SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
September 2, 1999
MICRON ELECTRONICS, INC.
-----------------------------------------------
(Exact name of registrant as Specified in Its Charter)
Minnesota
---------------------------------------
(State or other jurisdiction of incorporation)
0-17932 41-1404301
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(Commission File No) (IRS Employer Identification Number)
900 E. Karcher Road
Nampa, Idaho 83687
--------------------------------------------
(Address of principal executive offices)
(208) 898-3434
(Registrant's telephone number, including area code)
<PAGE>
Item 5. OTHER EVENTS
Amended and Restated Component Recovery Agreement
Effective September 2, 1999, Micron Electronics, Inc. (the "Company") and
its parent corporation, Micron Technology, Inc. ("MTI"), entered into an Amended
and Restated Component Recovery Agreement (as amended, the "Component Recovery
Agreement"). The Component Recovery Agreement, which was previously scheduled to
expire on September 2, 1999, has a term of two years and requires MTI to deliver
to the Company components used in connection with the Company's SpecTek memory
products division. The cost to the Company of components obtained from MTI will
be negotiated on a quarterly basis, but in no event will the cost be less than
50% of pre-tax net income generated from the sale of SpecTek products derived
from such components. The maximum cost payable by the Company to MTI for
components during fiscal 2000 will be as follows: first quarter, 50% of pre-tax
net income; second quarter, 62.5% of pre-tax net income; third quarter, 75% of
pre-tax net income; and fourth quarter 87.5% of pre-tax net income. At the
commencement of the second quarter of fiscal 2000 the Company has an option to
require MTI to purchase all of the assets of SpecTek for a purchase price equal
to net book value. At the commencement of fiscal 2001, MTI has an option to
require the Company to sell all of the assets of SpecTek under the same terms
and conditions. Additionally, the Company would have an option to require MTI to
purchase, and MTI would have the option to require the Company to sell, the
assets of SpecTek at book value if MTI's ownership in the Company falls below
50% or if an unrelated third party acquires more than 30% of the Company.
A copy of the Component Recovery Agreement is attached hereto as Exhibit
10.42 and is incorporated herein by reference.
Exclusive Sales Representative Agreement
----------------------------------------
Effective September 2, 1999, the Company and Micron Semiconductor Products,
Inc. ("MSP"), a subsidiary of MTI, entered into an Exclusive Sales
Representative Agreement (the "Sales Representative Agreement") under which MSP
will serve as exclusive sales representative for SpecTek memory products.
A copy of the Sales Representative Agreement is attached hereto as Exhibit
10.65 and is incorporated herein by reference.
<PAGE>
Item 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits.
The following exhibits are filed herewith:
10.42. Amended and Restated Component Recovery
Agreement effective September 2, 1999 by and
between Micron Technology, Inc. and Micron
Electronics, Inc.
10.65 Exclusive Sales Representative
Agreement effective September 2, 1999
between Micron Electronics, Inc. and Micron
Semiconductor Products, Inc.
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
MICRON ELECTRONICS, INC.
Date: September 10, 1999 By /s/ James R. Stewart
--------------------------------
James R. Stewart
Senior Vice President &
Chief Financial Officer
<PAGE>
EXHIBIT 10.42
AMENDED AND RESTATED
COMPONENT RECOVERY AGREEMENT
This Amended and Restated Component Recovery Agreement (the "Agreement") is
entered into effective as of September 2, 1999 (the "Effective Date") by and
between Micron Technology, Inc., a Delaware corporation located at 8000 Federal
Way, Boise, Idaho 83716 ("MTI"), and Micron Electronics, Inc., a Minnesota
corporation located at 900 E. Karcher Road, Nampa, Idaho 83687 ("MEI").
WHEREAS, MTI is engaged in the business of developing and manufacturing
semiconductor memory devices and MEI is engaged in the business of recovering
semiconductor memory devices for sale to third parties;
WHEREAS, MTI wishes to sell and MEI wishes to purchase certain
semiconductor memory devices which do not meet MTI's design and electrical
specifications and utilize them in less critical applications;
WHEREAS, MTI and MEI entered into a Component Recovery Agreement, effective
as of August 14, 1996 (the "Original CRA");
WHEREAS, the Original CRA was amended by Amendment Number 1 to Component
Recovery Agreement, effective as of August 30, 1996 (the "First Amendment");
WHEREAS, the Original CRA and the First Amendment were amended by Amendment
Number 2 to Component Recovery Agreement, dated September 2, 1998 (the "Second
Amendment"); and
WHEREAS, MTI and MEI wish to restate the Original CRA, the First Amendment
and the Second Amendment and simultaneously further amend such documents;
NOW, THEREFORE, for good and valuable consideration, the receipt of which
is hereby acknowledged, the parties hereto agree as follows:
The Original CRA, the First Amendment, and the Second Amendment are hereby
amended and restated to read in their entirety as follows:
1. Definitions. As used in this Agreement, the
following terms have the following meanings:
(a) "Affiliated Company" means any entity, including, without
limitation, a corporation, a partnership or a limited liability company, which
is at least fifty percent (50%) owned or controlled by MEI or by MTI and any
entity which is at least fifty percent (50%) owned or controlled by any such
entity.
<PAGE>
(b) "Components" means semiconductor memory devices, in die or packaged
form, limited to DRAMs, SRAMs, VRAMs and/or derivatives which have failed MTI's
design and electrical specifications. Notwithstanding the foregoing, Components
shall not include semiconductor memory devices sold in wafer form to those
entities set forth on Exhibit A hereto, as such Exhibit may be modified from
time to time by MTI in its sole discretion by providing written notice to MEI,
unless and until such devices are returned to MTI or its Affiliated Company.
(c) "Extended Term" has the meaning assigned to it in Section 17.1.
(d) "JV Companies" means, collectively, TECH Semiconductor
Singapore Pte. Ltd. and KMT Semiconductor Limited.
(e) "JV Components" means all Components produced by the JV
Companies that are obtained by MTI or an Affiliated Company of MTI from the
JV Companies.
(f) "Loss of Control" has the meaning assigned to it in
Section 17.3.
(g) "MEI Volume" means, at any given time and for each separate part
type, the quantity of full specification semiconductor memory devices purchased
by MEI during the previous fiscal work week.
(h) "Minimum Throughputs" has the meaning assigned to it in Section 6.
