrupt
Practices Act ("FCPA"). Seller shall not use any payment or other benefit
derived from Maxtor to offer, promise or pay any money, gift or any other thing
of value to any person for the purpose of influencing official actions or
decisions affecting this Agreement or with the intention of obtaining or
maintaining any business related to Maxtor, while knowing or having reason to
know that any portion of this money, gift or thing will directly or indirectly,
be given, offered or promised to:
(i) An employee, officer or other person acting in an
official capacity for any government or its instrumentalities; or
(ii) Any political party, party official or candidate for
political office. Further, Seller shall maintain books, records, and systems of
accounting and control adequate to insure that Seller's assets and operations
are accounted for and that Seller's business is carried out according to the
directions of Seller's managers.
5.3.4 Assurances and Compliance. Seller shall provide Maxtor
with the assurances and official documents that Maxtor periodically may request
to verify Seller's compliance with the Governing Laws or FCPA. Actions violating
the Governing Laws or FCPA are material breaches of this Agreement and may
result in civil or criminal penalties.
5.3.5 Government Flowdown Provisions. In no event will this
Agreement be placed under a U.S. Government Contract which would subject Seller
to any additional terms and conditions or liability.
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<PAGE> 20
5.3.6 Export Controls. Maxtor agrees that it will not knowingly
export or re-export, directly or indirectly, any Product to any destination to
which such export or re-export is restricted or prohibited by U.S. law, without
obtaining prior authorization from the U.S. Department of Commerce.
5.4 Limit of Time to Bring Action. No actions or arbitrations,
regardless of form, arising out of this Agreement, may be brought by either
party more than eighteen (18) months after such actions or arbitrations arose,
or in the case of nonpayment, more than eighteen (18) months from the date the
last payment was due.
ARTICLE VI - GENERAL
6.1 Term And Termination.
6.1.1 Term. This Agreement shall become effective on the
Effective Date and shall remain in force until the Termination Date, and on and
effective the Termination Date this Agreement shall terminate.
6.1.2 Renewal. The parties may agree in writing to extend this
Agreement for one or more terms of one (1) year.
6.1.3 Termination for Convenience. This Agreement or any Order
placed under this Agreement may be terminated in whole or in part at any time by
Maxtor for its own convenience. Any such termination will not be construed as a
breach. Maxtor's exclusive liability and Seller's exclusive remedy for such
termination will be compensation owed to Seller (i) as set forth in Section
2.13, (ii) under the terms of any ASIC Quotation, (iii) resulting from volume
pricing adjustments (true-ups) and (iv) as may otherwise be set forth in a
writing signed by both parties.
In no event will Maxtor's liability in the aggregate exceed the total
price which would have been paid under this Agreement for the work had it not
been terminated. Seller's termination claim must be submitted in writing no late
than 90 days from the date of receipt of termination notice.
6.1.4 Termination For Cause. This Agreement shall be terminated
for cause:
(i) If either party materially defaults in the performance
of any provision of this Agreement, then the non-defaulting party may give
written notice to the defaulting party that if the default is not cured within
thirty (30) calendar days, the Agreement will be terminated at the end of that
period and such termination shall not prejudice or limit either party's
remedies; or
(ii) If either party violates any intellectual property,
confidentiality, or license provision of this Agreement, then the non-defaulting
party may give written notice to the defaulting party of such violation and of
immediate termination and the Agreement will be
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<PAGE> 21
terminated when such notice is given and such termination shall not prejudice or
limit either party's remedies; or
(iii) Upon:
(a) the institution by or against either party
of insolvency, receivership or bankruptcy proceedings or any other proceedings
for the settlement of its debts; or
(b) either party's making an assignment for the
benefit of creditors; or
(c) (c) either party's dissolution,
this Agreement shall terminate immediately without notice and shall be deemed to
have been terminated by the party not so affected and such termination shall not
prejudice or limit either party's remedies.