(i) "MTI's Average Sales Price" means, for each separate part type, the
average of the prices associated with the lowest priced full specification
semiconductor memory devices sold by MTI during the previous fiscal work week in
the amount equal to the MEI Volume. For example, if the MEI Volume for 1-meg x 4
devices were 100 and if, during the same fiscal work week, MTI sold 50 1-meg x 4
devices for $4.00 per device, 100 1-meg x 4 devices for $5.25 per device and 50
1-meg x 4 devices for $6.00 per device, MTI's Average Sale Price for 1-meg x 4
devices would be $4.63 [(50 x 4 ) + (50 x 5.25) / 100].
(j) "MTI Components" means Components produced by MTI or an MTI
Affiliated Company which neither MTI nor an Affiliated Company of MTI obtained
from the JV Companies.
(k) "MTI Option Period" has the meaning assigned to it in Section 12.
(l) "Sales Agreement" means that Exclusive Sales Representative
Agreement, dated September 2, 1999, between Micron Semiconductor Products, Inc.
("MSP") and MEI under which MSP will serve as the exclusive representative on
all sales of Components recovered by SpecTek.
<PAGE>
(m) "Sale Notice" has the meaning assigned to it in Section 12 below.
(n) "SpecTek" means that division of MEI whose principal activities
consist of the recovery, testing and sale of Components.
2. Sales of Components. MTI hereby grants to MEI the right to purchase all
the MTI Components and all the JV Components and to resell such Components upon
the terms and conditions set forth herein and in the Sales Agreement.
Accordingly, during the Extended Term, MTI shall not sell or distribute the MTI
Components or the JV Components to any third party whether in the form of
components, modules or board level products without first offering such MTI
Components and JV Components for sale to MEI pursuant to the terms hereof.
Nothing contained herein shall obligate MEI to purchase MTI Components and JV
Components made available for sale by MTI; provided that the restriction on sale
and distribution contained in the immediately preceding sentence shall not apply
to any Components that MEI elects not to take within fourteen (14) days of
notice that such Components are available.
3. Component Recovery. MTI hereby grants to MEI the right to enter onto
MTI's premises at all reasonable hours to recover Components from MTI. This
right shall include the right by MEI personnel directly or indirectly, with or
without MTI's assistance, (i) to retrieve Components from MTI's Probe area; (ii)
to select and assemble Components retrieved from MTI's Probe area for submission
to MTI's Assembly area for packaging (encapsulation) by MTI or in MTI's
discretion to an assembly site of MTI's choice (MTI is under no obligation to
assemble these Components for MEI); and (iii) to retrieve Components from MTI's
Assembly area and from MTI's Test area. For the purpose of allowing MEI
personnel to select and assemble Components for packaging by MTI in MTI's
Assembly area, MTI agrees to make available to MEI at no cost a reasonable and
adequate amount of Assembly cleanroom floor space, but in no event less than 300
square feet of such floor space, for use by MEI personnel and equipment;
provided, however, that MTI may for reasonable business purposes deny MEI access
to MTI's manufacturing site, recover Components and provide such Components to
MEI off-site at MTI's cost. MTI shall bear all costs associated with MTI's
fabrication, probe, assembly and testing of Components that failed (as defined
in Section 1(b) above) in the Test area. MTI shall also bear all fabrication and
probe costs relating to Components MEI recovers from MTI's Assembly and Probe
areas. All manufacturing costs associated with the assembly of Components
recovered by MEI from MTI's Probe and Assembly areas shall be borne by MEI.
Except as otherwise provided above, the point of delivery shall be deemed to be
the point of shipment by MTI or its Affiliated Company at MTI's or its
Affiliated Company's manufacturing site. Components shall be shipped FOB the
point of delivery. Title and risk of loss of Components shall pass from MTI to
MEI at the FOB point. MEI shall (i) exercise its Component recovery operations
hereunder in a good and workmanlike manner consistent with generally accepted
industry standards; (ii) shall use good faith, commercially reasonable efforts
<PAGE>
to reduce costs and maximize profits with respect to recovered Components; and
(iii) shall cooperate with MTI and the JV Companies to recover as many
Components as is commercially reasonable. MEI may subcontract manufacturing,
assembly, testing, or module assembly services only at costs reasonably
consistent with then-current market rates and only to the entities listed on
Exhibit B hereto or such other entities approved in writing by MTI, such consent
not to be unreasonably withheld or delayed. If MTI fails to respond to MEI's
written request to use a new subcontractor within two (2) business days of MEI's
request therefor, such subcontractor shall be deemed approved by MTI.
4. Components Produced by JV Companies. During the Extended Term, MTI shall
make commercially reasonable efforts to obtain all Components produced by the JV
Companies to the extent that MTI is contractually entitled to obtain such
Components or is otherwise able, in its discretion, to obtain such Components.
The JV Components shall be sold to MEI upon the terms and conditions set forth
herein.
5. Profit Sharing. In consideration for the recovery and purchase by MEI of
the Components from MTI, MEI hereby agrees to share with MTI a percentage of the
profits derived from the sale of Components to third parties and MEI Affiliated
Companies and from intracompany sales or transfers to MEI's other divisions or
operations. For the purpose of determining profits on sales from SpecTek to
MEI's Affiliated Companies and intracompany sales or transfers to MEI's other
divisions or operations, prices for such Components shall be based on MTI's
Average Sales Price and established in accordance with the transfer price
schedule set forth in Schedule A attached hereto. Except as otherwise provided
below, during the Extended Term, the parties' respective profit sharing
percentages with respect to (a) JV Components and (b) MTI Components will be
negotiated on a quarterly basis; provided that MEI's profit sharing percentage
will not exceed fifty percent (50%) of pre-tax net income realized upon sale of
such Components and will not be less than the following:
<TABLE>
<CAPTION>
<S> <C> <C>
DURING PERIOD MINIMUM PERCENTAGES
1. Q1 of Fiscal 2000 50% of pre-tax net income
2. Q2 of Fiscal 2000 37.5% of pre-tax net income
3. Q3 of Fiscal 2000 25% of pre-tax net income
4. Q4 of Fiscal 2000 12.5% of pre-tax net income
5. Fiscal 2001 0% of pre-tax net income, unless otherwise
agreed by MTI
</TABLE>
If MTI and MEI cannot agree on MEI's profit sharing percentage for any quarter,
MTI can unilaterally set the profit sharing percentage as long as it is not
lower than the minimum percentage specified above for the quarter in question.
Notwithstanding the foregoing, if and during such period as the parties and the
JV Companies agree to utilize a pricing matrix based on effective yields and
worldwide average sales price in order to establish prices for JV Components,
MEI shall be entitled to purchase from MTI or its Affiliated Companies the JV
Components at the price established pursuant to such pricing matrix. MEI shall
<PAGE>
be invoiced by MTI or its designated Affiliated Company for such JV Components
and shall not be required to share profits with MTI on the sale of such JV
Components. MTI shall be responsible to pay the JV Companies for the JV
Components and shall be entitled to receive any applicable pricing discount
available to it under its agreements with the JV Companies.
6. Minimum Throughputs/Effect on Profit Sharing. The minimum quarterly
megabit throughputs of MTI Components (the "Minimum Throughputs") to be
delivered by MTI (or a designated affiliate) to SpecTek through the Extended
Term shall be as set forth on Exhibit C hereto. To the extent that the Minimum
Throughputs are not achieved in any fiscal quarter because of the failure of MTI
to deliver sufficient MTI Components, MEI's profit sharing amount under this
Agreement for such quarter will be increased by the shortfall in Minimum
Throughput multiplied by SpecTek's worldwide average selling price during such
quarter multiplied by MEI's profit sharing percentage applicable during such
quarter. The immediately preceding sentence shall not apply if the failure of
MTI to deliver the Minimum Throughput results from Acts of God, strikes,
embargoes, acts of civil or military authorities, shortages in transportation or
other events or factors beyond the reasonable control of MTI, whether or not
similar to the foregoing. Nothing in this Section 6 shall in any way limit or
reduce MTI's obligation to deliver to MEI all MTI Components which it is
otherwise required to deliver under this Agreement.
7. Payment of Profit Sharing Amount. Unless otherwise provided herein,
MTI's share of pre-tax net income realized from sales to third parties and
intracompany sales or transfers of Components shall be paid by MEI to MTI net
forty-five (45) days after the end of each MEI fiscal month.
8. Inspection of Records. MEI shall keep full, clear and accurate records
with respect to SpecTek's costs and its calculation of pre-tax net income
hereunder. MTI shall keep full, clear and accurate records with respect to its
supply of Components to MEI hereunder. Subject to the prior execution of a
nondisclosure agreement satisfactory to the party whose records are to be
inspected, each party's records relating to its respective performance hereunder
shall be open at all reasonable times during the term of this Agreement to the
inspection of a mutually agreeable third party. Neither party hereto shall
unreasonably withhold from the other information necessary to confirm compliance
with the terms of this Agreement, including but not limited to information
pertaining to intellectual property rights and agreements pertaining to the
Components. In the event a party requests an inspection as provided herein, such
party shall bear all costs and expenses associated with such inspection, unless
such inspection reveals noncompliance with the terms of this Agreement by the
other party, in which case the noncomplying party shall bear all such costs and
expenses.
9. Intellectual Property Rights. Each party hereby grants to the other
party during the Extended Term the right to use and make available as reasonably
<PAGE>
requested the intellectual property of the other, including but not limited to
patents, patent applications, software programs, and copyrighted materials, but
only so far as such intellectual property is necessary for the utilizing party
to identify, recover and sell the Components. In addition to bearing all costs
of development and manufacture of Components, MTI shall bear sole responsibility
for, and shall promptly pay when due, all royalty obligations arising from
patent license agreements entered into by MTI, and associated with sales of the
Components to and by MEI. MTI hereby agrees to indemnify MEI for any damages
incurred in the event of nonpayment by MTI of any such royalty obligations,
provided that such indemnification shall not extend to damages incurred as the
result of nonpayment of royalties arising from a bona fide dispute by MTI
regarding the terms or extent of such obligations. Royalty obligations paid by
MTI associated with sales of the Components shall be treated as costs for the
purpose of the computation of pre-tax net income referred to in Section 5 above.
10. Additional Equipment for Component Recovery Operations. During the
Extended Term, MTI will take commercially reasonable efforts to provide to
SpecTek such additional equipment as is reasonably appropriate for MEI to
perform its Component recovery operations, subject to the unanimous approval of
the Capital Committee (as defined hereinafter). Subject to such unanimous
approval, MTI shall use commercially reasonable efforts to make available such
equipment by purchasing it and leasing it to SpecTek at a rental rate equal to
the depreciation on the equipment in question. The Capital Committee shall
consist of one representative designated by MEI and one representative
designated by MTI. Nothing in this Section 10 shall prohibit MEI from purchasing
additional equipment for SpecTek, provided MTI shall not be required to purchase
or assume any obligations with respect to any such equipment.
11. Option to Purchase/Sell SpecTek Assets and Business. During the
Extended Term, MTI will have an option to require MEI to sell all assets
primarily used in the SpecTek business (excluding cash) to MTI for a purchase
price equal to net book value less liabilities and obligations reasonably
incurred in the operation of SpecTek's business. As a part of such sale, MTI
will assume SpecTek's liabilities and obligations reasonably incurred in the
operation of SpecTek's business and this Agreement shall terminate. This option
shall be exercisable commencing on the earlier to occur of (a) the first day of
the first fiscal quarter of MTI's fiscal year 2001 or (b) upon the occurrence of
a Loss of Control (as defined in Section 17) and shall continue throughout the
remainder of the Extended Term. The transaction shall be structured in such form
as the parties shall reasonably agree. MEI shall have an option to require MTI
to purchase all SpecTek assets and business upon the terms set forth in the
first two (2) sentences of this Section 11 which option shall be exercisable
commencing on the earlier to occur of (a) the first day of the second quarter of
MTI's fiscal year 2000, or (b) upon the occurrence of a Loss of Control and
shall continue throughout the remainder of the Extended Term.
12. No Transfer of Necessary SpecTek Assets. MEI shall not sell, assign,
transfer, pledge or in any other manner dispose of any assets primarily used in
<PAGE>
the SpecTek business without first giving written notice to MTI of such proposed
transaction (the "Sale Notice"). Notwithstanding the foregoing, MEI may sell,
contribute or otherwise transfer such assets to an Affiliated Company that is
100% owned or controlled by MEI, provided that such Affiliated Company agrees in
writing to be bound by the terms and conditions of this Agreement. The Sale
Notice must contain the exact name of the proposed purchaser and the terms and
conditions of the proposed sale. MTI shall have the option to acquire such
assets by paying to MEI the purchase price proposed in the Sale Notice. If MTI
does not exercise such option within forty-five (45) days after its receipt of
the Sale Notice (the "MTI Option Period"), MEI shall have the right to sell such
assets to the stated purchaser, only at the price and in accordance with the
terms and conditions stated in the Sale Notice which sale must be completed
within forty-five (45) days of expiration of the MTI Option Period. Except as
otherwise provided herein, this Agreement and any lease arrangement or agreement
with respect to equipment purchased for SpecTek by MTI pursuant to Section 10
above shall be nontransferable and nonassignable and shall be deemed to have
terminated immediately prior to MEI's entering into an agreement to sell a
majority of its SpecTek's assets to a third party.