6.1.5 Duties upon Termination. Upon any termination or
expiration of this Agreement:
(i) all licenses made to Seller under this Agreement shall
be terminated according to their terms effective the date of the termination or
expiration;
(ii) the parties will return or destroy all Confidential
Information received from the other party; and
(iii) neither party shall be liable to the other because
of such termination for compensation, reimbursement or damages on account of the
loss of prospective profits or anticipated sales or on account of expenditures,
investments, leases or commitments in connection with the business or good win
of Maxtor or Seller, or for any other reason growing out of such termination.
6.1.6 Survival. The terms of this Agreement which by their
nature may survive the termination or expiration of this Agreement shall survive
the termination or expiration of this Agreement.
6.2 General.
6.2.1 Except for either party's right to assign this Agreement
to any successor-in interest to the business of which this Agreement relates,
neither party shall assign this Agreement nor any rights or obligations
hereunder without the prior written consent of the other party. Any attempted
assignment without the. other party's consent shall be void and ineffective.
6.2.2 Consents. No consent required to be given under this
Agreement shall be unreasonably withheld.
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<PAGE> 22
6.2.3 Counterparts. This Agreement shall be prepared two
identical and original counterparts and both of which together shall be one and
the same instrument and either of which may be used for purposes of proof.
6.2.4 All remedies available to either party under this
Agreement are cumulative and may be exercised concurrently or separately, and
the exercise of any one remedy shall not be deemed an election of such remedy to
the exclusion of other remedies.
6.2.5 Independent Parties. Persons furnished by shall be solely
the employees or agent of such each party and shall be under the sole and
exclusive direction and control of the furnishing party. They shall not be
considered employees of the other party for any purpose. Each party shall remain
an independent contractor and shall be responsible for compliance with all laws,
rules and regulations involving, but not limited to, employment of labor, hours
of labor, health and safety, working conditions and payment of wages. Each party
shall also be solely responsible for payment of taxes, including federal, state
and municipal taxes, chargeable or assessed with respect to its employees, such
as social security, unemployment, worker's compensation, liability insurance and
federal and state withholding. Each party shall indemnify the other for any
loss, damage, liability, claim, demand or penalty including costs, expenses, and
reasonable attorneys' fees assessed against one party that may be sustained by
reasons of the other party's failure to comply with the provisions of this
Section. Neither party nor its employees, officers, directors, or agents shall
hold itself out as the agent, employee, partner, or joint venturer of the other
party, and shall make no commitment or engagement on the account of or on behalf
of the other party.
6.2.6 Force Majeure. Nonperformance of either party shall be
excused to the extent that performance is rendered impossible by strike, fire,
flood, governmental acts, orders or restrictions, civil or military authority,
explosion, war, strike, embargo, act of God, nature or the public enemy, or any
other reason where failure to perform is beyond the control and not caused by
the negligence of the nonperforming party. In the event of any delay caused by
such contingency, the delayed party may defer any performance or delivery
prevented by the force majeure condition for a period equal to the time lost by
reason of such delay, provided, however, that the delayed party promptly
commences and reasonably and diligently pursues actions to cure or circumvent
such cause. Whenever any cause delays or threatens to delay the timely
performance of this Agreement, Seller shall immediately notify Maxtor of all
relevant information with respect to such cause. If Seller is delayed in any
performance or delivery by more than thirty (30) days, Maxtor may terminate the
delayed performance or delivery or this Agreement and such termination shall not
be a breach of this Agreement and shall be without penalty.
6.2.7 Governing Language. English shall be the language of this
Agreement and the English language shall govern all disputes, performance and
interpretations.
6.2.8 Headings. The descriptive headings of the several Articles
and Sections of this Agreement are inserted for convenience only and do not
constitute a part of this Agreement and shall not affect the interpretation of
this Agreement.
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<PAGE> 23
6.2.9 Joint Work Product. The parties further acknowledge that
they have thoroughly reviewed this Agreement and bargained over its terms and
that for convenience, Maxtor has written down the terms of this Agreement
Accordingly, this Agreement shall be construed without regard to the party or
parties responsible for its preparation and shall be deemed to have been
prepared jointly by the parties.