13. Confidentiality. Each party acknowledges that it will have access to
certain information and materials concerning the business, plans, customers,
technology, and products of the other pertaining to the subject matter of this
Agreement that are confidential and of substantial value to the other party.
Each party agrees that it will not at any time disclose such confidential
information to any third party.
14. No Warranty. MTI MAKES NO WARRANTIES, EXPRESS OR IMPLIED, REGARDING THE
COMPONENTS, INCLUDING, BUT NOT LIMITED TO, ANY IMPLIED WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, OR QUALITY, OR OTHERWISE.
MTI DOES NOT MAKE TO MEI OR ANY CUSTOMER OF MEI, AND HEREBY EXPRESSLY DISCLAIMS,
ANY OTHER REPRESENTATION OR WARRANTY OF ANY KIND WITH RESPECT TO THE COMPONENTS.
ALL COMPONENTS ARE SOLD "AS IS" AND "WITH ALL FAULTS."
15. Limitation of Liability. Except as otherwise provided herein, in the
event of termination by either party in accordance with any of the provisions of
this Agreement, 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 any expenditures
or commitments in connection with the business or goodwill of either party.
16. Patent Indemnity. MTI represents and warrants that the delivery and
sale of Components hereunder will not infringe any patent, trademark or other
intellectual property rights of third parties. MTI shall indemnify and hold MEI
harmless of and from any and all losses, including loss of costs, claims
liabilities and expenses, including attorneys' fees, incurred by MEI with
respect to any such infringement of any patent, trademark or other intellectual
<PAGE>
property rights, provided that such indemnification shall not exceed that amount
equal to MTI's share of the net profits derived from the sale by MEI of the
infringing products. MEI shall have the right to offset against payments due to
MTI hereunder the amount of any indemnification by MTI to MEI under this
Section.
17. Term and Termination.
17.1 Term. The term of this Agreement shall commence on the Effective
Date and shall continue through, and shall expire on, the last day of the end of
MTI's fiscal year 2001 (the "Extended Term"), subject to earlier termination in
accordance with the provisions of this Agreement.
17.2 Termination by Mutual Agreement. This Agreement may be terminated
at any time upon the mutual written agreement of the parties.
17.3 Termination by MTI. MTI shall have the option to terminate this
Agreement upon MTI's Loss of Control of MEI (as defined below), by providing
written notice to MEI within ninety (90) days of such Loss of Control.
For purposes of this Section 17.3, "Loss of Control" shall mean the
earlier to occur of (a) the date on which MTI ceases to be the beneficial owner
of at least fifty percent (50%) of all MEI Equity Interests or (b) the date on
which an unrelated third party acquires more than thirty percent (30%) of all
MEI Equity Interests. "Equity Interests" shall mean any and all shares,
interests, rights to purchase warrants, options, participations or other
equivalents of, or interests in (however designated) corporate stock or other
equity participations, including partnership interests, whether general or
limited, including any preferred equity interests.
17.4 Termination for Cause. In addition to any other remedies provided
by this Agreement or available at law or in equity, subject to the terms of this
Section 17.4, either party may terminate this Agreement in the event that the
other party has defaulted in any of its material obligations hereunder. Any such
termination will be effective only after: (a) the non-defaulting party provides
written notice to the defaulting party specifying in detail the nature of the
default, (b) the default continues unremedied for a period of sixty (60) days
following the written notice, and (c) an arbitrator determines that a default of
a material obligation has occurred and remains unremedied after expiration of
the sixty (60) day period. Any arbitration pursuant to the foregoing clause (c)
shall be conducted according to the rules of the American Arbitration
Association (the "AAA") and shall be held in Boise, Idaho. A party requesting
arbitration shall give written demand to the other party and within thirty (30)
days after such demand the parties will attempt to agree on the appointment of
an arbitrator. If the parties are unable to agree on an arbitrator, the AAA upon
application of either party will appoint an arbitrator with experience in
transactions similar to those contemplated in this Agreement. The arbitrator
will begin the arbitration hearing within thirty (30) days after appointment and
shall render his or her decision within thirty (30) days of the conclusion of
the hearings. If the arbitrator determines that a material default has occurred
<PAGE>
and has remained unremedied, the non-defaulting party may terminate this
Agreement effective upon ten (10) days prior written notice to the defaulting
party. In the event of termination pursuant to this Section 17.4, the
non-defaulting party may exercise the option described in Section 11 by giving
written notice to the defaulting party of its election to exercise such option
within thirty (30) days after the effective date of the termination of this
Agreement.
17.5 Survival of Certain Terms. The provisions of Sections 13, 14, 15,
16, 17 and 19 of this Agreement shall remain in full force and effect after any
termination of the Agreement. With respect to Components delivered by MTI to MEI
for which profits have not yet been realized by MEI or paid to MTI, all the
provisions of this Agreement shall remain in full force and effect after any
termination of this Agreement.
18. Application to Subsidiaries. The obligations of either party hereunder
shall be applicable to subsidiaries of each such party. "Subsidiary" shall mean
any entity owned fifty percent (50%) or more by a party.
19. General Provisions.
19.1 Governing Law. This Agreement shall be governed by and construed
under the laws of the State of Idaho. Except as provided in Section 17.4 above,
the federal and state courts within the State of Idaho shall have the sole and
exclusive jurisdiction to adjudicate any dispute arising out of this Agreement.
19.2 Entire Agreement. This Agreement together with the Sales
Agreement, Exhibits A, B and C, which exhibits are incorporated herein, sets
forth the entire agreement and understanding of the parties relating to the
subject matter herein and merges all prior discussions between them. Except for
changes to Exhibit A hereto, no modification of or amendment to this Agreement,
nor any waiver of any rights under this Agreement, shall be effective unless in
writing signed by authorized representatives of both parties.
19.3 Notices. Any notice required or permitted by this Agreement shall
be in writing and shall be sent by prepaid registered or certified mail, return
receipt requested, addressed to the other party at the address shown at the
beginning of this Agreement or at such other address for which such party give
notice hereunder. Such notice shall be deemed to have been given three (3) days
after deposit in the mail.
19.4 Force Majeure. Nonperformance of either party shall be excused to
the extent that performance is rendered impossible by strike, fire, flood
governmental acts or 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.
19.5 Assignability and Binding Effect. The rights and obligations of
each party hereunder may not be assigned or transferred directly or indirectly
without the prior written consent of the other party, which consent shall not be
<PAGE>
unreasonably withheld. Provided, however, that either party may assign or
transfer all or any portion of its rights and obligations arising out of this
Agreement to one or more of its wholly-owned Affiliated Companies provided such
Affiliated Company shall agree in advance and in writing to the terms and
conditions of this Agreement. Change of ownership or control of MEI or MTI shall
not constitute an assignment or transfer under this Section 19.5. If MEI sells
or transfers all of its component recovery assets and business to a wholly-owned
Affiliated Company, MEI shall assign or transfer all of its rights and
obligations arising out of this Agreement to such Affiliated Company. Subject to
the foregoing, this Agreement shall be binding upon and inure to the benefit of
the parties hereto, their successors and permitted assigns. 19.6 Counterparts.
This Agreement may be executed in two or more counterparts, each of which shall
be deemed an original and all of which together shall constitute one instrument.
MICRON TECHNOLOGY, INC. MICRON ELECTRONICS, INC.
By: /s/ Steven R. Appleton By: /s/ Joel J. Kocher
---------------------------- ----------------------------
Title: Chief Executive Officer Title: Chief Executive Officer
<TABLE>
<CAPTION>
Schedule A
<S> <C> <C>
MTI's Average Transfer Price Transfer Price
Sales Price for Full for Systems Grade
Specification Parts
Parts
- -------------------------------------------------------
0X .975(X) .8288(X)
Transfer Price Transfer Parts
for Printer for Audio Grade
Buffer Grade Devices
Parts
- ------------------------------------
.70(X) .25(X)
</TABLE>
<PAGE>
Exhibit A
Wafer Customers
Kingpak Technology, Inc.
<PAGE>
Exhibit B
Permitted Subcontractors
Austin Manufacturing Services
Bright Technology, Inc
Component Technologies, Inc.
ECSC
Eldorado Technical Service, Inc.
Levin International, Inc
MCMS
Memory Works, Inc.
Micron Systems Integration
Modules Technology
SMS Memory Module Assembly, Inc.
Tanisys, Inc
Technicom, Inc
Wescom Marketing, Inc.
Wintec Industries
<PAGE>
Exhibit C
MTI Component Minimum Throughputs
385,000,000 Megabits
EXHIBIT 10.65
EXCLUSIVE SALES
REPRESENTATIVE AGREEMENT
This Exclusive Sales Representative Agreement (this "Agreement") is
effective as of September 2, 1999 (the "Effective Date") between Micron
Electronics, Inc., a Minnesota corporation, by and through its SpecTek division,
with its principal place of business at 900 E. Karcher Road, Nampa, Idaho 83687
("SpecTek") and Micron Semiconductor Products, Inc., a corporation organized
under the laws of Idaho, by and through its Crucial Technology division, with
its principal place of business at 8000 South Federal Way, Boise, Idaho 83716
("Crucial").
R E C I T A L S
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A. SpecTek recovers semiconductor memory devices, including the products
listed in Exhibit A attached hereto, as it may be amended from time to time
("SpecTek Products").
B. SpecTek and Crucial desire that Crucial act as the exclusive independent
sales representative for the promotion and sale of SpecTek Products in the
territory defined below under the terms and conditions set forth below.
C. SpecTek and Micron Technology, Inc. ("MTI"), Crucial's parent company,
entered into a Component Recovery Agreement effective as of August 30, 1996, and
have subsequently entered into the Amended and Restated Component Recovery
Agreement (the "CRA") concurrently with entering into this Agreement.
D. Defined terms used herein which are not defined herein shall have the
meanings assigned to them in the CRA.
NOW, THEREFORE, for good and valuable consideration, including the
obligations entered into by each party in connection with the CRA, the receipt
and sufficiency of which is hereby acknowledged, the parties agree as follows:
<PAGE>
1. Appointment as Exclusive Sales Representative of SpecTek.
(a) Appointment. SpecTek appoints Crucial, and Crucial accepts such
appointment, as SpecTek's exclusive worldwide (the "Territory") sales
representative for the purpose of performing all sales functions relating to the
sale of SpecTek Products, including without limitation identifying prospective
purchasers of, promoting the sale of, soliciting orders for, approving customer
credit for, and accepting or rejecting orders for SpecTek Products.
(b) Exclusivity. All sales of SpecTek Products shall be made
exclusively by Crucial.
(c) Independent Contractor. Crucial's relationship with SpecTek
established under this Agreement will be that of an independent contractor.
Except as provided in Section 5(a) below, neither party has, by virtue of this
Agreement, and neither party will represent that it has, by virtue of this
Agreement, any authority to bind the other party, to assume or create any
obligation, express or implied, to enter into any agreements regarding the other
party, or to make any warranties or representations on behalf of the other party
or in the other party's name.
2. Obligations of Crucial.
(a) Marketing Efforts. Crucial will use commercially reasonable efforts
to vigorously and aggressively promote and solicit orders for SpecTek Products
within those regions of the Territory in which Crucial has established marketing
networks.
(b) Facilities and Personnel; Costs. Appropriate arrangements will be
made so that Crucial will employ approximately five (5) of SpecTek's current
sales personnel. Crucial shall provide and maintain a sufficient number of
technical and sales personnel having the knowledge and training necessary to
inform customers properly concerning the features and capabilities of SpecTek
Products. Crucial shall be responsible for all costs associated with performance
of its obligations under this Agreement, including, but not limited to, costs of
Crucial facilities, personnel and marketing. Crucial shall not be entitled to a
commission for performance of its obligations under this Agreement.
Notwithstanding the foregoing, Crucial may charge SpecTek for fully-loaded
employee costs incurred by it to employ the sales personnel transferred to
Crucial as provided above, together with reasonable sales and marketing expenses
incurred in connection with sales of SpecTek Products by such employees.