6.2.10 Notices. Any notice required or permitted to be given
under this Agreement shall be in writing and shall be deemed to be sufficiently
given if delivered by hand or if sent by courier with a receipt requested or by
registered air mail postage prepaid, addressed to Maxtor or to Seller, as the
case may be, at the addresses first set forth above or to such other address as
may be furnished for such purpose by notice duly given under this Agreement.
Such notice shall be deemed to have been given when delivered by hand or two (2)
days after deposit with the courier or mail service. Any party may change its
address for such communications by giving such notice to the other party in
conformance with this section.
6.2.11 Severance. If any provision of this Agreement is held to
be invalid by a court of competent jurisdiction, then the remaining provisions
shall nevertheless remain in full force and effect. The parties agree to
renegotiate any term held invalid and to be bound by the mutually agreed
substitute provisions.
6.2.12 Time. Time is of the essence in all performances
hereunder. The words day, month, quarter, year, and the like shall mean calendar
day, month, quarter, year, and the like, unless expressly provided to the
contrary.
6.2.13 Waiver. The failure of any party to this Agreement at any
time or times to require performance of any provision of this Agreement shall in
no manner affect such party's available remedies or right at a later time to
enforce the same. No waiver by any party of any condition, or of the breach of
any term, covenant, representation or warranty contained in this Agreement,
whether by conduct or otherwise (in any one or more instances) shall be deemed
to be or construed as a waiver or continuing waiver of any such condition or
breach or of any remedy or as a waiver of any other condition or as a breach of
any other term, covenant, representation or warranty of this Agreement.
ARTICLE VII EXECUTION
7.1 Entire Agreement. The terms and conditions of this Agreement are the entire
agreement between the parties and supersede all previous agreements, proposals,
and understandings, whether oral or written, between the parties with respect to
the subject matter of this Agreement (except for confidentiality agreements
governing the exchange of information prior to the Effective Date which shall
continue to govern periods prior to the Effective Date) and no agreement or
understanding varying or extending the same shall be binding upon either party
unless in a written document signed by both parties. This Agreement shall
supersede all inconsistent or additional terms contained in any purchase orders,
sale acknowledgments or other similar documents delivered by the parties.
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<PAGE> 24
7.2 Execution. This Agreement shall not be effective until it has
been executed by Seller and accepted by an authorized representative of Maxtor
at a principal place of business.
7.3 Electronic Execution. To expedite the process of entering into
this Agreement, the parties acknowledge that Transmitted Copies of this
Agreement shall be equivalent to original documents until such time as original
documents are completely executed, produced, and delivered, and in the event of
the use of Transmitted Copies, each party shall use its best efforts, at its own
expense, to execute, produce, and deliver original copies. "Transmitted Copies"
shall mean copies which are reproduced or transmitted via photocopy, facsimile,
or other process of complete and accurate reproduction and transmission.
7.4 Capacity. By it's signature below, Seller represents and warrants
as follows, acknowledging that each and every such representation and warranty
has been materially relied upon by Maxtor in entering into this Agreement:
(i) SELLER CERTIFIES BY EXECUTION THAT THE SIGNER IS
AUTHORIZED TO EXECUTE THIS AGREEMENT AND THAT ALL NECESSARY CONSENTS HAVE BEEN
OBTAINED.
(ii) SELLER IS, AND HAS HELD ITSELF OUT TO BE, EXPERIENCED
IN DUTIES AND UNDERTAKINGS SIMILAR TO THOSE CONTEMPLATED IN THE AGREEMENT.
(iii) THE AGREEMENT IS IN THE ENGLISH LANGUAGE, AND SELLER
(ITSELF OR THROUGH ITS TRANSLATORS) UNDERSTANDS AND IS CAPABLE OF FLUENTLY
READING, SPEAKING, AND COMMUNICATING IN THE ENGLISH LANGUAGE.
(iv) SELLER HAS READ AND UNDERSTOOD ALL OF THE PROVISIONS
Of THE AGREEMENT.
(v) MAXTOR HAS EXPLAINED EACH AND EVERY TERM OF THE
AGREEMENT TO THE SATISFACTION OF SELLER.
(vi) SELLER HAS HAD THE OPPORTUNITY TO SEEK INDEPENDENT
ADVICE AND COUNSEL RELATED TO THE AGREEMENT.