(c) Customer-Related Responsibilities. Crucial will: (i) assist SpecTek
in locating prospective customers of SpecTek Products and provide pertinent
information concerning SpecTek Products to prospective customers; (ii) promptly
transmit to SpecTek significant customer inquiries and complaints; (iii) on
SpecTek's behalf but subject to Section 5(a) below, negotiate prices for SpecTek
Products reasonably consistent with then-current market conditions, assist
customers in placing orders for SpecTek Products, approve or reject customer
credit requests, accept or reject customer orders, and promptly transmit such
orders to SpecTek; and (iv) assist in expediting deliveries of SpecTek Products
to customers.
<PAGE>
(d) No Competing Products. Crucial will not sell, recover or
distribute Components, as defined in the CRA, except pursuant to the CRA and
under this Agreement.
(e) Market Conditions. Crucial will confer with SpecTek from time to
time at the request of SpecTek on matters relating to market conditions, sales
forecasting and product planning relating to SpecTek Products.
(f) Export Controls. Crucial acknowledges that SpecTek Products are
restricted by the United States government from export to certain countries and
agrees that it will not knowingly accept orders that would require the export or
re-export of any SpecTek Products in violation of any United States export
control laws; provided that SpecTek shall have in place customary and reasonable
safeguards to ensure that such laws are not violated.
(g) Sales Restrictions of Non-MTI Suppliers. Solely with respect to
sales of SpecTek Products purchased by SpecTek from suppliers other than MTI or
its affiliates ("Non-MTI Suppliers") Crucial shall comply with (i) sales
restrictions imposed by such Non-MTI Suppliers to the extent that Crucial is
notified in advance and in writing of such restrictions, and (ii) restrictions
imposed by any import bonds or requirements in connection with such SpecTek
Products to the extent that Crucial is notified in advance and in writing of
such restrictions.
3. SpecTek Obligations - Marketing and Technical Information.
SpecTek, at its own expense, will provide Crucial with marketing and
technical information concerning SpecTek Products, as well as samples, catalogs
and other sales aids for the use of Crucial in amounts sufficient for Crucial to
perform its obligations hereunder. When SpecTek so requests, and upon expiration
or termination of this Agreement, Crucial will promptly return such materials
then in its possession to SpecTek in good and usable condition, subject to
reasonable "wear and tear."
4. Records and Reports.
(a) Forecasts. Crucial and SpecTek shall cooperate in good faith to
prepare forecasts of future sales in order to facilitate SpecTek's production
scheduling. SpecTek shall diligently adhere to such forecasts in its production
of Products unless otherwise agreed between the parties.
(b) Notification. Crucial will notify SpecTek in writing of any claim
or proceeding directly involving SpecTek Products within ten (10) business days
after Crucial learns of such claim or proceeding.
5. Orders, Terms of Sale or License and Billing.
(a) Order Acceptance: Credit Indemnity. Crucial shall have full
authority to negotiate prices (provided that such prices shall be reasonably
consistent with then-current market conditions), accept and reject orders and
<PAGE>
approve customer credit; provided that Crucial shall indemnify and hold harmless
SpecTek for its profit sharing percentage under the CRA as applied to any bad
debt losses on sales of SpecTek Products in excess of the average bad debt level
(calculated as a percentage of total sales) for SpecTek customers during the
first three quarters of fiscal 1999, as set forth in Exhibit B.
(b) Terms of Sale. All sales to customers solicited by Crucial will be
according to the terms and conditions established by SpecTek from time to time,
subject to Crucial's consent, which consent shall not be unreasonably withheld.
(c) Payment. Unless otherwise agreed, all SpecTek Products shall be
billed by Crucial in the name of SpecTek or its designated affiliate directly to
the customer and Crucial shall act as SpecTek's agent in connection therewith.
All invoice payments are to be made directly to a SpecTek account agreed upon by
the parties. If any payment is received by Crucial in error, Crucial shall
immediately ensure that an amount equal to such payment is deposited into the
agreed account.
6. Proprietary Information.
Each party shall comply with the provisions of that certain Mutual
Confidentiality Agreement effective as of June 24, 1996 among the parties and
their
affiliated companies.
7. Indemnification.
(a) Indemnification. Each party will indemnify the other party and hold
it harmless from any claims, losses or damages, including court costs and fees
of attorneys and other professionals, for personal injury, tangible or
intangible property damage or any other liability, arising from (i) the
negligence of such indemnifying party, its employees or agents in connection
with this Agreement, and (ii) any breach of any provision of this Agreement by
the indemnifying party.
(b) Not Employees. In all matters relating to this Agreement, neither
Crucial nor its employees or agents are or will act as employees of SpecTek
within the meaning or application of any federal or state unemployment insurance
laws, old age benefit laws, social security laws, workers' compensation or
industrial accident laws, or under any other laws or regulations which may
impute any obligations or liability to SpecTek by reason of an employment
relationship. Crucial will reimburse SpecTek for and hold it harmless from any
liabilities or obligations imposed upon SpecTek by virtue of any such law with
respect to employees of Crucial in performance of this Agreement.
8. Proprietary Rights.
(a) Use During Agreement. During the term of this Agreement Crucial is
authorized by SpecTek to use the SpecTek trademarks, trade names, logos and
designations currently used by SpecTek for SpecTek Products ("SpecTek
Trademarks") in connection with Crucial's advertisement and promotion of SpecTek
Products. Crucial's use of the SpecTek trademarks will be in accordance with
<PAGE>
SpecTek's written policies in effect from time to time and provided to Crucial,
including but not limited to trademark usage and cooperative advertising
policies. Notwithstanding any provision of this Agreement, Crucial may market
and sell SpecTek Products under such other trademarks, trade names, logos and
designations that it may adopt from time to time and SpecTek shall cooperate
with Crucial in connection therewith; provided that prior to utilizing such
other trademarks, trade names, logos and designations Crucial shall obtain
SpecTek's prior written consent, such consent not to be unreasonably withheld or
delayed. If SpecTek fails to respond to Crucial's written request to use such
trademark, trade name, logo or designation within two (2) business days of
Crucial's request therefor, such request shall be deemed approved by SpecTek.
(b) Crucial Does Not Acquire Rights. During the term of this Agreement,
Crucial will not be required to pay any consideration for the use of the SpecTek
Trademarks, and nothing contained in this Agreement will give Crucial any right,
title or interest in any of them. Subject to Section 8(e) below and unless MTI
acquires the assets of SpecTek, Crucial acknowledges that SpecTek owns and
retains all SpecTek Trademarks, and agrees that it will not at any time during
or after this Agreement assert or claim any interest in or do anything that may
adversely affect the validity or enforceability of the SpecTek Trademarks.