(vii) A COMPLETE AND TRUE COPY OF THE AGREEMENT, EXECUTED
BY BOTH PARTIES, HAS BEEN DELIVERED TO SELLER AND RECEIPT OF SUCH COPY IS HEREBY
ACKNOWLEDGED.
THIS AGREEMENT REQUIRES THAT DISPUTES BE SETTLED BY BINDING
ARBITRATION.
In witness whereof, the parties have executed this Agreement as of
the Effective Date.
MAXTOR CORPORATION LUCENT TECHNOLOGIES INC.
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<PAGE> 25
By: /s/ DAVID BEAVER By: /s/ MARK STIBITZ
----------------------------- ----------------------------------
(signature) (signature)
David Beaver Mark Stibitz
- -------------------------------- --------------------------------------
(print name) (print name)
V.P. Materials V.P. Integrated Systems
- -------------------------------- --------------------------------------
(title) (title)
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<PAGE> 26
VOLUME PURCHASE AGREEMENT
EXHIBIT A
SPECIFICATIONS
<TABLE>
<CAPTION>
PRODUCT Part # Specification #
<S> <C>
[*]
</TABLE>
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[*] IDENTIFIES REDACTED MATERIAL DELETED PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
<PAGE> 27
EXHIBIT B
ADDITIONAL TERMS AND CONDITIONS FOR ASIC PRODUCTS
1. QUOTATIONS FOR ASIC PRODUCTS. Seller will issue quotations
("Quotations") covering the development of application specific integrated
circuits ("ASIC"). The Quotation and the Agreement, including this Exhibit B,
shall be the entire agreement with respect to the design, development and
production of the ASIC on behalf of Maxtor.
2. CHANGE OF QUOTATION TERMS. Quoted prices, fees and charges are
valid only for the parameters or other particulars relating to the ASIC as
stated in the Quotation. If any changes in such parameters or particulars become
necessary, including but not limited to revision or redefinition of the
specification or variations in quantities, functional description, package type,
or testing requirements, Seller may revise such prices by amendment to the
Quotation. Other quoted fees and charges are valid only for the respective
particulars stated in the Quotation. Seller may also amend the Quotation with
respect to any of such quoted fees and charges to make adjustments for changes
in Maxtor's requirements. Any such amendments to the Quotations shall reference
the Quotations and shall be further identified by their respective dates and
shall be accepted by Maxtor in writing.
3. PROTOTYPE APPROVAL. Within ninety (90) days after receipt of
prototypes for any ASIC covered by this Agreement, Maxtor may return any claimed
non-conforming prototypes to Seller with a written rejection statement
specifying the alleged failure or failures of the prototypes to meet the
acceptance criteria as provided in the mask order sign off sheet or mutually
agreed modifications thereof (the "Acceptance Criteria"). If Maxtor does not
return the prototypes with a written rejection statement within such ninety (90)
day period, then the design and prototypes shall be deemed to have been approved
by Maxtor and development work shall be deemed to have been completed by Seller.
If any prototype does not meet the Acceptance Criteria and is
rejected by Maxtor, Seller shall use commercially reasonable efforts to replace
it with one which does comply with the Acceptance Criteria. Seller shall not,
however, be obligated to replace any non-complying prototypes of which it has
not been notified within ninety (90) days of shipment of same to Maxtor. If
Seller, within ninety (90) days after receipt of Maxtor's timely written
rejection report, is unable to supply Maxtor with conforming prototypes, then
either party may by written notice to the other terminate this Agreement as to
such ASIC. Provided Maxtor has fulfilled all "Design hand-off Requirements" as
defined in the Quotation, if so terminated, unless otherwise provided in the
Quotation, all monies paid by Maxtor to Seller with respect to such ASIC will be
refunded in full within thirty (30) days. Such refund of monies shall be
Maxtor's sole and exclusive remedy and Seller's entire liability with respect to
nonconforming prototypes.
In the event that delivered prototypes comply with the Acceptance
Criteria, but do not function in Maxtor's application (e.g., logic design error,
change in required function, etc.), Maxtor shall pay all agreed upon NRE charges
incurred for the development of the ASIC and
<PAGE> 28
then Maxtor and Seller may negotiate a mutually agreeable redesign schedule and
price.
4. ORDERS. No orders for production units will be accepted by Seller
until after Maxtor has given written sign-off of prototype acceptance, except to
the extent that the parties have agreed in writing on responsibility for risk
and associated liability with respect to orders placed prior to prototype
acceptance. All orders for the design of the ASIC, for changes, for technical
assistance, for production quantities of the ASIC or for any other service by
Seller relating to this Agreement shall be in writing, shall reference the
Quotation by its number and date and any current amendments thereto by their
respective dates, and shall be signed by Maxtor. Seller shall acknowledge all
accepted orders in writing, or shall notify Maxtor if, for any reason, an order
cannot be accepted by Seller.
5. PROPRIETARY RIGHTS IN TECHNICAL INFORMATION. Unless otherwise
agreed in writing, Maxtor-supplied design information relating to the ASIC, as
incorporated in circuit design information, test vectors, test tapes, special
requirements specifications, and/or netlists, shall remain the property of
Maxtor. Seller shall use such information and results exclusively for the
design, manufacture and sale of the ASIC to Maxtor and in providing related
production services. Seller retains all rights in Seller's processing
information, mask works, mask sets, macro cells, and the like used in design,
production or in filling orders placed by Maxtor hereunder. Maxtor has no rights
in or to such processing information, mask works, mask sets, macro cells, and
the like.
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EXHIBIT C
PRICING QUOTATIONS
Quote #s
[*]
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[*] IDENTIFIES REDACTED MATERIAL DELETED PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
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EXHIBIT D
CHANGE NOTIFICATION POLICY
A) Product Change Notification - The changes outlined below which affect the
form, fit, or functionality of the Product require at least ninety (90)
calendar days prior written notice to Maxtor before any shipment of
Product affected by the change. Maxtor agrees to make every effort to
approve or disapprove the proposed changes within five (5) working days
after receipt of Product Change Notification.
(i) Wafer Fabrication
Changes in the appropriate starting material characteristics
including resistivity, thickness, and backside surface finish.
Changes in doping material source, concentration or process
technique.
Changes in passivation or glassivation material, dielectric doping
concentration, thickness, or technique.
Changes in metallization including composition, thickness, or
deposition technique.
Changes in oxidabon or diffusion process including oxide-composition
or thickness.
Changes in the gate formation process, material or technique.
Changes in the final backside process including wafer thinning or
backside metallization.
Technology changes that affect die structure topography (e.g.
double-diffused, epitaxial, isolation).
Mask changes or redesigns which alter die size, bond pad geometry,
active element dimensions, spacing or isolation, or which include
the addition of active elements or modification to connections to
active elements.
Changes in scribing and die separation methods.
(ii) Assembly
Changes in die attach material, method, or process temperature.
Changes in wire material composition.
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Changes to package dimensions and structure.
Changes to seal techniques (materials or sealing process), including
lid, lid seals, frame attach, and frame cleaning.
Changes in molding compound, molding processes, or chip overcoats.
Changes in lead frame design, geometry, material or coating, or lead
attach method.
Changes in device pin assignment.
Change in wire bond method (ultrasonic versus thermal compression).
Change in code marking method or pattern.
(iii) Silicon Materials
Change in the crystal grower furnace type (manufacturer or model).
Change in the use of reclaimed silicon as charge material in the
growth of crystals which have not previously used reclaim.
Change to less stringent chemical requirements for virgin
polycrystalline silicon or elemental dopants.
Changes that, in the opinion of the crystal growing engineer, could
alter an incompletely specified or unspecified material
characteristic.
Change in epitaxial reactor type (manufacturer).
Changes in process temperatures for epitaxial layer depositions.
Change in the material composition of susceptors for epitaxial
reactors.
Change in primary or secondary fiducial orientation or length.
Change in the type of lapping abrasive or polishing slurry used.
Changes in the mechanical dimensions or surface characteristics of
polished substrates.
Change in the process temperature for back seal layer deposition.
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