(c) No Continuing Rights. Unless MTI acquires the assets of SpecTek,
upon expiration or termination of this Agreement, Crucial will immediately cease
all display, advertising and use of all SpecTek Trademarks and will not
thereafter use, advertise or display any SpecTek Trademarks.
(d) Obligation to Protect. Crucial agrees to use reasonable efforts to
protect SpecTek's proprietary rights under SpecTek Trademarks and to cooperate
in SpecTek's efforts to protect such proprietary rights. Crucial agrees to
notify SpecTek of any known or suspected breach of SpecTek's proprietary rights
under SpecTek Trademarks that comes to Crucial's attention. Crucial acknowledges
that only SpecTek has the right to sue for infringements of SpecTek's
proprietary rights under SpecTek Trademarks.
(e) Micron Trademark. This Section 8 shall not apply to any trademark
incorporating the word "Micron".
9. Purchase by Crucial of Unsold Recovered Components.
Except as otherwise provided in (1) and (2) below, during the term of
this Agreement, Crucial or an affiliate of Crucial designated by it, will
purchase from SpecTek recovered Components (only products in module form, audio
RAM products, and sort/settle products unless otherwise agreed by Crucial) which
have been received into finished goods on or before 5:00 p.m. (MST) on the day
that is four (4) days prior to the close of each fiscal quarter, inclusive of
the last day of such fiscal quarter (the "Inventory Close Date") and which were
not sold and shipped during such fiscal quarter ("Unsold Recovered Components").
Crucial's obligation to purchase Unsold Recovered Components as of a given
Inventory Close Date shall be limited as follows:
<PAGE>
(1) In the event (i) the number of Components (in memory density
equivalents)placed into finished goods inventory during the two (2) calendar
week period prior to the Inventory Close Date exceeds (ii) the average number of
Components placed into finished goods inventory during the five (5) preceding
two (2) week periods, then Crucial shall not be obligated to purchase the
number of Components by which (i) exceeds (ii).
(2) In the event (i) the number (in memory density equivalents) of
Unsold Recovered Components exceeds (ii) the highest number of Unsold Recovered
Components for any of the preceding three (3) fiscal quarters, then Crucial
shall not be obligated to purchase the number of Components by which (i) exceeds
(ii).
In the event Crucial does not purchase Unsold Recovered Components due
to the limitations set forth in (1) or (2) above, and such Components are not
otherwise sold and shipped during the following quarter, Crucial shall be
obligated to purchase such Components at the end of such following quarter in
accordance with the terms of this Section 9, including the limitations set forth
in (1) and (2) above.
The purchase will be effective as of the last day of the fiscal
quarter. The purchase price paid by Crucial to SpecTek will be equal to the
worldwide average sales price for recovered Components of the same type and
quality as the Unsold Recovered Components as of the last day of the applicable
fiscal quarter and payment shall be made by Crucial within fifteen (15) days
after Crucial's receipt from SpecTek of inventory records and other
documentation, in form satisfactory to Crucial, verifying recovered Components
required to be purchased by Crucial hereunder.
SpecTek's profit sharing percentage under the CRA with respect to any
recovered Components which are delivered into finished goods after the Inventory
Close Date but before the end of a fiscal quarter, shall be the profit sharing
percentage in effect under the CRA for the quarter in which the Components were
delivered to finished goods regardless of when such recovered Components are
sold or purchased by Crucial.
10. [Intentionally Omitted]
11. Duration and Termination of Agreement.
(a) Term. This Agreement is for a term coincident with the term of the
CRA and will automatically expire or terminate simultaneously with the
expiration or termination of the term of the CRA. Notwithstanding the provisions
of this Section, or any other provisions of this Agreement, this Agreement may
be terminated at any time as set forth below.
(b) Termination for Cause. In addition to any other remedies provided
by this Agreement or available at law or in equity: Either party may terminate
<PAGE>
this Agreement at any time in the event that the other party has defaulted in
any of its material obligations pursuant to this Agreement and such default
continues unremedied for a period of thirty (30) days following written notice
from the non-defaulting party; provided that if such default is of a nature that
it cannot reasonably be cured within such thirty (30) day period the defaulting
party shall be allowed a reasonable time to remedy such default, not to exceed
ninety (90) days from the written notice.
(c) Automatic Termination. This Agreement terminates automatically,
with no further act or action of either party, if a receiver is appointed for a
party or its property, a party makes an assignment for the benefit of its
creditors, any proceedings are commenced by, for or against a party under any
bankruptcy, insolvency or debtor's relief law, a party is liquidated or
dissolved or the assets of a party are nationalized.
(d) Effect of Termination or Expiration. Upon termination or expiration
of this Agreement: (i) Unless MTI buys or has agreed to buy SpecTek's assets,
Crucial will cease to use any SpecTek Trademarks and will return all materials
provided by SpecTek pursuant to Section 3 of this Agreement; and (ii) for a
period of six (6) months after the date of termination or expiration, upon at
least two (2) weeks prior written notice to Crucial, Crucial will make available
to SpecTek for inspection and copying all books and records of Crucial that
pertain to Crucial's performance of and compliance with its obligations and
representations under this Agreement.
(e) No Damages for Termination or Expiration. NEITHER SPECTEK NOR
CRUCIAL NOR ANY OF THEIR AFFILIATES WILL BE LIABLE TO THE OTHER FOR DAMAGES OF
ANY KIND, INCLUDING INCIDENTAL OR CONSEQUENTIAL DAMAGES, ON ACCOUNT OF THE
TERMINATION OR EXPIRATION OF THIS AGREEMENT IN ACCORDANCE WITH THIS SECTION 11.
CRUCIAL WAIVES ANY RIGHT IT MAY HAVE TO RECEIVE ANY COMPENSATION OR REPARATIONS
ON TERMINATION OR EXPIRATION OF THIS AGREEMENT UNDER THE LAW OF THE TERRITORY OR
OTHERWISE, OTHER THAN AS EXPRESSLY PROVIDED IN THIS AGREEMENT. Neither SpecTek
nor Crucial will be liable to the other on account of termination or expiration
of this Agreement for reimbursement or damages for the loss of goodwill,
prospective profits or anticipated income, or on account of any expenditures,
investments, leases or commitments made by either SpecTek or Crucial or for any
other reason whatsoever based upon or growing out of such termination or
expiration. Crucial acknowledges that (i) Crucial has no expectation and has
received no assurances that any investment by Crucial in the promotion of and
solicitation of orders for SpecTek Products will be recovered or recouped or
that Crucial will obtain any anticipated amount of profits by virtue of this
Agreement, and (ii) Crucial will not have or acquire by virtue of this Agreement
any vested, proprietary or other right in the promotion of and solicitation of
SpecTek Products or in any "goodwill" created by its efforts hereunder.
<PAGE>
(f) Survival. Each party's rights and obligations under Sections 1(c),
5(a), 6, 7, 8(b), 8(c), 11, 12, and 13 of this Agreement will survive
termination or expiration of this Agreement.
12. Limitation of Liability.
IN NO EVENT WILL EITHER PARTY BE LIABLE FOR ANY LOST PROFITS OR ANY
FORM OF SPECIAL, INCIDENTAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES OF ANY
KIND, FROM ALL CAUSES OF ACTION OF ANY KIND, INCLUDING TORT (INCLUDING
NEGLIGENCE), CONTRACT AND BREACH OF WARRANTY, EVEN IF SUCH PARTY HAS BEEN
INFORMED IN ADVANCE OF THE POSSIBILITY OF SUCH DAMAGES.
13. General.
(a) Assignment. This Agreement is not assignable by either party, and
neither party may delegate its duties hereunder without the prior written
consent of the other party, provided, however, that either party may assign this
Agreement to a subsidiary or entity controlling, controlled by or under common
control with such party. Any attempted assignment in violation of this provision
shall be void. The provisions hereof will be binding upon and inure to the
benefit of the parties, their successors and permitted assigns.
(b) Notices. All notices and demands hereunder will be in writing and
will be served by personal service, facsimile transmission or certified mail,
return receipt requested, at the address of the receiving party set forth in
this Agreement (or at such different address as may be designated by such party
by written notice to the other party). All notices or demands by mail will be by
certified or registered mail, return receipt requested, and will be deemed
complete ten (10) days after mailing.
(c) Section Headings and Language Interpretation. The section headings
contained herein are for reference only and will not be considered substantive
parts of this Agreement. The use of the singular or plural form will include the
other form, and the use of masculine, feminine or neuter genders will include
the other genders.
(d) Governing Law and Choice of Forum. This Agreement shall be governed
by and construed under the laws of the State of Idaho. The federal and state
courts within the State of Idaho shall have the sole and exclusive jurisdiction
to adjudicate any dispute arising out of this Agreement.
(e) Force Majeure. Neither SpecTek nor Crucial will be responsible for
any failure to perform due to unforeseen circumstances or to causes beyond
SpecTek's or Crucial's reasonable control, including but not limited to acts of
God, war, riot, embargoes, acts of civil or military authorities, fire, floods,
accidents, strikes, or shortages of transportation, facilities, fuel, energy,
labor or materials.
<PAGE>
(f) Equitable Relief. Each party acknowledges that any breach of its
obligations under this Agreement with respect to the proprietary rights or
confidential information of the other party may cause the other party
irreparable injury for which there are inadequate remedies at law, and therefore
the other party may be entitled to receive in any court of competent
jurisdiction injunctive, preliminary or other equitable relief in addition to
damages, including court costs and fees of attorneys and other professionals, to
remedy any actual or threatened violations of its rights with respect to such
matters.
(g) Waiver. The waiver by either party of any default by the other
party will not waive subsequent defaults by a defaulting party of the same or a
different kind.
(h) Attorneys' Fees. In the event any litigation is brought by either
party in connection with this Agreement, the substantially prevailing party in
such litigation will be entitled to recover from the other party all the costs,
attorneys' fees and other expenses incurred by such party in the litigation, and
need not bring a suit to final judgment to substantially prevail
(i) Compliance with Law. Each party will obtain and maintain such legal
permits and licenses as are required by any governmental unit or agency in order
to fulfill its obligations hereunder and will comply with all applicable
international, national, state, regional and local laws and regulations,
including United States export laws, in performing its duties hereunder and in
any of its dealings with respect to SpecTek Products.
(j) Mutual Covenants. Each party will: (i) avoid deceptive, misleading
or unethical practices that are or might be detrimental to the other party, the
other party's products or the public; (ii) make no false or misleading
representations with regard to the other party or the other party's products;
(iii) not publish or employ, or cooperate in the publication or employment of,
any misleading or deceptive advertising material with regard to the other party
or its products; and (iv) make no representations, warranties or guarantees to
customers or to the trade with respect to the specifications, features or
capabilities of the other party's products that are inconsistent with the
literature distributed by such party.
(k) Severability. In the event any of the provisions of this Agreement
is held by a court or other tribunal of competent jurisdiction to be
unenforceable, the other provisions of this Agreement will remain in full force
and effect.
(l) Entire Agreement. This Agreement, together with its Exhibits and
the CRA, constitutes the entire agreement between the parties pertaining to the
subject matter hereof, and supersedes in their entirety any and all written or
oral agreements previously existing between the parties with respect to such
subject matter. If there is any conflict between any provision of this Agreement
and a provision of the CRA, the CRA provision shall control. Crucial
acknowledges that it is not entering into this Agreement on the basis of any
representations not expressly contained herein. Any modifications of this
Agreement must be in writing and signed by both parties hereto.
<PAGE>
(m) Execution of Agreement.
(i) Effectiveness. This Agreement will become effective only after
it has been signed by both parties and shall be deemed effective as of the
Effective Date.
(ii)Counterparts. This Agreement may be executed in two or more
counterparts, each of which when so executed will be deemed an original, and all
of which together will constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the Effective Date.
MICRON ELECTRONICS, INC. MICRON SEMICONDUCTOR PRODUCTS,
by and through its INC., by and through its
SPECTEK division CRUCIAL TECHNOLOGY division
By: /s/ Joel J. Kocher By: /s/ Donald A. Baldwin
------------------------ ------------------------
Name: Joel J. Kocher Name: Donald A. Baldwin
------------------------ ------------------------
Title: President Title: President
------------------------ ------------------------
Date: September 3, 1999 Date: September 2, 1999
------------------------ ------------------------
<PAGE>
EXHIBIT A
SPECTEK PRODUCTS
All semiconductor memory products now or hereafter recovered, manufactured,
assembled, tested or sold by SpecTek.
<PAGE>
EXHIBIT B
SPECTEK BAD DEBT FOR Q1-Q3 FISCAL 1999
--------------------------------------
.0940%
